If you're getting divorced in New York, do you know what property you get to keep and what you have to split with your spouse? You may also have questions about who will be responsible for the marital debts.
New York is an equitable distribution state, which means the court will divide marital property between spouses in a way that is equitable or fair. The court decides what's fair based on a set of factors that show what each of you contributed to the marriage and what each spouse will need to move forward after divorce. The division does not have to be equal to be considered fair.
If you and your spouse can't resolve your property disputes on your own, then you may end up in court, asking a judge to decide for you. Throughout the divorce process, you will have opportunities to decide with your spouse how you want to split your property between yourselves. The court will usually accept a written separation agreement on how you want to divide your property. But if you and your spouse can't reach a compromise, the court will step in and divide your property for you. (N.Y. Dom. Rel. § 236 (B)(3).)
Before the court can divide your property, it needs to know which property belongs to the marriage, which belongs to each spouse separately, and how much there is of each.
Generally, marital property is all property acquired or earned during the marriage, regardless of what the title says. (N.Y. Dom. Rel. § 236 (B)(c).)
Separate property is property you owned before marriage. It can also include some property you received during the marriage, like a gift, an inheritance, or a personal injury award to you alone. (N.Y. Dom. Rel. § 236 (B)(d).)
If you exchange your separate property for new property during the marriage, then that new property remains yours alone. There are circumstances, however, when the court categorizes an increase in the value of your separate property as marital property.
For example, if you owned a vacation home before marriage that your spouse updated and remodeled during the marriage, then the increase in that house's value is marital property because it comes from your spouse's efforts.
On the other hand, if you bought an apartment in an up-and-coming neighborhood before marriage and it improves in value during the marriage simply because the rest of the homes in the area do the same, then that increase in value remains your separate property.
At divorce, the court divides only the marital property. It can't award any property that was yours alone before or during marriage to your spouse. It can, however, consider all your financial resources—both your share of the marital property and your separate property—when deciding how much spousal maintenance (alimony) to award, if any.
Retirement assets—like a 401(k) or pension plan—are often the most significant assets in a couple's marital estate. Unless you and your spouse agree otherwise, the court will typically divide retirement accounts according to the equitable division factors listed below.
The court must determine whether the earning/ employee spouse has a premarital interest (which is separate property) before dividing the accounts. In most cases, the court will require a Qualified Domestic Relations Order (QDRO) which is a complex document that details the requirements for dividing the accounts.
The types of property commonly divided at divorce are real property like the family home, personal property like jewelry, and intangible property like income, benefits and debts. The court treats debts the same as any other real, personal, or intangible property. Before dividing an asset or debt, the court will have to characterize it as either marital or separate and then assign ownership or responsibility for it based on a set of factors designed to give an equitable result.
Factors the court uses to determine a fair distribution of marital property include:
In addition to any other factor that might be relevant to the particular circumstances of your marriage, the court specifically considers what the spouses may have lost at divorce, such as an interest in an inheritance, pension rights, or health insurance. It also evaluates future losses the spouses face in terms of taxes.
Some assets aren't easy to divide between two people. Something like cash, which is very liquid, can easily be split between the spouses. But the court may find that dividing a family business is more complex. Judges can order the parties to get an official business valuation to find out what a business is worth. Once a court has the value, it can order a distributive award—a payment from one spouse to the other to balance out an uneven distribution of property—if it is impractical to divide a substantial asset.
Although fault in causing the marriage to fail is not part of the calculation, the court can award less of the marital property to you if you wasted marital assets. You can't spend marital funds flying your lover to Paris, for example, without having to pay for it later. Likewise, you can't sell, transfer, or otherwise encumber martial property in anticipation of your divorce. If you do, the court can penalize you for it during the division. (N.Y. Dom. Rel. §236 (B)(5)(c).)
In addition to dividing marital assets, the court must also assign each spouse an equitable portion of the marital debt. The court will first categorize the debt as marital or separate and then use the same factors as listed above to determine the most equitable division.
Marital debts include any liability that either spouse accrued during the marriage, and used for the benefit of the marriage. For example, if one spouse applied for a store credit card and used it to purchase clothing for the couple's children, the court will divide the debt between the spouses.
Separate debt belongs only to the spouse who incurred it, and the court will allocate the debt to that spouse. For example, if one spouse purchased an expensive necklace for an ex-lover, the court will require that spouse take full responsibility for the debt.
It's important to understand that a court can not change the agreement either spouse made with a lender. For example, the court may allocate the Lowes credit card to one spouse, but if it's a joint credit card, the lender can pursue payment from either spouse.
Alimony (also called spousal maintenance) is a payment from one spouse to the other to help cover the supported spouse's expenses after the divorce. Similar to the division of property, the court's order for spousal maintenance must be equitable.
Payments can be periodic (monthly, for example) or in a lump sum and for a set or indefinite period of time. A spouse can request temporary maintenance payments during the divorce process, the amount of which the judge will base on specific income guidelines. (N.Y. Dom. Rel. § 236 (B)(5-a).)
When the court divides marital property and orders the divorce, the court can also make a permanent maintenance award. In New York, judges base an award for spousal maintenance on many of the same factors as the division of property. Some other factors include the spouses' level of education and earning capacity, the marital standard of living, and the needs of any children.
The court may also consider any history of domestic violence during the marriage, which may have kept the battered spouse from seeking or improving employment. The court is also free to look at any factor relevant to the award of maintenance, such as a spouse's ability to pay.
As with most divorce-related issues, like child custody and spousal maintenance, the court encourages couples to work together to reach a settlement agreement for property and debt division. Negotiating couples should each speak with an attorney to discuss their options before putting any agreement in writing. If the final agreement is fair to both spouses, the court will usually accept it.
You can read the law on division of property and spousal maintenance in the New York Consolidated Statutes, Article 13 of Domestic Relations, Section 236, which is divided into parts A and B. Part A applies only to divorces filed in New York before July 19, 1980. For all later cases, use part B.
If you have questions about your own case, you should contact a local attorney for advice.