As NY Equitable Distribution lawyers we deal with division of property and businesses, which can and are litigated among high net-worth individuals during a divorce. When a married couple goes through a divorce, the court is responsible for dividing their property. New York courts decide property divisions according to equitable distribution laws, assigning it fairly and equally among the spouses. There are different property classifications that are used by the court to help determine how the division takes place.
The two main categories of property are marital and separate property. Separate Property constitutes all of those that have been acquired prior to the marriage or by inheritance during the marriage. Such property is, therefore, not divided when the couple divorces, being considered un-shared property of the spouse who owned prior to marriage. Marital Property, on the other hand, is composed of all the property that was acquired by either one of the spouses during the marriage (with the exception of inheritances and gifts). Such property is equitably divided with basis on factors such as income, age, health, marriage length, needs and contributions of each spouse in keeping the property, and the alimony being awarded.
In addition to separate and marital property there are two other kinds of property classification under the equitable distribution law: Commingled Property and Increased Value of Separate Property . Commingled Property is one that has been acquired through a combination of marital and separate funds. In which case the property will be distributed through the use of either ‘source of funds theory’, or ‘transmutation theory’. In this case, ‘source of funds theory’ states that the spouse who contributed with its separate funds is entitled to a corresponding interest in the property, and the remaining balance will be deemed marital property, being subject to equitable distribution. The ‘transmutation theory’, on the contrary, states that when separate and marital funds are combined, the Commingled property then becomes marital property and will be subject to equitable division.
The last category is the Increased Value of Separate Property, which includes property that was acquired before marriage and then had its value appreciated during the marriage. In such case the property will be distributed through the use of ‘source of funds theory’ , which states that if the appreciation happened because of efforts of the other spouse, then it’ll be considered marital property. Otherwise, Transmutation of Funds theory will be applied, in which case the court assumes that the property is subject to marital equitable division, unless the spouse who claims separate property is able to prove that the appreciation occurred due to external factors.
Equitable distribution law seeks to fairly allocate marital or separate properties that spouses have acquired before and during their marriage. When equitable distribution is applied, it doesn’t necessarily mean the court will provide an equal division among the two parties, instead, it will aim to justly divide the assets among them. Courts will consider the situation and the totality of its circumstances, with the intention of satisfying the financial stability of each spouse in their post-marital lives.
In case a spouse who is going through a divorce feels that he or she needs legal assistance to resolve property issues, please feel free to call Gordon Price Diefenbach, an attorney in Manhattan, to discuss your case. The 24-Hour Hotline is (917) 734-7111. He will either speak to you at the moment of your call or will return your call within a matter of hours.