Divorce in New York comes with significant financial implications, but working with a skilled New York divorce attorney is often the key to protecting your assets while navigating equitable distribution procedures.
Key Takeaways:
- New York divides marital property “fairly”, which does not necessarily mean equally. This means various factors like the length of the marriage, the financial and non-financial contributions of each spouse, each spouse’s income and earning potential, and more will be considered.
- Taking early steps, such as freezing joint accounts and retaining financial documents, can help safeguard your assets during the divorce process.
- Working with other experts like financial advisors and tax professionals ensures that you understand the financial and tax consequences of certain asset division outcomes and alimony arrangements, which helps you to secure a fair outcome.
Divorce is a major life event that impacts nearly every aspect of your life, and your finances are no exception. When a marriage ends, it’s not just about emotional healing or adjusting to a new routine - it’s also about dividing assets, determining spousal and child support, and ensuring your financial future is secure. In New York, where divorce laws are complex, it’s crucial to understand the financial implications of divorce and take steps to protect your assets.
In this blog, we will walk you through key considerations regarding the financial aspects of divorce in New York and provide practical tips on how to safeguard your financial future during and after the process.
Understanding Equitable Distribution in New York
New York is an equitable distribution state, which means that marital property is divided “fairly,” but not necessarily equally. The goal is to divide assets and debts in a way that is just, which means considering various factors such as the length of the marriage, each spouse’s financial contributions, and other relevant circumstances. Understanding how New York courts approach asset division can help you plan a strategy for protecting your assets with the help of a skilled New York divorce attorney.
Marital Property vs. Separate Property
The first step in protecting your assets is to understand the distinction between marital property and separate property:
- Marital Property: This includes, with several specific exceptions, assets and debts acquired during the course of the marriage, regardless of whose name is on the title or account. This can include real estate, vehicles, retirement accounts, savings, and even businesses.
- Separate Property: This consists of assets owned by one spouse before the marriage, the proceeds of a personal injury lawsuit, and assets that one spouse received as a gift from a third party or inheritance during the marriage. Separate property is typically not subject to division in divorce, but there can be exceptions, especially if it was commingled (mixed) with marital property.
Key Factors in Asset Division
New York courts may look at various factors when determining how to divide assets, including:
- The duration of the marriage: Longer marriages may lead to more equal distribution of assets.
- The financial and non-financial contributions of each spouse: This includes both income and homemaking, child-rearing, or other non-financial contributions to the marriage.
- The economic circumstances of each spouse: A spouse with fewer financial resources may try to claim a greater share of marital property.
- The tax implications of dividing certain assets: Some assets may have steeper tax consequences than others, which can affect the overall fairness of the division.
Steps You Can Take to Protect Your Assets During Divorce
1 - Get Organized: Understand Your Financial Situation
Before proceeding with any legal action, it’s important that you take a detailed inventory of all your assets and debts. This includes bank accounts, retirement accounts, real estate, vehicles, personal property, and any business interests. Make sure to also include debts such as mortgages, loans, and credit card balances.
Having a clear picture of your financial situation will help your attorney advocate for you more effectively. Be prepared to provide detailed documentation and consider also working with a financial advisor who can help identify the value of certain assets, especially complex ones like businesses or investments. Of course, sometimes you may be unable to obtain all this information and in those circumstances, we are skilled at ensuring we have what we need to properly represent you.
2 - Take Action to Protect Your Assets Early
Once you decide that divorce is truly the path you want to take, it’s important to take steps to protect your assets. This might include:
- Freezing joint accounts: If you share a bank account with your spouse, consider separating your finances as soon as possible to prevent one spouse from withdrawing large sums of money without the other’s consent. Before doing so, it is imperative that you consult with your lawyer.
- Retaining documents: Keep records of all financial transactions, including statements from financial institutions, investments, and tax filings. These documents will be crucial in determining the value of assets and debts.
- Avoiding transferring assets: Don’t attempt to hide or transfer assets in an effort to shield them from division. This could backfire and negatively impact your case.
3 - Hire a Skilled Divorce Attorney
Working with an experienced divorce lawyer in New York is one of the most effective ways to protect your financial interests during divorce. Your attorney will help you navigate the complexities of asset division, ensure that your rights are protected, and work toward a fair settlement that minimizes any potential financial impact.
An attorney can also help you with the following:
- Negotiating settlements: Your lawyer can help you reach an agreement that ensures an equitable distribution of assets and protects your long-term financial stability, or guide you through other methods of alternative dispute resolution like meditation and collaborative law.
- Litigation: If a settlement cannot be reached, a divorce lawyer can present a strong case to advocate for your interests.
- Spousal support (alimony): A knowledgeable attorney will help determine if alimony is applicable in your case and work to ensure that any support arrangements are fair and reasonable.
5 - Understand the Tax Consequences
Certain assets, such as retirement accounts, stock options, or real estate, may have significant tax implications when they are divided. It’s important to work with both your divorce attorney and a tax professional to understand the tax consequences of asset division. You may want to consider:
- Transferring assets tax-efficiently: For example, transferring retirement funds through a Qualified Domestic Relations Order (QDRO) can help avoid tax penalties.
- Evaluating the tax impact of selling assets: If you and your spouse agree to sell property or liquidate assets, consider how this will affect your tax liability.
6 - Consider Future Financial Planning
Divorce can significantly alter your financial trajectory, which is why it’s important to consider future planning once the divorce is finalized. This includes reviewing:
- Retirement plans: Divorce may impact your retirement savings, so it’s important to ensure your future retirement plans are not further impacted by a poorly designed resolution.
- Child support or alimony payments: If you are required to pay or receive alimony or child support, make sure you understand how these obligations will affect your long-term financial plans.
Trust Joseph Law Group, P.C. to Help You Build a Solid Foundation for Your Post-Divorce Financial Future! Call Today!
Divorce in New York can have significant financial consequences, especially when it comes to dividing assets and determining spousal support. However, with the right preparation and legal guidance, you can protect your financial future during this challenging time.
Our experienced New York divorce attorneys have 100+ years of collective experience, and can help you understand your financial situation, consider the tax implications of certain asset division outcomes, and achieve favorable results. With the right approach, you can ensure that your financial interests are safeguarded, allowing you to move forward and build a stable future!
Let us provide the exceptional representation you deserve to successfully transition to the next chapter. Call today to book your free case evaluation and take the next steps.
