In New York, all marital property will be "equitably distributed" in a divorce proceeding.
"Separate property," as its name implies, won't be included in an equitable distribution. Separate property includes:
- Property acquired before the marriage
- Property acquired through inheritance or by gift from anyone other than the spouse
Compensation for personal injury cases, (but not compensation for lost wages) and property acquired in exchange for separate property will generally remain separate property, and the increase in value of separate property is generally considered separate property.
"Marital property" is any non-separate property which is acquired by either party, regardless of title, including:
- Business interests
- Real estate
- Bank accounts
- Professional licenses
Many cases involve litigation over the classification of property as "separate" or "marital."
Once all property is disclosed and classified, the next step is to place a value on all property. In valuing a property, one key question is what date should be used to set the value of the property. The court is free to use any date from the commencement of the divorce action to the date of trial, or any date in between. Different assets can have different valuation dates. The general rule for valuation, which contains numerous exceptions, is that assets which appreciate by active participation by a party will be valued at the date of the commencement of the divorce, while assets which appreciate passively (such as due to market forces) will be valued at the date of trial. The date of valuation can be highly contested.
The third step in equitable distribution of property is to determine a value for each asset, separate and marital. Some assets are simple to value, such as bank accounts. Other assets will need an appraiser's expert opinion, such as real estate, business interests or a professional license. An expert will base his or her opinion on what information is known about the asset.
The last step in equitable distribution is for the court to make an "equitable" or fair division of marital property. In determining how to divide the marital property, the court will consider the following factors:
- The income of the parties at the time of the marriage and at the time of the commencement of the action
- The duration of the marriage and the age and health of both parties
- The need of a custodial parent to occupy or own the marital residence and/or household items
- The loss of inheritance and pension rights
- An award of maintenance (internal link)
- Any equitable claim or interest or contribution make by the nontitled party through services as a spouse, parent, wage earner, or home maker
- The liquid or non-liquid character of the marital property
- Probable future financial circumstances of each party
- Impossibility or difficulty in evaluating a component or interest in a business corporation,and so forth, and the economic desirability of keeping theses assets intact and free from claim from the other party
- Tax consequences to each party
- Wasteful dissipation of any of the assets by either spouse
- Any transfer below fair market value made in contemplation of a divorce
- Any other factor the court deems relevant