Equitable distribution is a process for dispersing property acquired by or owned by either spouse upon the termination of marriage. Distribution replaces “common law” principles of property ownership. Prior to equitable distribution, New York was a “common law” state. This meant that property acquired by either spouse during the marriage was distributed according the owner named on the property title.

In the state of New York, all property acquired and income earned during a marriage is subject to equitable distribution. When a marriage is dissolved, the courts must make decisions regarding the distribution of property. There are a number of factors that the court must consider before the property is divided.

When distributing property, the courts sort out what is to be considered separate property and what is to be considered marital property. Separate property usually remains separate and marital property is distributed equitable between both spouses. The courts will also take into consideration the circumstances surrounding the case and both parties.

Separate property is:

• Property acquired before marriage
• Property acquired descent or gift from a person other than the spouse
• Personal injury compensation
• Property acquired in exchange for or the increase in value of separate property
• Property considered separate according to a written agreement between the spouses

A spouse must show proof that the property is indeed separate. This procedure must be done with all real property as well as bank accounts, investment accounts or any other asset that has value.

Marital property is:

• Property acquired during the marriage
• Property acquired before the execution of a separation agreement
• Property acquired before the beginning of a matrimonial action

Businesses, Degrees or Licenses
Businesses, degrees and licenses are all property subject to equitable distribution. If a spouse’s business was formed during the marriage, then it is considered marital property. If the business was created prior to marriage and continued on during marriage, then the marriage has an interest in the increase in value of the business. If a spouse obtained any kind of degree during the marriage, the increased earnings as a result of the license are subject to equitable distribution. Any law, medical, MBAs , accounting or financial planning licenses acquired during the marriage are also subject to distribution laws.

Debts
Marital debt must also be divided when you prepare your separation agreement. If the debt occurred during marriage, it is marital debt. It does not matter if that debt is in your name or your spouse's name.