Types of Property Distribution Issues that Can Arise in a Divorce

By Michael DiFalco

In New York, marital property is divided under “equitable distribution” statutes. This means that courts divide property equitably which does not always mean equally. New York judges will consider a number of factors to determine how the marital property is divided.

In some circumstances, one spouse may have contributed more (or less) toward the marriage. In other cases, a spouse may have run their own business with only some indirect contributions by the other spouse. A party may have inherited a residence or accounts which might be separate. New York courts do their best to ensure that each spouse receives an equitable share of the property as part of a divorce settlement.

Marital Property vs. Separate Property

To understand how issues can occur during property division, it’s vital to know the differences between separate property and marital property.

Separate Property

In New York, separate property is owned exclusively by one spouse rather than jointly. 

Generally, separate property includes any assets that each spouse owned before marriage, which were acquired through inheritance or a gift from a third party, personal injury settlements or proceeds (including 9/11 Victim Compensation Funds) and any property set forth as separate property pursuant to a prenup. 

Separate property may include real estate, investment accounts, vehicles, businesses, and personal items. When splitting assets in a divorce, the courts do not distribute assets determined to be separate to the other party.

However, under some circumstances, separate property may turn into marital property when one spouse contributes toward a pre-existing asset, such as purchasing a home or combining retirement accounts. In these situations, legal disputes over rightful ownership can arise. 

Marital Property

As opposed to separate property, marital property is anything earned or acquired while a couple was married, regardless of who is on title, including retirement accounts, pension credits earned during the marriage, an individual or joint bank account or investment account, as well as any homes or other real property.

A New York court is required to equitably distribute any marital property in a divorce. There is full and complete disclosure and discovery of all aspects of the financial issues in a marriage which is required to ascertain the scope, nature, as well as the value, of any marital property that requires distribution.

When a party contributes separate property to a marital asset, like a marital residence, that party may be entitled to a separate property credit. It is the burden of the person seeking such a credit to prove their separate property claim.

Division of Debts

Due to New York’s equitable distribution laws, judges must thoroughly review all debts accrued during the marriage to make an informed decision on how to distribute them.

In most situations, debts from credit cards, car loans, and home mortgages are split equally because they were likely used to benefit the marriage rather than one individual. However, sometimes a judge can order one spouse to take on a personal debt whenever these were accrued without consent or used unequally or if the parties incomes mean it is unfair for the parties to equally share in the debt.

Valuation of Assets

While the balance in a bank account or the value of a home can be determined relatively easily, other assets may be more challenging to value. As a result, there are instances when couples can disagree on the total value of an asset. This can require expert appraisers or business valuation accountants to get involved. 

The parties can agree or the court can order these assets to be appraised or valued to determine the value of any marital property or appreciation in separate property. 

An experienced divorce attorney who has valued assets in high net worth divorce matters as well as dealt with the valuation of small, sole proprietorship businesses, can help guide you through the valuation of assets in order to ascertain what property is worth before it is distributed equitably. 

Factors the Courts Will Consider to Distribute Property

In a contested divorce, the courts will review all assets and individual contributions from each spouse. In many cases, disputes over these elements can become complicated, requiring your attorney to gather and present evidence to strengthen any claims or disputes. 

Some common factors that can lead to issues in court include:

  • The overall length of the marriage
  • Each spouse’s history of income and financial contributions
  • Non-financial contributions toward the home
  • Age and health of the parties
  • Future earnings and economic security
  • Separate property assets and claims
  • Needs of minor children as well as other family members 

Courts can also consider the future financial circumstances of each party, as well as the fact that one party has not participated fully in their career while supporting the other spouse or raising children.

Representation for Your Divorce

Aiello & DiFalco represent family law cases in Garden City, NY, and the surrounding areas. Contact our office for a free consultation if you’re thinking about divorce.

About the Author
I am a partner at Aiello & DiFalco LLP, and my priority for my clients is to guide them through an arduous court case to provide them with the opportunity to write the next chapter in their life. I tailor my approach to each client’s priorities and positions, and to the extent that matters can be predicted, I will always provide a realistic perspective of how the law could be applied to the particular facts and circumstances of a case. Since I thrive on helping people and solving problems, I bring an optimistic and positive approach to practicing in a very difficult area of law. With more than a decade of experience handling hundreds of cases, I have the ability to get results on the issues my clients view as priorities. When cases or certain issues cannot be settled, I have a solid record of success at trials, hearings, and on appeals. Feel free to contact me for a free initial consultation, I am always available to help.