Divorce is a challenging experience for anyone going through it, and understanding how your property will be divided can be one of the most stressful parts. In New York, divorce follows a process called equitable distribution. This means that the court will divide marital property in a way that is considered fair, but not necessarily equal. There are many factors that the court takes into account when deciding what is fair, and these factors can sometimes make the process feel complicated. However, with the right knowledge and guidance, you can better understand how equitable distribution works and what it may mean for you and your financial future.
What is Equitable Distribution?
Equitable distribution is the method used in New York to divide assets and debts during a divorce. It is important to know that equitable does not mean equal. While some people might think everything will be split 50-50, that is not always the case. Instead, the court looks at what is fair for both parties based on their individual situations. The goal is to make sure that neither person is unfairly disadvantaged after the divorce. This process only applies to marital property, which includes assets and debts acquired during the marriage. Any property that either spouse owned before the marriage or received as a gift or inheritance during the marriage is usually considered separate property and not subject to division.
Marital vs. Separate Property
One of the first steps in equitable distribution is determining which property is marital and which is separate. Marital property includes anything acquired by either spouse during the marriage, no matter whose name is on the title or deed. This can include homes, cars, bank accounts, investments, and even retirement accounts. It also includes any debts that were taken on during the marriage, such as mortgages, car loans, or credit card debt.
Separate property is anything that one spouse owned before the marriage or acquired as a gift or inheritance during the marriage. This property remains with the original owner and is not divided during the divorce. However, if separate property is mixed with marital property or used to benefit both spouses, it may be considered marital property. For example, if one spouse owned a house before the marriage but both spouses contributed to paying the mortgage during the marriage, the house may become marital property.
The staff is extremely friendly and knowledgeable. They truly care about their clients and walk you through the process every step of the way. I highly recommend Jean and here team for any legal needs.– Joseph B.
Was a real advocate for me while going through my divorce. Responded to emails and calls promptly and guided me through the entire process. Fair, responsive and frankly a light during a tough time.– Melissa W.
Factors Considered in Equitable Distribution
The court looks at many factors when deciding how to divide marital property. Some of the main factors include the length of the marriage, the age and health of each spouse, and the income and earning potential of each spouse. The court also considers how much each spouse contributed to the marriage, both financially and non-financially. This includes things like staying home to care for children or maintaining the household.
Another important factor is the financial needs of each spouse after the divorce. For example, if one spouse will have primary custody of the children, they may need a larger share of the marital assets to provide a stable home for the children. The court also looks at the future earning potential of each spouse. If one spouse gave up a career to support the other or to raise children, they may be entitled to a larger share of the marital property to help offset the loss of earning potential.
Additionally, any marital debts are divided as part of the equitable distribution process. The court will look at who took on the debt and how it was used. If the debt was taken on for the benefit of both spouses, such as a mortgage or car loan, it will likely be divided between the two. However, if one spouse took on debt for personal use, such as credit card debt for personal shopping, that spouse may be responsible for repaying it.
Related Videos
How long does a Divorce take?
What is a no Fault Divorce in NY?
How the Court Values Marital Property
Once the court has determined which property is marital and which is separate, it must assign a value to each marital asset. This can sometimes be difficult, especially for assets that do not have a clear monetary value, like a family business or retirement accounts. The court may need to bring in appraisers or other professionals to determine the value of these assets. In some cases, the spouses may agree on the value of their property, which can make the process faster and less expensive.
The court also considers the liquidity of each asset, which refers to how easily it can be turned into cash. For example, a bank account is highly liquid because it can be accessed and used right away, while a house or retirement account may take time and effort to sell or cash out. The court may award more liquid assets to one spouse if they need immediate access to funds, while the other spouse receives less liquid assets.
Retirement Accounts and Pensions
Retirement accounts and pensions are often one of the largest assets in a divorce. In New York, retirement accounts that were earned during the marriage are considered marital property and are subject to equitable distribution. This includes 401(k) accounts, IRAs, and pension plans. The court may divide these accounts between the spouses, or they may award one spouse a larger share of other assets to offset the value of the retirement accounts.
In some cases, the court may issue a Qualified Domestic Relations Order (QDRO), which allows one spouse to receive a portion of the other spouse’s retirement benefits. The QDRO is sent to the retirement plan administrator, who will then pay the benefits directly to the spouse. This can be a complicated process, and it is important to have the right legal guidance to ensure that your retirement benefits are properly protected.
Alimony and Equitable Distribution
In some cases, equitable distribution may also affect alimony, or spousal support, payments. Alimony is designed to help one spouse maintain the same standard of living they had during the marriage, especially if they were financially dependent on the other spouse. If one spouse receives a large share of the marital assets, they may receive less alimony, or none at all. Conversely, if one spouse receives less in the property division, they may be awarded alimony to help make up for the difference.
The court considers the same factors for alimony as it does for equitable distribution, including the length of the marriage, the financial needs of each spouse, and the future earning potential of each spouse. Alimony can be temporary or permanent, depending on the circumstances of the divorce. In some cases, the court may award rehabilitative alimony, which is designed to help one spouse get back on their feet and become self-supporting. This type of alimony is usually awarded for a set period of time and may be used to pay for education or job training.
Protecting Your Financial Future
Divorce can have a significant impact on your financial future, and it is important to take steps to protect yourself during the equitable distribution process. One of the best ways to do this is to work with a knowledgeable divorce attorney who can help you understand your rights and make sure that you receive a fair share of the marital assets. It is also important to gather as much financial information as possible, including bank statements, tax returns, and investment account statements. This will help ensure that all marital assets are properly accounted for and valued.
In some cases, divorcing spouses may be able to reach a settlement agreement on their own or through mediation. This can be a faster and less expensive way to resolve property division issues, but it is still important to have a lawyer review any agreement to make sure that your rights are protected.
Equitable distribution in New York divorce can be a complex and emotional process, but understanding how it works can help you feel more confident and prepared as you move forward. By knowing the difference between marital and separate property, understanding the factors that the court considers, and taking steps to protect your financial future, you can work toward a fair and equitable resolution. If you are going through a divorce and need guidance, the team at Mahserjian & Mahserjian-Ortiz, PLLC is here to help you navigate the process and ensure that your interests are protected every step of the way.
