Last month, we covered some of the most common mistakes people make during the property division process. This month, we're following up with a general summary of New York property division laws.
Your property division case can set the tone for your financial future post-divorce. Understanding how property division works in our state enables you to pursue the best long-term outcome.
Let's Talk: Marital Property Vs. Separate Property
There are two types of property in property division cases: separate, and marital.
Marital property applies to assets and liabilities that both parties have contributed to in a meaningful way.
Separate property applies to assets and liabilities that only one party owns, such as a gift or a personal bank account.
During property division, only marital property gets divided. All parties get to retain their separate property, unless a legally binding contract such as a prenuptial agreement dictates otherwise.
However, it is important to note that separate property can become marital property under certain circumstances.
For example, let's say you own a small business before you get married. That business is your separate property. Now, let's say that after you marry, your partner starts chipping in and helping out with the business. One day, they come up with an idea that increases the business's value significantly. Because both parties have contributed meaningfully to the business at that point, it would become marital property (again, unless a contract like a prenup specified otherwise).
A property division lawyer can help you assess whether certain assets are marital or separate property.
Understanding Equitable Distribution
New York is an equitable distribution state, which means that the court divides assets and liabilities "equitably" among parties during a divorce.
An "equitable" division does not mean assets and liabilities get split between spouses 50/50. The court's objective is to ensure that each spouse enjoys the same quality of life post-divorce that they experienced while married.
To achieve that goal, the court may award one party more or less assets and liabilities, depending on the circumstances of the divorce.
For example, if one spouse gets total physical custody of the children, the court may award them the marital home to make caring for the children easier.
Additionally, if one spouse makes significantly more money than the other, the court may award them less assets and more liabilities since they'll have an easier time getting back on their feet financially post-divorce.
Let's go back to separate and marital property for a moment.
Courts often award property to spouses proportionately to how each spouse increases the value of the property.
For example, let's say you buy a house before you get married using only your money. After you get married, your spouse pays for a renovation that increases the home's value by 30%. The court may ask you and your spouse to sell the house during the property division process and award you 70% of the profits while awarding your spouse 30%—a distribution that reflects how much each of you contributed to the property's worth.
Factors the Court Considers in Property Division
New York courts consider several factors when deciding property division cases, including:
- The income of each spouse;
- The assets and liabilities each spouse owns and their worth;
- The length of the marriage;
- Whether the couple shares any children;
- Whether either party plays a role in any pre-existing spousal or child support arrangements from previous marriages, and;
- How each spouse contributed to the marriage as a homemaker or breadwinner.
To get the best outcome from your property division case, you should hire a family lawyer with experience handling property division cases. You should also consider hiring a financial professional like a certified public accountant (CPA) to help you value assets and liabilities.
To schedule a consultation with an experienced property division lawyer, please contact us online or via phone at (631) 237-9525.