DIVORCE - WHEN SEPARATE PROPERTY BECOMES MARITAL PROPERTY

Brown v. Brown, 2017 NY Slip Op 1175 - NY: Appellate Div., 2nd Dept. 2017:

"The proceeds from an action to recover damages for personal injuries are considered separate property (see Domestic Relations Law § 236[B][1][d][2]; Chamberlain v Chamberlain, 24 AD3d 589, 593). "For equitable distribution purposes, an award pursuant to the September 11th Victim Compensation Fund is the equivalent of a recovery in a personal injury action" (Howe v Howe, 68 AD3d 38, 44). However, separate property that is commingled, for example, in a joint bank account, loses its character of separateness and a presumption arises that each party is entitled to a share of the funds (see Banking Law § 675[b]; Sherman v Sherman, 304 AD2d 744; DiNardo v DiNardo, 144 AD2d 906, 906). "That presumption, however, may be overcome by clear and convincing evidence, either direct or circumstantial, that the account was created only as a matter of convenience" (Crescimanno v Crescimanno, 33 AD3d 649, 649). The presumption may also be overcome by evidence that the account, although joint, is managed solely by one party (see Chamberlain v Chamberlain, 24 AD3d at 593), or that the funds were deposited into the joint account only briefly (see Wade v Steinfeld, 15 AD3d 390, 391). In this case, the Supreme Court correctly determined that by depositing the proceeds of the award into the parties' joint account, the defendant's separate property lost its character of separateness and a presumption arose that each party was entitled to a share of the funds, which was not rebutted."