New York views marriage not only as a legal partnership but as an economic partnership as well. As such, when a marriage comes to an end, both the assets and debts of the marriage must be apportioned between the parties. This is accomplished, in New York, via Equitable Distribution. One important thing to remember is that the term “equitable” does not mean “equal”. As such, assets and debts are not always split 50/50.
In order to determine how to apportion the assets and debts of a marriage, the Court must first determine what is “marital property” - which is defined as “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which the title is held, except as otherwise provided in an agreement to the provisions of such statute, and that marital property does not include separate property as defined in the statue.” On the other hand, “separate property” is defined as “property acquired before the marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse; compensation for personal injuries; property acquired in exchange for or the increase in value of separate property; except to the extent that such appreciation is due in part to the contribution or efforts of the other spouse; and property described as separate property by written agreement of the parties pursuant to the provisions of the statute; property acquired by either spouse after commencement of the matrimonial action or the execution of a separation agreement.”
Once a determination is made as to “marital” versus “separate” property, the Court can then make a determination as to Equitable Distribution. As you likely guessed by now, the Court looks to a number of factors to determine how to apportion the “marital property”. These factors are as follows:
The income and property of each party at the time of marriage, and at the time of the commencement of the action;
The duration of the marriage and the age and health of both parties;
The need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
The loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
The loss of health insurance benefits upon dissolution of the marriage;
Any award of maintenance under subdivision six of this part;
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;
The liquid or non-liquid character of all marital property;
The probable future financial circumstances of each party;
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 tax consequences to each party;
The wasteful dissipation of assets by either spouse;
Any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration; and
Any other factor which the court shall expressly find to be just and proper.
Unless the parties can negotiate and agree to a settlement regarding their assets and debts, the Court will review documents and hear testimony regarding all marital assets and debts at trial. Once completed, the Court will issue a written decision detailing how the “marital property” will be distributed. In that decision, the Court will outline which factors from the above list that it applied in making its determination.
Once a decision has been issued, the parties must effectuate the distribution of the assets and debts, ensuring that they cooperate with one another in signing any and all necessary documentation for the orderly transfer of assets and debts.