What Is the New York Divorce Law for Equitable Distribution?
In New York, the law regarding marital assets division during a divorce is based on the concept of equitable distribution. This does not necessarily imply that the distribution will be equal – although that may be the case. It does imply that this distribution will at least be fair. If you choose Spodek Law Group to represent you in your divorce, our job will be to show the court what a fair distribution would be in your case.
The statutory basis of this law can be found in New York Domestic Relations Law Section 236. In many instances, the two parties in a divorce case will have signed an agreement – either prior to or during their marriage – regarding child custody, child support, maintenance (i.e. alimony) and the division of property. Such arrangements are usually referred to as either prenuptial or postnuptial agreements or stipulations of settlement.
If the said agreement has been written and acknowledged or proven using the same legal requirements demanded when recording deeds, this agreement will most likely be honored during any later divorce proceeding. There are a number of different processes that the two parties can use to settle any outstanding issues, including negotiations, mediation, settlement discussions and collaborative law. But in instances where there has been no prior agreement – whether prenuptial, postnuptial or otherwise – a different approach has to be used when determining equitable distribution during divorce proceedings.
To begin with, it will be necessary to determine what part of the property owned by the couple represents marital property and what part represents separate property. In New York State, marital property is generally described as that property that was acquired while the two individuals were married and not yet legally separated. Note that legal separation is not the same as physical separation.
Using these criteria, the couple’s marital property and separate property are identified. It is the responsibility of the spouse claiming that a particular item is separate to claim that property in a legally formal way. The definition of separate property would include anything any assets or items the couple has already agreed to view as separate in a properly written agreement. Beyond this, separate property is also that property that one of the two parties received prior to their marriage, as a gift from someone other than their spouse or as part of an inheritance.
Note that personal injury compensation is considered to be separate property, as are increases in the value of separate property – except in cases where that increase in separate property value is a consequence of contributions the spouse has made. These contributions are referred to as “sweat equity.” Equitable distribution will apply to any other property purchased or otherwise obtain during the marriage itself.
Once the case begins, the two parties may agree on a date for the valuation of the given asset, or the court will choose the valuation date – which can range from the filing date to the actual day of the trial. When there is any disagreement about valuation of a particular asset, experts can be brought in to give their opinion. These can include forensic accountants, appraisers, vocational experts or others with relevant knowledge and experience that will help them determine the value of the asset. Financial experts are frequently called in to provide asset valuations for things like businesses, degrees, licenses and retirement assets.
It is your lawyer’s task to offer a convincing argument to the court regarding how the value of a given asset should best be distributed. For the court, it is necessary to weigh several factors when determining just what fair and equitable means in the case before it. Your lawyer will argue in court regarding the insignificance or relative importance of certain items. Some of the many points to be considered under domestic relations law include:
• The income and the property of the couple at the time they were married.
• The duration of the marriage.
• The age and health of the couple.
• If one of the parents has custody of a child or children, will they need to remain in the marital residence?
• Do they own items in the residence?
• When the marriage ends, how will it impact pension rights and any inheritance?
• When the marriage ends, how will the health insurance be impacted?
• Will any maintenance – or alimony – the ordered by the court?
• Were any indirect or direct contributions made by one spouse – including dual efforts, financial expenditures, or efforts as homemaker, parent, spouse and money earner – to the potential or career of the other spouse?
• What are the liquid assets – such as cash or capital assets – of the couple versus their less liquid assets – such as such as retirement funds or real estate?
• What are the future financial prospects for both spouses?
• What will be the tax impact for both spouses?
• Did either spouse waste any of the couple’s marital assets?
• In either spouse transfer any assets for less than their actual value prior to the divorce?
A court may choose to take into account any number of other factors that it decides would be proper points to consider. Courts can also choose to make distributive awards, either as an alternative to distribution of assets or as an addition to any court mandated distribution. The court can further order that the residence of the couple be occupied by a spouse than the one that actually owns it.
If you have any additional questions regarding equitable distribution, the divorce process, family law or have other legal points you want clarified, please feel free to search the various blog entries on the Spodek Law Group website. If you would like to make further inquiries, please contact our office for a consultation. We would be pleased to talk with you about your situation