How the Court Determines a Fair Division of Debt and Assets
In a New York State divorce action, marital property is equitably divided. The word “equitable” does not necessarily mean equal, but in most cases equitable distribution will be an even 50/50 split. Both assets and debts are divided in this way. The division is generally equal because the courts base the distribution on the contributions, both direct and indirect, of the parties. Even though one of the spouses may have made most of the money and accumulated most of the assets, the other spouse’s contributions as spouse, parent and homemaker are assumed to have an equal value.
There are exceptions to the general rule that assets and debts are divided equally, however. In cases where the parties have been married a short time and they have kept their accounts in separate names, or where there are no children and the parties have clearly made unequal contributions to the marriage, the distribution of assets can be unequal.
There is a further exception to the equal division rule that applies even in cases where the parties have been married a long time and their contributions to the marriage are presumed to be equal. In cases where one of the spouses owns an interest in a business, the non-owning spouse will generally receive less than half of the value of the business-owning spouse’s interest in the business. How much less than half depends on the extent of the non-owning spouse’s involvement in the business. If he/she was very involved and helped with the books, etc., the interest can be 40% or more. If the non-owning spouse had little to no direct involvement in the business, the interest is often 10-15%.
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