Dividing Assets in New York Divorce
New York divorce cases can be complex. Whether contested or uncontested, each divorce action can bring about their own unique set of challenges. The most common challenge New Yorkers face is equitable distribution, which is the division of marital assets.
What is a Marital Asset?
A marital asset is an asset that is acquired during the course of a marriage. An asset can be tangible or intangible, and can include a piece of property or plot of land, jewelry, or shared financial accounts and investments. IRA’s and 401(k)’s are also subject to equitable distribution during divorce.
Items that cannot be divided during equitable distribution are assets that were obtained by either party prior to marriage. Gifts or inheritances received by a spouse will be deemed a non-marital asset, unless the asset is co-mingled during the marriage. For example, a wife may receive a large cash inheritance from a deceased family member. The husband will have no claim to the wife’s money during divorce, unless she deposited the funds into a shared bank account, or used it to pay for a mortgage, bills, or other marital expenses.
Business Holdings and Enhanced Earnings
Entrepreneurs face additional challenges during divorce because their business interests may be at risk. This can especially ring true if the business has been co-mingled during the marriage, or if the other spouse has made contributions towards its success. Contributions can be direct (the other spouse was an employee of the business), or indirect (the other spouse provided monetary or emotional support). The type of business, as well as how ownership is distributed amongst partners or employees, will determine if the company is subject to distribution.
An often overlooked item that can be eligible for equitable distribution is the potential for enhanced earnings. The Enhanced Earnings Capacity is a highly complex aspect of divorce. It reflects the amount of money you can expect to earn over your lifetime as a result of a professional license or advanced academic degree. The potential for money earned may be divided during equitable distribution. Generally speaking, however, a spouse must be able to prove that they contributed to their partner’s degree. Contributions can include paying tuition or related costs, or becoming a homemaker during the course of their spouse’s studies.
Statement of Net Worth
A Statement of Net Worth (SNW) is a document that outlines each litigant’s income and financial obligations, as well as tangible and intangible assets. Both parties are required to fully disclose all relevant information on their SNW and file it with the court. The SNW will help determine pendente lite support, as well as post-judgment alimony and child support. A judge will not tolerate spouses who hide or dispose of their assets in an attempt to skew a support order in their favor. To ensure that clients do not do this, it is important the gather financial documents in the early stages of divorce. A financial checklist can help them keep track of their progress.
High Net Worth Divorces
High net worth couples face an extended discovery and distribution processes during divorce. High net worth individuals typically have over $1 million dollars in tangible and intangible assets. Because of the sheer amount of property and accounts owned, disputes may arise over which spouse can claim ownership over a particular item. If litigants can reach an agreement regarding distribution, then the court will intervene. A judge will hold a trial to discuss financial holdings and assets, and issue a ruling detailing how marital assets are to be divided among the parties.
Court appearances and trials can be time consuming and incredibly expensive. It is best to avoid going to trial unless absolutely necessary. One way to help prevent costly litigation is to sign a prenuptial or postnuptial agreement. These agreements can stipulate which assets are marital or premarital, as well as how they are to be divided in the event of divorce. It is always recommended that high net worth individuals have up-to-date postnuptial agreements.
A NYC Divorce Powerhouse
Navigating the waters of the New York Unified Court System can be tricky, and doing so without the representation of a qualified divorce and family law attorney is ill-advised. The staff at Brian D. Perskin & Associates, P.C. specialize in contested, high net worth matrimonial matters. The legal team has over 50 years of combined experience, striving to get their client’s the fair and lucrative divorce settlements they deserve. Make sure you case is in the right hands, and schedule your free consultation today!