Understanding Equitable Distribution in New York Divorce Cases

When a couple goes into a divorce litigation, with their divorce lawyers in the New York courts, it’s up to the court to determine how that couple’s debts, assets, and belongings should be divided between the two parties, if a settlement is not eventually reached. Although a lot of people assume that assets and liabilities should simply be provided to each party on a 50/50 basis, the truth this isn’t always the way the courts work. In fact, dividing assets can be a little more complex than that, which is why the New York legal system has implemented a system called “Equitable distribution” to make the process simpler.

As a divorce attorney, Mr. Darren M. Shapiro helps his clients to understand the nature of equitable distribution before they go into divorce litigation, so they can have an idea of what they’ll be dealing with. When a judge equitably distributes assets, he or she will consider a number of important facts about the couple, including financial contributions during the marriage, what their income-earning potential might be, and what their current income is, among other reasons enumerated in the Domestic Relations Law. Importantly, courts are not supposed to lump in the “separate” assets that were gathered before a marriage into account when distributing belongings.

Addressing the Basics of Equitable Distribution

For those wondering about the nuances of equitable distribution, in 2009 the Court of Appeals made an important decision (Mahoney-Buntzman v Buntzman 2009 NY Slip Op 03629 [12 NY3d 415] about how the courts should distribute certain liabilities and assets in a divorce. The case in question involved a wife and husband married in 1993. When the marriage occurred, the husband was already paying maintenance support to his previous wife, and he also had two children with the wife from the previous marriage, while the wife had a child from another relationship too.

During the course of the new marriage, the husband sold interest in two of the companies he had started before the marriage took place, and the husband reported the income from the sales of those companies on a joint tax return that he filed with his wife. He also took out a loan to enroll in an advanced education program during the marriage too. In 2003, the wife filed for divorce and sought credit for the assets used to make maintenance payments to the husband’s former wife, as well as the assets used to pay the husband’s student loan. The wife also requested that the courts take the money the husband received for selling his two companies into account because it wasn’t something that the legal system usually saw as a separate asset.

Distributing Assets in a Divorce

In cases like the one above, Mr. Shapiro is responsible for helping clients to present their case to the courts as effectively as possible, according to their best interests. As a divorce attorney, he can help draft arguments and requests to the court that ask them to take important considerations into account when making decisions about equitable distribution. The court in the case above concluded that the wife wasn’t entitled to credit from the payments made to the former spouse and explained that when marital property pays off one spouses debt, or increase the value of a separate property, the courts usually respect the decision the couple made together at the time, and don’t intervene afterwards to reward credit. Also, importantly the court awarded the wife equitable distribution on the settlement funds from the company sales. The Husband had reported the funds as business income on a tax return. Accordingly he could not take a position contrary to that in the divorce and the funds were classed as a marital asset.

In the case of the husband’s student loan debt, the court said that the wife was again not entitled to credit because the husband got his degree when married and that the wife would have benefited during that marriage if the education had lead to a higher income for the husband. However, in a footnote, the court claimed that if the debt had still been around, they may have considered it as a separate debt for the husband. Additionally, the court also said that the proceeds that came from the husband’s decision to sell his companies should be joint property because the funds were treated as such when the husband filed the joint tax return with his wife. Parties are not permitted to take a position that would go against the information provided in a tax return.

Dealing with the Complexities of Divorce

As a divorce lawyer, Mr. Shapiro can help his clients to understand the complications of separating assets and liabilities during a divorce case. After all, it’s not always as simple as it seems to provide each individual person in a marriage with the assets they believe they deserve. Additionally, Mr. Shapiro’s position as a child custody attorney means that he’s also on hand to help those concerned with equitable distribution consider other important factors during their divorce, to do with things like child support, and custody.

If you’re currently going through a divorce in New York, or you’re considering bringing an end to your marriage, then it’s important to make sure that you have the right support on hand to help you with issues like equitable distribution. Sometimes, it is possible for clients to take actions early in the divorce procedure to help protect their interests at a later stage. Mr. Darren M. Shapiro’s law and mediation office are on hand to offer support handling a range of divorce attorney issues on the behalf of clients. To find out more, or schedule a free consultation with Attorney Shapiro, get in touch through our online form, or over the phone at (516) 333-6555.