Property Division in New York

The New York law about property division for divorcing couples is known as the Equitable Distribution statute. One of the biggest concerns of many divorcing couples in New York is how their property and possessions will be divided. What will they be able to keep under New York's complex property division laws? How much will they have to split with their spouse? Matrimonial property division lawyer Ellen Holtzman says, "Although the process can be very stressful, divorcing couples are frequently able to agree about how to divide their property. This is especially true once they have a clear understanding of the factors that a judge will have to consider if the court decides for them."

In courtroom trials and negotiated settlements, Ellen and her experienced equitable distribution legal team have a record of success in helping clients achieve their goals when it comes to dividing marital property. Over the years, Ellen B. Holtzman has negotiated many hundreds of property division agreements and prevailed in dozens of equitable distribution trials. Here, Ellen answers some of the questions divorcing spouses may have about how property is divided in the state of New York.

What does equitable distribution even mean?
It's not a term in general use except among attorneys and judges. Equitable is just a longer word for fair, and distribution is the action of sharing the marital property -- that is, property acquired during the marriage. The goal of this law is the fair division of the property, taking into consideration all of the circumstances in each particular case. The statute identifies the "circumstances" using a list of 16 factors. Depending on how the judge views those factors [listed below], and the circumstances of each case, equitable distribution does not necessarily mean equal division.

So the couple's property is not always equally divided?
It could mean that. According to Ellen, it all depends on the factors that are outlined in the statute and the circumstances of the case. The court could decide to divide the marital property 50-50 or 60-40 or 70-30 or even 90-10. The Equitable Distribution law requires the court to consider 16 very specific factors in determining who gets what property. If the couple cannot reach an agreement the judge will divide marital property based on "the circumstances of the case and of the respective parties."

Do all states take the same approach to property division?
No. Nine states, including California, Nevada, and Arizona, are known as community property states with respect to property division. Basically, in those nine states, if the property was acquired during the marriage, the spouses own the property equally, and it will be divided 50-50.

What is considered marital property?
In New York, all property acquired by either or both spouses after the date of the marriage -- and before the commencement of a divorce action -- is considered marital property. Even if your name is not on the title, the property is still marital property if it was acquired during the marriage. Marital assets include anything of value: houses, apartments, bank accounts, cash, stocks and bonds, vacation homes, retirement accounts, cars, boats, planes, the art on the walls, the Steinway grand piano, and the furniture. Also included are the silver, the crystal, and the dinnerware -- even credit card points and airline miles. Ellen notes that there are only a handful of exceptions to this rule.

What is considered separate property?
This can be tricky. Generally, separate property is any property you owned before your marriage. But what if you bought a vacation home before your marriage and its value increased during the marriage? If the increase is simply because the value of all the real estate in the area increased, then it remains your separate property. But if your spouse renovated the home and its value increased as a result, the increase in value is going to be considered marital property. What if you sold your separate property and bought something else with that money? Ellen says that the money you used for the new purchase remains your separate property.

Are there any exceptions to the marital property rule?
Yes, but very few. Examples would be an inheritance or a gift from a third party or a personal injury award. As long as you keep that money separate and don't use it to pay household bills or deposit it into a joint account, it's not considered marital property.

What about my childhood baseball card collection?
If you didn't add anything to your collection during the marriage, the baseball card collection is still your separate property. If you added to it while you were married, causing it to increase in value, the additional value is considered marital property.

Is it true that the debts also get divided?
"Yes," says Ellen, "and debt that was yours before the marriage remains your debt to pay. As to debt incurred after the marriage -- it depends. It will usually be 50-50 unless you can give the judge a reason to decide otherwise. For example, if you can show that your spouse has spent large sums on vacations with another man or woman or has given gifts of jewelry or fur coats to a lover, the judge will take that into consideration." Ellen also notes that when judges decide who will get what, one of the factors they consider is whether either spouse has wasted or used the marital property for non-marital purposes. The use of marital property for non-marital purposes has a name: it is called "dissipation of assets."

We are in the process of divorcing, but not yet divorced. When do purchases stop being considered marital property?
Ellen says, "Very often, the spouses negotiate the terms of the divorce and the property division in advance -- before they ask the court for a judgment of divorce. If the couple is negotiating the terms of their agreement between themselves or with help from their attorneys -- and this is usually the less costly way to go -- they agree on the date themselves." Ellen notes that if the parties do not establish a termination date themselves, the statute says the termination of marital property occurs on the date the divorce action is filed with the clerk of the court.

Why does the law require both spouses to provide sworn statements of net worth?
Ellen says, "The property division process always begins with compulsory financial disclosure. This is the legally required Step One. It can be overwhelming, especially for spouses who did not keep track of the family finances. However, it is extremely important for the court to have a full picture of the financial state of both parties before the judge can order any necessary assistance, such as temporary maintenance or temporary child support. Also, if the spouses want to avoid letting a judge decide who will get what, both of their attorneys need as much information as possible as soon as possible in order to help negotiate the division of property. Our office provides clients with a detailed worksheet containing all of the information required by the court. It really helps clients with gathering the needed information. If more help is needed, our experienced staff members often assist with the financial disclosure -- because it is a tall order."

Is it true that my retirement benefits will also have to be divided?
Any retirement benefits that you earned up until the date of the marriage will remain your separate property. Retirement benefits accrued during the marriage and up until the date the divorce action was filed -- or a date the spouses agree on -- are marital property and are also subject to equitable distribution. Ellen stresses that any spouse awarded part of a pension should be sure that they obtain their QDRO (Qualified Domestic Relations Order) at the time of the divorce.

What are the 16 factors the judge weighs if the spouses cannot agree on how to divide their property?

1. The income and property of each party at the time of marriage, and at the time of the commencement of the divorce action;
2. The duration of the marriage and the age and health of both parties;
3. The need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
4. The loss of inheritance and pension rights as of the date the divorce action is filed;
5. The loss of health insurance benefits upon dissolution of the marriage;
6. Any award of maintenance granted;
7. Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party. The court shall not consider as marital property subject to distribution the value of a spouse's enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse;
8. The liquid or non-liquid character of all marital property;
9. The probable future financial circumstances of each party;
10. 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;
11. The tax consequences to each party;
12. The wasteful dissipation of assets by either spouse;
13. Any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
14. Whether either party has committed an act or acts of domestic violence against the other party and the nature, duration and impact of such act or acts;
15. In awarding the possession of a companion animal, the court shall consider the best interest of such animal. "Companion animal" or "pet" means any dog or cat and shall also mean any other domesticated animal normally maintained in or near the household of the owner or person who cares for such other domesticated animal;
16. Any other factor which the court shall expressly find to be just and proper.

How can I get a divorce without going through all of this?
If a valid prenuptial or postnuptial agreement is in effect that provides for the ownership, division, and distribution of both the separate and marital property, that agreement will take precedence.