Just as it is hard to define “convenience” in the previous example, there is no bright line rule as to when a deposit into a joint account will be deemed “transmutated” (sorry) into a joint asset. The outcomes vary according to the specific facts of each case. For example, in Pauk v. Pauk, NYLJ 10/15/96 p.30, col. 6 (2d Dept. 1996), the husband had deposited separate funds into a joint bank account one year before the couple purchased the marital residence. Upon divorce, the husband claimed that he had not intended the deposit to become a joint asset, even though he later used the monies (ironically) to help pay for the jointly-titled house. The Court found that there was, in fact, a transmutation of the deposited funds, so that the husband was not entitled to a separate property credit from the proceeds of the sale of the house.
Sometimes the outcome appears to hinge on the creativity of the litigants, as in Giuffre v. Giuffre, 204 A.D.2d 684, 612 N.Y.S.2d 439 (2d Dept. 1994), where the husband was able to convince the court that the reason he had placed his separate funds into joint accounts was to take advantage of greater FDIC insurance.
But rather than scramble in a divorce litigation for a good explanation in order to get the deposit of your inheritance back (while your husband or wife relaxes knowing that he/she will get back every penny of his/her inheritance used to purchase the house), the far easier course, of course, is to go to the trouble ahead of time to open a separate account with that inheritance. Unless, of course, your intention is truly to make your spouse feel loved and included by putting the money in a joint account. And, if you are among the forty-five percent of people whose marriages do not end in divorce, you will probably never live to regret it.
If, however, you are not so fortunate, or it is a little late for good planning, you may wonder whose interests are really being served when the distinctions drawn by the law seem arbitrary, and impossible to predict while married. Frankly, there at least should be uniformity in the “equitable distribution” of marital assets upon divorce, if not an outright uniform split of assets as in states that evenly divide the “community property” acquired by spouses during marriage. In the view of this writer, the latter approach seems a bit extreme. The idea of empowering the courts to decide how things should be split up on a case-by-case basis is a good one, since every case presents unique facts that may influence a reasonable man’s view of what is a fair split of assets and debts. Equal is not always best. However, if the playing field itself is not level, the dignity usually accorded to the referee is lost on the players. If the ordinary person is to feel fairly treated by his society, he must be fairly treated in the courts. Unfortunately, too little attention is paid to the common sense and basic fairness of the law – not just a particular law, but the way in which the laws work together, for this is the way that the law is encountered. Too often, a particular outcome (the joint account deposit is a good example) will be nicely explained (by, say, a judge in his Findings of Fact) in a way that seems very smart and well analyzed, but which fails to consider the rest of the case as a whole. But the basic fairness or unfairness of the result is not lost on the parties. The effect of bad law in divorce is, ultimately, a bad image of marriage, for those who have been burned once tend not to forget. And if we are to work to strengthen families, they must have faith that the institution that binds them will not betray them. Especially in an age with a rampant divorce rate, we must work to ensure, through thoughtful legislation, that divorce is fair for everyone.