In New York, once you are married your assets are considered marital assets (marital property) with some very limited exceptions. It does not matter who bought the property, as the property/asset is considered to be owned by both spouses. Therefore, for example, if the car you own was bought after you were married, it doesn’t matter if the car is registered under your name or your spouse’s name, because it will be considered a marital asset.
For most divorcing parties, their major asset is the house they live in. Other marital assets include bank accounts, investment funds, vested and non-vested pension and retirement benefits, real estate, furnishings, jewelry, businesses, collectibles, the value of a degree earned during the marriage, just to name a few.
In New York, there are three basic steps in dividing property (equitable distribution).
First Step:
Deciding if the property is “marital property” or “separate property”.
A court will divide your assets into two categories: marital property or separate property. Separate property can be property that you inherited, gifts and property owned prior to the marriage. However, it is possible for you to convert your separate property into marital property. For example, f you inherited $10,000 and placed that cash into a joint banking account, it most likely will be considered marital property. If you had placed that same $10,000 into your own banking account, it almost certainly would be considered separate property.
Note that it is presumed that any property acquired during the marriage is to be classified as marital property. You have to show the Court why a particular piece of property should be classified as separate property.
Second Step:
Property that is classified as marital property will then be evaluated or appraised for its value. In order to determine a value for each asset, a certain date must be established to determine the date the property will valued on. For example, if your house is classified as marital property then which date do we choose to value it on: the date you bought the house, today’s date or somewhere in between?
Martial property will be divided into two categories: passive assets and active assets. Examples of passive assets are real estate and mutual funds. Examples of an active asset is a family business.
Typically, passive assets are valued as close to the date of trial as possible or if the parties settle the divorce, as close to the date of settlement as possible; and, generally, active assets are valued on the date that the Summons was filed.
Third Step: Distributing the marital property
After the marital property is evaluated it is distributed to the spouses. In most divorce, marital property is equally divided between the spouses. Equally divided does not mean that each piece of property has to be “split in two” or equally divided. For example, if you have the following assets, all of which have been classified as marital property with the value as indicated:
• Home: worth $150,000 (market value minus the mortgage on house)
• Cars: three cars worth $50,000
• Jewelry: worth $50,000
• Stocks: worth $50,000
If one spouse takes the house (worth $150,000), the other spouse could take all the cars, jewelry and stocks (worth $150,000 in total) and that would be an equally divided marital property.
Although most of the time, marital property will be divided equally, since New York is an equitable distribution state, the Court could consider the following factors in distributing the property equitably (which means that it will probably not be 50-50):
• Income of the parties at the time of the marriage and at the time the Summons in the divorce was filed
• Duration of the marriage
• Need of the custodial parent to occupy the marital residence
• An award of maintenance (alimony)
• The liquid or non-liquid character of the marital property
• Probable future financial circumstances of each party
• Tax consequences to each party
Finally, debts accumulated during the marriage most also be divided. If the debt was incurred during the marriage, it is a marital debt. Like a marital asset, marital debts will undergo a three-step process to determine who has to pay it and how much has to be paid.
If you need a Long Island Divorce Attorney to help you in your divorce or in your equitable distribution (property division) issue, contact the Badanes Law Office today.
