When a couple gets divorced, any joint property gets divided according to state law. New York state is an equitable division state, which means that marital property may be divided in a way that best meets the needs of both parties. Couples may also make use of prenuptial or other agreements to determine how property is divided.
What Types of Property Are Eligible for Division?
Anything that was acquired during a marriage is the joint property of both parties to the union. Examples of property that may need to be divided include a home, car or money inside of a bank or brokerage account. Small items such as silverware, clothing or electronics may also need to be divided if they were acquired during the marriage.
What If Property Was Acquired Prior to a Marriage?
If an asset was acquired prior to a marriage, it generally belongs to whoever first owned it. However, in some cases, an asset may be considered commingled with marital assets. This may mean that sole property now becomes marital property. For instance, if money from a joint bank account was used to purchase a home in one spouse’s name, the home may become joint property because of how it was paid for.
What Determines If an Asset Is Sole or Marital Property?
There are many factors that may determine ownership of a given asset. In most cases, wherever the source of funds for a given item originated determines who owns it. If the money came from a joint account, it is generally considered joint property. If the money came from an account in one person’s name, that person generally owns it.
What Happens to Assets that Appreciate During a Marriage?
In some cases, an asset may be considered both joint and sole property. For example, let’s say a person owned a business prior to getting married. At the time of a divorce, the company had appreciated in value by 50 percent. For the purposes of a divorce settlement, the difference between the value of the company at the time of the marriage and at the end of the divorce will generally be considered marital property.
This means that if the company was worth $100 million more at the time of divorce compared to when the marriage became official, the couple would divide the $100 million. Of course, it is also possible to wait until a later date to actually sell the company divide the proceeds. In some cases, a spouse would be entitled to an equity stake in the company that could be liquidated in an orderly fashion.
It is important to note that these rules generally apply regardless of what type of asset grew in value during a marriage. It is not uncommon for couples to have investment portfolios or homes that are worth more at the end of a marriage as compared to the beginning of the marriage.
What Role Does a Prenup Play in Dividing Property?
A prenuptial agreement is a customized arrangement between individuals that may better meet their needs. Such an agreement must be valid under state law, and it cannot be singed under duress. Ideally, it will be created and signed several months before the wedding actually takes place. Furthermore, it may be a good idea for an attorney to review it before it goes into effect.
Prenuptial agreements may spell out how assets such as a business or home are divided. It may also determine who is entitled to alimony and under what conditions it may be paid. Usually, alimony is based on the length of the marriage or how much the higher earning spouse may be worth at the time of a divorce.
It should be noted that child custody and child support matters generally cannot be resolved in a prenuptial agreement. This is because the state uses a best interest of the child policy when determining these issues. However, a parent who has joint custody of a child may be entitled to a greater share of marital property or additional spousal support.
Those who are about to get divorced may want to talk with an attorney as soon as possible. This may make it easier to learn more about state law and how it could impact a person’s ability to retain key assets. It may also make it possible to craft a negotiating position that may result in a favorable outcome for an individual.
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