Equal vs. Equitable Distribution in New York

How the Law Divides Marital Property in the Empire State

A marriage is a partnership, and the property must be divided when that partnership is dissolved. If it were a business partnership, assets and debts would be divided according to the partnership agreement, which would have assigned a percentage of ownership according to each partner's contributions to the company's operations. The company might have a general partner, who takes on the lion’s share of responsibilities, and a few silent partners, who put up capital but are not active in day-to-day operations. So, profits or losses would likely be divided unequally if the business was sold or dissolved.

In New York, it’s the same way for divorces. Though most people think of marriage as a 50-50 partnership, New York Domestic Relations Law requires the court to consider factors that might lead to a different result, maybe a 60-40 or a 70-30 split. What’s required is that the division is fair under the circumstances of the marriage.

Equitable Distribution Versus Community Property

Across the United States, there are two major systems for dividing marital property. Nine states, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, practice community property. This is the system that the western regions inherited from the Spanish, while Louisiana and Wisconsin got it from the French. Perhaps because of many high-profile Hollywood divorces, community property is the system that most people imagine when they think of divorce. Under community property law, courts divide marital property strictly 50-50, without regard to who earned how much or spent how much during the marriage.

The remaining states practice some form of equitable distribution. Under this system, courts seek a fair distribution of property that might not be equal. This means the court is free to award a greater share of the marital estate to the party who played a greater role in acquiring, preserving, and growing its assets. The court may also punish a party who has wastefully reduced the estate’s value by awarding a smaller portion of the assets and/or a greater share of its debt. The equitable distribution process consists of three major steps.

How the Law Divides Marital Property in the Empire State

For the purposes of equitable distribution, property consists of assets and debt. Each party gets to keep all of their separate property, but all marital property goes into a pool to be divided. To begin, each party makes a full financial disclosure, listing all assets and debt they hold. Each party states whether items in their possession are separate or marital. Inevitably, there are disagreements about the designations, and determinations must be made.

Separate and Marital Property in Equitable Distribution

Generally speaking, assets and debt acquired during the marriage are considered marital property. As for separate property, there are several conditions by which a court could decide in favor of sole ownership:

  • A party acquired the property before the marriage and kept the property separate during the marriage
  • A party acquired the property during the marriage by using separate property
  • A party acquired the property during the marriage as an inheritance or a gift from someone other than the spouse
  • The property is designated separate in a valid marital agreement

It must be noted that property can start out as separate but, through a process known as commingling, can become marital. For example, if a party receives a cash inheritance and places it in the joint savings account, a court probably will not allow a claim that it is separate property.

Step Two: Valuing Property in the Marital Estate

Once an item is placed in the marital estate, it must be assigned a value. The market value of some items, such as real estate or automobiles, can be readily determined. Other items, such as fine art and jewelry, require a professional appraisal. Parties often produce conflicting assessments, and these matters must be resolved. Eventually, the full value of the estate is determined.

Step Three: Dividing the Estate

The court considers fourteen statutory factors when determining the relative portions of the marital estate to award to each party. These factors include:

  • A party’s treatment of an asset in contemplation of marriage
  • Alimony
  • Each party’s income and property
  • Each party’s probable future financial circumstances
  • Tax consequences to each party
  • The complexity of business assets and the desirability of keeping them intact
  • The duration of the marriage and the age and health of the parties
  • The loss of health insurance benefits due to the divorce
  • The loss of inheritance and pension rights due to the divorce
  • The need for a custodial parent to occupy the marital residence
  • Whether a spouse has wastefully dissipated marital assets
  • Whether the marital property is liquid or non-liquid

Finally, the court is allowed to consider any other factor it finds to be “just and proper.” Courts, therefore, have great latitude when deciding the correct proportion for the division of property.

One spouse might not have contributed as much financially to the marriage, but may have sacrificed for the other’s career, or acted as a homemaker and primary caregiver of young children. One party might be in frail health, unable to work at a demanding job, and need ongoing medical care. The court will want to maintain those parties, if possible, at the standard of living they enjoyed during the marriage. On the other hand, one spouse might have been reckless with spending, made bad investments, gambled funds away, or spent lavishly on a paramour. The court could reduce that party’s share as a consequence of bad behavior. It’s up to each party and their attorneys to inform the court of factors that argue in their favor or against the other party.

When it comes to property division, it’s important to have a skilled attorney guide you through the process. Spouses sometimes attempt to hide assets, using offshore bank accounts and other strategies, such as a fraudulent transfers. An experienced attorney can usually spot such tactics and put a stop to them. But even if your spouse is completely transparent throughout the process, an attorney’s lack of attention to detail could cost you a significant portion of the wealth you deserve. Mistakes are costly, because you can’t return to court and ask for a modification of your property settlement like you might for child support. You can only appeal property division if you discover evidence that your ex committed fraud. So, choose your divorce attorney wisely to help ensure the best possible results.


Karen Rosenthal

Karen B. Rosenthal is a partner and co-founder at matrimonial litigation firm Bikel Rosenthal & Schanfield LLP, where she brings 35 years of matrimonial law experience to bear in matters involving high-net-worth equitable distribution, contentious custody battles, and other high-stakes disputes. Certified as an Attorney for the Child and a frequent speaker on topics related to children going through high-conflict divorce, she has been recognized as a leading New York lawyer by Super Lawyers, Best Lawyers, Crain's New York Business magazine, and New York magazine.

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