A Summary of How Marital Property is Divided in New York

New York’s laws regarding the division of marital property are found in Domestic Relations Law Section 236-B. Prior to its enactment in 1980, marital property did not exist, and property simply went to the spouse who owned the property. For all cases since 1980, marital property is divided between husband and wife without regard to title. 

New York Equitable Distribution as Ancillary Relief

Under equitable distribution, a spouse may assert a claim to marital property only in conjunction with a divorce or other matrimonial action. Should there be no matrimonial action filed, or if the status of the marriage is not changed, the non-titled spouse has no right to any marital property which is held under the other spouse’s name.

With one exception, equitable distribution may exist only as secondary (ancillary) relief in conjunction with main matrimonial actions defined under Domestic Relations Law Section 236-B(5)(b) and (c), which are as follows:

(a) An action for a divorce.

(b) An action for an annulment or dissolution.

(c) An action to declare the nullity of a void marriage.

Under all three of these actions, the statute requires the court to make a determination as to the division of property. However, if no claim is made for equitable distribution, the court’s determination will usually be to leave the title to any property as is.

There can be no claim for equitable distribution under an action for a separation (D.R.L. 200), as that action does not seek to change the marital status. Likewise, if the main cause of action (the divorce, annulment, or declaration of a nullity) is not granted for any reason, the court is powerless to change the title of the marital property. See D.R.L. Section 236-B(5)(a).

The sole exception under which equitable distribution may be granted outside these three actions is found in Domestic Relations Law Section 236-B(2). This section allows a special proceeding to be filed for equitable distribution following a foreign (i.e., non-New York) divorce. In what appears to be a legislative oversight, this special proceeding may only be brought following a foreign divorce. A strict reading of this statute means there can be no equitable distribution following a foreign annulment or a declaration of a void marriage.

Property awards cannot be modified. The lack of authority to modify a property award is consistent with the fundamental concept of equitable distribution, since any post-judgment application by either former spouse cannot change his or her marital status.

It is for this same reason that a court cannot make a pendente lite (pre-trial) award of equitable distribution, since the marital status cannot be changed by motion, but only by trial. However, a court can direct certain actions pendente lite to preserve marital assets pending the trial. For example, the court can direct the sale of the marital home to preserve the equity as an asset, but it may not distribute the proceeds before trial.

Equitable Distribution: Step by Step 

Step 1: Identifying All Property

Mandatory disclosure of all assets, without regard to whether they are marital or separate, is required for both parties. A comprehensive but non-exhaustive list of assets includes: 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, and trademarks.

In addition to the tangible assets listed above, a professional degree, professional license, or special training or skills which enhances the earning capacity of a spouse is considered an asset. The leading case in this area is O’Brien v. O’Brien, which explains the reasoning why professional licenses are considered an asset which can be distributed. Since O’Brien, the concept has been expanded through subsequent decisions beyond the initial holding of professional licenses, and now includes training or skills which enhance a spouse’s earning capacity.

Step 2: Classification of Property

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

Separate property is defined as property acquired before the marriage, property acquired by bequest, devise, descent (i.e., an inheritance), or by gift from anyone other than the spouse. Separate property also includes compensation for personal injury cases, but only that part which constitutes punitive damages and pain and suffering. Separate property also includes property acquired in exchange for separate property. Appreciation of separate property will be considered separate property if the non-titled spouse cannot prove some sort of contribution towards the appreciation.

Marital property is defined as any property which is not within the definition of separate property. Put another way, marital property 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 all subject to equitable distribution, even if only one person is the titled owner. 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.

Step 3: Valuing 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 – the date to be used in determining the value.

Before the court can determine a value for each asset, it must first establish which date should be used to set value. The court is free to use any date from the commencement date of the matrimonial action to the date of trial, or any date in between. 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, when the value of an asset fluctuates greatly, the date of valuation can become a highly contested issue. 

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.

Step 4: Application of the Statutory Factors

In making an “equitable” distribution of marital property, the court will consider the following statutory factors. The court need not consider each and every factor in making this determination. Nor is any one factor dispositive. This list should be used as a guideline only.

(a)  The income of the parties at the time of the marriage and at the time of the commencement of the action.

A change in the relative incomes of each party will be a factor considered by the court. A spouse whose income has grown less than that of his or her spouse, or whose income has decreased, will tend to be favored in receiving a larger share of the marital assets.

(b)  The duration of the marriage and the age and health of both parties.

For a shorter marriage, courts will often tend to “unwind” the marriage and put each party back in the position they would have been had the marriage not occurred. The longer the marriage, the greater the chance of the court making a distributive award. For older parties, the need for marital property may increase their share of the award, especially if the asset is income-producing. A spouse who is unable to work due might also be entitled to a larger share of the marital assets.

(c)  The need of a custodial parent to occupy or own the marital residence and/or household items.

If there are sufficient assets to offset the home, the court may award ownership of the marital home to the custodial parent. If not, the court may award the custodial parent the exclusive right to occupy and use the marital home for a specific period of time, often until the youngest child reaches either eighteen or twenty one years of age.

(d)  The loss of inheritance and pension rights.

The loss of the right to inherit from a spouse is a statutory factor, but rarely used by courts. A loss of pension rights has been offset by the 1984 Court of Appeals decision in Majauskas v. Majauskas, but still remains a statutory factor.

(e)  An award of maintenance.

An award of maintenance will be a factor considered by the court. In general, 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.

(f)  Any equitable claim or interest or contribution made by the non-titled party as services as a spouse, parent, wage earner, or homemaker. Effects on the career of the other spouse are considered as well.

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, 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 homemaker.

(g)  The liquid or non-liquid character of the marital property.

The liquidity (i.e., how easily the marital property may be converted to cash) will be a factor in how the court awards marital property. 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.

(h)  Probable future financial circumstances of each party.

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 a greater need for income may be awarded income-producing marital assets as his or her equitable share. 

(i)  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 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, the asset remains intact, and other assets or other financial consideration is used to offset the undivided asset.

(j)  Tax consequences to each party.

The court may consider the tax impact to the parties 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.

(k)  Wasteful dissipation by either spouse.

Wasteful dissipation of marital assets by a spouse may be offset by awarding the other spouse a greater share of the remaining assets.

(l)  Any transfer below fair market value made in contemplation of a matrimonial action.

Transferring assets to a third party for less than what they are worth will almost always result in severe sanctions against the offending party. 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.

(m)  Any other factor the court deems relevant.

The court may consider any other factor in its discretion. 



This article is provided as an educational service by J. Douglas Barics, attorney at law. If you have any questions or comments, you are welcome to contact Mr. Barics at lawyer@jdbar.com or (516) 829-4600. For more articles and information, please visit www.jdbar.com.

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