New York State is an “equitable distribution” state, rather than a community property state. This means that all marital assets, as well as debt, are divided equitably, or “fair” in New York State. Equitably does not necessarily mean equally.
Assets and debt are divided into two separate categories:
- Separate Property, which includes anything that was acquired before the marriage; inheritances received during the marriage; gifts from a third party; personal injury awards; or those assets/debts identified as separate in a Prenuptial or a Postnuptial Agreement. Separate property is not subject to equitable distribution and remains with the titled spouse.
- Marital property is all other property and is subject to equitable distribution.
When dividing assets and debt equitably, courts consider a variety of factors to determine distribution. These factors can be found in New York State Domestic Relations Law §236B(5)(d):
- the income and property of each party at the time of marriage, and at the time of the commencement of the action;
- the duration of the marriage and the age and health of both parties;
- the need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
- the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
- the loss of health insurance benefits upon dissolution of the marriage;
- any award of maintenance under subdivision six of this part;
- any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party. The court shall not consider as marital property subject to distribution the value of a spouse’s enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse;
- the liquid or non-liquid character of all marital property;
- the probable future financial circumstances of each party;
- the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest intact and free from any claim or interference by the other party;
- the tax consequences to each party;
- the wasteful dissipation of assets by either spouse;
- any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
- whether either party has committed an act or acts of domestic violence, as described in subdivision one of section four hundred fifty-nine-a of the social services law, against the other party and the nature, extent, duration and impact of such act or acts;
- in awarding the possession of a companion animal, the court shall consider the best interest of such animal. “Companion animal”, as used in this subparagraph, shall have the same meaning as in subdivision five of section three hundred fifty of the agriculture and markets law;
- and any other factor which the court shall expressly find to be just and proper.
When distributing assets and debt, a key factor to consider is the value of such assets. This may include hiring someone to appraise a residence, or a valuation expert or accountant to determine the appropriate value of a business. For assets such as bank accounts and retirement accounts, updated statements should be exchanged.
Bank accounts and retirement accounts are generally divided in a manner where each party receives a specific dollar amount lump sum. For some assets, however, this would be impractical or contrary to law, such as a business. In these cases, a distributive award of an equitable amount is generally awarded to the non-titled spouse to “achieve equity between the parties” [DRL § 236B(5)(e)].