Question

How can I protect my assets in a divorce in New York?

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When clients first come to my firm and tell me that they believe they are about to get divorced, they often follow up this declaration with a concern: what’s going to happen to my property? Cash, stocks, real estate, retirement funds, sometimes even entire businesses – clients have some general idea that a divorce touches on all of these things, but they are unsure of how and to what extent their assets will be affected. Is it true that divorce can bankrupt one or both halves of a couple? Does everything get split 50-50? Most importantly, what can I do to avoid financial ruin?

The good news is, divorce definitely does not mean automatic financial ruin and a good divorce lawyer can do a lot to help a spouse hold on to the bulk of his or her assets. How courts divide assets in a divorce in New York is complex and involves both statutory law and case precedent, but a few general rules are applicable to most divorces.

First, it is of course helpful to have either a prenuptial or postnuptial agreement. A pre- or post-nup, if skillfully drafted, should resolve many of the uncertainties presented in marital dissolution. If a married couple is wondering what happens to a house if they were to divorce, there is a simple way to answer that question: enter a postnuptial agreement that dictates what happens to the house.

Of course, if you are already on the road to divorce, it may be too late for that. Here is the first thing to understand about the division of assets in a divorce: the threshold question applied to every piece of property will be, is it separate property (property belonging to one spouse), or marital property (property owned by both spouses)?

Separate property will not be divided by a court – (subject to some caveats) it will remain the property of whichever spouse holds title to it. Sounds great, right? But there is a catch. Any property purchased or obtained during the marriage (with a few exceptions) is presumptively not separate, but rather, marital.

Marital property is subject to division between the spouses. But even if something is declared to be marital, that does not necessarily mean it will be divided in half. New York is a so-called “equitable distribution” state. This means that marital property is to be divided fairly, and “fair” does not necessarily mean “equal.”

As a property owner, you may now be wondering what the division actually will be. The answer is, that depends – courts look to many factors to determine what is equitable, including the contributions spouses made to the acquirement or betterment of property, the ages and health of the parties, the income-earning capacity of the spouses, even the tax consequences of distribution.

It sounds intimidating, but in fact, New York’s equitable distribution system is a key reason why the quality of your divorce lawyer matter. A skilled divorce attorney can highlight the distribution factors that favor your side, while minimizing or distinguishing the ones that do not. In this respect, parties are not entirely at the mercy of the court’s whim when it comes to dividing their assets, and they are free to show why, exactly, a division too tilted toward the other party would be unfair. You can learn more about property division in a New York divorce here.

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

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