TRANSCRIPT 🔗
Welcome to Moving Forward, Divorce and Family Law with Andrew Wood. Welcome to Moving Forward, Divorce and Family Law with Andrew Wood. Andrew H. Wood is a family and matrimonial attorney based in Albany serving clients across upstate New York. Known for his detailed oriented and transparent approach, he helps clients make informed decisions during life's biggest transitions. I'm Lisa Mosbey and today we're talking about how property and assets are divided in New York divorces. Andrew will go over what counts as marital property, how the process works, and why equitable doesn't always mean equal. Thank you so much for joining me again today Andrew. Thank you for having me again Lisa. You know Andrew, what do you think is the most important thing for people to understand about how property division works in New York? Yes, as you stated in the intro, New York state is an equitable distribution state. Equal distribution does not mean equal distribution, although oftentimes property assets, liabilities are divided equally, that is not always the case, so it's equitable not equal. The other important thing that people need to realize is the distinction or classification of marital property and separate property. Those are the two separate and distinct classes of assets that are involved in matrimonial litigation. You knew I'm going to ask you the difference between those two. What is the difference? Sure, so separate property is any property that was owned by a spouse prior to the party's marriage and also property that was acquired by one spouse during the marriage either through inheritance, gift, or personal injury settlement is generally the main three that are acquired. Real or marital property is any other property that was acquired during the marriage, so that is from the date the parties were married until the date that one party commenced in action for divorce. Why does that distinction matter so much? Suffer property cannot is not divided between the parties. The separate property will remain the property of whoever owns that property. Marital property is what is divided between the parties and it's difficult because in matrimonial action people may have oftentimes in marriages, people have maintained separate bank accounts and they deposit their income into their own separate bank account and then they use that money to purchase an asset whether it be real estate, a vehicle or something else just because that money was purchased by them from using the funds in their bank account, that's still a marital asset as opposed to a separate asset which might be a vehicle that they inherited from their mother or grandfather or whoever it may be. So that's a lot of different accounts and assets. What kinds of assets tend to create confusion? Things like retirement accounts investment accounts are real estate? They all can cause some confusion depending on the scenario, the situation, every divorce case is different. With real estate, confusions arise
Load full transcript
sometimes if a party has let's say a separate property credit in the real estate, that would arise if somebody purchased used funds that they inherited or that were their separate property and used those funds as the down payment to a house. In that situation they might get a credit towards the value of that house for their separate property credit. Retirement accounts sometimes create the same issue if somebody had started a retirement account or had an interest in a pension prior to their marriage, they get a credit for that portion of the retirement account that was not marital. So all assets can have some difficulties in determining marital share and separate share but there is something that an experienced matrimonial attorney can figure out after getting the necessary information. And then how did the courts decide what's a fair or equitable division when the spouses disagree? That's usually unfortunately done after a trial. The courts have to make a determination that parties weren't able to agree and settle and the court looks at numerous factors that are enumerated in the statutes and the laws of New York State. They also take into account the way people acted during the marriage that would come up in testimony that would be given during the trial and they look at bank account statements, they look at credit card statements, they look at the brutality of the party's marriage and what they have in terms of assets, what they have in terms of liabilities. If it's necessary for one person to, you know, for example, keep the marital residence or there's a business that's involved and the spouse that owns that business wants to maintain that business and it needs to maintain that business because it's his or her livelihood. Then how are they going to offset the value of that business with other assets in the marital estate? And then Andrew, are there steps couples can take before or during the divorce to make the property division process smoother or less stressful? There are. There's always things the spouses can do to make it less stressful. One is, everything needs to be, you know, valued or determined, getting bank account statements, credit card statements, usually for the past at least two years is helpful, see if there's any major transactions, anything of that nature. Personal property is always an issue that comes up in divorce matters. If parties can go through, you know, their house or the garage or wherever they may have personal property stored, kind of make a detailed list of who is going to keep what? If they can narrow the issues down, so, you know, the husband gets the living room furniture and the wife gets the dining room furniture, but that is, you know, extremely helpful and if we only have a couple issues that the parties can agree on or pieces of personal property that the parties cannot agree on, that makes things much easier for the courts, the parties and the attorneys and it's much less in legal fees for the parties.
And then the follow-up question is, of course, how are debts like credit cards and mortgage divided during a divorce? So, relatively the same way, you look at the debt was acquired during the marriage. That is generally a narrow debt that will be divided evenly. Oftentimes people have credit cards in their own names, but the other party might be a user on that credit card or have, you know, have a credit card in their name for that account. Other times, the one spouse may have a credit card in their name alone, but they're responsible for all the grocery shopping, for buying, clothing for the children, for paying the bills. In that circumstance, those bills are generally divided evenly between the parties. It's often the case that debts are not evenly divided when one person was spending extraordinarily just on themselves or wastefully dissipating the monies. In that circumstance, you know, they may be responsible for a greater share or all of a debt. And in an earlier question, you mentioned that if they own a business together, how do you approach valuing or dividing a business when it's part of the marital property? When it comes to valuing a business, depending on, you know, the type of business and how large it is or how intricate it is, oftentimes you'll hire what's known as a business valuation or business expert. In which case, they will get necessary documents pertaining to the business, financial statements, financial records, bank account statements, any debts, any installment contracts and the businesses might own, and go about through their process valuing the business. There's different ways to value different types of businesses. I've seen many different valuation reports. It also depends on how much of what share of the business a person owns. If they own 100% of the stock of the business or if they're a minority owner in it, for example, it's a large family company and there's many people that work in the business. Their percentage might be less and with that comes less rights and the value is less. But generally hiring an expert to do it, there are ways can be done without an expert. You know, attorneys will regularly go through and look at the bank account and if it's just a sole proprietor that is a contractor or a lawyer, you know, you can kind of go through the records and figure out what their income is and try to come up with the valuation whether I'm dealing with the party themselves or their attorney and see if we can agree on something otherwise. I would have to go to the court. And then once we have a value of that business, it's how do they pay that? So that's usually done through what's called a Distributive Award, which is a payment or either a one-time lump sum payment or it's paid over a period of time for the value or the marital value of that to the other party. And same thing with the house. If one person wants to keep the house and there's say the other party is entitled to $100,000 equity from that house, the options are generally take out refinance the mortgage, get a higher mortgage so you can pay that person their share or get a home equity line of credit to pay that person off. Or if there's other assets in the marital estate, maybe retirement accounts, assets, we look at a different way, but bank accounts, things of that nature that can offset the equity in the house. That's how that is generally divided between the parties. That makes sense. And if one spouse believes that the other isn't being fully transparent about finances, what options exist to uncover hidden assets? First, there's truly a discovery process, as a much more attorney, I would ascertain whether it be from the party, from their attorney, or from the financial institution, one of the bank statements. And those alone provide me with the significant amount of information. If there's further, if I don't think I'm capturing at all, you can hire an expert as well. And there's higher financial forensic experts. You can hire accountants. You can hire private investigators to search for other assets and to look through the statements even further to see if we're missing anything. That makes sense. You know, where I want to leave it today, Andrew, is what is your best advice for keeping expectations realistic and protecting long-term financial stability through maybe a property settlement? That's a great question. As with other issues involved in the matrimonial field, it's getting an idea from the outset of the party's financial situation, of their assets, of their incomes, and what they're looking to do. Try to achieve those goals within the means that are there and realize that there are ways many different ways to, once we look at all the assets and the debts, to figure out something that will work for them. Is it affordable for them? And then also, if they don't already have a financial advisor, I have a list of referrals that can provide to them accountants, things of that nature to help them on the right path, to make sure that they can preserve the assets they have, that they have income and disposable income that they can, to care for themselves, for the children, and to provide and prepare for their future. Andrew, I want to thank you for your insights today on settlement expectations. I think sometimes it's challenging and we don't know where to turn, so this has been very eye-opening and enlightening. Thank you, sir. Thank you, Lisa. That's it for today's episode of moving forward divorce and family law with Andrew Wood. If you're in upstate New York and need straight forward guidance about dividing your assets or understanding your financial rights in a divorce, visit awoodesq.com to learn more. Thanks for listening. And remember, to like, subscribe, and share this episode with someone who might need it. And we'll see you next time. And leave us a review in the comments.