One of the biggest reasons divorce takes so long, is property and debt division. After all, it’s not just a relationship you’ve been sharing with your spouse, it’s money, property, and other tangible assets, too, and it can take a while to untangle all those years shared ownership. Especially when everything has to be analyzed beneath the nuanced scrutiny of New York’s equitable distribution laws.
The underlying goal of these rules, is to divide property in a way that sets both partners up for long term success. However, the process of getting there can sometimes be convoluted, which is why it’s a good idea to know how it works, before heading in.
Equitable Distribution: The Low Down
New York is an equitable distribution state. The famous saying is that “equitable does not necessarily mean equal,” however, most of the time the issues of property and debt division are resolved by an equal division of the marital assets (and debts).
The process of determining equitable distribution requires three distinct steps: classification, valuation, and division.
Classification: Separate Versus Marital Property
The first step in equitable distribution is determining what has to be distributed. In New York, only marital assets are subject to equitable distribution. Marital assets are any assets acquired from date of marriage to date you commence an action for divorce, sign a separation agreement, or any other agreed upon date. The manner in which title is held does not matter in classifying an asset as “marital” or “separate.” So, all that matters is when the asset was acquired – not whose name the asset is in (which means, yes, the bank account in your sole name may be a marital asset!). Marital assets includes real property (like your home) but also money in 401(k) accounts, as well as stocks, bonds, and any other investments you might have. If the accounts pre-date your wedding, whatever percentage you owned prior to marriage will be considered separate property, while the remainder is marital.
The only assets not subject to equitable distribution are assets that are classified as “separate property.” Separate property is all assets that were acquired before marriage, through inheritance, gift from someone other than your spouse, property designated your separate property in a prenuptial agreement, property you receive in exchange for your separate property, or personal injury settlement.
This classification might seem straightforward, but after years of mixing and interchanging separate and marital property, tracing ownership back to your pre-marriage days might be harder than you think.
Valuation: What is the Asset Worth
This step is often one of the simplest – in the valuation portion of equitable distribution, you simply determine the value of the individual assets. Most often, this is done by looking at the bank statement, retirement statement, or obtaining an appraisal of the marital residence. If, however, there is a business interest then a more in-depth, and formal, valuation may be required to make sure that the true value is realized and distributed between spouses.
Distribution: Who Gets What
Once prior steps are complete, it’s time to divvy things up.
So long as you have clear proof of ownership, any separate property will leave with whichever spouse brought it into the marriage. As for everything else, in lieu of a valid prenuptial agreement, all marital property will be subject to an equitable distribution between partners.
Determining What’s “Fair”
In order to ensure your division is as fair as possible, the court will analyze a number of individualized factors, some of which will include:
The education level, earning potential, and property owned by both partners;
How long you were married;
Your standard of living;
Age and physical health;
Any minor children, as well as custodial responsibilities;
Pensions, insurance, and other benefits that your divorce might sever;
Business ownerships, partnerships, or shares—both their value, and whether or not having an outside interest would affect said value;
Taxes; and even,
How responsible both of you have been in handling your finances over the years.
This list isn’t exhaustive, and, in fact, judges are free to evaluate any other factors they think are relevant to an equitable split. For example, the career sacrifices made on behalf of a homemaking spouse. Or, if one partner financially contributed to the other’s education. Even obligations one party might have to a disabled child or incapacitated parent might be relevant.
As mentioned above, most often, the result is an equal division of the assets. This may be equal division of each individual asset or a result which – overall results in an equal division (even though individual assets may not be equal).
Air it All Out
Speaking of success, one element of property division that is crucial to a hassle-free resolution, is not hiding anything.
This bit of advice can’t be stressed enough. Financial investigators are well versed in the tricks people pull to hide assets, so the chances of you getting away with something are slim, and the penalties severe. Lying in court—even if it’s “just” in your divorce—is still perjury. And attempting to conceal money, or even undermine the worth of something, is fraud. Both of these crimes carry hefty punishments, including fines, subpoenas of all tax and income records, and in some cases, even jail time. Even worse than all of the foregoing, though, is that if you are found to be lying your credibility with any judge is destroyed – which can have devastating consequences on your overall matter.
In the end, your honesty and forthcoming will earn you respect of the court, and a faster more economical resolution.
Fault and Property
Finally, it’s important to note, that marital fault – or the reason why the marriage is coming to an end – does not impact equitable distribution. Having said that, there are instances when a spouse’s “bad behavior” may impact equitable distribution – for example, a gambling problem which created significant debt may lead to an unequal division of the assets. This is one area where it is important to have full understanding of the nuances of the law as it applies to your situation. Therefore, it’s important to discuss these matters with your attorney, if you think they might come up in your divorce.
Lauren L. Hunt: New York Divorce Attorney
The process of dividing property can be painstaking and arduous, especially for those who were married a long time or have assets that may be part marital and part separate
If you have more questions about marital property in New York, and how these laws might affect your divorce, I want to hear from you. Schedule a consultation by calling the offices of Lauren L. Hunt at (518) 282-7300, or, make an appointment online, and let me help you receive the property division that’s equitable for you.
Frequently Asked Questions
How are marital assets distributed?
How are marital assets valued?
What is separate vs. marital property?
How is property divided in divorce?