Friday, April 3, 2015

Equitable Distribution Rights in New York

In many contested divorces, both sides lose.  The way to win - for both sides - is to identify and know your rights, stay focused, and keep any litigation targeted towards defined goals.

In principal, matrimonial litigation is an easy area of law.  Nearly everything is a question of "equity," with the court determining what is fair based upon the unique facts of each case in the event the parties cannot agree.  In practice, however, it can be very difficult to get divorcing spouses (or even reasonable attorneys) to agree on what is fair. 

There are some basic guidelines for equitable distribution.  Some of these guidelines are established by statutes and case law, while others are a matter of common practice that divorce attorneys pick up with experience.   There are, generally, four categories of assets at issue in a divorce.

First, seperate property (premarital property, inherited property, personal injury proceeds, and certain other defined categories) remains seperate.  

Second, ordinary marital assets (bank accounts, the marital portion of retirement accounts, real estate, etc.) are generally divided equally.

Third, personal property and tangible household items are best divided by mutual agreement.  In most cases, the personal property is not worth fighting over.  Although perhaps costly to acquire, used items often have negligible value.  They can be sold with the proceeds divided, but that often is not an ideal solution.  If you have two decent TV's for example, you are probably better off getting the worse of the two rather than selling them both and trying to buy a new one with your half of the proceeds.  Resolution of simple disputes can be facilitated by a series of coin flips or a similar divice. In higher asset cases, a detailed appraisal can be used to account for the value of collectables, artwork, jewelry, antiques, etc. 

Fourth, with illiquid "assets," such as a business created during the marriage, the value of a degree or professional license, or similar items, equitable distribution usually does not mean equal.  The non-titled spouse's interest in these assets is proportionate to their direct or indirect contribution towards the acquisition and growth of the asset during the marriage.  These rights can range from zero for an essentially absentee spouse to near-50% for a side-by-side equal business partner. Experts can place a dollar value on these items, and the non-titled spouse's interest is usually around 20% in a typical case. 

There are no "winners" in equitable distribution in the ordinary sense.  The parties are dividing what they already own.  The winners in divorce are the parties who maximize their proceeds from the marital estate, which in most cases means reaching a fair distribution while minimizing the transaction cost of obtaining that result.  Hiring a skilled attorney is an investment.  Divorce attorneys cannot increase the overall marital estate, but we can complete the due diligence needed to assess the value of the estate, and guide you towards making informed decisions as to your rights.  

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