During the process of divorce, a separating couple will need to divide their marital property. In the state of New York, divorcing couples will be required to split and distribute marital property equitably. "Equitably" does not necessarily mean that property will be split equally between the two spouses; rather, it implies that the marital property will be divided fairly.
Unfortunately, what may seem fair or just to you may not be what a judge deems fair. Oftentimes, items that were brought into a marriage by one party end up being converted into marital property either intentionally or, in some cases, accidentally. Gray areas such as these can cause significant difficulties in the property distribution process, especially in cases centered on the division of a marital home, a family business, bank accounts, debts, or retirement plans.
The courts will typically view your marriage as a partnership and will split your property based on this assumption. What you originally thought was yours may not be in the eyes of the law.
Marital property could include:
If you are determined to ensure a fair and just distribution of your marital property, it will be crucial that you speak with our skilled lawyers. We maintain an impressive network of financial consultants and expert forensic accountants who can uncover hidden assets or private business funds to help you keep what is yours or access what should be shared with you.
As part of the distribution process, the marital residence will need to be appraised. Unfortunately, the collapse of the housing market has significantly impacted property distribution. The result can come as a rude shock to spouses who thought their homes were worth more than they are now.
Some couples will be left with unfavorable, yet necessary, options:
We can provide you with legal counsel on the legal ramifications and implications of any of the choices that are available to your family. Having represented many families in the Beacon and Dutchess County areas, we know that the process of parting with a former spouse and your property can be incredibly difficult. We aren't afraid to take swift legal action to effectively help you make beneficial choices.
When a couple divorces and there is a family business, it will be necessary to determine the value of the business. If you own a business and you are headed toward divorce, we highly recommend calling upon a business valuation expert who will distinguish between the business’ “active” and “passive” appreciation.
Valuating the active and passive appreciation in a business is crucial and the difference matters a lot. Often, a spouse’s interest in a closely-held business exceeds the marital residence, so it must be given the attention it deserves. Not only is the business a valuable asset, but valuation can be a complex matter, especially if the spouse owned the business before the marriage.
In the context of divorce, the active appreciation of a business owned prior to a marriage is typically included in the marital estate, whereas the passive appreciation is left out. By “active appreciation,” we’re referring to a spouse’s active involvement in the business during the marriage.
Active involvement can mean a variety of things, such as buying a bigger building so the business can hire more employees and expand operations, developing new products and services that lead to the company’s growth, and other activities that contribute to the company’s appreciation.
On the other hand, “passive appreciation” has to do with an increase in value of a premarital asset due to external market conditions. For example, if a premarital asset, such as a piece of land increased in value during the marriage strictly because of market conditions, and not because of the owner spouse’s active involvement, the increased value would remain separate property and would strictly belong to the owner spouse.
If the same piece of premarital property tripled in value because the owner spouse developed the land (active appreciation) while he or she was married, the increased value during the marriage would be counted as marital property and subject to division under New York’s equitable division laws.
If you’re divorcing and one of you owned a business or real estate before the marriage, it’s critical that the active and passive appreciation are distinguished because it can make an enormous difference in the settlement. Having a knowledgeable attorney and business valuation expert can help protect your interests throughout the divorce process.
At the Law Office of Dennis R. Vetrano, Jr., LLC, we are dedicated to the practice of family and matrimonial law. Each member of our firm has acquired the necessary skills and resources to help guide your case to an optimal and fair resolution.