28 Jun Divorce 101, Part 7: Marital Assets and Equitable Distribution
What qualifies as a marital asset?
Under the New York Domestic Relations Law, the court’s first step in dividing the assets is considering whether the property is marital or separate. With certain exceptions, marital assets are the property and cash that you and your spouse obtained during the marriage, including items obtained prior to the execution of a separation agreement. These assets may include real estate, personal property (such as motor vehicles, artwork, or furniture), cash, and securities and bank or retirement accounts.
Marital property does not include cash or property that the couple has specifically excluded in a prenuptial agreement, property owned before the marriage, inheritances, or third party gifts or property obtained in exchange for separate property (including real estate). Courts consider such assets “separate property.” However, prospective clients should be aware that if separate property assets are commingled with marital property, those assets may be subject to equitable distribution. If there is a dispute as to whether the property is marital or separate, the spouse claiming that it is separate will have to prove the separate nature of the property or it will be presumed marital by the courts.
The law requires each spouse to provide a value of the marital property before the Court can distribute it between the spouses.
What is equitable distribution?
Next, the Court will determine how to fairly divide the marital assets. In so doing, it will evaluate numerous complex factors, including, but not limited to:
- the duration of the marriage
- the number of minor children involved
- the income and source of income of each spouse at the time of the marriage
- the income and source of income of each spouse after the divorce
- the employability and vocational skills of each spouse
- the future earning potential of each spouse
- each spouse’s ability to acquire assets
- the health and age of the spouses
- the conduct of the spouses during the marriage
- the value of the estate and any liabilities
- the loss of potential inheritance or pension rights, or health insurance
The Court may also take into account any other factor it deems relevant to an equitable division, such as whether certain types of property can be divided (e.g., a family home that children still live in). In such cases, the court may make a “distributive award,” which is a monetary payment made from one spouse to the other to compensate for the property that will not be split.