One of the most important aspects of divorce for many couples, especially those with significant wealth, is the division of property. Different states approach property division differently, both with respect to how they define marital property and the rules regarding the division of assets. As to the latter point, states are generally divided between the community property and equitable distribution approaches to property division.
Community property states vs. equitable distribution states
Whereas community property states generally assume, at least initially, that property should be divided equally, the equitable distribution approach does not make that assumption. Rather, equitable distribution entails the consideration of various factors to come up with a distribution plan that is fair and just for both parties. In other words, equitable distribution is about reaching a fair outcome.
Property division in New York
Under New York law, marital property generally means all property acquired by either or both spouses during the marriage, prior to the beginning of a dissolution or the ratification of a separation agreement. Separate property is that which is: acquired prior to marriage; inherited or received as a gift to one spouse; compensation for personal injuries; or acquired by one spouse in exchange for his or her contributions to the increased value of separate property. Separate property may be specifically defined by the couple by written agreement, as in a prenuptial agreement.
Courts consider a wide variety of factors in determining how to reach an equitable outcome concerning marital property. These factors include: the income and property of each party; the length of the marriage; the health and age of the parties; the probable future financial circumstances of each party; the liquidity of marital property; the tax consequences of any given distribution plan; and whether either spouse dissipated assets during the marriage.
How to achieve a fair outcome
It is critical for those considering divorce, particularly those with significant wealth, to work with an experienced attorney to ensure they have the best possible opportunity to achieve a fair outcome with respect to property division. A skilled attorney can work to ensure the other spouse’s assets are fully accounted for and that the court has all the information it needs to reach a just result.