Is NY a 50/50 Divorce State? Understanding Asset Division in New York

Equitable Distribution in NY Divorce

What is Equitable Distribution?

Equitable distribution is a legal concept that governs the division of property and debt between spouses during a divorce. It is how division of marital assets and property is conducted, in which the court divides fairly, but not always 50/50 amongst parties to a divorce.

New York is an equitable distribution state, so the court looks at many factors when dividing marital assets and property. Thus, the overall goal of equitable distribution is to get a fair and just property division in each case.

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Equitable Distribution vs. Community Property

Community property states, like California and Texas, divide property 50/50 amongst parties. Equitable distribution states, like New York, look at many factors to divide property fairly. This approach to property division takes into account classifying marital vs. separate property and business complexities that may exist within a partnership. Equitable distribution gives the court more flexibility and discretion to divide marital property depending on the circumstance.

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Marital Property vs. Separate Property in NY

What is Marital Property?

Marital property is all the assets acquired during the marriage: income, investments, and property. Marital property is also debts incurred during the marriage, including credit card debt and mortgages, if created for marital purposes and benefited both parties. Gifts, inheritances, and personal injury awards are generally separate property, but it is important to understand how marital debt incurred during the marriage for the family’s benefit is allocated to each spouse by the court.

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What is Separate Property?

Separate property is assets owned before the marriage, including personal property, investments, and retirement accounts. It also includes gifts, inheritances, and personal injury awards received during the marriage. Separate property is not subject to equitable distribution and is usually kept by the original owner. To claim something as separate property in a divorce, you need to have clear evidence that it was acquired before the marriage or kept separate from marital funds.

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Can Separate Property Become Marital Property?

Separate property can become part of the marital estate through commingling, where marital and separate property are mixed together. Commingling can happen when separate property is used to fund marital expenses or when marital income is deposited into a separate property account. Examples of commingling are mixing separate and marital funds in a joint account or using separate property to fund a joint retirement account.

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Factors in Equitable Distribution in NY

Income and Earning Capacity of Each Spouse

The court looks at the income and earning capacity of each spouse, including when assets are in one spouse’s name, when determining equitable distribution. The court may look at education, work experience, and job prospects when evaluating earning capacity. The court may also look at the impact of child custody and support on earning capacity.

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Length of the Marriage

Length of the marriage is a big factor in equitable distribution. Longer marriages may get a more equal division of property, while shorter marriages may get a less equal division, especially considering the other spouse’s contribution to asset appreciation or renovation. The court may also look at the age and health of each spouse when evaluating the length of the marriage.

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Age and Health of Each Spouse

The court looks at the age and health of each spouse when determining equitable distribution. The court may look at factors such as retirement age, health insurance benefits, and medical expenses when evaluating the impact of age and health on earning capacity. The court may also look at the impacts of age and health on child custody and support.

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Valuing and Dividing Assets in a NY Divorce

Methods of Valuation

The court may use different methods to value separate and marital property, including market value, appraisal, and expert testimony. The court may also consider the tax implications of asset division when valuing. They may use a combination of methods to value complex assets like businesses or real estate.

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Why Valuation Matters

Valuation is key in equitable distribution. It ensures a fair division of marital assets between the spouses, so each gets an equal share based on the true market value of their property and prevents one spouse from being unfairly disadvantaged by inaccuracy. An inaccurate valuation can result in an unfair division of property, which can be appealed. The court may look at the expertise of appraisers and other experts when valuing.

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How to Manage Complex Assets

Complex assets like businesses and real estate need specialized expertise to value and divide. The court may consider using experts like appraisers and accountants to value and divide complex assets. The court may also consider using alternative dispute resolution (ADR) methods like mediation and arbitration to resolve complex assets. ADR has many advantages: it’s cost-effective, encourages open communication and cooperation problem-solving, and often results in a faster outcome.

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Dividing Debt in a NY Divorce

How Debt is Treated in Equitable Distribution

Debt is considered a marital asset in a New York divorce. Like mentioned above, the court looks at the debt incurred during the marriage, including credit card debt, mortgages, and other liabilities. The court may look at the impact of debt on earning capacity and child custody and support, along with the impacts of debt on retirement and health insurance benefits.

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Special Considerations in a New York Divorce

Retirement Assets and Equitable Distribution

Retirement assets, like 401(k)s and pension plans, are considered marital property in a NY divorce. The court may look at the impact of retirement assets on earning capacity and child custody and support. Using a qualified domestic relations order (QDRO) to divide retirement assets is common. A QDRO is a court-approved order that directs a retirement plan to pay a portion or all of a participant’s benefits to a former spouse.

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Business Interests and Marital Property

Business interests, like partnerships and corporations, are considered marital property in a NY divorce. The court may look at the impact of business interests on earning capacity and child custody and support.

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Hidden Assets and Disclosure

Hidden assets, like secret bank accounts and investments, are considered marital property in a NY divorce. The court may look at the impact of hidden assets on earning capacity and child custody and support. The court may use discovery methods like depositions and subpoenas to uncover hidden assets.

NY Divorce Timeline: What to Expect

The timeline for a NY divorce varies depending on the complexity of the case. Clients should expect several stages: filing, service, and discovery during the divorce process, and a final judgment, which may include provisions for equitable distribution, child custody and support, and spousal support.

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How to Navigate a New York Divorce

Seeking professional help, like a NY divorce attorney, is key in navigating a divorce. A divorce attorney can guide you on equitable distribution, child custody and support, and other aspects of divorce. They will represent you in court and negotiate settlements for you. You should consider experience, expertise, and communication style when choosing an attorney. Also, consider the attorney’s approach to alternative dispute resolution methods like mediation and arbitration to ensure equitable and collaborative property division.

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How to Prepare for a Successful Outcome

Preparing for a successful outcome in a New York divorce requires a strategic approach. You and your attorney should consider factors such as documentation, communication, and alternative dispute resolution methods when preparing for a successful outcome.

Here at Hannon De Palma, LLC, we believe in focusing on what truly matters -- protecting your rights, using our expertise to create successful outcomes for the entire family, and focusing on creating a future where everyone can thrive. Practicing across Westchester County, Manhattan, Long Island, and Boston, the Hannon De Palma team has decades of experience representing clients in custody and divorce cases.

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Call our office at (914) 444-1900 or fill out a simple, free online consultation form to begin your next chapter.

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