Division of Property

Equitable Distribution Statute

Issues relating to property division in divorces are governed by New York’s Equitable Distribution Statute, which is DRL Section 236 Part B. New York is an equitable distribution state, as opposed to a community property state like California. (In a community property state, it does not matter how the property was acquired, and everything gets distributed 50-50 by the Divorce Court.)

In equitable distribution states like New York, the first step is to determine whether the particular property is marital property or separate property. Essentially, marital property is anything acquired by either spouse as a result of his or her work during the marriage, and it does not matter whether title is in the joint names of the spouses, or the husband’s or wife’s sole name. Separate property is anything acquired prior to the marriage or after the commencement of a divorce action, an inheritance, or a gift from a third party.

Importance of Good Records

It can be very beneficial for New York divorcees to have kept records for a long time. That is because the spouse asserting a separate property claim has the burden of proof. The burden of proof is satisfied if the separate property is traced back to its separate property source with a paper trail. If such burden of proof is not satisfied, then the Court will treat the property as marital, and equitably distribute it at the time of the divorce.

Separate Property vs. Marital Property

It is also important to avoid co-mingling (mixing) separate property with marital property. When that happens, the alleged separate property can lose its separate property character, and it is treated as marital property and equitably distributed. However, there are exceptions to this co-mingling rule in New York.

One of such exceptions applies to the marital home. When a spouse uses separate property to pay the down payment for the purchase of a marital home in which title is placed in the joint names of the spouses, although the separate property down payment is co-mingled with a marital asset (the marital home purchased in joint names during the marriage), the prevailing rule in New York caselaw is that the spouse who paid the separate property down payment is entitled to a separate property credit for the amount of the down payment.

This is best explained by a hypothetical example. Let’s say that during a long-term marriage with children, the parties purchase a home for $500,000, the wife uses $100,000 from her inheritance to pay the down payment, and title to the home is put into the joint names of husband and wife. If they divorce, the wife would receive the first $100,000 of equity in the home “off the top,” and then the parties would equally divide between them the remaining equity. Assuming there is no mortgage or broker fees, the wife would receive $300,000 ($100,000 separate property credit plus $200,000), and the husband would receive $200,000.

Equitable Doesn’t Necessarily Mean Equal

Another important principle in New York law is that equitable distribution does not necessarily mean equal distribution. There are numerous statutory factors that the Court considers in determining what percentage of the marital assets each spouse gets. However, the following general rules apply to most NY divorces:

In short term marriages, (less than 5 years) without children, the Courts treat the marriage as a pure economic partnership. Therefore, the spouse who earns and contributes more money in acquiring the marital assets, typically gets a higher percentage of the assets than the other spouse when they divorce;
On the other hand, in a long-term marriage (over 10 years) with a child or children, it is much more likely that the Court will make a 50-50 distribution of the marital assets. This means that — in a long-term marriage with children — the spouse who is the primary child caregiver and home maker, who contributes less money than the other spouse, will very likely be awarded 50% of the marital assets. New York recognizes the value of caring for children and the home, which also frees up the primary breadwinner spouse so he/she can go out and make most of the money.

These equitable distribution issues are very fact-sensitive, and it is important to consult with an experienced matrimonial lawyer regarding them, so that the recent applicable NY statutory and caselaw is applied to the pertinent facts. Then, and only then, can you truly know your rights and obligations with respect to division of property in New York divorce cases.

Know the Law and Make Your Own Decisions

It’s important to become educated regarding these principles, and then decide what is best for you. For instance, many years ago, after receiving an inheritance, I intentionally comingled it with marital funds in a join investment account with my wife, knowing that I was converting my separate property into a marital asset. My wife and I are true life-partners; she had done an extraordinary job as the primary caregiver for my niece (who was orphaned at age 11), as well as our own two children.