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Monday, November 7, 2011

Distribution of Property and Assets in a Divorce

I have been asked by many clients about property and assets in a divorce.  The presumption is that all property is just split 50/50, or that if someone was at fault, then the other party gets everything.  This is not the case. 

First it is important to differentiate between separate property and marital property in a divorce, as the court has no jurisdiction to distribute property that is not considered marital property. 

Generally speaking, all property acquired by either spouse before the marriage is considered non-marital property. All property acquired after the marriage is considered property of the marriage or marital property.

Property Is Presumed To Be Marital Property Except For:
  • Property acquired by gift, legacy or descent.
  • Property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, legacy or descent.
  • Property acquired by a spouse after a Judgment of Legal Separation.
  • Property excluded by valid agreement of the parties.
  • Any judgment or property obtained by judgment awarded to a spouse from the other spouse.
  • Property acquired before the marriage.
In terms of distribution of property that is considered marital property in New York, equitable distribution laws apply.

Directly from Domestic Relations Law Sec. B(5)(d): 

In determining an equitable disposition of property under paragraph c, the court shall consider:

(1) the income and property of each party at the time of marriage, and at the time of the commencement of the 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 upon dissolution of the marriage as of the date of dissolution;

(5) the loss of health insurance benefits upon dissolution of the marriage;

(6) any award of maintenance under subdivision six of this part;

(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;

(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) any other factor which the court shall expressly find to be just and proper.

Property acquired during the marriage is presumed to be marital property. Raviv v. Raviv, 153 AD2d 932 (2nd Dept. 1989). This presumption may be overcome by the party seeking to prove it is separate, but absent such proof the default is to assume it is marital. Likewise, when one spouse puts property in the name of both spouses, the asset becomes marital. See Lisetza v. Lisetza, 135 AD2d 20 (3rd Dept. 1988). However, the transferring party should be given a credit. Robertson v. Robertson 186 AD2d 124 (2nd Dept. 1992).

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