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Decades Of Litigation Experience

SALE OF ASSETS DURING DIVORCE ACTION

| Jul 21, 2021 | Firm News |

By Matt Cavallo, Esq.

After a divorce action is commenced, the parties might think that they would be able to move assets without restrictions, but this is not the case. According to New York Domestic Relations Law Section 236(B)(2)(b), the parties cannot “sell, transfer, encumber, conceal, assign, remove or in any way dispose of, without the consent of the other party in writing, or by order of the court, any property (including, but not limited to, real estate, personal property, cash accounts, stocks, mutual funds, bank accounts, cars and boats) individually or jointly held by the parties, except in the usual course of business, for customary and usual household expenses or for reasonable attorney’s fees . . . .”

However, the parties during a divorce action may wish to sell a marital asset and have the proceeds from that sale be distributed to them while the action is pending. In that situation, as the above statute indicates, the parties need to have the written consent of the opposing party to engage in those actions.

Furthermore, even before a divorce action is commenced, the court, in considering the equitable distribution of the property of the marriage, must take into account “any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration . . . .” DRL § 236(B)(5)(13). When a person transfers assets in contemplation of a matrimonial action, then the assets they transferred to third parties may still be used to determine equitable distribution issues. See Buchsbaum v. Buchsbaum, 292 A.D. 2d 553, 554 (2d Dep’t 2002).