Equitable Distribution, Jean Mahserjian Blog

Key Factors Considered in Equitable Distribution Cases in New York

Posted on by Jean Mahserjian
Equitable distribution cases in New York are a significant component of divorce proceedings and often become the focal point of the process. These cases involve the fair allocation of marital property between spouses. It is important to note that equitable distribution does not necessarily mean an equal division of assets. Instead, it refers to a fair distribution based on various factors that are considered by the court. Each divorce case is unique, and the courts take many aspects into account when making decisions on how to divide property. Understanding the key factors involved in equitable distribution is essential for those going through a divorce in New York.

What Constitutes Marital Property?

Before delving into the factors considered in equitable distribution, it is important to clarify what constitutes marital property in New York. Marital property includes any assets acquired by either spouse during the marriage, regardless of whose name the property is in. This can include real estate, bank accounts, retirement accounts, businesses, and even debts. Conversely, separate property is generally not subject to division in a divorce. Separate property includes assets acquired before the marriage, inheritances, gifts received by one spouse from a third party, and compensation for personal injury. However, there are situations where separate property can become marital property. If a spouse commingles their separate property with marital assets, it may be treated as marital property. For example, if one spouse inherits money and deposits it into a joint bank account used for marital expenses, it may be considered marital property. This distinction between separate and marital property is crucial in equitable distribution cases, as it determines what assets will be divided between the spouses.

Length of the Marriage and Contributions

One of the most important factors considered in equitable distribution cases in New York is the length of the marriage. The duration of the marriage can greatly influence how assets are divided. In longer marriages, the court may be more inclined to divide assets more equally, as both spouses are seen to have contributed significantly to the marriage over time. The court will also consider the contributions of each spouse during the marriage, including both financial and non-financial contributions. Financial contributions are relatively straightforward and include income earned by each spouse during the marriage. However, non-financial contributions are also highly significant and often overlooked. These can include the role of one spouse as a homemaker, caring for children, managing the household, and supporting the career advancement of the other spouse. Courts recognize that contributions made by a stay-at-home parent or homemaker are just as valuable as financial contributions made by the other spouse. In many cases, the non-earning spouse may be entitled to a larger share of the marital assets to account for their role in supporting the family.
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The Health and Age of the Parties

Another important consideration in equitable distribution cases is the health and age of each spouse. The court will look at the physical and mental health of both parties when deciding how to distribute assets. If one spouse has significant health issues, the court may allocate more assets to that spouse to ensure that they have the resources needed to cover medical expenses and maintain their standard of living. Similarly, the age of the parties can be a factor, as older spouses may have less time to rebuild their financial security after the divorce, especially if they are close to retirement age. In cases where one spouse is much older or in poorer health than the other, the court may award them a greater share of the marital property. The rationale is that the spouse in better health and with a longer life expectancy has more opportunities to accumulate wealth in the future. On the other hand, younger and healthier spouses may be expected to recover more quickly from the financial impact of the divorce.

Income and Earning Capacity

The income and earning capacity of each spouse are also critical factors in equitable distribution cases in New York. The court will examine the current income of each spouse as well as their potential to earn money in the future. In situations where one spouse has significantly higher earning capacity than the other, the court may award a larger share of the marital assets to the lower-earning spouse. This is especially true in cases where one spouse gave up their career or education to support the other spouse or to raise children. Earning capacity is often influenced by factors such as education, job experience, and marketable skills. For example, if one spouse has a high-paying career in a specialized field, while the other spouse has been out of the workforce for years to care for children, the court may compensate the non-earning spouse with a larger portion of the marital assets to help bridge the gap in their earning potential. Additionally, the court may consider whether one spouse requires further education or training to become self-sufficient after the divorce.

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The Value of Marital and Separate Property

The value of the marital property itself is, of course, a central consideration in equitable distribution cases. The court will work to determine the fair market value of all marital assets, which can be a complex process, particularly when dealing with high-value assets such as businesses, real estate, or investment portfolios. Each spouse’s separate property is not subject to division, but its value may still be relevant. If one spouse has substantial separate property, the court may award a larger portion of the marital assets to the other spouse to achieve a fair result. In some cases, the value of marital property can fluctuate significantly between the date of separation and the date of distribution. The court may decide to distribute assets based on their value at the time of distribution, taking into account any appreciation or depreciation in the value of the property. This can be particularly important in cases involving businesses, stocks, or other investments that may change in value over time.

Tax Implications of Asset Distribution

Equitable distribution in New York also requires consideration of the tax implications associated with the division of assets. Different types of assets may have different tax consequences for each spouse. For example, retirement accounts, real estate, and investments may be subject to taxes when they are liquidated or withdrawn. The court will take these potential tax burdens into account when dividing assets to ensure that one spouse is not unfairly disadvantaged by tax liabilities. The court may also consider whether one spouse is in a higher tax bracket than the other and adjust the distribution of assets accordingly. Additionally, the court may look at whether there are any tax advantages or disadvantages related to the timing of the distribution. In some cases, it may be advantageous to delay the division of certain assets until a later date to minimize the tax impact.

Wasteful Dissipation of Assets

In cases where one spouse is found to have engaged in wasteful dissipation of marital assets, the court may adjust the distribution of assets accordingly. Wasteful dissipation refers to the reckless or intentional squandering of marital property by one spouse for their own benefit, typically during the breakdown of the marriage. This can include excessive spending, gambling, or the transfer of assets to third parties with the intent of reducing the amount available for distribution. If the court finds that one spouse has engaged in wasteful dissipation, they may award a larger share of the remaining marital assets to the other spouse to compensate for the lost property. The goal is to ensure that both parties receive a fair distribution of the assets, even if one spouse has acted irresponsibly with the marital funds.

The Future Needs of the Parties

The court will also consider the future needs of both spouses when making decisions about equitable distribution. This includes not only their financial needs but also their housing and lifestyle needs. For example, if one spouse will have primary custody of the children, the court may award them the marital home to ensure stability for the children. Similarly, if one spouse requires ongoing medical care or support due to a disability, the court may allocate more assets to them to cover these future expenses. The court aims to ensure that both spouses can maintain a standard of living that is as close as possible to what they enjoyed during the marriage. This can be particularly challenging in cases where the marital assets are limited or where one spouse has significantly greater needs than the other. In such cases, the court may prioritize certain assets or financial resources to ensure that both parties can meet their future needs. Navigating the complexities of equitable distribution in New York requires a thorough understanding of the legal principles involved and a careful analysis of each spouse’s circumstances. At Mahserjian & Mahserjian-Ortiz, PLLC, we are dedicated to helping you protect your rights and secure a fair outcome in your divorce. Our experienced attorneys understand the emotional and financial challenges that come with divorce, and we are committed to providing compassionate and personalized legal representation. If you are facing a divorce and need guidance on equitable distribution, contact us today to discuss your case and find out how we can assist you in achieving the best possible resolution.
Jean Mahserjian