Equitable Distribution of Marital Property in a Divorce or Annulment
In every divorce or annulment, any property acquired during the marriage is subject to being divided equitably between the parties.
Equitable Distribution is available in a Divorce or an Annulment
Equitable distribution is required to be in every divorce or annulment whenever the status of the marriage is changed. A divorce which dissolves the marriage, an annulment which voids it, or a declaration stating the marriage was void at the beginning is sufficient to authorize the court to determine each spouse's fair share of marital property.
If you are not sure if equitable distribution applies to you, there two simple questions give the answer.
- Is there an act of getting married that is authorized under the laws where the marriage took place?
- If so, is there a divorce or annulment filed in New York?
If the answer to both questions is "yes" equitable distribution should apply.
Read More: Divorce and Annulments
How Equitable Distribution Divides Marital Property
The equitable distribution law of DRL 236 B mandates that every judgment of divorce distribute marital property in a way that is fair and equitable between the parties. Marital property is defined as any property or asset which was acquired during the marriage, with a few exceptions such as an inheritance, personal injury awards, or gifts from someone other than your spouse. If any of the following assets were acquired during the marriage, the court has the authority to divide these them between the spouses:
- Real Estate, including the marital home
- Pensions, IRA and 401(k)
- Business Interests
- Bank Accounts
- Assets Secretly Transferred or Wasted by your Spouse
The Marital Home and Real Property
Any real property including the marital home can be divided and awarded between the parties. The Court has broad discretion how to award real estate; it can order the property to be sold and the proceeds divided, it can order a sale in the future and award one spouse exclusive occupancy until that time, it can use other assets to offset a spouse's interest in the property, or it can order a buyout spread over time.
Retirement and Tax Deferred Accounts
Pensions are distributed based on a percentage of the monthly payout. A Qualified Domestic Relations Order, known as a QDRO is part of this process. The Qdro does not establish the percentage, it merely is the authorized order that allows the pension plan to pay someone else than the pension holder.
Tax deferred accounts such as IRA or 401(k) are normally distributed based on a dollar amount.
A business must be valued for it to be distributed, and an expert opinion is required. The method used to calculate value will play a significant role in the experts conclusion. The following options are available to the expert:
- 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
If stocks are publicly traded, the shares can be divided or they can be ordered to be sold and the proceeds divided. When they are not publicly traded, they need to be valued and either the shares are transferred or a buyout is ordered either by a dollar amount or by an offset using another asset.
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.
Hidden Assets, Dissipated Assets
When assets or hidden or wasted, determining equitable distribution becomes more difficult, but these problems can be solved. Hidden assets can be located in a number of ways. Tax returns and financial disclosure can often leave clues as to their existence. Statistical analysis can be used to back into actual sales of all cash businesses using inventory orders.
Wasteful dissipation of marital assets presents different challenges. Here, the asset is known, but it no longer exists. The value must be established and that figure is usually offset with the distribution of other assets.
What is Marital Property?
Only marital property can be distributed. Marital property is defined as any asset or property which is acquired by either spouse from the date of marriage to the date the divorce is filed, subject to a small number of exceptions.
What Steps are Necessary to Obtain Equitable Distribution of Marital Property
- An action for a divorce or annulment must be filed. Unlike community property which exists independent of a divorce, marital property can only be awarded in conjunction with the marriage being dissolved or declared void.
- The asset must be acquired during the marriage and not fall into one of the limited exceptions.
- The asset must be valued. Failure to value marital property may preclude the court from distributing it
- 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.
- Equitable distribution is subject to separate property credits. If you can trace separate property contributions to marital property, the law allows you to obtain a credit back for your separate property before the marital property is divided.
If you are in a situation where there are valuable assets acquired during the marriage, it doesn't matter if these assets are in your spouse's name, held jointly with you, or in your name. If an asset is found to be marital, the court must determine how it is divided between the parties.
Call for a Free Phone Consultation or to Schedule a Low Cost Office Consultation
If you have have additional questions, contact our office to learn about your legal options for protecting your rights in any type of matter that involves equitable distribution. To get your free phone consultation or to make an appointment, call (631) 864-2600. Serving clients in Suffolk, Nassau, Queens, Manhattan, Bronx, Westchester. Rockland, Orange and other surrounding counties are accepted on a case by case basis.
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