Equitable distribution of marital property in new york
Property Division - Equitable Distribution of Marital Property
1. Classification of Assets: Separate and Marital Property
When you married, you and your spouse may have owned assets (real estate, bank and investment accounts, valuable artwork or other collectibles, interest in a business, etc.) that each of you had acquired before the marriage. Assets acquired before marriage are classified as “separate property”, and separate property belongs to the spouse who acquired it before the marriage (with some exceptions).
During the marriage, you and your spouse may have obtained more assets. There is a presumption[1] that assets obtained during the marriage are marital property, and marital property is supposed to be equitably distributed to each spouse.
You and your spouse may exclude certain property from the marital estate by entering into a marital agreement, such as a prenuptial or postnuptial agreement. Without such an agreement, the presumption that property acquired during the marriage is marital property applies. The only exceptions to that presumption are inheritances, personal injury/worker’s compensation awards for pain and suffering, and gifts from third parties.
Marital property includes the following items acquired during the marriage:
Real estate (including a coop apartment) you and/or your spouse acquired, except for any contributions of separate property made to such property (like paying part or all of the down payment with separate property funds);
Personal property, like cars, boats, airplanes, furniture, and artwork;
Cash, securities, bank accounts, retirement accounts and pensions;
Gifts to each other.
Separate property includes:
Real property you obtained or owned before the marriage;
Personal property you obtained or owned before the marriage;
Property you obtained by inheritance or gift from someone other than your spouse during the marriage;
Compensation received for personal injuries during the marriage not related to loss of wages or earning capacity during the marriage;
Property acquired in exchange for your separate property during the marriage;
Any increase in the value of separate property, except to the extent that the increase is due to contributions or efforts of your spouse or self during the marriage;
Property described as separate property in a written agreement between you and your spouse.
When you or your spouse file for legal separation or divorce, you can agree on what property is marital property, what property is separate property, and how the property will be distributed. If you cannot agree, the court will decide those issues, after a trial. The court will also decide what would be a fair and equitable, but not necessarily equal, division of the marital property.
Unless you have mixed or commingled your separate property with marital property or separate property is transmuted into marital property, your separate property remains yours alone after the divorce, and so does your spouse’s separate property. The court will confirm that your separate property belongs to you and your spouse’s separate property belongs to your spouse.
However, if you mix or commingle your separate property with marital property, the court may consider part or all of your separate property to be marital property and divide it up with your spouse. This rule does not usually apply to real estate, particularly the marital home, where a separate property contribution to the purchase will normally remain your separate property. You will be able to get your separate property contribution back after the marital house is sold.
Examples:
You inherit stock and deposit it into a jointly-owned investment account that both you and your spouse worked to grow. A court may consider all of the investment account – including the inheritance - to be marital property, and it will be divided up as such.
You brought a valuable antique chair into the marriage, but it was in disrepair. You encouraged your spouse to work on the chair and get it in shape for sale. Your spouse does so, and at the time of the divorce, the chair has greatly increased in value. A court may consider the increased value of the chair (the difference between the chair’s current value and its value before the repair) to be marital property due to your spouse’s direct efforts (the repairs) during the marriage that increased the value of the chair.
You have a bank account from before the marriage in your name and after the marriage you added your spouse’s name. By adding your spouse’s name, there is now a presumption that you gifted one-half the value of the account to her/him, and the entire account becomes marital property.
Once the court determines the what assets are marital property (the “marital pot”), it then must determine the value of the marital property before dividing it “equitably” (fairly), considering the circumstances of the case and of the parties involved, but it does not necessarily mean “equally.” There is no requirement of a 50/50 split of marital property.
In making an “equitable distribution” of marital property, the court must consider 15 specific factors and 1 catch-all factor:
(1) the income and property of each party at the time of marriage, and at the time of the commencement of the action;
(2) the duration of the marriage and the age and health of both parties;
(3) the need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
(4) the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
(5) the loss of health insurance benefits upon dissolution of the marriage;
(6) any award of maintenance under subdivision six of this part;
(7) any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party. The court shall not consider as marital property subject to distribution the value of a spouse's enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse;
(8) the liquid or non-liquid character of all marital property;
(9) the probable future financial circumstances of each party;
(10) the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest intact and free from any claim or interference by the other party;
(11) the tax consequences to each party;
(12) the wasteful dissipation of assets by either spouse;
(13) any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
(14) whether either party has committed an act or acts of domestic violence, as described in subdivision one of section four hundred fifty-nine-a of the social services law, against the other party and the nature, extent, duration and impact of such act or acts;
(15) in awarding the possession of a companion animal, the court shall consider the best interest of such animal. "Companion animal", as used in this subparagraph, shall have the same meaning as in subdivision five of section three hundred fifty of the agriculture and markets law; and
(16) any other factor which the court shall expressly find to be just and proper.
Even after considering the 15 specific factors, the court may consider “any other factor” it finds to be fair in arriving at an equitable distribution of the marital property. Also, certain types of property cannot be divided in kind, such as real property. In that case, the court may make a “distributive award.” A distributive award is a monetary payment by one spouse to the other, either in a lump sum or paid over time to compensate for the property which could not be distributed in kind.
[1] A “presumption” is a rule of thumb that a court will apply in reaching a decision. The presumption of marital property can be rebutted, but it is up to the party challenging the presumption to prove why the presumption should not apply.