Long Island Family Law and Mediation Blog
For some time now on this blog, I have been publishing these bullet point guides, which are a blend of my blogs over the years, as a solution for people who need to learn more about divorce. The end of a marriage is a complicated thing, and the complexities of your case may begin to feel overwhelming when you’re approaching litigation for the first time. These bullet guides aim to provide an easy-to-access way to answer some of your most pressing questions.
In this bullet point guide, we will be looking specifically at marital and separate property in divorce equitable distribution, as well as the role that taxes might play in separating assets. We will also touch on the decisions to be made about business ownership during a New York divorce.
Defining Marital and Separate Property
As mentioned in previous blog posts and guides, the process that New York courts use to distribute assets between two parties in a divorce is called equitable distribution. This process involves sharing “marital assets” based on what the court considers to be just and fair.
- Marital assets are broadly defined by the New York law for Domestic Relations as property obtained after the date of the marriage and before a separation agreement is executed, or the filing of a divorce case.
- Separate property is not included in equitable distribution considerations under the Domestic Relations Law. Separate property is anything that was kept separate and either acquired before the date of the marriage, or the property that was received by one party as a gift or inheritance. Sometimes, personal, or separate property may also include personal injury awards.
- In New York divorce cases, marital property can include a range of things, including retirement and pension benefits acquired within the marriage, automobiles, real-estate, furniture, stocks, bank accounts, and even business components. All marital property must be equitably distributed according to the laws of New York, unless there is an agreement otherwise.
- When determining how to divide marital property between two spouses, the courts will often consider a variety of things, including the current income of each spouse, their age, their earning potential, their health, and the contributions that each person made to the marriage, both financial and otherwise.
Businesses and High Net Worth in Divorce Cases
Because equitable distribution in New York does not always mean that assets are split 50/50 between couples, it’s crucial for anyone undergoing a divorce to think carefully about how they’re going to protect their assets and get the fair share of the items they’re owed. Working with the right divorce attorney can assist with this.
- Being informed about your options and using the right tools is particularly important in a high net worth divorce situation. Various methods can be used, like financial discovery, depositions, subpoenas and more that can be utilized to give the court a better picture of the situation.
- A full valuation of assets is often essential when dealing with a divorce case. By valuing assets properly, you will be able to have a more accurate and reasonably discussion about the possibilities of equitable distribution. High net worth divorce cases could include one party who has assets relating to shares in a company or business. Accessing an accurate business valuation for these items will be essential to ensuring the right kind of settlement or decision from the court.
- Usually, when a business is involved in a divorce case, and one spouse started the business during the marriage that continues to generate profits after the divorce, the judge needs to determine who will have ownership of the business, and how future income generated by that business will impact the financial situation of the receiving spouse.
- In most cases, the court will award the business ownership to the spouse that started the company. It’s not often feasible for a business to be jointly run by two former spouses. In order to compensate the spouse who doesn’t receive the business, the judge will often order the spouse receiving the company to buy the other spouse out.
- Courts in New York will also need to look at whether post-divorce maintenance is appropriate (there are guidelines based on income and length of the marriage for maintenance). In making the correct determination, the court will consider various factors, including the spouses’ relative income, and income generated by the business.
Tax Implications in Divorce Cases
There can often be a range of tax implications associated with the assets of each party. These implications can range from capital gains to future income taxes. In some cases, I may recommend the use of tax or financial professionals advice in a divorce to generate more information about finances and taxes.
- With each divorce case, it’s important to consider the assets, liabilities, and tax considerations of each couple and individual carefully. Taxes that need to be paid on various things, from business payments to home costs and sales need to be considered alongside equitable distribution.
- Each agreement and case is different, so it’s difficult to know for certain what kind of outcomes each situation will lead to. Tax filing status is often a big consideration in divorce. For instance, the couple may need to determine who can file taxes and get deductions for any children involved in the marriage.
- Common language in a settlement agreement could even allow the husband and wife to file joint taxes or separate taxes for any tax year that they’re still married, or at some juncture throughout the year. In the event that tax refunds are received, they may be designated by agreements as belonging to one spouse or the other.
If you have any concerns about the issues mentioned above, or you would like to discuss your divorce case with me further, you can contact my office through my online contact form, or over the phone at (516) 333-6555 to schedule an appointment. Your initial consultation, up to the first thirty minutes, is free, via in-person chat, phone call, or video conference.