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Equitable Distribution
How Marital Property is Divided in New York under Domestic Relations Law Section 236 B

Domestic Relations Law 236 B(5)

By J. Douglas Barics
Updated August 2019

 

Equitable Distribution in New York

Domestic Relations Law Section 236 B is the controlling statute for all matrimonial actions filed after July 19, 1980. Subsection 236 B(5)(c) provides that marital property shall be equitably distributed between the parties in consideration of the circumstances of the case.

DRL 236B is only the starting point in understanding the law of equitable distribution. Subsequent case law has greatly established significant other rules, such as presumptions, what constitutes marital property, and how the law is applied in a divorce.

Historical Context of Equitable Distribution under DRL 236 B

Common Law Property

Common law property is based on title; whoever has title to property owns the property. Titled ownership under common law property is not affected by marriage.

Prior to the enactment of domestic relations law 236 B, New York was a common law property state . Marital property as it is now known did not exist. Property and assets simply went to the spouse who held title. Under the old (pre 1980) DRL 236, no provision existed for distribution of property. The only available remedy was alimony, and alimony was only available to wives. No provision existed for husbands to be awarded alimony.

Moreover, if a husband could prove marital fault rested with the wife, she would be precluded from receiving alimony.

Community Property

Community property is a property system based on civil law. Tracing its roots back to the Visigothic Code, it provided that property acquired during a marriage is owned jointly by both the husband and wife. This ownership vests immediately by operation of law; no specific steps are required to be taken.

Equity versus Law

The concept of equity and law has its origins in the English legal system. An action at law refers to some sort of existing rule of law from which a remedy could be granted. Equity covered everything else, and came to be because remedies at law were too rigid and narrow. Actions at law were decided by a jury, while actions in equity are decided by a judge only. A court’s equitable authority is to give it the powers to fashion a remedy that is fair and appropriate under the circumstances.

The End of Gender Based Alimony & The End of Alimony as the Sole Remedy for a Spouse in a Divorce

In 1979, the Supreme Court case of Orr v Orr was decided. In it, Court States reversed a lower court’s decision, and struck down an Alabama gender based alimony statute as unconstitutional under the equal protection clause. (Note- Ruth Bader Ginsburg filed an amicus curie on behalf of the ACLU urging reversal of the lower court which upheld gender based alimony).

Following the decision of Orr, New York joined the ranks of other states and revised its matrimonial laws significantly. Alimony was now gender neutral, making alimony available to either spouses. In addition, New York also split Domestic Relations Law 236 into two parts. DRL 236 Part A provided for gender neutral alimony for any case commenced before July 19, 1980. DRL 236 Part B not only provides for gender neutral spousal support, but also for the equitable division of marital property. Part B abandoned the term “alimony” and replaced it with “maintenance” to distinguish between cases under Part A and Part B., and to avoid the perceived stigmatism of the word alimony.

Equitable Distribution

DRL 236 Part B created a new property right under equitable distribution. Unlike community property which vests automatically upon marriage, the concept of marital property is a potential right which conditionally vests upon the commencement of a matrimonial action and fully vests upon the dissolution of the marriage. Outside of a change in the marital status, there is no right to marital property.

 

New York Equitable Distribution as Ancillary Relief

No cause of action or enforceable claim to marital property exists outside of a marital action. Instead, equitable distribution exists only as ancillary relief to a matrimonial action which dissolves the marriage between the parties.

DRL 236 B(5)(a) provides that equitable distribution of marital property shall be made "in an action wherein all or part of the relief granted is divorce, or the dissolution, annulment or declaration of the nullity of a marriage." This provision authorizes the court to equitably distribute marital property only when the relief granted results in a change in the marital status through a divorce or an annulment. Absent such a change, the court is powerless to distribute marital property. The sole exception is also contained in DRL 236 B(5)(a), which authorizes a special proceeding for equitable distribution following a foreign divorce. This appears to be a legislative oversight, as equitable distribution shall occur in New York divorces and annulments, but not for foreign annulments. The intent of this provision is to allow for equitable distribution following the dissolution of a marriage over property located in New York which was not subject to division in a divorce granted outside of New York.

Should there be no matrimonial action filed, or if the status of the marriage is not requested to changed such as in an action for a separation under DRL 200, or if the divorce or annulment is denied, the non titled spouse has no right to seek equitable distribution of the marital property, since DRL 236 B(5)(a) mandates that the divorce, dissolution or annulment of the marriage must be granted as a condition for equitable distribution. For example, in Walczak v. Walczak, 206 A.D.2d 900 (4th Dept. 1994) the Supreme Court granted a divorce following a trial, and made a determination of equitable distribution. On appeal, the Appellate Division held the trial court improperly granted the divorce, and since no divorce was granted, " the marital property was not subject to equitable distribution (Domestic Relations Law § 236 [B] [5] [a])." In Meier v. Meier 156 A.D.2d 348 (2nd Dept. 1989), following a jury trial on the divorce grounds, the court made an award of equitable distribution. The Appellate Division reversed, finding that the plaintiff failed to meet the level of proof on the grounds of cruel and inhuman treatment under the Brady and Hessen standards. In reversing the award of the divorce to the plaintiff, the court further held "Equitable distribution of the parties' marital property, unlike maintenance, custody and child support, is only available in actions where the marital relationship is terminated by divorce, dissolution, annulment or the declaration of the nullity of a void marriage, or in a proceeding to obtain a distribution of marital property following a foreign divorce judgment (Domestic Relations Law § 236 [B] [5] [a]; [6] [a]; § 240 [1].

It therefore follows that by definition, equitable distribution of property can never be modified, since any post judgment application by a former spouse cannot change their marital status, and would run afoul of DRL 236 B(5)(a).

The absolute mandate to dissolve the marriage is the reason why the court cannot entertain a pendente lite motion for equitable distribution, as the change in the marital status required by DRL 236 B(5)(a) is not met. In Adamo v Adamo, 18 A.D.3d 407 (2nd Dept. 2005) the Appellate Division held that "It is well settled that before some alteration in the marital relationship, courts lack the authority, absent the consent of the parties, to direct the sale of the marital residence owned by the parties as tenants by the entirety." Adamo remains the controlling law, and parties should not expect the court to grant a pendente lite motion to sell marital property. In Sedgh v Sedgh 142 Misc. 2d 931 (Sup. Ct. Nassau County 1989) the Supreme Court of Nassau County declined to follow two other Supreme Court decisions which granted a pre trial motion to sell the marital home.

Identifying all Property and Assets Owned by Both Parties

Under DRL 236 B (4), mandatory financial disclosure is required for all income and assets without regard to whether it is marital or separate. The rational is fairly simple; it is the Court to determine whether property is separate or marital, and full disclosure allows each party to obtain the facts to verify any separate property claims.

A comprehensive but non exhaustive list of assets include:

  • cash
  • checking accounts
  • savings accounts
  • security deposits
  • securities
  • notes
  • mortgages held
  • stocks
  • stock options
  • commodity contracts
  • broker's margin accounts
  • loans to others
  • accounts receivables
  • business interests
  • cash surrender value of life insurance
  • vehicles
  • real estate
  • interests in trusts
  • contingent interests
  • household furnishings
  • jewelry
  • art
  • antiques
  • precious metals
  • tax shelter investments
  • collections
  • judgments
  • causes of action
  • patents
  • trademarks

To this end, both parties to a divorce must complete and file a statement of net worth.

A net worth statement is only the starting point in disclosing property and assets. For many cases, it is sufficient as each spouse knows the assets held by the other. But in other cases, it is a one time chance to disclose all assets in a sworn statement, and a significant omission can have dire consequences.

Additional assets can be found in discovery through the use of written questions (interrogatories), oral questions (depositions/Examination before trial), document demands, review of documents and tax returns, subpoenas and the use of experts.

Efforts to limit financial disclosure are not favored. In Trafelet v Trafelet (1st Dept. 2017) the Husband made a pre trial motion for summary judgment under CPLR 3212 seeking an order declaring certain trusts as separate property. The Supreme Court denied his motion and the First Department affirmed, stating that “In a divorce action, [b]road pretrial disclosures which enables both spouses to obtain necessary information regarding the value and nature of the marital assets is critical if the trial court is to properly distribute the marital assets”

Read More: Motion Practice

 

Classification of Property as Marital or Separate

Once all property has been identified, the next step is to classify each asset as either marital or separate.

Separate Property

Separate property is defined under DRL 236 B(1)(d) as the following:

  • property acquired before the marriage
  • property acquired by bequest, devise, descent (i.e., an inheritance)
  • gifts to one spouse from anyone other than the other spouse. However, it is often disputed whether a gift was to one or both spouses, the latter making it marital property.
  • compensation for personal injury cases, but only that part which constitutes punitive damages and pain and suffering.
  • separate property acquired in exchange for separate property.
  • appreciation of separate property will be considered separate property if the non titled spouse did not contribute towards the appreciation.
  • property designated as separate by a validly executed marital agreement as defined in DRL 236 B(3).

Marital Property

Marital property defined as any property which is not within the definition of separate property, and is any property which is acquired by either party during the marriage, regardless of who actually owns the asset. Thus, a business interest, real estate, bank accounts, pensions, and professional licenses are marital property and are subject to equitable distribution. Likewise, portions of personal injury awards covering lost wages are also marital property, as is appreciation of separate property when the non titled spouse can show contribution towards the appreciation.

 

Presumption of Marital Property

Property acquired during the marriage is presumed to be marital property. Raviv v. Raviv, 153 AD2d 932 (2nd Dept. 1989). This presumption may be overcome by the party seeking to prove it is separate, but absent such proof the default is to assume it is marital. Likewise, when one spouse puts property in the name of both spouses, the asset becomes marital. See Lisetza v. Lisetza, 135 AD2d 20 (3rd Dept. 1988). However, the transferring party should be given a credit. Robertson v. Robertson 186 AD2d 124 (2nd Dept. 1992).

Property that was acquired during the marriage is presumed to be marital and the burden to show it is separate lies with the party seeking to show it is separate. This presumption means that absent proof to the contrary, the default classification is marital.

The rational behind this presumption was explained in the Court of Appeals case of Fields v Fields, which stated that since marriage is an economic partnership, marital property should be construed broadly and separate property narrowly. In Rosenberg v Rosenberg (2nd Dept 2016), the Second Department held that testimony alone was not sufficient to overcome the presumption of marital property as it was not supported by documentary evidence.

When there are no disputed facts in whether a specific asset is separate or marital, a motion for summary judgment under CPLR 3212 can be made. However, any disputed fact is sufficient to defeat a summary judgment motion and defer the issue to trial. In Trafelt v Trafelt (1st Dept. 2017), the Husband made a pre trial motion to have certain property declared separate without the need for a trial. The Supreme Court denied his motion and the First Department affirmed the denial of this motion and held that since there were disputed facts, the issue should be resolved at trial.

 

Examples of Classification of Property

Engagement rings are separate property, as it was given prior to the marriage. See Lipton v. Lipton 134 Misc.2d 1076 (Sup. Ct., New York County 1986). Wedding gifts are gifts made to both spouses and are therefore marital. Nehorayoff v. Nehoravoff, 108 Misc. 2d 311 (Sup. Ct., Nassau County 1981).

Classifying the appreciation of separate property as marital or separate was addressed in the Court of Appeals Case of Price v. Price, 69 N.Y.2d 8 (Court of Appeals 1986) which held that if the titled spouse took no active actions regarding the separate property, and the appreciation was due to market conditions, then the property would remain separate. If the titled spouse did actively manage the separate property, then that activity is marital. However, for the non titled spouse to be entitled to a share of that, he or she must still show some sort of contribution towards the appreciation. The holding of Price was expanded in Hartog v. Hartog, 85 N.Y.2d 36 (Court of Appeals, 1995) in which the Court of Appeals said the non titled spouse must show the titled spouse actively participated in the appreciation by some degree.

The court in Majauskas v. Majauskas 474 N.Y.S.2d 699 (Court of Appeals, 1984) ruled that vested pensions are marital property. This holding has been expanded to include unvested pensions and other retirement accounts.

A disability pension is considered to be both marital and separate. The portion of a disability pension that a spouse would have received had they not become disabled is marital. Dolan v. Dolan, 78 NY2d 463 (Court of Appeals 1991). This value is subtracted from the total value of the disability pension. Newell v. Newell, 121 Misc. 2d 586 (Sup. Ct. Queens County, 1983).

 

Professional Licenses: The O’Brien era and beyond

From 1985 to 2016, a professional degree, professional license or special training or skills which enhances the earning capacity of a spouse was considered an asset which could be distributed. In the seminal case O'Brien v. O'Brien, 498 N.Y.S.2d 743 (Court of Appeals, 1985), the Court of Appeals determined a new type of asset existed. Professional license and enhanced earnings was determined to be an asset subject to division.

The Court of Appeals ruling in O'Brien created this new asset as a remedy to a wife who paid for her husband's medical schooling only to find there were no marital assets to be awarded when the husband commenced a divorce right after obtaining his license. After O'Brien, the concept was expanded through subsequent decisions beyond the initial holding of professional licenses, and included training or skills which enhance a spouses earning capacity. Following the holding of O'Brien, the Appellate Division case of Marcus v. Marcus held that for some cases, the value of the professional license will merge with the professional practice. The concept of merger was eliminated in the Court of Appeals case of McSparron v. McSparron, 87 N.Y.2d 265 (Court of Appeals 1995) which held that both a license and practice must be evaluated. The Court did warn against duplicate awards, but offered little guidance on how to do so.

The concept of classifying professional licenses as an asset was not adopted by any other state, despite O'Brien being decided over twenty years ago, and the entire concept remains highly criticized by many members of the bar association. Efforts to have the legislature change the statute failed until January 2016, when the amended statute became effective and eliminated professional licenses and enhanced earnings as an asset.

Effective January 23, 2016, professional licenses cannot be directly awarded. However, the new revisions do allow for an indirect award by allowing them to be considered. While the new statute did eliminate enhanced earnings as an asset to be distributed directly, the amended provision does allow the court to consider the contributions to the other spouse's license or enhanced earnings as a factor in distributing other assets. This amended is ironic, as it still allows for indirect distribution of enhanced earnings only if there are other assets being awarded. But if the only asset is the license or enhanced earnings, no such award could be made. Yet this was the exact reason why the Court of Appeals created this asset in the O'Brien case to begin with.

To the extend that enhanced earnings will still play a factor in equitable distribution, this concept can produce some very curious results. In Holterman v Holterman, 3 N.Y.3d 1 (Court of Appeals, 2004) the wife was awarded a distributive share of the husband's future earnings, which was to be paid over time. The husband argued that since the wife was receiving a share of his income via equitable distribution, his child support should be based on his share of his income. The Court of Appeals disagreed, and stated that since DRL 240 did not permit child support to be reduced by a distributive award, the husband's child support would be based on both his share of his earning plus his ex wife's share. As the dissent calculated, after child support, maintenance, equitable distribution, and taxes, the husband was left with a little more than $16,000 per year from his $181,000 income. While this is an extreme case, it does illustrate the dangers facing the monied spouse.

Recoupment

Recoupment is the concept that applies when marital property is used to pay separate property expenses. If marital property is used to pay separate property expenses or obligations, these payments cannot generally be recouped. This specific issue was decided by the Court of Appeals in Mahoney-Buntzman v Buntzman 2009 NY Slip Op 03629 [12 NY3d 415]. In this case, marital income was used during the marriage to pay the husband's existing child support and maintenance obligations from a prior marriage. The Court of Appeals held that the wife could not recoup these payments. The Court held that expenses paid during the marriage before either party is seeking to end the marriage, and provided there is no fraud or concealment, should not be reviewed by the court under most circumstances, and that the parties choice as to how they spend marital funds should be respected. However, the rule set forth in Mahony-Buntzman is not absolute. In Levenstein v Levenstein 2012 NY Slip Op 07090 [99 AD3d 971], the Second Department held that the wife was entitled to a credit for marital funds used by the husband to pay arrears that existed prior to the marriage. The Second Department distinguished Levenstein from Mahony Buntzman, reasoning that the obligations in Levenstein existed prior to the marriage, while the obligations in Mahony Buntzman accrued during the marriage. Moreover, the Levenstein action was an annulment based upon bigamy, and the court held that it would be inequitable to allow the husband to benefit from his criminal activity. In Iarocci v Iarocci 2012 NY Slip Op 06191 [98 AD3d 999], the Second Department affirmed the trial court decision to give the wife a credit based upon the husband repaying his sister a debt accrued prior to the marriage.

Valuing Marital Property

Once all property is disclosed and classified, the next step is to establish a value on all property. Valuation of property leads to another issue; which date should be used in determining value.

Valuation date of marital property

Before the court can determine a value for each asset, it must first establish which date should be used to set value. Under DRL 236 B(4)(b) the court is free to use any date between the commencement date of the matrimonial action to the date of trial. Each asset may have a different date to set value.

The general rule for setting a valuation date is the passive/active approach. Assets which appreciate passively through market forces are often valued at the date of trial, while assets which appreciate actively through contribution of the parties are often valued at the date of the commencement of the action. Needless to say that when the value of an asset fluctuates greatly, the date of valuation can become a highly contested issue.

It is possible to file a pre-trial motion which seeks to have the court set a valuation date, rather than have the issue of valuation dates determined at trial.

Appeals from non final orders such as the setting of valuation dates must not be taken lightly, as there are may procedural traps for the unwary which are beyond the scope of this article.

Assignment of a dollar amount

Once a valuation date is set, a dollar value will be set for each asset. Some assets are simple to assign a value, such as bank accounts, stocks and cash. Other assets will require an expert's opinion to set a value, such as real estate, business interests, or a professional license. In many cases, the value of an asset will not be agreed upon, and the court will decide value after hearing both sides during the trial.

Case law has held that failure to establish value can preclude the court from including that asset in the division of property. See Elkus v. Elkus 169 AD2d 134 (1st Dept. 1991).

As separate property is a factor in making a determination for equitable distribution, the value of separate property should also be evaluated.

 

Application of the Statutory Factors Listed in DRL 236 B(5)

In making an "equitable" distribution of marital property, the court will consider the following statutory factors enumerated in DRL 236 B(5)(d). The court need not consider each and every factor in making this determination. Nor is any one factor dispositive and this list should be used as a guideline only.  The distribution of marital assets must be based on the consideration of the circumstances of the particular case, based upon application of the statutory factors. See Brinkmann v Brinkmann (2nd Dept 2017). In Holterman v Holterman the Court of Appeals held that trial decisions issued by the Supreme Court are given broad discretion when they comprehensively address the statutory factors in a meaningful way.

Factor 1: The income of the parties at the time of the marriage and at the time of the commencement of the action. DRL 236 B(5)(d)(1)

A change in the relative incomes of each party will be a factor considered by the court under DRL 236B(5)(d)(1). A spouse whose income has grown less than their spouses, or whose income has decreased, will tend to be favored in receiving a larger share of the marital assets.

 

Factor 2: The duration of the marriage and the age and health of both parties. DRL 236 B(5)(d)(2)

The duration of the marriage and the age and health will be a factor considered by the court pursuant to DRL 236B(5)(d)(2). For a very short marriage, courts will often tend to "unwind" it and put each party back in the position they would have been had there been no marriage not. For longer marriages, the court will divide the marital property it deems fair under the circumstances, and for long term marriages, a fifty fifty division of marital assets is the norm.

The age and health will be a factor, as a spouse who is unable to work due to health reasons or loss be unable to secure a profession due to age may result in a greater award of marital property. Any maintenance award must be taken into account as well.

 

Factor 3: The need of a custodial parent to occupy or own the marital residence and to use or own its household effects. DRL 236 B(5)(d)(3)

If there are sufficient assets to offset the home, the court may award ownership of the marital home to the custodial parent and offset the home with other property. See Galanopoulos v Galanopoulos (2nd Dept. 2017) If there are not sufficient assets,  the court may award the custodial parent the exclusive right to occupy and use the marital home for a specific period of time under DRL 234 and DRL 236 B(5)(f), often until the youngest child reaches an age deemed appropriate by the court, which often ranges from eighteen to  twenty one years of age.

Read More: Exclusive Occupancy

 

Factor 4: The loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution. DRL 236 B(5)(d)(4)

A spouse has various inheritance rights which are lost following a divorce. The loss of these rights is a factor under DRL 236B(5)(d)(4), but is rarely used by the courts. This factor should still be considered, especially if there is significant amount of separate property that a surviving spouse may have otherwise inherited.

The loss of pension rights has been largely offset by the 1984 Court of Appeals case Majauskas v. Majauskas and subsequent case law. Majauskas held that a pension is a marital asset subject to equitable distribution.

 

Factor 5: The loss of health insurance benefits upon dissolution of the marriage. DRL 236 B(5)(d)(5)

The cost of maintaining a new health insurance policy post divorce can be a factor in determining equitable distribution under DRL 236 B(5)(d)(5).

 

Factor 6: Any award of maintenance under subdivision six of this part. DRL 236 B(5)(d)(6)

An award of maintenance made under DRL 236 B(5)(d)(6) will be a factor considered by the court. In some cases, an award of maintenance may work against receiving a greater share of the marital property than what would have otherwise been awarded. An award of maintenance may also affect which assets are distributed, as an award of maintenance decreases the need for income producing property.\

 

Read More: Maintenance

Factor 7: 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. DRL 236 B(5)(d)(7)

This statutory factor allows the court to consider the contributions of the non titled party in determining that spouse's share of the martial property. Thus under DRL 236B(5)(d)(7), if one spouse acquires marital property in his or her name alone, the other spouse may show contribution towards that property by providing services as a spouse, taking care of the parties children, working, or being a home maker.

It is the burden of the non titled spouse to show what contributions they made, either direct or indirect. When no contribution is shown, the property will not be divided. See Elsayed v Edrees (2nd Dept. 2016).

 

Factor 8: The liquid or non-liquid character of all marital property; DRL 236 B(5)(d)(8)

The liquidity (i.e., how easily the marital property may be converted to cash) will be a factor considered by court in distributing marital property. DRL 236B(5)(d)(8) recognizes that highly liquid assets may simply be divided, while non liquid assets may give rise to a distributive award, or warrant an award of maintenance instead.

 

Factor 9: Probable future financial circumstances of each party. DRL 236 B(5)(d)(9)

Under DRL 236B(5)(d)(9), a poor future financial outlook will be a factor considered, both in the share of marital property awarded to each spouse, as well as specific assets. For example, a spouse with greater need for income may be awarded income producing marital assets as his or her equitable share.

 

Factor 10: 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; DRL 236 B(5)(d)(10)

The difficulty or impossibility in evaluating an asset can affect how other marital assets are divided. Some assets cannot or from an economic sense, be divided. In those cases, DRL 236B(5)(d)(10) allows the court to keep an asset intact, and use other assets or other financial consideration to offset the undivided marital property. For example, dividing a small business between divorcing spouses often makes little sense. In these cases, another asset may be used to offset the marital portion of the business, or a distributive award of cash made pursuant to DRL 236 B(5)(e) may be used instead. The end result is that each spouse still receives the same dollar amount, but some assets may be retained solely by one spouse.

 

Factor 11: Tax consequences to each party. DRL 236 B(5)(d)(11)

The court may consider the tax impacts to the parties under DRL 236B(5)(d)(11) when deciding how to distribute marital assets. Expert testimony will generally be required. In theory, the court will try to minimize the taxes paid by each party, thereby increasing the size of the after tax marital estate.

 

Factor 12: The wasteful dissipation of assets by either spouse; DRL 236 B(5)(d)(12)

Wasteful dissipation of marital assets by a spouse may be offset by awarding the other spouse a greater share of the remaining assets. What constitutes wasteful dissipation under DRL 236B(5)(d)(12) is a question of fact for the court to decide. For example, in Kaprov v Stalinsky (2nd Dept. 2016), the Second Department held that the husband committed marital waste when he abandoned numerous business ventures whose value was at least $285,000.

 

Factor 13: Any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration; DRL 236 B(5)(d)(13)

Transferring assets to a third party for less than what they are worth will almost always result in severe sanctions against the offending party under DRL 236B(5)(d)(13). The court can and almost always will award a higher percentage of the remaining assets to the other spouse. In addition, a separate action may be filed to undo the transfer. This action, while separate, can be joined together with the divorce action and the two cases tried together.

 

Factor 14: Any other factor which the court shall expressly find to be just and proper. DRL 236 B(5)(d)(14)

Under DRL 236B(5)(d)(14), the court may consider any other factor in its discretion.

This catch all factor covers marital fault. Unlike the old alimony rules prior to 1980, marital fault does not play a factor in the financial disposition. The Court of Appeals in O’Brien stating that such an approach is inconsistent with the concept of marriage being an economic partnership. Marital fault will play a factor when it is considered so egregious that it shocks the conscious of the court.

 

Equitable Distribution is at the Court's Broad Discretion

Provided the court considers the statutory factors (See Brinkmann v Brinkmann), the Court is given great discretion in determining the proper disposition of marital property.

An award of 5% of marital assets was upheld as being within the Court’s discretion Larowitz v Lebetkin (1st Dept. 2019). The First Department rejected the argument that small awards such as 5% should be limited to cases involving egregious marital fault.

 

Distributive Award in Lieu of Equitable Distributiion

A distributive award, defined in DRL 236 B(1)(b), and authorized under DRL 236 B(5)(e), is a cash payment which is used in conjunction with equitable distribution of marital property when it is impractical or burdensome to divide specific property, or to balance the division of property under equitable distribution when it is impossible or impractical to allocate each spouses' share using non cash assets alone. This concept is illustrated in Galanopoulos v Galanopoulos. The Court declined to order the sale of the marital residence. Instead, the Husband was awarded a credit towards his share.

 

Tax Aspects of Equitable Distribution

A transfer of property from one spouse to another as part of a divorce to a spouse or former spouse is a non taxable event.

 

Conclusion

Equitable distribution is a remedy that vests only upon dissolution of the marriage. Courts are given broad discretion to fashion a disposition of property that is custom tailored to the facts and circumstances for each case, provided the Court follows the statutory factors.


The article "Equitable Distribution: How Marital Property is Divided in New York under Domestic Relations Law Section 236 B" is provided as a free educational service by J. Douglas Barics, attorney at law, and does not constitute legal advice. Legal advice may only come from a qualified attorney who is familiar with the facts and circumstances of a specific case.
If you have any questions or comments, please feel free to contact Mr. Barics at lawyer@jdbar.com or (631) 864-2600. For more articles and information, please visit www.jdbar.com.
Copyright (c) 1998-2019 by J. Douglas Barics, attorney-at-law. All rights reserved.
J. Douglas Barics, Esq. – Divorce, family, matrimonial, trial and appeals lawyer in Long Island, New York.