In New York state, marital property is determined according to the rules of “equitable distribution,” which requires marital property to be divided along lines that are considered fair to each partner, either by their own agreement or through court intervention.

These rules are codified in New York’s Domestic Relations Law Section 236(B). Essentially, when making a determination on equitable distribution, the court looks at a number of statutory factors to determine how to divide the divorcing parties’ marital property in an equitable manner.

This is different from other states that operate under the rules of “community property.” So, in New York state, what is marital property, what is separate property, and what does it mean to divide property equitably?

What Is Marital Property?

The definition of whether something is marital property or separate property is largely time-related. New York statute defines marital property as “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.”

To be considered marital property, an asset must be:

• acquired by one or both spouses after the couple became legally married regardless of whose name the asset is in; and
• acquired prior to legal separation or a legal matrimonial action.

Clearly, the definition of marital property is wide-ranging. Virtually all property that has value can be considered marital property, including, but not limited to:

• houses and other real estate bought over the course of the marriage;
• vehicles & property such as cars, boats, airplanes, furniture, or artwork;
• cash, cryptocurrency, bank accounts, financial securities such as stocks & bonds, retirement accounts, pensions;
• physical assets like gold or other precious metals;
• businesses and professional practices; and
• gifts given by one spouse to the other, either physical or monetary.

However, New York matrimonial law states that “[marital property] shall not include separate property.” Separate property consists of assets acquired before the marriage, during any legal period of separation, as well as certain specific types of property acquired during the marriage. Common examples of separate property include:

• inheritances received by one party;
• compensation for personal injuries; and
• property which was obtained during the marriage but purchased and maintained solely through a party’s own separate property.

The laws pertaining to separate property are very complicated, and separate property claims are subject to challenge in divorce proceedings under such theories as transmutation and commingling. For example, adding to separate assets during the marriage, changing the title to joint names, and other active contributions to premarital property can alter the characteristic of separate assets, making them wholly or partially subject to equitable distribution. These challenges are especially ripe in the case of long-term divorces, where a party’s separate property claim traces back over the course of decades.

How Is Marital Property Determined in a Divorce?

A couple who chooses to divorce is free to divide their marital or separate property in any way that they choose, and they may even choose to share their separate property with one another. Couples are often able to reach an agreement on property division that is agreeable to both spouses, and courts encourage couples to resolve any differences and work together fairly to decide how to split assets and liabilities.

However, if couples cannot agree on how to separate their assets, it will be up to the court to determine where each piece of property (asset, debt, or liability) belongs: under marital or separate property. If a prenuptial contract was signed, the court must adhere to any specific provisions outlined in the agreement.

New York Is an Equitable Distribution State

New York is an “equitable distribution” state. Equitable does not mean “equal.” This is in contrast to “community property” states, where property acquired during the marriage is strictly split evenly between the parties. While this method of distribution may seem simpler and presumptively fair, it may result in an inequitable result given the parties’ respective earning capability, individual assets, and behavior during the marriage. In order to determine the division of property in New York, courts look to the factors enumerated in DRL 236(B), which include:

• marriage length, age and health of each partner;
• property and income held by each spouse;
• loss of inheritance or property rights from divorce;
• loss of health insurance benefits;
• court-ordered maintenance (alimony or child support);
• contributions made by each spouse to the other’s separate property;
• value or liquidity of all marital property;
• future financial circumstances;
• assignment of business interests or ownership;
• tax consequences of property assignation;
• wasted or expended marital property by either spouse;
• market value of the marital property at the time of disposition; and
• custody of minors and the need to use the marital house and its contents.

The divorce process can be long and difficult, especially if you and your spouse are not able to reach an agreement on the assets. It is important to make sure that you receive everything you are entitled to from your marriage to properly set you up for the next chapter in life. It is very difficult to modify or overturn a court’s decision on equitable distribution, so we encourage you to seek the advice of an attorney to help you get the result you need the first time.

Tully Rinckey attorneys understand that the issues involved in divorce can be challenging, and they will handle your matter with the attention and tact it deserves. Every divorce is unique. If you have additional questions about your divorce, our team of attorneys is available to assist you today. Please call 8885294543 to schedule a consultation, or schedule a consultation online.

Michael Yadanza, Esq., is a Senior Counsel in the New York City office of Tully Rinckey, PLLC, where his primary areas of practice are family and matrimonial law and employment law.