When a couple relocates from California to Manhattan, they bring their careers, their furniture, and frequently, a fundamental misunderstanding of their own assets. A husband passes away, assuming his will dictates exactly where his “half” of the marital wealth goes. Instead, his widow and children from a prior marriage spend the next two years fighting in Surrogate’s Court. The confusion stems from a single legal reality—our jurisdiction does not recognize community property.
Many of our clients use the phrase casually, assuming it simply means “what is ours.” Legally, community property is a specific statutory regime found in only nine U.S. states. Under that system, spouses automatically share equal ownership of most assets acquired during the marriage, regardless of whose name is on the account. New York relies on a completely different framework. Here, title dictates ownership during your lifetime, but a web of equitable distribution and estate laws takes over when a marriage ends by death or divorce.
The Myth of the Automatic Split
To understand how your wealth will transfer, we first have to classify it. Separate property generally includes assets you owned before marriage, alongside inheritances or gifts received specifically by you. As long as you keep these assets isolated, they remain yours to control as a sole custodian.
Marital property encompasses the wealth built during the marriage. If a Vanguard index fund is solely in your name, you manage it. But if you pass away, Surrogate’s Court does not care that only your name appears on the brokerage statement. The court examines when those funds were acquired and how they were used.
Stewardship.
That is what true legacy planning requires. It demands that we look past the superficial labels of “mine” and “ours” to examine the actual mechanics of how an asset will transfer to the next generation. Relying on default state laws to sort out property rights leaves your family vulnerable to prolonged disputes and unnecessary taxation.
The Commingling Trap
Wealth is rarely static. A wife inherits a brokerage account from her father and uses half of it for a down payment on a joint home in Brooklyn. A husband brings a pre-marital savings account into the union but occasionally deposits his shared paycheck into it. We call this commingling.
Once separate funds mix with shared funds, tracing the original separate property becomes a forensic accounting exercise. Often, the commingled funds are legally transformed into joint assets. I frequently see families where a parent intended to pass a specific, pre-marital asset to children from a first marriage, only to discover that years of commingling gave the surviving spouse a legitimate, overriding claim to the money.
For business owners and executives, the distinction is even more critical. If you start a company before you marry, the business is your separate property. However, if your spouse contributes to its growth—even indirectly by managing the household so you can work eighty-hour weeks—a portion of the business’s appreciation in value during the marriage may be treated as marital property. Without deliberate planning, a family business can easily fracture during probate.
The Spousal Right of Election
Here is where the distinction between separate and joint property takes a sharp turn in estate law. People often assume that if they meticulously maintain an asset as separate property, they have absolute authority to leave it to whomever they wish—perhaps a charitable foundation or a sibling.
Under New York law, that assumption is dangerous. EPTL §5-1.1-A grants a surviving spouse a “right of election.” This statute prevents you from completely disinheriting your husband or wife. Regardless of whether your assets are strictly separate property, your surviving spouse has an absolute right to claim the greater of $50,000 or one-third of your net estate.
The law effectively pulls separate property, joint bank accounts, and even certain trust assets into a single pot to calculate the surviving spouse’s share. You cannot simply title an account in your own name, declare it separate property, and write your spouse out of your will. If you intend to leave your wealth to someone other than your spouse, we typically consider a carefully drafted post-nuptial agreement where the spouse formally waives their right of election.
Importing Wealth from Other States
We represent many executives who built wealth in states like Texas or California before moving to the East Coast. When you cross state lines, your property rights do not automatically reset.
Assets acquired in a community property state retain their character even after you establish residency here. New York handles this under the Uniform Disposition of Community Property Rights at Death Act (EPTL Article 6, Part 6). If an individual dies owning property that was community property in their prior home state, the surviving spouse’s 50 percent interest in those specific assets is preserved.
Managing these imported assets requires immense precision. If you sell a California home and use the proceeds to buy a new primary residence, taking title as “joint tenants with right of survivorship” might inadvertently destroy the specific tax advantages associated with community property—most notably, the double step-up in basis that can eliminate capital gains taxes for the surviving spouse. The simple act of checking the wrong box on a deed can cost a family hundreds of thousands of dollars in unnecessary taxation.
Taking Intentional Action
Proper legacy planning requires a prudent, deliberate approach to asset titling. We do not rely on assumptions about what belongs to whom. We examine the deeds, the beneficiary designations, and the historical origin of every significant account to ensure your estate plan actually aligns with your family’s reality.
Before you assume your assets are protected by how they are currently titled, request a marital asset review and title audit with our office to classify your accounts and align them with your trust funding strategy.
