The equitable distribution statute became law in July of 1980 and has evolved extensively since that time. Essentially, all “marital” property is subject to distribution except for “separate property.” Domestic Relations Law 236[B][c] defines “marital property” as:
All property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held, except as otherwise provided in agreement pursuant to subdivision three of this part. Marital property shall not include separate property as hereinafter defined.
Separate property is generally defined as inheritances, property owned prior to the marriage, gifts from non-spouses and income received in compensation for a personal injury. While appreciation of separate property is considered to be separate property, extensive case law has abrogated this concept significantly. In many cases, the courts have held that the appreciation of separate property may be subject to distribution. Domestic Relations Law §236 (B)(1)(d)(3) excludes from the definition of “marital property” … “property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse.” The courts have interpreted this language rather expansively, and efforts of a spouse may include such contributions as raising children, taking care of a household, and generally supporting the other spouse’s efforts at earning a living.
Marital property can be distributed even if it is held solely in the name of one of the parties. It is important to note that in terms of splitting martial assets, equitable does not mean equal. Assets do not have to be distributed equally to each party.
A significant portion of divorce litigation involves evaluating the assets and determining what percentage each party should receive of that asset. Property can include almost everything, including the marital home, vacation homes, automobiles, household furnishings, bank accounts, stock portfolios, pensions and retirement plans, interests in businesses and professional degrees. In New York, a party’s “enhanced earning capacity” which includes the value of any degree, license or certification obtained during the marriage can be distributed as well.
The court decisions addressing equitable distribution have held that there cannot be a distribution of property without a divorce or pursuant to a valid separation agreement. As a result, one of the common strategies utilized in divorce cases by the parties who do not wish to have property distributed, involves challenging the grounds for divorce.
Litigation support experts are commonly used in cases involving valuation of significant assets, including forensic and tax accountants, business evaluators, real estate appraisers and other similar experts. The use of these experts can make an equitable distribution case rather expensive to litigate.