When a marriage ends in divorce, it comes with a lot of difficult decisions and tough discussions that neither spouse ever anticipated having. Dividing a family’s assets during a divorce can often add even more stress to an already complicated situation. To help you and your spouse through the process, here’s everything you need to know about marital property and how it is divided in a divorce.
What is Marital Property?
Marital property, or marital estate, is defined as property or cash acquired by one or both spouses during a marriage, regardless of whose name the asset is under. It is possible to exclude certain property from your marital estate by entering a marital agreement, such as a prenuptial or postnuptial agreement. Without one, all property obtained during the marriage is considered marital property, minus a few exceptions, including inheritances, personal injury/worker’s compensation, and third-party gifts.
Any property or cash previously owned or obtained prior to the marriage is considered separate property. This also includes any increase in value or payments made to your separate property during the marriage.
- Separate property, so long as it is kept separate and not co-mingled in marital accounts.
- This also includes any increase in value or payments made to your separate property during the marriage in most cases. Exceptions include when a spouse has added value to the separate property during the marriage, that spouse may negotiate for some amount of the added value.
The following are included in marital property:
- Real property purchased by you or your spouse during the marriage
- Personal property, such as cars, boats, airplanes, artwork, and furniture purchased together during the marriage
- Cash, bank accounts, pensions, retirement accounts, and pensions obtained during the marriage
- Advanced educational degrees, and specialized business permits acquired during the marriage
- Gifts to one another
What is Equitable Distribution?
Prior to its adoption of equitable distribution, New York was a “common law property” state, meaning the court distributed the property owned by either spouse based on who held the title. The goal of equitable distribution is to ensure fairness in the contributions of both spouses throughout the marriage, as well as what each party will need after the divorce is finalized. But fairness does not necessarily mean “equal.” In New York, property is not divided in half; though most Judges do divide in half. Here are 13 specific factors involved in determining equitable distribution:
- Each spouses’ income and property at the time of the marriage, and at the time of the divorce.
- Length of the marriage and the age and health of both spouses.
- If there are minor children involved, the need of the spouse who has custody of the children to live in the marital residence and to use/own its household contents.
- Loss of inheritance and pension rights because of the divorce.
- Loss of health insurance benefits because of the divorce.
- Any award of support or maintenance the court will be making.
- If one spouse made contributions to marital property that the spouse does not have title to; for example, where one spouse helps the other spouse obtain a degree or certification to make more money.
- Liquid or non-liquid character of all marital property (meaning the ability to be converted to cash).
- Probable future financial circumstances of each spouse.
- Impossibility or difficulty of determining the value of certain assets, and whether one spouse should be awarded the business to run without interference by the other.
- The tax consequences to each party.
- Whether either spouse has used up any of the marital property throughout divorce process.
- Whether either spouse transferred or disposed of marital property at less than market value with knowledge of the divorce.
The court may also take into consideration “any other factor” it finds fair in establishing the final distribution of marital property. For property that cannot be divided in any way (i.e.. real property), the court may require a monetary payment, known as distributive award, by one spouse to the other, whether in a lump sum or over time.
Division of Property in New York Divorces
In many cases, spouses are able to agree on how to divide the property to meet both parties’ needs without getting the courts involved. Divorce mediation offers spouses control of their decisions through a cooperative and amicable process. Even if a full agreement is not met, mediation allows you to narrow the issues in dispute for litigation to help the distribution process go more smoothly.
If a couple cannot agree on how to divide their marital property, a judge will determine which assets or debt fall into the “marital” or “separate” categories and use the factors listed above to divide all estates fairly. If a prenuptial or post-nuptial agreement has been signed, then the court must follow the provisions of the contract.
To learn more about how divorce mediation can help you and your spouse negotiate the distribution of your property fairly and amicably, contact our experienced divorce mediators today.