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Deposit of Separate Funds in a Joint Account for One Month Converted the Separate Funds to Marital Property

The First Department interpreted a prenuptial agreement using standard contract-interpretation rules. The court determined that the terms of the agreement allowed the husband a separate property credit for each property to which he contributed $1 million of his separate funds. The court noted that the husband was not entitled to a separate property credit for $8.5 million paid for a Park Avenue apartment because the funds were first deposited in a joint account, converting them to marital property:

The husband is not entitled to a credit for the $8.5 million paid from the parties’ joint account at closing on the Park Avenue apartment. Although those funds were previously his separate property, they became marital property when he transferred them into the joint account. Since the husband’s transfer of separate funds into a joint account transformed those funds into marital property for all purposes, when funds from that joint account were then used for the purchase of the parties’ apartment, there was no use of separate property for the acquisition of the apartment. In any event, there is no evidence that the joint account was established only for convenience, or that the fund transfer was merely transitory, since the funds remained in the joint account for a month … .  Babbio v Babbio, 2014 NY Slip Op 05365, 1st Dept 7-17-14

 

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