When dividing assets in a New York divorce, it is important to remember that “Equitable” distribution doesn’t necessarily mean “equal” distribution.
One of the principal fears my clients have at the start of a divorce is losing half of his or her assets. Because financial issues can be a driver of marital stress it seems almost unfathomable to people that they might have to get by on even less than they currently have. The thought of going backward financially on top of ending a marriage can be psychologically crippling so it’s important to approach asset division in a rational manner.
The first step is to block out the noise that is likely building to a fever pitch around you. The minute divorce talk moves away from the couple and into the public realm, everyone in your circle–family and friends alike–suddenly becomes a legal expert. Unless they are admitted to practice law and specialize in divorce, I can assure you that they are not experts. No matter how well-intended the members of your support system, the courts will take a systematic approach to evaluating the asset base of the marriage and determining the most equitable way for both parties to move forward. With that said, let’s hang on that word “equitable” for a moment.
“Equitable” distribution doesn’t necessarily mean “equal” distribution. There seems to be a general assumption that the court adds up everything you and your spouse have, make you sell them and divide by two. Rest assured it’s a little more nuanced than that. For example, any assets belonging to one party or the other prior to marriage are generally not considered marital property. However, if that asset is something that was physically improved during the marriage, the appreciable value will likely be considered.
Under New York State law, marital property is, “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement.” Therefore, assets such as your primary residence, investment properties, automobiles, insurance policies, etc. that are purchased during the marriage will likely be divided. (That classic car you bought and restored as a teenager that now sits in storage appreciating in value, will more than likely be off limits.)
One of the worst things you can do is attempt to hide assets. I can’t tell you how often I encounter this on both sides of the divorce. More often than not, this is generally due to the horrible advice of a friend or family member as described above (or even an unethical lawyer). There’s something called “compulsory financial disclosure” under the law that mandates full disclosure of liquid and tangible assets. Any attempt to hide or withhold information from the other party can only place you in an unfavorable light with the courts and jeopardize an otherwise equitable settlement agreement. If you seemingly get away with it, and it is found out later by your then ex-spouse, he or she can then sue to re-open the divorce based on your fraud and/or misrepresentation.
Assuming all sides are transparent and the asset base is easy to determine, the more difficult financial road is the one ahead. Settling issues such as child support and alimony is far more open for interpretation and dependent upon multiple factors. Here again, having an open dialogue with your attorney is essential as he or she is the one who will be making the case for what is needed going forward. Everyone’s definition of “fairness” is different and it sometimes evolves throughout the process. Holding back information from your attorney can only lead to poor decision making and it’s critical to get it right from the start.