How your marital assets are divided in your divorce hinges on many things, but the first and most important issue is where you live. Each state has its own laws about divorce. States fall into two groups when it comes to property division laws: community property states and equitable distribution states. Where your divorce is filed determines how your assets will be divided. In situations where there are choice of law options, it makes sense to weigh the alternatives.
Community Property States
States that use community property rules determine what is marital property and then divide it in a 50/50 split so that each spouse gets exactly half. There are no factors consulted that take into account the parties' needs, financial situations, or contributions during the marriage. Nine states use community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Community property laws may be beneficial to you if you are the moneyed spouse who might walk away with less than half in an equitable distribution state.
Equitable Distribution States
All other states (including New York) use equitable distribution to divide assets in a divorce. The court divides the assets in a way that is fair but not necessarily equal. A variety of factors can be considered in the determination, such as the parties' financial positions, the parties' health and age, the length of the marriage, and the parties' income potential. Because of this, the judge has a lot of discretion in dividing the property, and as a result, one spouse may exit the divorce with more than the other spouse. Equitable distribution laws are beneficial to non-moneyed spouses who can be granted more than the one-half they would be entitled to in a community property state divorce.
What Determines Where You Can File for Divorce
Each state has specific laws that determine when a person may file for divorce in that state. Some states require "residency" while other states require "domicile." Domicile laws require that you have a permanent home in the state. Residency laws require your presence in the state for a certain period of time. New York has residency requirements. In order to file for divorce in New York:
- You or your spouse must have lived in New York continuously for a minimum of two years before the filing of the divorce
- Your or your spouse must have lived in New York continuously for a minimum of one year before the filing, and one of the following three options are also true: you got married in New York, lived in New York together while married, or the grounds for the divorce happened in New York
- You and your spouse are both residents of New York on the day of the filing, and the grounds for the divorce happened in New York.
Spouses in Two States
It's not uncommon for spouses to live in two different states during the marriage, or to separate before the divorce with one spouse moving to another state. Each spouse has the right to file for divorce in any state where they meet the residency or domicile requirements. One spouse could meet the requirements in New York, while the other meets the requirements in California.
Each person has the absolute right to file for divorce in their own state. If both spouses do this, the general rule is that the divorce will be heard in whichever state has received the first filing. In the situation of a concurrent filing, the cases could proceed in both states, and whichever proceeding concludes first will issue the divorce decree ending the marriage.
If the spouses live in New York and California and only the New York spouse files, the New York court does not have jurisdiction over the California spouse unless they consent to jurisdiction, are present in the state to be served, or have minimum contacts within the state which gives rise to jurisdiction.
How Assets in Different States are Handled
If you and your spouse are both residents of New York, or you both consent to or are held to meet New York jurisdictional requirements, New York will handle your divorce if you file here. If you own property in other states, the New York court does not have jurisdiction over that property (called in rem jurisdiction).
Still, it does have jurisdiction over both of you (called in personam jurisdiction). That means that while the court cannot directly impact the asset in the other state, it can direct you and your spouse to take actions regarding the property you own in other states. By this means, out of state property can be divided in a New York divorce. Thus, New York can direct a couple to divide property they own in California under equitable jurisdiction guidelines.
If a couple lives in a community property state and divorce there, but own property in another non-community property state that they acquired while living in that other state, that property is called quasi-community property. Any property that would have been considered community property if acquired in the community property state is treated as if it were actually community property.
However, if the court does not have jurisdiction over both parties (such as if one spouse resides in another state and has not consented to jurisdiction), the court won't be able to direct the out-of-state spouse to take any actions, In this situation, the court can proceed with what is called a divisible divorce which ends the marriage. Another action would need to be taken in the other state where that spouse lives to impact those out-of-state assets.
Planning for Divorce
No one ever plans to get divorced. However, it is wise to take precautions to protect yourself should divorce ever become an issue. This is why a prenuptial agreement is an essential document you should have in place before you marry. Likewise, if you feel your marriage may be heading for divorce, it makes sense to take stock of your situation and consider where you would best be served while continuing or establishing residency so that if divorce is necessary, you are in the best position possible.
It is important to contemplate the states where you might wish to live and the types of laws they have in place that govern property settlement in a divorce. For example, perhaps you currently reside in New York, but you have a home in California. It might be to your benefit to live in California for the time period required to establish residency there for divorce (note that California only requires you to have lived in the state for six months and the last three months in the county in which you are claiming residency to be able to file for divorce and also note you do not need to have established residency at all to file for a legal separation in California).
If you have the interest in and the option of living in another state to meet residency requirements so that you can file for divorce there, it could benefit your outcome in the divorce property settlement. Before taking any action, please talk with your attorney so that you can consider all of the actions available to you, as well as all of their potential ramifications.