When a married couple decides to end their relationship, the distribution of their assets and liabilities often becomes a critical point of contention. Did you know that according to a 2021 survey by the National Endowment for Financial Education (NEFE), more than eight in 10 or 85% of US admittedly deceived their spouse regarding finances?
If you are going through divorce and you want to make sure that your properties and assets will be divided equally among you and your soon-to-be ex-spouse, you need a lawyer to help you out. Head to this page to know what a property division lawyer in New York can do for you:
https://www.tsiglerlaw.com/nyc-property-division-lawyer/
For the meantime, let us look at equitable distribution and what it means:
Legal Basis for Equitable Distribution
Equitable distribution is a legal principle used in New York to divide marital property during a divorce. It refers to the fair and just allocation of marital property and debts between the spouses, as determined by the court.
Unlike community property states, where assets are split 50/50, New York aims to distribute property fairly, though not equally. The division of marital property is guided by the principle of equitable distribution rather than community property.
The legal basis for equitable distribution can be found in Section 236 of the New York Domestic Relations Law. This statute provides the framework for how courts should approach the division of marital property in divorce cases. It outlines factors that judges must consider when deciding how to distribute assets, such as the length of the marriage, each spouse’s financial contribution, the future financial needs of each party, and any other relevant circumstances.
By following this legal basis, the court aims to achieve a distribution that’s fair and considers the specific circumstances of each case.
Factors Considered in Division
As mentioned, when determining the division of marital property in New York, courts consider various factors to ensure a fair and just distribution.
Factors considered include the duration of the marriage, each spouse’s income and earning potential, contributions made by each spouse to the marital property, the age and health of each spouse, and the tax consequences of the division. Courts also assess any wasteful dissipation of assets, such as gambling or excessive spending, by either spouse.
The court looks at whether one spouse will be the primary caregiver of any children and the impact this may have on their earning capacity. Future financial needs, such as retirement savings or ongoing medical expenses, are also considered.
The standard of living during the marriage is another factor, along with any prenuptial agreements that are in place.
Separate Vs. Marital Property
Separate property typically includes assets acquired before the marriage, inheritances, gifts, or any property explicitly designated as separate in a prenuptial agreement. Marital property, on the other hand, generally involves assets acquired during the marriage, regardless of who holds title or contributes financially.
Determining whether an asset is separate or marital can sometimes be complex. For instance, if you combine separate property with marital assets, it may be challenging to separate them during divorce proceedings. The increase in value of separate property during the marriage could be considered marital property subject to division.
Understanding the distinction between separate and marital property is important in equitable distribution proceedings as it directly impacts how assets and debts are divided between spouses.
Valuation of Assets and Debts
Valuing assets such as real estate, businesses, investments, retirement accounts, and personal property is necessary for a fair division. Hiring professionals like appraisers, accountants, or financial experts can help in determining accurate values.
When valuing assets, it’s important to consider factors like market fluctuations, depreciation, outstanding debts, and potential future value.
For example, the business value may not just be its current worth but also its future earning potential. Similarly, debts must be evaluated correctly to ensure an equitable distribution.
In cases where there are disputes over the value of assets or debts, mediation or court intervention may be required to resolve them. Provide documentation and evidence supporting the valuation to strengthen your position during negotiations or legal proceedings.
Challenges in Equitable Distribution
Equitable distribution can be complicated due to various challenges that arise during asset and debt division in divorce cases. One challenge is determining the value of complicated assets like businesses, investments, or real estate.
Valuing these assets accurately requires expertise and may involve hiring professionals such as appraisers or forensic accountants, adding time and cost to the process.
Another common challenge is identifying separate property from marital property. New York law considers assets acquired before the marriage or through inheritance or gift as separate property, not subject to division.
Tracing the commingling of separate marital assets can be complicated and require thorough documentation and legal support.
Unequal bargaining power between spouses can also lead to one party pressuring the other into unfavorable settlements. This power dynamic can hinder reaching a fair distribution agreement and may necessitate mediation or court intervention to ensure equity in the division of assets and debts.
Conclusion
In New York, equitable distribution is the fair division of marital assets and debts during a divorce. Valuing assets and debts can be complicated, leading to challenges in reaching a fair settlement.
You need to seek legal advice in order to have a proper division of property and debts.
