High-earning spouses in Midtown Manhattan and across New York City may not know what to expect as they prepare for divorce. When dividing assets and debts in a New York divorce, spouses either have the option of settling with one another or litigating. If the courts manage marital property and debt division, then New York’s equitable distribution statute, DRL § 236, guides the process.
What can divorcing professionals anticipate during equitable distribution in New York?
Equitable is not the same as equal
To many people, an even split of marital assets and liabilities seems like the logical outcome. However, in a New York divorce, financial division is much more nuanced. A judge must split both marital debts and marital assets in a manner that is just or fair.
That doesn’t necessarily mean an equal split. Factors, including the wages of both spouses and their earning capacity, can influence what a judge views as appropriate. When deciding who pays debts in a New York divorce, judges consider who has enough income to cover those recurring expenses.
Frequently, higher-earning spouses receive more assets because they contributed more financially to the marital estate and are in a better position to maintain those resources. However, offsetting assets with debts in a divorce is a common strategy.
Those keeping financed vehicles or homes with mortgages assume responsibility for those obligations. Spouses with higher wages may also assume responsibility for more credit card debt and other household financial obligations. The overall allocation of both property and debt must be fair and based on the ability of each spouse to maintain assets or pay marital debts. Even accounts in the name of one spouse could be part of the marital estate if the debt originated during the marriage.
When pursuing a fair divorce debt allocation in New York, accurate financial disclosures are of the utmost importance. Professional asset valuations can help validate the fair market value of certain resources. In scenarios where there are questions about separate property or other challenges, such as allegations of hidden income, working with the forensic accountant might be necessary.
A New York family law attorney’s support is often critical in a complex divorce. Working with a divorce lawyer can help high-earning spouses protect the assets they deserve to retain and work to ensure a fair allocation of marital debts as well.