Equitable Distribution

Equitable Distribution in a New York Divorce

What you need to know about how marital property is divided in a divorce

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What is Equitable Distribution?

Equitable distribution is a legal right to have a matrimonial court divide all marital property regardless of title as part of a divorce or other matrimonial action which dissolves the marriage. Equitable property is divided according to state law, and generally means property is divided "equitably" and not "equally." Outside of a matrimonial action which results in the dissolution of the marriage, no right to equitable distribution exists.

What is Community Property?

Community property is a legal right to marital property that exists independent of a divorce or dissolution of a marriage. It is enforceable during the marriage, during a divorce, or even after a divorce. Community property rights are set by state law, which can award it on factors similar to equitable distribution. The key difference is when the property right vests.

What Steps are Needed to Get Equitable Distribution?

• The first step in getting an award of equitable distribution is getting married. The marriage itself is the "planting" of the seed of equitable distribution, with the date of the marriage being the starting date of marital property rights despite these rights not being enforceable prior to a divorce.
• The second step is filing for a divorce or an annulment, as seeking to dissolve the marriage "germinates" the seed, with the date of filing acting as a cutoff date for the right to marital property. The right to marital property can be enforced only as part of the divorce.
• The third step is a judgment of divorce or annulment, which "harvests" the marital property in which the right to the property becomes a fully vested right outside of the divorce action.

What Types of Matrimonial Cases Authorizes Equitable Distribution?

Equitable distribution is authorized in any matrimonial case which affects the marital status of the parties. Under the equitable distribution law, the following types of matrimonial cases can award marital property.

• A divorce
• An annulment
• A declaration that a marriage is void
• A declaration to declare a foreign marriage valid or void.
• A special proceeding following a non-New York divorce.

What is Marital Property?

Marital property is any property acquired by either spouse from the date of the marriage to the date the divorce is filed. The three exceptions are (1) an inheritance, (2) gifts and (3) personal injury awards. These are considered separate property even though they were acquired during the marriage.

What is Separate Property?

Separate property is any property acquired prior to the marriage, property acquired after the start of the divorce provided it doesn't come from marital property, and the three exceptions to marital property acquired during the marriage.

What Factors are used to Divide Marital Property?

Marital property is divided using the factors listed in DRL 236 B(5). They are the following:

• The income of the parties
• The length of the marriage and health of the parties
• The need of the custodial parent to occupy the marital home
• Loss of inheritance and pension rights
• Loss of health insurance
• The award of maintenance
• Direct or indirect contributions to acquiring marital property
• The liquidity or lack of liquidity of marital assets
• Probably future financial circumstances of both parties
• The difficulty in evaluating assets or a business and that it might be impractical to divide up a business
• The tax consequences
• Marital waste
• Intentionally transferring assets to hide them
• Any other factor the court finds relevant

What Date is Used to Value Marital Property?

The value of marital property is any value set by the court starting from the date the divorce was filed and ending on the date of the trial. The court has broad discretion to use any date within this timeframe. In general, assets which appreciate due to the actions of a party are valued at the date of commencement, while assets which appreciate passively are valued at the date of the trial.

How is the Marital Home Divided?

The marital home is divided based upon the broad discretion of the court standard. The specifics will vary from case to case, and the court will base its decision on the facts presented at trial. The court has the authority to award the home to one spouse outright using other assets to offset it, or sell the property, or defer the sale until the time of exclusive occupancy is over.

How is a Retirement or Tax Deferred Account Divided?

Retirement accounts and pensions are divided based by awarding each spouse a portion of the marital portion of the account.

Pensions are distributed based on a percentage of the monthly payout using a Qualified Domestic Relations Order, known as a QDRO.

Tax deferred accounts such as IRA or 401(k) are normally distributed based on a dollar amount.

How is a Business Interest Divided in a Divorce?

A business is divided either by awarding a percentage of the business to each spouse, or using a dollar offset to the non titled spouse. If an offset is used, an expert valuation of the business is needed to establish the offset amount.

How Does an Expert Value a Marital Asset?

An expert will value a marital asset by choosing one of several valuation methods and applying the correct one to the asset. There are several valuation methods.

• Fair market value - the value if the business were to be sold to a hypothetical value
• Replacement value - the value if the business were lost and the cost to replace it "as is"
• Inventory value - the value if all the assets were sold off

How are Stocks Divided?

Publicly traded stocks are usually divided in a divorce by giving each party their share of the stocks outright.

How are Bank Accounts Divided?

Bank accounts are the simplest asset to divide in equitable distribution. The Court will award each spouse a portion, which is easy to convert to a dollar amount, or the Court may simply award a dollar amount.

What Steps are Necessary to Obtain Equitable Distribution of Marital Property?

• An action for a divorce or annulment must be filed.
• Each asset must be classified as either a marital asset or as separate property.
• The asset must be valued.
• The contribution of the spouse seeking equitable distribution must be explained. Contribution may be either direct or indirect, such as being a stay at home parent or homemaker.
• The court will decide which assets to distribute in its trial decision, or if the parties reach an agreement, the stipulation will determine the equitable distribution award.
• The judgment will contain the terms of the stipulation or trial decision, at which time the right to the marital property becomes fully vested.

Contact Our Divorce Attorney Today

At the Law Office of J. Douglas Barics, we have the skills and knowledge to handle any divorce involving equitable distribution, no matter how challenging or convoluted. With over 25 years of matrimonial experience, we can bring to you the services of a large firm at a fraction of the cost. When you need a skilled matrimonial lawyer located in Suffolk County, call The Law Office of J. Douglas Barics.