Protect Your Financial and Property Rights
New York State is an “equitable distribution” State. Equitable distribution does not mean that property will be divided equally or that debt will be allocated equally. Rather, it means the courts will distribute property and allocate debt based upon numerous statutory factors.
Among other things, the court will consider these factors:
· Income and property of each party at the time of marriage
· Income and property at the time of the commencement of the action
· The duration of the marriage
· The age and health of the parties
· The need of the custodial parent to occupy the marital residence
· The loss of inheritance and pension rights upon the termination of the marriage
· Any award of spousal maintenance
· Any claim or contribution made to the acquisition of marital property by the party not having title
· The liquid or non-liquid character of all marital property
· The probable future financial circumstances of each party
· The difficulty of evaluating any component asset or any interest in a business or profession
· The economic desirability of retaining such asset or interest intact or free from interference
· Tax consequences to each party
· Wasteful dissipation of assets by either spouse
· Transfer or encumbrance made in contemplation of a matrimonial action without fair consideration
· The loss of health insurance to a spouse
Domestic Violence is a new factor
Effective with divorce actions commenced on or after May 3, 2020, an additional statutory factor was added, namely: “whether either party has committed an act or acts of domestic violence...against the other party and the nature, extent, duration and impact of such act or acts”
A court does not have the authority to divide property or allocate debt until a divorce is granted. A court does have the authority to “preserve” marital property by restraining either spouse from using, borrowing against, selling, or transferring assets while an action is pending. In fact, there are certain “Automatic Orders” that come into play when a divorce action is commenced. But a court can award interim child support, spousal maintenance and/or counsel fees prior to granting a divorce.
An asset is subject to equitable distribution, as long as the asset is “marital” property, regardless of who holds title. Although there are several exceptions, “marital” property is defined as property acquired between the date of the marriage and the date a divorce action is commenced.
If a party is claiming that certain property is “separate” and not subject to equitable distribution with the other spouse, that party has the burden of proving such a claim. Examples of separate property are property acquired prior to the marriage, property acquired during the marriage by inheritance or as compensation from a personal injury case, or as a gift from a third party.
Keeping it separate
Of course, many claims of marital or separate property are disputed thereby requiring some legal resolution or negotiation. Many of these disputes could be avoided with timely and appropriate legal guidance. For example, if one spouse receives an inheritance and puts the inherited funds into a joint account with their spouse, there is a presumption that a gift was intended to the other spouse thereby turning what would have been separate property into marital property. On the other hand, and with some good record keeping, if that inheritance were put into a segregated account only in the recipient’s name, and marital funds are not put into that segregated account, that spouse could easily maintain that inheritance and any increases in its value as their separate property.
People do not normally think they need to speak to a divorce lawyer when receiving an inheritance or a gift, such as for a down payment on the purchase of a house. But with timely legal guidance and good record keeping, people can preserve their rights and avoid costly litigation.
For divorce actions that commenced prior to May 3, 2020, marital “fault” or grounds is not a factor in terms of the distribution of marital property unless the fault is “egregious” or involves the wasting of marital assets. However, for divorce actions commenced on or after May 3, 2020, domestic violence is a factor the court must consider.
Get Good Advice
There may be other complications related to other scenarios that should be reviewed on a case-by-case basis. In any event, while the general guidelines shared in this article cover a few scenarios, the specifics of each case vary and, therefore, any pursued solutions would be customized as determined by your particular circumstances.
Philosophically, the most important thing I want to convey about my practice is that your family assets should be equitably distributed for the benefit of you and your family and not squandered by personal spite or excessive legal machinations. Whether you need mediation, consultation services, the negotiation of an amicable agreement, or litigation, let us meet for an initial consultation to better understand your situation and develop a game plan.