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New York Property Division
Property Distribution Laws in New York

In New York the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the Supreme Court divides the marital estate within the Judgment of Divorce.

New York is an equitable distribution state that uses the dual classification of property. The appreciation of separate property is separate. Equitable does not mean equal, or even half, but rather what the Supreme Court considers fair.

The court does not consider marital misconduct. However, economic misconduct - the dissipation of assets in support of drug addiction or gambling or the secretion of assets or the maintenance of a paramour - may result in a compensatory property award to the victim spouse.

Factors in Equitable Distribution

According to Consolidated Laws of New York - Domestic Relations Laws - Article 13 - Sections: 236, the court considers the following factors when distributing property upon divorce:

  • the income and property of each party at the time of marriage, and at the time of the commencement of the action;
  • the duration of the marriage and the age and health of both parties;
  • the need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
  • the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
  • any award of maintenance under subdivision six of this part;
  • any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party;
  • the liquid or non-liquid character of all marital property;
  • the probable future financial circumstances of each party;
  • the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest intact and free from any claim or interference by the other party;
  • the tax consequences to each party;
  • the wasteful dissipation of assets by either spouse;
  • any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
  • any other factor that the court shall expressly find to be just and proper.

Marital Property vs. Separate Property

Property acquired from the date of the marriage through the date of separation is marital property and subject to distribution. On the other hand, separate property is immune property, which means assets acquired before marriage, by inheritance or by gift from someone other than the spouse, compensation for personal injuries, property acquired in exchange for separate property, the increase in value of separate property (such as stock appreciation, interest, or real estate appreciation), and property identified by marital agreement of the spouses.

Separate property commingled with marital property becomes marital. Untainted separate property obtained before or during the marriage remains immune from distribution.

In order to establish an asset as separate property, it must remain under the control of the spouse claiming it. Property combined with joint property for the benefit of both spouses becomes marital. In New York, the appreciation in the value of separate property remains separate property.

Unlike many jurisdictions, New York considers advanced degrees marital property.

Valuing Property

Depending upon the asset and the agreement of the spouses, different methods of valuation are used to determine the value of a marital asset. When the spouses agree, courts generally accept what they say about the value of an asset. Absent agreement, experts may be retained by the parties or by the courts to determine the value of marital assets. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

The Marital Home

In New York, as in many jurisdictions, the equity of the marital home is often one of the biggest marital assets. The equity is the market value of the house, less any liabilities against the property, such as a mortgage, taxes, home equity loans. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and buy out the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In New York, vested pensions are marital property. Vesting means that the worker spouse has met all the requirements for receipt of the pension. Unvested pensions are not marital property. Until the pension has vested, the worker spouse has only an expectancy of interest in the pension.

In New York, the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:

  • Defined Contribution Plans: A defined amount of money belonging to the employee. The employee and/or the employer make defined contributions. The balance of the plan is constantly changing, but its value is definable at any given point. 401(k)s, 403(b)s and profit sharing plans fall into this category.
  • Defined Benefit Plans: A retirement benefit where an employer promises to pay a benefit to an employee sometime in the future, based upon some type of formula. Normally, this formula is based on the employees salary near the end of his or her career and the number of years he or she worked for the employer before retirement. Defined benefit plans are much more complicated to value and often require the professional evaluation of an actuary to determine exact values.

In New York, if spouses share in each others retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, and how such benefits should be paid.

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