New York automatic orders and what they freeze

The moment a divorce summons is filed in New York, a court order takes effect against the person who filed it. Nobody signs it, no judge reviews it, and no hearing happens. It just starts.

Most people find out about the automatic orders after they have already broken one.

What are the automatic orders in a New York divorce?

Five restrictions and one notice duty, written into section 236(B)(2)(b) of the Domestic Relations Law. The plaintiff serves a copy of them along with the summons, and they read as follows:

• No moving property. Neither party may sell, transfer, encumber, conceal, assign, remove, or dispose of any property, individually or jointly held. The statute names real estate, personal property, cash accounts, stocks, mutual funds, bank accounts, cars, and boats.

• No touching retirement. Neither party may transfer, encumber, assign, remove, withdraw, or dispose of tax deferred funds, stocks, or other assets in an IRA, a 401(k), a profit sharing plan, a Keogh, or any other pension or retirement account. Neither may apply for retirement or annuity payments either.

• No unreasonable debt. No further borrowing against a credit line secured by the family residence, no further encumbering of assets, no unreasonable use of credit cards or cash advances.

• No changes to health coverage. Neither party may remove the other or the children from existing medical, hospital, or dental insurance, and each has to keep the existing coverage in force.

• No changes to life insurance beneficiaries. Each party also has to keep existing life, automobile, homeowners, and renters policies in force.

• A ten day notice duty. If either party receives notice of a tax lien, foreclosure, bankruptcy, litigation, or the lifting of a bankruptcy stay that could adversely affect the marital estate, they have to send written notice to the other party within ten days.

When do the automatic orders take effect?

At different moments for each spouse, and the gap matters.

They bind the plaintiff immediately on the filing of the summons or the summons and complaint. They bind the defendant immediately on service of the automatic orders with the summons.

So if you are the one filing, you are under a court order about your own accounts before your spouse knows the case exists. And if you are the one being served, the restrictions attach the second the papers are in your hand.

They stay in force until the judgment of divorce is entered, or the action is dismissed, discontinued, or stayed, whichever comes first. A court can terminate, modify, or amend them on motion, and the parties can change them by a written agreement that is signed and acknowledged.

What spending is still allowed under the automatic orders?

Three carve-outs, and they are the only three:

• The usual course of business. A business that buys inventory and pays vendors keeps doing that.

• Customary and usual household expenses. Rent, the mortgage payment, groceries, utilities, the car payment, the kids' activities.

• Reasonable attorney's fees in connection with the action. You are allowed to pay your divorce lawyer out of a marital account.

There is also a narrow exception on the retirement side: a party who is already in pay status may keep receiving those payments.

Everything else needs either your spouse's written consent or a court order. That includes moves people think of as neutral, like consolidating two accounts, rolling an old 401(k) into an IRA, or refinancing the house at a better rate.

What counts as violating a New York automatic order?

The ones that catch people are ordinary financial housekeeping done at the worst possible moment:

• Moving money between accounts. Even a transfer between two accounts you both know about is a transfer, and it looks worse than it is once someone charts the statements.

• Rolling over a retirement account. A rollover is a transfer of tax deferred funds. Starting a new job and moving the old plan is the classic accidental violation.

• Taking a 401(k) loan to pay legal fees. The attorney's fee exception covers paying the fees. It does not authorize withdrawing from a retirement account to do it.

• Dropping a spouse from your employer health plan at open enrollment. The order says keep it in force, and open enrollment is not a defense.

• Selling a car or refinancing the house. Both are disposing of or encumbering property, however sensible the deal is.

• Changing a life insurance beneficiary after separating. Common, understandable, and squarely prohibited.

What happens if you violate the automatic orders?

They are court orders, so the remedy is contempt. A court can order the asset restored, credit the value back into the marital estate on distribution, award attorney's fees against the violating spouse, and in serious cases impose sanctions.

The distribution consequence is often the sharper one. Section 236(B)(5)(d) lists wasteful dissipation of assets and transfers made in contemplation of a matrimonial action without fair consideration as factors the court weighs when dividing property, so a violation does not just get undone, it colors how the judge sees the rest of your case. The equitable distribution chapter covers how those factors work.

If you already violated one before you read this, say so early. A transfer disclosed and explained in your statement of net worth is a much smaller problem than one your spouse's lawyer finds in a bank statement six months later.

How do you get around an automatic order legitimately?

Two routes, both on the record.

• A written agreement with your spouse. The statute allows the orders to be modified or amended by written agreement between the parties, duly executed and acknowledged. If you both want the house sold, put it in writing in that form.

• A court order. Bring a motion. Courts routinely permit a sale, a refinance, or a retirement rollover when the reason is sound and the proceeds are protected.

Either way, the point is that the decision gets documented before the money moves. The statement of net worth chapter explains how transfers get disclosed once they have happened, which is the harder conversation.