YOUR RELATIONSHIP WITH YOUR LAWYER
GROUNDS FOR DIVORCE
EQUITABLE DISTRIBUTION: THE DIVISION OF MARITAL PROPERTY
MAINTENANCE (ALIMONY OR SPOUSAL SUPPORT)
HEALTH INSURANCE
DIVISION OF DEBTS
PRIOR TO THE DIVORCE DECREE
POST-NUPTIAL AGREEMENTS
CUSTODY
GRANDPARENT VISITATION
CHILD SUPPORT
DOMESTIC VIOLENCE
ANATOMY OF A TYPICAL DIVORCE ACTION IN WESTCHESTER COUNTY
SUMMARY OF SELECTED PROVISIONS OF THE DOMESTIC RELATIONS LAW
RESOURCES AND READINGS - PACE WOMEN'S JUSTICE CENTER
Under the laws of New York State, at the time of divorce, the property of a married couple acquired during the marriage is to be distributed equitably, or fairly, between the parties. It is important to note that, in this context, "equitable" and "fair" do not necessarily mean "equal". There is no requirement under New York law that marital property be split 50/50 between the parties.
If you and your spouse have not agreed to a property settlement, in dividing property, the court will consider a number of factors set forth in the statute which governs divorce. These factors include, among other things, each spouse's financial position at the time of marriage and at the time of divorce, the length of the marriage and each party's financial and non-financial contributions to the martial property. Marital debts are also considered in an equitable distribution of property. (However, as discussed below in this guide, the division of debts does not end your liability to creditors for debts in your name and for joint debts.) Below is the full list of factors the court may take into consideration:
It is important to realize that some of the factors weigh more heavily than others, particularly under certain circumstances. For example, in a case where the parties have been married for a long period of time, a 50/50 division of certain types of marital property is more likely to be viewed as "equitable" regardless of the other factors.
Under the equitable distribution "system", the assets of the parties are first characterized as "marital" or "separate". The marital property is then valued and the court will make an "equitable" distribution of the marital property (unless the parties have distributed their property by a valid, written agreement). Marital property is all property (other than separate property, which is described below) acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action (other than an action for legal separation), regardless of the form in which title is held.
Separate property consists of four categories: (1) property acquired before marriage or inherited property acquired by bequest, devise or descent, or property acquired by a gift from a party other than the spouse; (2) compensation for the pain and suffering associated with personal injuries; (3) property acquired in exchange for, or the increase in value of, separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse; and (4) property described as separate property by written agreement of the husband and wife.
In the absence of circumstances or an explicit agreement indicating other intentions, the property of each spouse acquired before the marriage remains separate property. However, if one spouse transfers title to separate property to both spouses jointly—for example, by adding the other spouse to the deed of an inherited house—it may be asserted that it was the intention of that spouse to convert or "transmute" separate property into martial property. Similarly, if separate property such as pre-marriage bank accounts are comingled with funds from the other spouse or funds acquired during the marriage, then such property can become marital property. The assertion that such property is not martial property may be rebutted.
Loosely defined, marital property is any property acquired during the marriage by either or both spouses, regardless of the form in which it is held, who earned it or who holds title to it. Retirement accounts in one spouse's name and separate bank accounts can all be marital property. There are, however, some important exceptions to the general rule as noted above. An inheritance, a gift to you from someone other than your spouse, or an award or settlement resulting from a personal injury is considered separate property even though received during the marriage. Also, if separate property is sold, the cash proceeds of the sale are separate property. However, a spouse may claim that the value of the appreciation of separate property constitutes marital property.
From 1985 until January 2016, professional licenses—and the professional practices that accompanied them (if applicable)—were considered to be marital property that could be distributed. In January 2016, amendments to the statute made it such that professional licenses can no longer be awarded as part of distribution. That is, the spouse's "enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement" will not be considered marital property subject to distribution; however, the court can consider as martial property subject to distribution any "direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse."
Professional practices or other businesses are considered martial property subject to equitable distribution. However, since these often cannot be divided, the court may award business to the appropriate spouse and the other spouse may receive other marital assets or monetary compensation for his or her appropriate share.
You should be aware that the valuation of marital assets is an extremely important component of a matrimonial case. A house, business, artwork, professional practices, retirement plans, and other assets must be valued fairly. Your lawyer should inform you of the need to hire appraisers to value major marital assets and discuss the risks of accepting the value claimed by your spouse.
Your lawyer should be able to give you a feeling as to how a court would apply the law to the facts of your particular case in determining the division of marital assets. However, even the most experienced and skilled lawyer's projection of the outcome of your case is just an educated guess. Ultimately, if your case goes to trial the outcome will depend on the court's perception of the merits.
There are many different types of retirement plans that may constitute marital assets, which are subject to equitable distribution. For example, IRA accounts may be divided or "rolled over" into an IRA in the name of the recipient spouse. A self-employed person can contribute to a business retirement plan called a Keogh. Deferred compensation plans permit an employee to defer income until retirement. Employees may make various retirement plans available, in addition to pensions, such as profit sharing, 401(k) savings plans, and employee stock ownership (ESOP). Specialized retirement plans are often available to railroad employees, teachers, union members and government employees. Information about sponsored retirement plans is available from the plan administrator, with proper authorization from the spouse covered by the plan.
Often, lawyers work with actuaries and other experts to value a spouse's interest in retirement plans and to prepare orders that comply with federal and state laws and regulations and the rules of the retirement plan. You should also be aware that you may require a court order such as a DRO (Domestic Relations Order) or a QDRO (Qualified Domestic Relations Order) to receive benefits from your spouse's retirement plan. A draft DRO or QDRO or other form of order may be submitted to the plan administrator for review before the order is submitted to the court. It is often important for the spouse who is covered by a retirement plan to obtain appropriate forms relating to benefits under the plan from his or her employer. The alternative payee (spouse of the plan participant) should obtain information about the timing and receipt of benefits and election forms from the plan administrator after approval of the QDRO or DRO.
It is also essential to consult with a qualified tax advisor as to tax consequences, if any, of receipt of retirement benefits. Additionally, if your spouse is or was in the military service, military law may govern the distribution of certain assets.
In certain circumstances, the court will not be able to equitably divide the marital property between the parties. For example, this may occur when the property is illiquid or it cannot actually be divided or distributed between the spouses (e.g., ownership of a business). In this case, the court may award a cash payment in lieu of the equitable distribution of such marital property. The spouse who retains the asset pays the other spouse the cash equivalent of that spouse's equitable share. A distributive award can be either a lump sum payment or a series of installment payments over time. The purpose of a distributive award is to supplement, facilitate or effectuate the distribution of marital property and to achieve equity between the parties.
Maintenance (also known as "alimony" or "spousal support") is a payment from one former spouse to the other. For more information on maintenance and what maintenance you may be eligible for, see the following section of this guide.
The distribution of marital property and payment of maintenance and child support may be viewed as an economic package. The "package" also often provides for the occupancy or sale of the marital home and "special relief" such as the purchase and maintenance of health and hospitalization insurance coverage for a former spouse and children and life insurance coverage. Furthermore, a favorable property settlement may reduce or eliminate the need for maintenance. This does not mean that a dollar of maintenance is always equal to a dollar awarded in the form of a property settlement. For practical, legal and tax reasons, some of which are touched on below, this may not be the case.
Specific information on how much maintenance and child support you may be eligible for are covered in detail in separate sections of this guide.
Because of the many issues affecting the structure of a divorce settlement, particularly one concerned with a marriage of long duration during which substantial assets have been accumulated, there are no easy answers and no generalizations applicable to this question. Each settlement must be scrutinized by one or more astute professionals who will take into consideration the particular circumstances of the case viewed against the complex background of enforcement issues, tax consequences and the possible impact of a future declaration of bankruptcy
A simple example of how tax considerations may affect this decision is the fact that, in New York, payments of maintenance are taxable income to the recipient and are deductible by the spouse making the payment. (However, it should be noted that as of January 2019, this is no longer the case for federal income tax purposes as discussed later in this guide.) In contrast, a distributive award intended to compensate a homemaker for her contribution to the marriage is generally structured as a tax-free transfer.
Furthermore, whether it is advisable to accept the marital home as all or part of an award will depend not only upon the market value of the house in the context of fluctuating real estate markets, but also upon whether the home is to be sold and what the projected tax consequences of any re-sale will be. Of course, the person who receives the marital home must be able to afford to "carry" the costs of maintaining the home. If a large portion of the owner's income must be used to pay the mortgage, real estate taxes, homeowner's insurance, etc., the result may be a poorly maintained home and a loss in value. The profit received upon sale of the marital home may be subject to capital gains tax while any compensatory payment or credit to the spouse who does not get the house is generally tax-free. There are also "non-tangible" elements to consider such as the relationships with neighbors and children's relationships with friends, as well as proximity to schools. There are additional tax consequence that should be considered in the event of a sale of the martial home. It is important that the tax consequences of any re-sale be discussed with your tax advisor.
As an example of how bankruptcy could affect the decision between a settlement and maintenance, consider the following. The right to receive maintenance puts the recipient spouse in the position of a creditor with the attendant risks of non-payment and the burden of enforcement. Under certain circumstances, payment of obligations may be modified or excused by the court because of changes in the financial situations of the spouses. These changes would have to involve extreme financial hardship such as unemployment or the ill health of the payor. Even if a settlement agreement or judgment of divorce has been signed, in certain bankruptcy proceedings, the payor may seek a discharge in bankruptcy of obligations to make future payments intended as distributions of marital property. Accordingly, it may be prudent to consult with a bankruptcy lawyer in view of changes in the bankruptcy code to discuss the possibility of the discharge of your right to receive marital property or a distributive award. Maintenance and child support payments made pursuant to a written agreement or court order generally cannot be discharged in bankruptcy.
It is not unheard of for spouses to attempt to minimize assets by depositing funds in another person's account, overpaying credit card statements, delaying the distribution of trust income and deferring income. An accountant may be engaged to review such items as owner loans dividends, retained earnings, distributions of income by partnerships and subchapter S corporations, bonuses, expense accounts, retirement plans depreciation of property and perquisites of employment.
Where it is suspected that a reduction in income is related to the marital dispute, an accountant may look for a sudden unexplained reduction in salary, deferred payment of salary and bonuses, an increase of personal expenses paid by the business, payment of salary to third persons, payment of business expenses to a "shell" business created by the self-employed spouse, unusually high payments to suppliers, loans to the company by the owner which have the effect of reducing income paid to the owner and/or reducing the value of the business, and payroll checks that are not cashed or cash receipts that are not deposited. It may be necessary to search for undisclosed assets. In some cases, forensic accounting techniques require the review of numerous documents to follow a "money trail". The process can be very expensive. The search for information may include such sources as computer records, receipts, passports, foreign income reported on tax returns and records showing transactions which are just under the limit which must be reported by banks to the government.
The relevant date for valuation of martial property may be determined by a court to be any time from the date of commencement of the divorce action to the date of trial. The valuation date is selected in light of the particular circumstances presented. The trial court has broad discretion in selecting valuation dates and depending upon the circumstances, it may fix different valuation dates for different assets. The appropriate date for a particular asset may depend upon whether any change in value of the asset during the time period referred to above is due to the contribution or management of one spouse or to market forces over which neither spouse had control. Actively managed assets, for example a family business, may be valued at the commencement of actions while so-called passive assets may be valued as of the date of trial. The inherent difficulties in applying the above rule can provide fertile ground for negotiation and litigation.
Property owned by a minor child, whether received from a parent or other person, is not considered marital property. However, the existence of such property will be a factor that the court may consider in determining the amount of support awards. The existence of property owned by a child will be particularly relevant if either spouse, as custodian or trustee, has access to such property for the payment of expenses or other purposes.
As a general rule, the marital fault of a party is not a relevant consideration in the distribution of marital property or an award of maintenance, especially since New York became a "no-fault" divorce state. Thus, the fact that one spouse was a blameless victim while the other effectively destroyed the marriage by his or her abandonment or adultery is irrelevant to both the property division and maintenance. However, in April 2020 the list of factors the court may take into consideration for equitable distribution (as outlined earlier in this section) was expanded to specifically include acts of domestic violence.
Additionally, marital fault that is egregious or shocking may be taken into consideration in determining an award of property and maintenance under the “catch all” provision in the above-listed factors. Even where egregious fault exists, though, it is only one factor to be considered by the court and by no means precludes a sharing in the marital property or even the receipt of maintenance by the culpable party. Furthermore, it is often costly to prove this type of marital fault and matrimonial attorneys recognize this fact.
Apart from such issues of marital fault, the court is required to consider economic fault in distribution and maintenance determinations. Economic fault consists of actions by a spouse to dissipate, transfer or encumber assets prior to or during a matrimonial action in order to thwart the equitable division of property. In addition to the willful action of a spouse to dissipate martial property, a court may also consider other behavior, such as gambling or substance abuse which may have led to a decrease or “wasting” of assets.