In New York, property is divided equitably when a couple divorces. This can result in an equal property division, but it doesn't always. An equitable property division is one that is fair, considering what each spouse contributed to the marriage and what each spouse will need to move forward.
This article answers some common questions about New York's equitable distribution system. For more information, see the article New York Divorce: Dividing Property. For all of our articles on divorce in New York, see our New York Family and Divorce Law page.
What is equitable distribution?
Equitable distribution is a method for dividing a married couple's property when they divorce. Prior to the adoption of equitable distribution in New York, New York was a "common law property" state. Under that system, the property owned by either spouse was distributed at divorce according to the manner in which title was held. If only one spouse's name appeared on the title, that spouse received the property.
New York is now an equitable distribution state. When a couple divorces, the court must divide their marital property equitably, or fairly. This doesn't necessarily require an equal split of the couple's assets. Instead, the judge will strive for a fair outcome, considering:
- each spouse's income and property when they married and when they filed for divorce
- the duration of the marriage
- each spouse's age and health
- the need of the parent with custody to live in the family home and use or own its effects (furniture and so on)
- the pension, health insurance, and inheritance rights either spouse will lose as a result of the divorce, valued as of the date of the divorce
- whether the court has awarded spousal maintenance (alimony)
- whether either spouse has an equitable claim to marital property to which that spouse does not have title, based on that spouse's contribution of labor, money, or efforts as a spouse, parent, wage earner, or homemaker, including contributions to the other spouse's earning potential (by, for example, working to put the other spouse through school)
- the liquid or non-liquid character of all marital property
- the probable future financial circumstances of each spouse
- if the marital property includes a component or interest in a business, corporation, or profession, the difficulty of valuing that interest and whether it would be desirable for that interest to be retained intact, free from claims or interference by the other spouse
- the tax consequences to each spouse
- whether either spouse has wastefully dissipated marital assets
- whether either spouse has transferred or encumbered marital property in contemplation of divorce without fair consideration, and
- any other factor the court expressly finds to be a just and proper consideration.
What property is subject to equitable distribution?
Only marital property is divided by the court. Each spouse gets to keep his or her own separate property.
Marital property includes all property acquired by either or both parties during the marriage, regardless of the form in which title is held, subject to the exceptions below. Each spouse's income during marriage, the property purchased with that income, the property they purchased while married (such as a house or car), the retirement benefits each spouse earned during marriage, and the appreciation of all this property while the couple was married, is all considered marital property.
What is separate property?
Separate property is not divided when a couple divorces. Instead, each spouse gets to keep his or her own separate property, except to the extent that the other spouse has contributed to its increase in value. Separate property includes:
- property either spouse acquired before marriage
- property either spouse received individually as an inheritance or gift, except from the other spouse
- compensation for personal injuries to either spouse
- any property characterized as separate property in a valid prenuptial agreement or other written contract, and
- property acquired from the proceeds or appreciation in value of separate property, unless that appreciation is partly due to the efforts or contributions of the other spouse.
Is a business or professional practice subject to equitable distribution?
Yes. Businesses, professional practices, and enhanced earning capacity attributable to the attainment of a career, or professional license, educational degree, profession or license is considered "property" subject to equitable distribution. However, as noted above, interests in a business or career may be difficult to divide, or it may be undesirable to do so. In this situation, the court will typically award the actual business or practice to the spouse who is running it, awarding the other spouse property to make up the difference.