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When a couple gets divorced, any joint property gets divided according to state law. New York state is an equitable division state, which means that marital property may be divided in a way that best meets the needs of both parties. Couples may also make use of prenuptial or other agreements to determine how property is divided.
What Types of Property Are Eligible for Division?
Anything that was acquired during a marriage is the joint property of both parties to the union. Examples of property that may need to be divided include a home, car or money inside of a bank or brokerage account. Small items such as silverware, clothing or electronics may also need to be divided if they were acquired during the marriage.
What If Property Was Acquired Prior to a Marriage?
If an asset was acquired prior to a marriage, it generally belongs to whoever first owned it. However, in some cases, an asset may be considered commingled with marital assets. This may mean that sole property now becomes marital property. For instance, if money from a joint bank account was used to purchase a home in one spouse’s name, the home may become joint property because of how it was paid for.
What Determines If an Asset Is Sole or Marital Property?
There are many factors that may determine ownership of a given asset. In most cases, wherever the source of funds for a given item originated determines who owns it. If the money came from a joint account, it is generally considered joint property. If the money came from an account in one person’s name, that person generally owns it.
What Happens to Assets that Appreciate During a Marriage?
In some cases, an asset may be considered both joint and sole property. For example, let’s say a person owned a business prior to getting married. At the time of a divorce, the company had appreciated in value by 50 percent. For the purposes of a divorce settlement, the difference between the value of the company at the time of the marriage and at the end of the divorce will generally be considered marital property.
This means that if the company was worth $100 million more at the time of divorce compared to when the marriage became official, the couple would divide the $100 million. Of course, it is also possible to wait until a later date to actually sell the company divide the proceeds. In some cases, a spouse would be entitled to an equity stake in the company that could be liquidated in an orderly fashion.
It is important to note that these rules generally apply regardless of what type of asset grew in value during a marriage. It is not uncommon for couples to have investment portfolios or homes that are worth more at the end of a marriage as compared to the beginning of the marriage.
What Role Does a prenup Play in Dividing Property?
A prenuptial agreement is a customized arrangement between individuals that may better meet their needs. Such an agreement must be valid under state law, and it cannot be singed under duress. Ideally, it will be created and signed several months before the wedding actually takes place. Furthermore, it may be a good idea for an attorney to review it before it goes into effect.
Prenuptial agreements may spell out how assets such as a business or home are divided. It may also determine who is entitled to alimony and under what conditions it may be paid. Usually, alimony is based on the length of the marriage or how much the higher earning spouse may be worth at the time of a divorce.
It should be noted that child custody and child support matters generally cannot be resolved in a prenuptial agreement. This is because the state uses a best interest of the child policy when determining these issues. However, a parent who has joint custody of a child may be entitled to a greater share of marital property or additional spousal support.
Those who are about to get divorced may want to talk with an attorney as soon as possible. This may make it easier to learn more about state law and how it could impact a person’s ability to retain key assets. It may also make it possible to craft a negotiating position that may result in a favorable outcome for an individual.
Division of property is one of the most consequential parts of the divorce process. If you are considering filing for a divorce in New York, it’s essential to understand how property is divided so that you can manage your expectations. This article discusses the crucial aspects of division of marital property in New York.
Divorcing couples have the option of settling division of marital property out of court. In that case, the family court will order division of the property as per the settlement submitted by the couple. If the parties are unable to reach a consensus out of court, the formula of division of the property will be determined by the court in accordance with the applicable law.
Ney York distribution of property law
The law governing the division of marital property varies from state to state. New York follows an equitable distribution marital property regime as opposed to a community property regime. What is the difference? In equitable distribution, the ultimate goal is to split marital property fairly, not necessarily evenly. Further, equitable distribution does not take marital misconduct and fault into consideration. In community property regime, each party gets half of the marital property.
In equitable distribution states such as New York, the court considers several factors to make the distribution of property fair. It all depends on how your New York property division lawyer argues out the case. It pays off to have a lawyer who will defend your interests aggressively. It’s worth noting that only marital property is distributed. The court will, therefore, have to separate marital property from private property first.
Marital property is property earned or acquired during the marriage, regardless of whose name is on the title deed. Simple as that sounds, it’s not uncommon to find attorneys arguing on whether a certain property should be treated as marital property or separate property. Generally, separate property is the property that belonged to each party before marriage. Some categories of property obtained during the marriage may also be treated as separate property. These categories include gifts, personal injury compensation, and inheritance. If separate property acquired before marriage appreciates during the marriage, the value gained is treated as marital property.
Factors considered when dividing marital property
The following are some of the factors considered when dividing marital property equitably between divorcing parties.
- Length of the marriage
- Age and health of each party
- The effect of the divorce on health insurance benefits
- The liquidity of the marital property
- Special needs of the custodial parent. For example, the custodial parent is more likely to be awarded the marital residence
- The effect of the divorce on the pension and inheritance rights of each party
- The probable financial future of each party
- Any wasteful disposal of property by the parties
- Any past transfer of marital property without fair consideration
- The tax burden falling on each party after the division of the marital property
These factors are not fixed; depending on how the attorneys present the case, the court may consider any reason that it deems just. From the factors listed above, there are two points worth noting: wasteful disposal of property and transfer of property without fair consideration. Some unscrupulous partners will start wasting or transferring marital property in anticipation of the divorce. If your partner does that, and you prove it during the divorce proceedings, the court will compensate you accordingly when dividing marital property.
Some assets are not divisible between two parties. For example, how can a business interest be divided? When distributing such assets, the court may order one party to make a specified payment to the other in order to balance the distribution.
How can NYC property division lawyers help you get a fair deal?
Division of property is a complex process with a lot of quarreling points, right from debating what property should be considered marital property to the actual division of the property. If you hire an accomplished property division attorney, you increase the chances of getting a fair deal considerably. As you may have noted, the outcome you get could be down to the number of issues your attorney draws the attention of the court to.
The role of NYC property division attorneys is not limited to courtroom battles; there are many more issues that these divorce attorneys could help you with. For example, between an out-of-court settlement and a court determination, which route gives you a better deal? A good lawyer will advise you on the cost-benefit implications of every step you take in the divorce process. In the past, people have spent more money on legal expenses than the value of the property they acquire in the end. With the help of a skilled lawyer, you will avoid such terrible mistakes.
New York is an equitable distribution state. In New York City, if you are involved in divorce, the court will divide the marital assets in a fair manner. This does not mean that the division will be an exact 50/50 split between the two spouses, but the court will look at all financial and material assets including all the facts and elements of the marriage in order to ensure it is as fair for both parties as possible.
The court will look at factors such as the following before determining the disposition of marital property and assets:
- Length of the marriage
- Children from the marriage
- Health and age of both spouses
- Earning ability of each spouse
- Contributions to the marriage
- Needs of each party
- Needs of any children involved
- The nature of all property
Only the marital property and assets will be divided. Each spouse may have separate property that is not included in the decision and distribution. Whatever was earned during the marriage can be considered with few exceptions. A lawyer can advise what is and isn’t considered marital property in your individual case, however, usually whatever the spouse acquired before the marriage, is not considered part of the marital property.
Retirement income can be considered marital property if the retirement funds are derived from income made during the marriage. Any property purchased during the marriage just as insurance policies and debt acquired are marital property. Separate property that won’t be considered for division includes some of the following:
- Inheritance or Gifts (not given by spouse)
- Property acquired before the marriage
- Any item listed as separate within a prenuptial agreement or other written contract
- Compensation for personal injuries
There can be comingling of separate property in the marriage which can then be considered marital property such as if one spouse places money from an inheritance they received before the marriage into a joint bank account.
By law, both spouses are required to disclose their financial property. Sworn statements of net worth are required along with the most recent federal income tax return for full disclosure. If either spouse does not comply with the law on this matter, the court can impose fines and sanctions on the offending party.
A New York City court will usually follow these steps during the division of marital property: decide whether each asset is marital property or separate property, assign a value to all of the marital property, distribute the assets. The court may issue a one-time settlement or a distribution over a period of years.
In the last few decades, people have waited longer to marry, which means each partner brings not only personal wealth to the marriage but debt. What happens to debt in the event of a divorce? Will you be responsible for the frivolous spending of your spouse who incurs major debt? Each divorce case is different, with different elements that are unique to that marriage, and there may be extenuating circumstances affecting the outcome, however, the following is recognized by law in regards to who is responsible for debt:
Individual Account: The party who opened the account with their name, income and credit history whether married or single is responsible for the debt.
Joint Account: This account holds that both parties are responsible for the debt incurred because both incomes and credit histories were used to open the account.
Account Users: Sometimes an “authorized user” can be placed on an account. This is done strictly for convenience. For example, one spouse has opened an individual account but wants the other spouse to be able to use the credit card associated with the account. Although credit bureaus will report the names of both parties who have access to the credit, only the spouse who opened the individual account is responsible for the debt.
Pension plans, 401K’s and other retirement plans are all considered marital property. Whatever portion earned in these plans while you were married will be considered and divided. Even some instances of separate property can be considered marital assets even if they are not comingled. For example, if the value of your individual property increased due to your spouse.
The fair and equitable distribution of marital property and assets can be complicated, stressful, and might leave one or both parties resentful or dissatisfied. Having a lawyer who can work with you to navigate the complex nature of equitable distribution of marital property can lower the very stressful nature of divorce.