Marital property

 

Before property can be distributed in a divorce, you must first determine what property is subject to distribution. This is known as marital property, which essentially is all property acquired by one or both of the parties during the marriage (but before the commencement of the divorce action), with certain important exceptions. It does not matter whose name the property is titled in. For instance, real estate, motor vehicles, bank accounts, etc. in the name of only one spouse are marital property if they were acquired during the marriage. Marital property also includes the value of pensions, licenses (e.g. law license, medical license) and businesses.

 

Separate property

Any property that is not marital property is considered the separate property of one spouse. The following is a listing of what constitutes separate property:

·        Property acquired by one spouse prior to the marriage

·        Gifts made to one spouse

·        Inheritances

·        Personal injury awards

 

Any property purchased by one spouse with separate property is also considered separate property, as long as the source of funds can be shown. For instance, if you inherit money and buy a car with that money, the car is your separate property. Note that an engagement ring given by the husband to the wife is the separate property of the wife.

 

 

How marital property is distributed

 

All marital property is subject to what is called “equitable distribution”. Equitable distribution is a concept of property distribution that treats the marriage as an economic partnership and recognizes the efforts, both direct and indirect, of the non-titled spouse towards the acquisition of the property. Both spouses are entitled to an equitable share of marital property, regardless of who actually acquired the property.

 

Equitable does not necessarily mean equal and the court must consider the circumstances of the parties in determining how property will be distributed. The Domestic Relations Law sets forth thirteen factors that a court must consider when determining how marital property will be distributed. These factors include the following:

 

·        the income and property of each party at the beginning of the marriage and when the divorce action is started;

·        the age and health of the parties and the length of the marriage;

·        the need of the custodial parent to occupy the marital residence;

·        whether one spouse will lose inheritance or pension rights;

·        whether one spouse will be getting maintenance;

·        the efforts made by a spouse towards the acquisition of marital property, whether directly, such as by contributing money or labor,  or indirectly, as a homemaker or parent;

·        the liquid or non-liquid character of marital property, i.e. whether the property is in cash or can be transformed into cash or is in the form of a business or other asset that is not readily divisible;

·        whether it would be difficult to value an interest in a business or profession and whether it would be desirable to keep such an interest intact;

·        the probable future financial circumstances of each party;

·        the tax consequences to each party;

·        the wasteful dissipation of assets by either spouse;

·        any transfer or encumbrance of property made in contemplation of divorce without fair consideration;

·        any other factor which the court shall find just and proper

 

 

Pensions and Divorce

 

Please note that the following is an extremely brief summary of a complex subject:

Retirement benefits earned during the marriage (but before the commencement of the divorce action) are considered to be marital property subject to equitable distribution. How retirement benefits are distributed is determined by whether the retirement plan is a defined benefit plan (employee’s benefits are  based on compensation earned) or a defined contribution plan (benefits based on contributions from employee). The pension will either be paid out to the employee and the spouse upon the employee’s retirement (pursuant to what is called a Qualified Domestic Relations Order) or will be distributed to the spouse in cash based on a computation of its present value (done by experts who can determine the value of a pension). The parties may agree to allow the employee spouse to keep the entire pension in exchange for other assets, such as the marital residence.