By Sari M. Friedman, Legal Counsel
Fathers' Rights Association (NYS & Long Island)
What is Equitable Distribution?
Many people think it means equal sharing of all marital assets when there is a
divorce. But that's not true. There are "Community Property" states
where an equal division is mandated. And there are "Equitable Distribution" states that allow the Court to award each party to the dispute a
share of a "marital asset" in an amount the Court deems fair.
New York is an Equitable Distribution State.
How Does Equitable Distribution Work?
Assets accumulated after the date of marriage and before commencement of
an action to dissolve the marriage are called "marital assets".
These assets are commonly equally divided but not always. There are times
the court awards the non-titled holder less than half.
But assets that are acquired before marriage or after commencement of a
divorce action are called "Separate Assets and not subject to Equitable
Distribution. Included too in the "Separate Assets" category
are special gifts or inheritances to one party during the marriage. However,
separate assets that appreciate in value during the marriage do not necessarily
reward the holder. That portion of the asset that represents appreciation
during the marriage, is subject to Equitable Distribution. Except if the
appreciation is due to market conditions rather than the active efforts
of the party who owns it, then the appreciation is deemed passive appreciation
and little if any distribution is made of the appreciation.
If, however, the asset grew in value due to the active efforts of one or
both spouses (such as a business), then a greater award will be made of
it when equitably distributed.
Be Aware of Special Situations
What if the owner of a separate asset co-mingled it by putting it in a
joint name with the other spouse? The presumption is then created that
the intent was to make it a "marital asset. The burden would rest
with you then to explain why this was co-mingled if indeed the intent
was not to create a marital asset.
The date used for valuing an asset to be distributed at trial is normally
the value either as of the date the action was commenced or the date of
the trial. Normally, if the asset is the result of one's labor such
as a business or pension, the court uses the date the action was commenced
under the theory that the other spouse should not be entitled to participate
in the fruits of the other's labor after that point.
If, however, an asset fluctuates in value based upon market forces, such
as stocks and real estate, then the Courts normally use a date of valuation
as close to the date of distribution as possible, which is the date of
Placing a value on certain assets can be troublesome. To value publicly
traded stocks, one needs only to read the latest Stock Exchange quote.
But it is much more difficult to value a closely held, on-going business
such as a grocery store or print shop. Usually, accountants are hired
for this job and disputes may arise as to what is the correct value. The
actual value is determined by the Court.
Education acquired during a marriage which led to obtaining a degree or
license such as, but not limited to, doctor, lawyer, accountant, nurse,
etc. are also assets to be valued. Again, accountants are utilized to
value these licenses and degrees. The approach normally taken is to look
at the extent to which the advanced degree or license has enhanced one's
earnings potential over the person's work/life expectancy. Thus, the
more a person was earning before obtaining the license or degree, the
more their prior career path could have likely produced in income, the
less enhancement the new license or degree created in income and the lower
the value of the education. Again, disputes arise over the proper value
to be placed on these degrees or licenses and the Court will make the
Equitable Distribution can be complicated. That's why it is important
to be aware of the law.
Speak to your attorney and measure your options before starting an action. It can save you lots
of future aggravation and hours of arguments.