A Discussion on Equitable Distribution
During the initial divorce consultation, prospective clients often ask questions concerning Equitable Distribution, as far as it relates to the division of assets acquired during the marriage, what their spouse will be entitled to, and what they themselves will be able to retain after the divorce is finalized. The answers to the latter questions are not always cut and dry therefore, there are several things an attorney, analyzing the potential case, should go through with prospective clients.
In the state of New York equitable distribution is a means to divide marital property and assets. In New York, the controlling statute pertaining to equitable distribution falls under Domestic Relations Law (DRL) Section 236B. Prior to the enactment of DRL§236B, New York was a common-law state which meant that the spouse who held title to an asset or property would retain title to said property and/or assets. The term “marital property” is commonly used today however previous to the enactment of DRL 236B this term was not a consideration. Again, property and assets acquired during the marriage would go to the spouse who held the title. The only possible remedy for the untitled spouse was “alimony”. Alimony was only applicable to a wife and not available to husbands. However, if the court found that the end of the marriage (fault) was due to the actions of the wife, she would be precluded from alimony. In New York, the term alimony has since been changed to the more gender-neutral term “maintenance”.
How does one identify property and assets said to be marital property? Disclosure is usually required once a divorce action has commenced. The parties will be required to list all assets. The latter list will often include, but is not limited to bank accounts, stocks, bonds, retirement benefits, real property (residential home and investment properties), cash surrender value of life insurance policies, household furniture, art, paintings, and so forth. Your debt is also considered within equitable distribution as well. Yes, I said it correctly, your debt! It’s not just about assets accumulated during the marriage. Debt is also a big consideration when parties are assessing equitable distribution. Parties tend to rack up debt associated with credit cards, loans, executory contracts (i.e., financing vehicles), second mortgages, etc., therefore don’t forget to include your bills when completing a disclosure sheet. The disclosure sheet also known as your Statement of Networth will include all assets, irrespective of whether it is separate or marital. Something else to consider is professional licenses, from 1985-2016 professional licenses and earning capacity were deemed assets that could be distributed. Effective January 23, 2016, professional licenses are no longer directly awarded, however they are indirectly awarded by allowing them to be considered. It seems the amendment of DRL 236(B)(5) is still a work in progress and cases will most likely be a good indication of how the amendment will evolve and be interpreted in the future.
One question that is without a doubt always asked by prospective clients is, what if any, is my separate property? What will I be able to keep without having to give a portion to my spouse? The simple answer is anything that you acquired prior to the marriage that has remained separate will be considered your property and not subject to equitable distribution. However, sometimes that too is not clear cut because there are times when people co-mingle their separate property/assets with marital assets. Inheritances also enjoy separate property classifications. It is important to have an attorney review what property you believe is separate and whether any marital funds have been used to maintain and/or add value to that alleged separate property. DRL 236(B)(1(d) provides a list of what is believed to be separate property however keep in mind that assets believed to be separate can turn into marital when co-mingling takes place. The statute states that the following is separate property: acquired before the marriage, an inheritance, gifts to a spouse (as long as it isn’t said to have been given to both spouses, which then makes it marital property), compensation in a personal injury case that consist of pain and suffering and punitive damages and separate property used to acquire another separate property.
I have colleagues and clients who call with all types of questions on equitable distribution and there is never an exact science used to determine exactly what you will get or what you won’t get, however, an experienced family attorney can give you guidance as to what all the possible outcomes can be after you have filed for a divorce and provided a good comprehensive list of all your assets and liabilities. The statutes give us a starting point in which we can then use to see whether the parties have deviated in any way, i.e. used the marital property to upgrade the home and/or make additions, paid the mortgage with marital income, and the like. Also keep in mind that the court may consider things such as the duration of the marriage, economic and non-economic contributions within the marriage, whether a spouse had to forgo higher education so that the monied spouse could create or increase the financial lifestyle of the family, whether one spouse was required to stay home to be a caretaker for the children or for the betterment of the home, etc. Over the years, case law and by extension amendments to the statutes are looking to become as progressive as the people who come are looking for the courts to intervene on their behalf. Societal demands increased desire to make more money, rising costs in living expenses, longer working hours, increased use of electronics are all part of this progressive society therefore one will see greater consideration when looking at equitable distribution in matrimonial proceedings. Ensure that you discuss all concerns with your attorney and above all else be honest without your attorney because omitting documents, financials, and information from your attorney may work to your detriment.
By Denise Melville Blackman Esq.