When a marriage ends in New York, one of the most challenging aspects of divorce is dividing marital property. This process can be emotionally and financially complex, as spouses must figure out who gets what from the life they built together. To guide couples through this process, New York uses a set of rules called Equitable Distribution Law. Equitable distribution means the division of property in a way that is fair, though not always equal. This approach considers several factors to decide how assets and debts should be divided between the spouses. At, Cole, Sorrentino, Hurley, Hewner & Gambino, P.C., we are here to guide you through the legal process and help you navigate the complexities of your case.
Richard H. Cole
Partner
Thomas F. Hewner
Partner
Donna L. Haslinger
Partner
Vivian P. Roche'
Partner
Keith R. Rosso
Attorney
Tasha D. Frazie
Attorney
Understanding Marital and Separate Property
In a divorce, not all property is divided between spouses. New York law recognizes two types of property: marital and separate. Marital property includes assets and debts acquired during the marriage, regardless of who paid for them or whose name is on the title. This means income earned by both spouses and items purchased with that income, like cars, homes, or savings, are part of the marital estate.
Separate property, on the other hand, is anything owned by a spouse before the marriage. This could be property inherited or received as a gift and stays with the spouse who originally owned it. For example, if one spouse inherited a sum of money from a relative, that money remains separate, provided it was not mixed with marital funds. Understanding the difference between these two types of property is essential because separate property is usually not subject to division.
How New York’s Equitable Distribution Works
When dividing marital property, New York does not split everything 50-50, as some other states do. Instead, it aims for what is considered fair. Equitable distribution means the court looks at each spouse’s circumstances and contributions to decide who should get what. The judge may grant one spouse a larger share of the marital property if it appears fair to do so. However, both spouses will usually end up with some share of the assets and debts, even if the distribution is not equal.
Factors Considered in Equitable Distribution
The court takes many factors into account when determining what is fair. These factors help the judge understand the whole picture of the marriage, including each spouse’s financial situation and their role in the household. Some key factors the court may look at include the income and property of each spouse at the time of marriage and divorce, the length of the marriage, and the age and health of each spouse.
The court also considers the future earning potential of each spouse. For instance, if one spouse has been a stay-at-home parent, their earning potential might be lower than the spouse who continued to build their career. Contributions to the marriage, like child care or homemaking, also matter. Even if a spouse did not earn money, their contributions to the household are valued in the division process. Other factors, like tax consequences, the need for a marital home for any children involved, and the loss of benefits like health insurance, can also impact how the court divides assets and debts.
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Dividing Specific Assets
When dividing property, the court looks at all types of marital assets. Real estate, like the marital home, is often the largest asset in a divorce. If one spouse wants to keep the home, they may need to “buy out” the other spouse’s share or give up a different asset of similar value. Retirement accounts, such as pensions or 401(k) plans, are also subject to division. These accounts can be divided directly or offset with other assets.
Bank accounts and investments are usually divided based on their current value, though the court might adjust the division if one spouse has a greater need. Additionally, debts acquired during the marriage, such as mortgages, loans, and credit card balances, must also be divided fairly. The court will try to make sure that both spouses share the responsibility for paying off these debts, but in a way that is reasonable given each spouse’s financial situation.
What Happens to Gifts and Inheritance
In New York, gifts and inheritance that one spouse receives during the marriage are generally considered separate property. This means they are usually not divided between spouses in a divorce. For instance, if one spouse inherits a property from a parent, this property remains separate unless it was mixed with marital property. Mixing occurs when the inherited asset is used jointly, like adding an inherited sum to a joint bank account. Once separate property becomes mixed, it may be seen as marital property and become subject to division. Therefore, it is often wise for spouses to keep inherited assets in separate accounts if they wish them to remain separate.
Spousal Maintenance and Marital Property Division
Spousal maintenance, also known as alimony, can play a role in marital property division. New York courts sometimes order one spouse to pay maintenance to the other, especially if one spouse needs support to maintain a reasonable standard of living. The court may consider the amount and duration of maintenance when dividing marital property. For example, if one spouse is set to receive maintenance, they may receive a smaller share of the marital assets. Spousal maintenance aims to help one spouse transition financially after divorce and is a separate matter from property division, though it can impact the final outcome of the division.
Tax Consequences of Property Division
An often-overlooked part of property division is the tax impact. Dividing assets may come with tax implications that affect each spouse differently. For instance, if one spouse receives the family home, they may face future capital gains taxes if they sell it later. Retirement accounts also have tax consequences, as withdrawals from these accounts can be taxed. The court considers these consequences, as the aim of equitable distribution is not only to be fair in division but also fair in its impact on each spouse. Spouses may need to work with tax professionals or financial advisors to understand how property division will impact them over time.
Handling Hidden Assets
One issue that sometimes arises in divorce is the hiding of assets by one spouse. Hidden assets can include bank accounts, property, or other valuable items that a spouse may try to keep secret to avoid sharing them. New York law requires both spouses to fully disclose all assets, as the court cannot divide what it does not know exists. If one spouse suspects the other is hiding assets, they may seek assistance from legal or financial professionals to locate these assets. The court takes hidden assets seriously and may adjust the division if it finds one spouse has not been honest.
The Role of Legal Guidance in Property Division
Navigating property division during a divorce can be complex, especially with many factors to consider. Equitable distribution aims to provide a fair outcome, but this process can feel overwhelming for couples. Each case is unique, and the way New York’s laws apply can vary greatly based on individual circumstances. Working with a lawyer can help each spouse understand their rights and ensure they are treated fairly. A lawyer can guide them through identifying marital and separate property, valuing assets, and presenting their needs to the court.
Divorce can be a difficult and emotional time, and understanding how New York’s equitable distribution laws work can help make the process less stressful. Knowing what to expect can empower each spouse to make decisions that support their financial future and well-being. While the law aims for fairness, having proper legal support is essential for navigating the complexities of property division and protecting one’s interests.
If you are going through a divorce and need assistance with dividing marital property, Cole, Sorrentino, Hurley, Hewner & Gambino, P.C. can help. Our team understands New York’s equitable distribution laws and will work with you to achieve a fair resolution. Let us guide you through this challenging time so you can move forward with confidence. Reach out to our firm today to learn more about how we can support you.