New York views marriage as not only a legal partnership but an economic partnership as well. As such, when a marriage comes to an end, the assets and debts of the marriage must be apportioned. This is done via New York’s Equitable Distribution Law. One important thing to remember is that the term “equitable” does not mean “equal”.
In order to determine how to apportion the assets and debts of the marriage, the Court must first determine what is “marital property”. Marital property 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 pursuant to the provisions of such statute, and that marital property does not include separate property as defined in the statute. On the other hand, separate property is defined as: property acquired before 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 contributions 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 of such property. As you could have guessed by now, the Court looks to a number of factors to determine how to apportion “marital property”. These factors are:
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.
Once Unless the parties can agree to a settlement, the Court will review documents and hear testimony regarding all marital assets and debts at trial. Once completed, the Court will issue a Decision and detail how the marital property will be equitably distributed. In that Decision, the Court will outline which factors it applied above and how these factors were applied.
As regards debts, the Court will determine the relative responsibility of the parties for marital debts and make sure those debts are satisfied. While the debt is usually apportioned in the same manner as the assets, an argument can be made to the Court that the party earning significantly more income should be responsible for more of the debt as they are better able to pay.
Once a Decision has been issued, the parties must effectuate the distribution of property, ensuring the sign any and all documentation necessary for the transfer of assets, sale of assets, liquidation of assets and payment of debts.