How a Spouse’s “Contributions and Efforts” Factor into a Court’s Equitable Distribution Analysis in New York

New York is an equitable distribution state. Thus, when it comes to dividing up a couple’s assets in a New York divorce case, the court will consider a number of factors. However, before the court gets to the point of dividing up the assets, it needs to determine which assets are subject to the equitable distribution rules.

Pie ChartOnly marital property is subject to equitable distribution. And as a general matter, property that is determined to be the “separate property” of one spouse will remain with that spouse. Courts use a common-sense approach when determining whether property is marital or separate property. Under New York Domestic Relations Law section 13-236, separate property includes property acquired before the marriage and property that was gifted to one spouse by someone other than the other spouse.

In addition, “property acquired in exchange for [separate property] or the increase in value of separate property” will be considered separate property unless the increase in value is due in part to the “contributions or efforts of the other spouse.” This last category of separate property is often the subject of much dispute. A landmark case decided by the New York Court of Appeals set forth the framework regarding how courts view these claims.

The Facts of the Case

Husband was gifted 25% of his father’s company before he met Wife. Once they were married, Husband was gifted another 25% of the company. After this, the couple entered divorce proceedings. Prior to the divorce being final, however, Husband became the sole owner of the company.

Before she met Husband, Wife was a nurse. However, shortly after they were married, Wife quit her job to become a full-time mother and homemaker. Throughout the marriage, Wife occasionally worked part-time as a nurse, attended conferences with Husband, and helped Husband host company events.

Wife asked the court to determine that the increase in value of the company constituted a marital asset because, although the company was gifted to Husband, the increase in value was due, in part, to her contributions and efforts. The trial court rejected Wife’s request, and Wife appealed.

The Court’s Decision

The court began its analysis by noting that the underpinnings of the equitable distribution analysis assume that a marriage is an economic partnership that depends “not only upon the respective financial contributions of the partners, but also on a wide range of nonremunerated services to the joint enterprise, such as homemaking, raising children and providing the emotional and moral support.”

Taking this into account, the court determined that when one spouse’s separate property increases in value due in part to the contributions of the other spouse, any increase in value of the asset should be considered marital property that is subject to equitable distribution. The court made sure to draw a distinction between an increase in value that is due to causes unrelated to the other spouse’s efforts, such as market forces, and an increase in value that is due to the other spouse’s efforts.

Are You Involved in a New York Divorce?

If you are currently in the process of a New York divorce, or you are considering filing for divorce, you should consult with a Long Island equitable distribution attorney. Attorney Darren M. Shapiro has extensive experience representing parties in all kinds of New York family law issues, including divorce and child custody matters. To learn more, call 516-333-6555 to schedule a free consultation today with the Law and Mediation Offices of Darren M. Shapiro.

More Blog Posts:

Equitable Distribution in New York Divorce Cases, Long Island Family Law and Mediation Blog, March 7, 2018

Under New York Family Law, Marriage May Boil Down to an “Economic Partnership”, Long Island Family Law and Mediation Blog, April 6, 2018