What is equitable distribution?
Unlike what you may think, equitable distribution is not just dividing up assets so that each person takes half. Many factors are taken into account. What this really means is that the decision is made regarding potential fairness rather than simply splitting it down the middle. That being said, sometimes splitting it down the middle is considered fair. When negotiating an out-of-court settlement, it is important to understand relevant law in addition to considering basic concepts of fairness. Once the law is understood, it is possible to enter an agreement that reflects your own unique situation and what you and your spouse think is fair and reasonable in light of your own circumstances. An agreement made before or during the marriage is valid and enforceable provided such agreement is in writing and signed and acknowledged in proper form.
In reviewing the factors considered by the Court, it is important to understand that the Court need not consider each and every factor in making its determination. Nor is one factor dispositive. N.Y. Dom. Rel. Law § 236(B)(5)(d) cites the following factors:
d. In determining an equitable disposition of property under paragraph c, the court shall consider:
(1) the income and property of each party at the time of marriage, and at the time of the commencement of the action;
(2) the duration of the marriage and the age and health of both parties;
(3) the need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
(4) the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
(5) the loss of health insurance benefits upon dissolution of the marriage;
(6) any award of maintenance under subdivision six of this part;
(7) [Eff. until Jan. 23, 2016. See, also, subpar. (7), below.] 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;
(7) [Eff. Jan. 23, 2016. See, also, subpar. (7), above.] 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 court shall not consider as marital property subject to distribution the value of a spouse's enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse;
(8) the liquid or non-liquid character of all marital property;
(9) the probable future financial circumstances of each party;
(10) 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;
(11) the tax consequences to each party;
(12) the wasteful dissipation of assets by either spouse;
(13) any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
(14) any other factor which the court shall expressly find to be just and proper.
The process of equitable distribution:
Generally, when using equitable distribution, there are three main components for the parties and attorneys to consider:
- Firstly, the parties must decide on what property will become available for the equitable distribution. In other words, the parties need to clarify the property that is marital vs. separate property.
- Secondly, the parties must assign values to those properties.
- To determine value, often one has to consider both the date used and the evidence of value given.
- Lastly, the actual distribution occurs.
It is important to know that, according to equitable distribution law, not all property will be distributed, but rather only marital property as opposed to separate property. Under N.Y. Dom. Rel. Law § 236(B)(1)(c):
The term "marital property" shall mean all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held, except as otherwise provided in agreement pursuant to subdivision three of this part. Marital property shall not include separate property as hereinafter defined.
In addition, under N.Y. Dom. Rel. Law § 236(B)(1)(d):
The term separate property shall mean:
- property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse;
- compensation for personal injuries;
- 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;
- property described as separate property by written agreement of the parties pursuant to subdivision three of this part.
Cases are Unique:
The last important thing to remember is that each case is unique when determining a fair and equitable property settlement. That is why it is of utmost importance to consult with an experienced attorney on relevant law and how it might be applied to the specific facts and circumstances of your own matter.