New York State Judicial Institute
March 25, 2015
10:25am - 11:25am
HOT TOPICS IN EQUITABLE DISTRIBUTION
Faculty: Hon. Hope Zimmerman, JSC
Elena Karabatos, Esq.
Kathleen Donelli, Esq.
I. RECENT TRENDS IN EQUITABLE DISTRIBUTION PERCENTAGES
OF BUSINESSES AND OTHER MARITAL PROPERTY …………………… 2-11
II. CREDITS FOR SEPARATE PROPERTY ………………………………...…… 11-25
A. Burden of Proof to Trace Separate Property ………………………….….. 11-12
B. Commingling Marital with Separate Property ……………………….…… 12-13
C. Transmuting Separate Property into Marital Property……………….……. 13
1. Financial Accounts …………………………………………….…… 13-17
2. Marital Residence …………………………………………….……. 17-22
D. Active v. Passive Appreciation in Separate Property……………….……. 22
III. RESPONSIBILITY FOR MARITAL DEBT …………………………….…..… 25
IV. USING SEPARATE PROPERTY FOR CHILD SUPPORT ………………...… 25
Hon. Hope Zimmerman
Supervising Judge, Matrimonial Center
Nassau County Supreme Court
1200 Old Country Road
Westbury, New York 11590
Elena Karabatos, Esq.
Schlissel Ostrow & Karabatos, PLLC
200 Garden City Plaza
Garden City, NY 11530
Kathleen Donelli, Esq.
McCarthy Fingar LLP
11 Martine Avenue - 12th Floor
White Plains, New York 10606
I. RECENT TRENDS IN EQUITABLE DISTRIBUTION PERCENTAGES OF BUSINESSES AND OTHER MARITAL PROPERTY
1. Statutory Basis: Domestic Relations Law 236B(5)(d). The statute provides thirteen factors (and one catch-all factor) to consider in determining the equitable distribution of marital property:
(1) the income and property of each party at the time of marriage, and at the time of the commencement of the action;
(2) the duration of the marriage and the age and health of both parties;
(3) the need of a custodial parent to occupy or own the marital residence and to use or own its household effects;
(4) the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;
(5) the loss of health insurance benefits upon dissolution of the marriage;
(6) any award of maintenance under subdivision six of this part;
(7) any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party;
(8) the liquid or non-liquid character of all marital property;
(9) the probable future financial circumstances of each party;
(10) the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest intact and free from any claim or interference by the other party;
(11) the tax consequences to each party;
(12) the wasteful dissipation of assets by either spouse;
(13) any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
(14) any other factor which the court shall expressly find to be just and proper.
2. “Equitable Distribution” does not mean “equal” distribution.
The courts have consistently held that “equitable distribution” does not necessarily mean an “equal distribution”, and the courts are given the discretion to determine the appropriate distribution of assets. See Arvantides v. Arvantides, 64 N.Y.2d 1033, 478 N.E.2d 199, 489 N.Y.S.2d 58 (1985); Rose v. Rose, 18 A.D.3d 852, 795 N.Y.S.2d 472 (2d Dept. 2005); McKnight v. McKnight, 18 A.D.3d 288, 795 N.Y.S.2d 199 (1st Dept. 2005); Greene v. Greene, 250 A.D.2d 572, 672 N.Y.S.2d 746 (2nd Dept. 1998); and Rosenberg v. Rosenberg, 145 A.D.2d 916, 536 N.Y.S.2d 605 (4th Dept. 1989). Equitable distribution must be based on the circumstances of the particular case and the consideration of the statutory factors. See Holterman v. Holterman, 3 N.Y.3d 1, 814 N.E.2d 765, 781 N.Y.S.2d 458 (2004).
In Arvantides, supra, the Court of Appeals held that the Appellate Division did not abuse its discretion in reducing the Wife’s share of the value of her Husband’s dental practice from 50% to 25%. Even when considering the Wife’s contributions as a homemaker, the Court found that in light of the Wife’s modest contributions to the dental practice, she was entitled to only 25% of same. The Court also considered the fact that the Wife received an award of maintenance, medical expenses, insurance benefits, and the more valuable of the parties’ two homes.
The Court even has the discretion to deny a spouse 100% of a particular asset in determining what is an “equitable distribution”. For example, in Coffey v. Coffey, 119 A.D.2d 620, 501 N.Y.S.2d 74 (2d Dept. 1986), the Wife sought equitable distribution of, inter alia, six certificates of deposit. The Second Department agreed with the trial court’s determination that the CDs were marital property because they were purchased with funds derived from marital property (the former residence of the Husband’s mother which the Husband had conveyed to himself and his Wife as tenants by the entirety). However, the Court held that the Husband must be credited with the creation of that marital asset and must also therefore receive a 100% credit for the acquisition of the CDs. Therefore, the Wife was not entitled to any of the principal from the CDs. (She was entitled to 50% of the interest earned upon the CDs.)
C. Trends in Distribution Percentages as Developed Through Recent Caselaw
30% of marital property business; 2.5% of increase in value of separate property business.
Vantine v. Vantine, ___ N.Y.S.2d___, 2015 N.Y. Slip Op. 01700, 2015 WL 790141 (3d Dept. 2015). Supreme Court awarded Wife 2.5% of the increase in value of the Husband’s separate property business interest, and 30% of the value of the Husband’s marital property business. The Third Department affirmed. The trial court determined that the Husband had a minor role in the appreciation in the increase in value of the separate property business, and the Wife made minimal contributions to the Husband’s minimal involvement in the company.
25% of businesses.
Sutaria v. Sutaria, 123 A.D.3d 909, ___ N.Y.S.2d ___ (2d Dept. 2014). Husband appealed trial court’s award to the Wife of 25% of the value of his two businesses. Appellate Division affirmed, finding that the award “properly accounts for the plaintiff’s direct and indirect contributions to the businesses, including her contributions as the primary caretaker for the parties’ children, which allowed the defendant to focus on the businesses.”
25% of appreciation in separate property business interest, 25% of marital property real estate holding company, 50% of marital property tax refund and stocks.
Hymowitz v. Hymowitz, 119 A.D.3d 736, 991 N.Y.S.2d 57 (2d Dept. 2014). 20 year marriage. Wife appealed trial court’s award to her of 15% of the increase in value of the Husband’s separate property business interest. The Husband acquired his interest in the hardware store business during the marriage by way of a gift to him from his father and uncle. The Second Department increased the Wife’s equitable distribution share from 15% to 25%, holding that such award “will take into account the defendant’s limited involvement in the plaintiff’s business, while not ignoring the direct and indirect contributions she made as the primary caretaker of the parties’ children, as a homemaker, and as a social companion to the plaintiff, while foregoing her career”. The Second Department also held that the trial court erred in finding that the Husband’s interest in the holding company that owned the building in which the business was located was his separate property. Upon finding such asset to be marital property, the Court held that the Wife should have received a 25% share of the Husband’s interest in same. The Court also modified the trial court’s decision so as to award the plaintiff with 50% of certain stocks, and 50% of the marital portion of a joint tax refund issued for the calendar year in which the action was commenced. The marital portion of the tax refund was calculated by taking a pro-rata share of the refund based upon the number of months that had accrued during the year prior to commencement of the action.
50% of portion of business acquired during marriage.
Turco v. Turco, 117 A.D.3d 719, 985 N.Y.S.2d 261 (2d Dept. 2014). 15 year marriage. Husband owned 50% of commercial bakery business at time of marriage. During the marriage he purchased an additional 29% of the business using marital property. The trial court failed to award the Wife with any portion of the business. The Second Department modified, holding that the Wife should receive a 14.5% interest in the business; i.e. 50% of the marital property portion. There is no discussion of factors supporting such award. No award was made for any appreciation in the separate property portion of the business, as the Wife failed to meet her burden of establishing that her efforts contributed to an increase in value.
30% of business (hedge fund).
Sykes v. Sykes, 992 N.Y.S.2d 161, 43 Misc.3d 1220 (Sup. Ct., NY County) (Cooper, J.) (May 2, 2014). 14 year marriage. Husband’s position at trial was that Wife should receive no more than 5% of the $8 million value of his hedge fund. Wife argued that she should receive 50%. Justice Cooper’s decision provides an in-depth discussion of the caselaw regarding the equitable distribution of business assets. The focus of the Court’s analysis was the extent of the Wife’s contributions, direct and indirect, to the creation and growth of the business. The evidence at trial showed that the Wife was not directly involved in the hedge fund, and her role as a “corporate spouse” was minimal. However, the Husband seldom asked her to perform in the role as a “corporate spouse”. The Court discussed the concept of an “economic partnership”, and the Wife’s contributions as a homemaker and stay-at-home mother. The Husband attempted to negate those contributions, arguing that she “outsourced” most domestic chores to hired assistants. However, the Wife established that she and her Husband agreed to “divide and conquer”, by having the Wife in charge of the home, and the Husband in charge of working outside the home. Ultimately, based on the facts of this case, the Court awarded the Wife 30%, i.e. $2.4 million for her equitable share of the hedge fund.
35% of value of corporate stock shares.
Alexander v. Alexander, 116 A.D.3d 472, 985 N.Y.S.2d 1 (1st Dept. 2014). 25 year marriage. First Department affirmed award to Wife of 35% of the value of the Husband’s interest in a corporation. The factors considered by the court were the duration of the marriage (25 years), the “contribution by the Wife in running the household and raising their two sons throughout the marriage, and the fact that most of the increase in corporate revenues, which resulted in the increased share price, occurred in the same year as the commencement of this action.” Query: does this mean that the Wife would have received a greater percentage had the increase in value of the shares occurred earlier in the marriage?
30% of value of business.
V.M. v. N.M., 990 N.Y.S.2d 440, 43 Misc.3d 1204 (Sup. Ct., Albany County) (Lynch, J.) (March 26, 2014). 13 year marriage. The Husband started his diamond import and wholesale business shortly before the marriage, and the parties stipulated that it was marital property with a value of $8.4 million. The record showed that the Wife was actively engaged in the business for approximately four years prior to the birth of the first child. She had an MBA and GIA certification, and was responsible for developing a part of the business, including creating the concept, copyright, trademark, and website design and marketing. “She is clearly a well educated, competent individual who played an important role in the business.” Based on the foregoing, the Court awarded the Wife 30% of the value of the business.
50-50 division of jointly owned business.
Wei Jiang Sun v. Yong Jian Li, 990 N.Y.S.2d 440, 43 Misc.3d 1205 (Sup. Ct., Queens County) (Jackman Brown, J.) (March 19, 2014). 13 year marriage. Court directed that the value of the jointly-owned dry cleaning business be equally divided.
20% of realty business.
Gordon v. Gordon, 113 A.D.3d 654, 979 N.Y.S.2d 121 (2d Dept. 2014). Trial court awarded Wife 20% of Husband’s interest in realty company. Second Department affirmed. “The award of 20% ‘takes into account the plaintiff’s minimal direct and indirect involvement int he defendant’s company, while not ignoring her contributions as the primary caretaker for the parties’ children, which allowed the defendant to focus on his business (citations omitted)”.
25% of dental practice; 0% of entity deemed to be a mere conduit for payments for freelance work; 50% of any future sale of copyrighted works; 25% of royalties.
A.C. v. J.O., 975 N.Y.S.2d 707, 40 Misc.3d 1236 (Sup. Ct., New York County) (Silber, J.) (August 12, 2013). 12 year marriage. Husband’s “business” was valued at $124,000. However, Court found that the entity was not a true business. Rather, it was a conduit for the Husband to receive payments for his freelance work in television production. The Court found the “business” to be personal to him and not sale-able. For those reasons, and based on the finding that the Wife had not made any contributions to the “business”, the Court did not award the Wife any share of the value of same.
The Wife’s dental practice was valued at $316,000. The Court discussed caselaw awarding 20% and 30% of businesses. Based on what the Court found to be “minimal direct and indirect contributions toward the establishment of the plaintiff’s business, but cognizant of his support of her for the four years she was in dental school, and of the parties’ first child, who was born during the summer before she started her last year of dental school” the Court awarded the Husband 25% of the value of the practice.
The Husband also held copyrights to four scripts, which were not valued. The Court directed that the Wife receive 50% of any sums paid to the Husband for the sale or use of the works, as they were created entirely during the marriage. To the extent that the Husband is required to adapt, modify, revise or otherwise spend time changing the scripts, the Wife is not entitled to any compensation he may earn for such future modifications. In addition, the Wife was awarded 25% of any fees or royalties that the Husband may earn from the four copyrighted scripts.
33% of appreciation in separate property business.
Benabu v. Rienzo, 104 A.D.3d 714, 961 N.Y.S.2d 482 (2d Dept. 2013). Duration of marriage not specified. Husband appealed from judgment of divorce. However, it was proper for the trial court to award the Wife 33% of the appreciation in the Husband’s business during the marriage for her indirect contributions.
15% of business; all other assets divided equally.
MI. S v. MA. S., NYLJ 1202646902432, at *1 (Sup. Ct. Nassau County) (Bennett, J.) (March 17, 2014). 16 year marriage. Parties’ bank and retirement accounts, real property, airline miles, and jewelry divided equally. The Wife was awarded 15% of the Husband’s interest in his medical practice due to her “minimal” indirect contributions.
17% of partnership interest; 50-50 division of future sale proceeds of real property; 50-50 division of marital portion of retirement plans
Ira S. v. Janice S., NYLJ 1202650165483, at *1 (Sup. Ct., New York County) (Drager, J.) (April 8, 2014). 25 year marriage. Court awarded 17% of the value of Husband's law firm partnership interest to Wife. While the wife provided indirect contributions to the attainment of this asset since she cared for the parties' children, and limited direct contributions by entertaining Husband's clients and discussing law firm tactics with him, the primary factors that enabled Husband to achieve professional success and become a partner were his "innate intelligence" and his law and LLM degrees earned prior to the marriage. Moreover, the Court found that the Wife engaged in conduct during the litigation that had a serious negative impact on the Husband's partnership interest.
The Court directed the parties' townhouse in New York City and their residence in Bridgehampton be sold, and awarded each party 50% of the future net sale proceeds. The Court also awarded each party 50% of the marital portion of Husband's retirement plans and other marital assets.
Enhanced Earning Capacity
30% of enhanced earning capacity - - medical degree and license.
Kim v. Schiller, 112 A.D.3d 671, 978 N.Y.S.2d 229 (2d Dept. 2013). Trial court (Rockland County) awarded Wife 50% of Husband’s enhanced earning capacity. Second Department reduced award from 50% to 30% (from $247,000 to $148,200). Court found that Wife did not make direct financial contributions to the Husband’s attainment of his medical degree and license, but she made substantial indirect contributions. She was “supportive of defendant’s attainment of his degree and the advancement of his career.” She also worked full time throughout the marriage other than when on maternity leave or on disability due to lupus. She also contributed her earnings to the family, “bore two children for whom she had care taking responsibility, cooked the family’s meals, and participated in the housekeeping.”
30% of enhanced earning capacity - - nursing degree.
Owens v. Owens, 107 A.D.3d 1171, 967 N.Y.S.2d 465 (3d Dept. 2013). 24 year marriage. Third Department affirmed award to Husband of 30% of the enhanced earnings attributable to the Wife’s nursing degree. Although the Wife sought to reduce that percentage on appeal, the Court found that the Husband encouraged her to pursue her dream, financed her education, and was the primary caregiver to the children while she pursued the degree on a full time basis. The Court affirmed the 30% award notwithstanding its finding that the Husband engaged in economic fault by spending/losing nearly $4.6 million of separate property monies. (The court did slightly increase the Wife’s maintenance award based on its conclusion that the Husband engaged in wasteful dissipation of his separate property, but this did not result in a reduction in the EEC award to the Husband.)
15% of enhanced earning capacity - - Associate’s degree and Bachelor’s degree.
McCaffrey v. McCaffrey, 107 A.D.3d 1106, 967 N.Y.S.2d 162 (3d Dept. 2013). 12 year marriage. Both parties appealed trial court award to Wife of 15% of the husband’s enhanced earnings. During the marriage, the Husband earned an Associate’s degree in telecommunications and a Bachelor’s degree in business administration with a minor in accounting. The jointly retained expert valued the enhanced earnings attributable to the Husband’s degrees at $204,000. The trial court found that 25% of that constituted separate property ($51,000), and that only 50% of the marital portion of the Husband’s enhanced earning potential ($76,500) was traceable to his degrees. The Wife was awarded 15% of that sum ($11,475). At trial there was evidence from the Husband’s personnel file remarking on the beneficial effect that his degrees had on his employment and the fact that he included his degrees on every promotion application. Further, the Wife testified that while the Husband was in school she rearranged her scheduled, transported him to and from classes, and assumed a greater share of the household responsibilities. Part of the education was paid for with marital funds. While the Wife argued for a greater percentage of the EEC, the Court found that the Husband expended significant effort in obtaining the degrees, attending night classes while working full time, and occasionally a part-time second job.
15% of enhanced earning capacity and law practice.
Vertucci v. Vertucci, 103 A.D.3d 999, 962 N.Y.S.2d 382 (3d Dept. 2013). 19 year marriage. Parties cross-appealed from judgment of divorce. Certain real property and other assets were divided equally between the parties (it is unknown if other allocations were made). The parties were married during the Wife’s entire third year of law school and her practice was started during the marriage. There was conflicting testimony at trial as to the Husband’s involvement in matters that contributed to the Wife obtaining her law degree and the start of her practice. The Court held that the award of 15% was well within the trial court’s discretion in light of the evidence.
50% of appreciation in separate property - - marital residence.
Lowe v. Lowe, 123 A.D.3d 1207, 998 N.Y.S.2d 252 (3d Dept. 2014). 6 year marriage. Husband appealed trial court’s award to Wife of 50% of the appreciation in his separate property marital residence, stock account, and 401(k), arguing that the Wife’s share should be reduced to 20%. Appellate division affirmed the award of 50% of the increase in value of those assets during the marriage. Factors supporting the trial court award included the Wife’s reduced future earning capacity due to her disability, the award of spousal maintenance, and the fact that the Wife’s equitable distribution had been reduced by a finding of wasteful dissipation by her. The wasteful dissipation consisted of the Wife’s spending over $30,000 with home television shopping channels, for which her equitable distribution was reduced by approximately $15,000.
70/30 Division of future sale proceeds of marital residence.
Smithie v. Smithie, 122 A.D.3d 719, 995 N.Y.S.2d 722 (2d Dept. 2014). Marriage of approximately 10 years. Second Department affirmed award of to Wife of exclusive occupancy of marital home until remarriage or the youngest child’s high school graduation. But, court reversed award to her of 50% of the future sale proceeds, and reduced her share to 30%.
50-50 division of marital property, including investment properties.
Morille-Hinds v. Hinds, 988 N.Y.S.2d 523, 42 Misc.3d 1230 (Sup. Ct., Queens County) (Jackman Brown, J.) (January 31, 2014). 14 year marriage. Wife was the breadwinner, while Husband was the stay-at-home parent caring for the parties’ son. Husband also did handyman work and other manual labor for the parties’ investment properties. Wife sought to limit Husband’s equitable distribution to 15%. Court held that the Husband is entitled to 50% of all marital assets “based on his substantial non-economic contribution and home and child care services.”
50% of appreciation in separate property (real estate).
Aebly v. Lally, 112 A.D.3d 561, 977 N.Y.S.2d 50 (2d Dept. 2013). Second Department affirmed award to Husband of 50% of the appreciation in the Wife’s pre-marital real property.
50% distribution of sale proceeds of real property.
Halley-Boyce v. Boyce, 108 A.D.3d 503, 969 N.Y.S.2d 467 (2d Dept. 2013). Second Department affirmed award of 50% of sale proceeds of real property.
50-50 distribution of real property and investment bonds.
Finch-Kaiser v. Kaiser, 104 A.D.3d 906, 962 N.Y.S.2d 3444 (2d Dept. 2013). Husband appealed portions of judgment of divorce. However, trial court properly directed the sale of the Husband’s real properties, with the proceeds to be divided equally between the parties and the trial court also properly awarded the Wife 50% of a one-time payment made by Husband’s company to an attorney trust fund for the purchase of certain out-of-state real estate. The Second Department modified a mistaken double-counting of assets with respect to the parties’ investment bond account, but the 50% distribution was adhered to.
12.5% distribution and 100% distribution of real property.
MD v. JD, NYLJ 1202649530030, at *1 (Sup. Ct., Nassau County) (Goodstein, J.) (April 4, 2014). 3 year and 6 month marriage. Prior to the marriage, the parties purchased two homes, one in New York (the "Marital Residence") and one in Florida. Husband put $50,000 down on the purchase of the house in Florida, deeding it to his parents. Wife put down the remaining $350,000, as a loan to the Husband which he "promised" to repay but never did. Shortly after the marriage, title was transferred to the parties. After the commencement of the action, the Florida house was sold and the net proceeds were approximately $244,000.
The Marital Residence was purchased for $850,000 in the parties' joint names, all of which was paid from the Wife's separate accounts. Husband signed a Promissory Note for the amount of $475,000, representing half of the purchase price plus half of the $100,000 that the parties expected to expend on improvements. Shortly after purchasing the Marital Residence, Husband convinced Wife to sign a satisfaction of the loan, though it was undisputed that he had not paid back the $475,000. There was a home equity line of credit against the Marital Residence with an outstanding balance of approximately $175,000 which the Wife claimed was a result of the Husband drawing down the HELOC without her knowledge.
Husband was awarded 12.5% of the net sale proceeds from the Florida house based on his contribution to the purchase price. Wife was awarded 100% of the Marital Residence. The Court noted the Husband's failure to make any contributions to the Marital Residence, his lack of credibility, the short duration of the marriage, the nature in which the Husband manipulated the Wife, and the Wife's separate finances from prior to the marriage. Wife was held solely responsible for the HELOC.
100% distribution of real property; 80/20 division of accounts; 50-50 division of pension
MP v. VP, NYLJ 1202677582324, at *1 (Sup. Ct., Nassau County) (Bennett, J.) (November 18, 2014). 22 year marriage. Court awarded 100% of the marital residence to the Wife based, in part, on the egregious conduct of the Husband, who was incarcerated after being convicted of rape and incest against the parties' daughter. During his incarceration, Wife was solely responsible for the children and the marital residence. The Court also considered the marital waste caused by the Husband's unreasonable demands that the Wife expend over $100,000 of marital assets for his criminal attorneys. The Court found that the Husband's criminal acts devastated the family psychologically and financially to the extent that it significantly interfered with Wife's ability to be self-supporting. Wife was awarded 80% of the parties' retirement and brokerage accounts and 50% of the Husband's pension.
Bank Accounts, Retirement Accounts, Pensions, Investment Accounts.
50% of bank accounts and stock portfolio.
Macaluso v. Macaluso, 124 A.D.3d 959, ___ N.Y.S.2d ___ (3d Dept. 2015). 20 year marriage. Husband appealed decision awarding Wife 50% of two joint bank accounts and a stock portfolio. The decision suggests that the source of the funds in the accounts was the Husband’s separate property, but he added the Wife’s name to the stock account and the bank accounts were jointly titled and he could not meet his burden of proof on the separate property claims. Notwithstanding the apparent separate property source of funds in the accounts, the Court distributed the assets equally between the parties in this 20 year marriage.
“Unequal” division of bank accounts where no economic partnership.
Taylor v. Taylor, 123 A.D.3d 693, 997 N.Y.S.2d 733 (2d Dept. 2014). Marriage of “long duration”. Second Department affirmed trial court’s equitable distribution of marital assets. Distribution percentage is not specified, but it is clear that the parties’ bank accounts were not equally distributed. “Notwithstanding the long duration of the parties’ marriage, there is no requirement that the distribution of each item of marital property be made on an equal basis.” The court cited the fact that the parties “had not functioned as an economic partnership for many years” as a factor for the unequal distribution.
50-50 division of jointly owned business, pension, cash.
Cabral v. Cabral, 122 A.D.3d 893, 998 N.Y.S.2d 111 (2d Dept. 2014). “Long-term” marriage. Second Department affirmed trial court’s equal division of the income from the parties’ (apparently jointly owned) insurance business, pension, and federal tax lien levied against the business. Court found that both parties made significant contributions to the marriage. The Husband established the business and after his license was revoked, the Wife continued the business.
10% of marital property annuity derived from personal injury lawsuit.
Rizzo v. Rizzo, 120 A.D.3d 1400, 993 N.Y.S.2d 104 (2d Dept. 2014). Wife appealed award to Husband of 100% of an annuity which was determined to be the Husband’s separate property. Second Department modified the award. The annuity was purchased pursuant to a settlement agreement in a civil action commenced jointly by the parties to recover damages for the Husband’s personal injuries and the Wife’s loss of consortium. Both parties were named as plaintiffs in the civil action. The Second Department found that the annuity, which would otherwise be partially the separate property of each of the parties, was converted to marital property as a result of the nature of the annuity and their use of the payments. Nonetheless, the Court only increased the Wife’s share from 0% to 10%, stating “equity dictates that the plaintiff should receive most of the annuity, as he is permanently disabled and unable to earn an income now or in the future, whereas the defendant is employed and has future earning capacity.
50-50 division of marital debt.
Augustin v. Bullen, 112 A.D.3d 658, 976 N.Y.S.2d 553 (2d Dept. 2013). Second Department modified trial court’s determination to allocate to the Husband 61% of certain medical bills incurred as a result of the Wife’s pregnancies (a marital debt). Court held that appropriate allocation was 50% to each party.
50-50 division of marital debt and net proceeds of the sale of marital home.
Alleva v. Alleva, 112 A.D.3d 567, 977 N.Y.S.2d 267 (2d Dept. 2013). Second Department affirmed trial court’s determination to allocate credit card debt equally between the parties even though some of it was incurred during the pendency of the divorce action. Net sale proceeds of home also to be divided equally.
50/50 division of net rental income from jointly-owned properties.
Lucere v. Lucere, 109 A.D.3d 796, 971 N.Y.S.2d 155 (2d Dept. 2013). Second Department held that trial court erred in failing to award Wife a 50% share of the net rental proceeds that the Husband colleges from jointly owned condominiums.
50-50 division of non-business assets.
Bellizzi v. Bellizzi, 107 A.D.3d 1361, 968 N.Y.S.2d 235 (3d Dept. 2013). 42 year marriage. While there is no requirement that each item of marital property be distributed equally, Court determined that “relative parity is appropriate here in light of the 40-plus years of marriage and no factors justifying an unequal distributive award.”
30% of pension.
Cornish v. Cornish, 107 A.D.3d 1322, 968 N.Y.S.2d 659 (3d Dept. 2013). 19 year marriage. Trial court awarded Husband 30% of the Wife’s pension. On appeal he sought 50%. Third Department affirmed based on the Husband’s “limited contribution to the economic partnership”. The Husband was a stay-at-home parent, responsible for homemaking and the primary caretaker of three children while the Wife provided financial support for the family. However, the Husband’s alcoholism interfered with this ability to perform those duties, and his parents provided a substantial amount of the children’s care. In addition, the Wife testified that she repeatedly asked the Husband to find employment or return to school once the children were school-aged but he refused.
100% of pension.
Rubackin v. Rubackin, 107 A.D.3d 872, 968 N.Y.S.2d 108 (2d Dept. 2013). Second Department affirmed trial court to Wife of 100% of her pension. Award was based on the Wife’s “role in recent years as the parties’ primary wage earner and the primary caregiver of the parties’ children.” The Court also considered the fact that the Husband received a $2 million inheritance.
50% of joint investment account.
Lauzonis v. Lauzonis, 105 A.D.3d 1351, 964 N.Y.S.2d 796 (4th Dept. 2013). Duration of marriage not specified, but at least 8 years. Wife appealed trial court’s determination not to equitably distribute property. Upon a finding that the parties’ joint investment account was marital property, the Appellate Division stated that it should have been equally divided between the parties.
Unequal distribution due to Husband’s egregious economic fault.
Branche v. Holloway, 46 Misc.3d 1217(A), 2013 N.Y. Slip Op. 52336(U) (Sup. Ct. N.Y. Co. 2013), affd 124 A.D.3d 553, ___ N.Y.S.2d ___ (1st Dept. 2015). 20 year marriage. In addition to liquidating, dissipating, or failing to disclose more than $2 million in assets (approximately 25% of the marital estate), Husband had forged the Wife’s name on a waiver of survivor benefits in his separation agreement from his employer and testified incredibly at trial (answering that he could not recall or did not know the answer to questions, except when the answer furthered his interests). Although the Wife had also hid financial documents and dissipated a smaller amount of assets, she was entitled to more than 50% of the marital assets. The Court distributed the parties’ sizeable marital estate in a manner so as to minimize the amount of transactions.
Wife not equally liable for Husband’s income tax obligation.
Nolan v. Nolan, 104 A.D.3d 1102, 962 N.Y.S.2d 453 (3d Dept. 2013). 7 year marriage. Wife appealed from equitable distribution award. It was error for the trial court to hold the Wife liable for 50% of the Husband’s tax obligation for 2 years after their separation. The Wife was not obligated to file jointly and the Husband did not show the amount that his taxes were increased or the Wife’s taxes were decreased by either action.
50% of “special cash award”.
S.H. v. E.S., NYLJ 1202676582939, at *1 (Sup. Ct. Westchester County) (Christopher, J.) (November 18, 2014). 15 year marriage. Husband’s $1,750,000 special cash award from his employer was a signing bonus that fully “vested” prior to the date of commencement because he met all of the criteria for the award as of that date and was, therefore, marital property, even though the second half was not payable until after commencement. Wife was awarded 50% of the entire amount received. Remainder of marital property divided primarily equally.
50-50 distribution of real estate, stocks, and medical debt.
Spathis v.Dulimof-Spathis, 103 A.D.3d 599, 960 N.Y.S.2d 384 (1st Dept. 2013). Wife appealed from equitable distribution award. The trial court should have awarded the Wife 50% of the mortgage payments made on the Husband’s separate property apartment with marital funds and should have reduced the Husband’s distributive award by 50% of the amount of the Wife’s medical debt that she incurred during the marriage. The trial court properly awarded Wife 50% of stocks purchased with marital funds, notwithstanding the fact that the options to purchase the stocks were earned by the Husband prior to marriage.
Equal division of assets for long-term marriage/advanced age and failing health of parties.
R.R. v. B.R., NYLJ 120271350119, at *1 (Sup. Ct. Essex County) (Muller, J.) (December 30, 2014). 36 year marriage. Plaintiff Husband was 89, in the advanced stages of Parkinson’s Disease, and totally disabled, requiring 24-hour care. Plaintiff resided with his daughter in Maine, who commenced the action on his behalf, having been given power of attorney (the Court seriously questioned whether the daughter was the driving force behind the action). Defendant Wife was 83, had thrombocythemia and non-melanoma skin cancer. Wife had difficulty ambulating but was able to live independently with the help of services and an aide. Both parties’ expenses exceeded their incomes but the Husband resided with his daughter and she testified that she was able to cover the difference for him. The Court placed “great significance on the unusual circumstances of this case” and noted that the parties built the marital residence themselves, by hand, rendering the emotional attachment to the home a factor to be considered, as the Wife still resided in that residence. The Court granted the Wife a life estate in the marital residence and divided the parties’ remaining assets equally. The parties would each share 50% of the monthly payments from the reverse mortgage on the home. The Court declined to require the Wife to reimburse the Husband for 50% of the ambulance expenses he incurred in traveling to/from Court for trial, as it was not the defendant Wife’s responsibility.
II. CREDITS FOR SEPARATE PROPERTY
A. Burden of Proof to Trace Separate Property
Clark v. Clark, 117 A.D.3d 668, 985 N.Y.S.2d 276 (2d Dep't 2014):
Property acquired during marriage presumed to be marital property subject to equitable distribution, and party seeking to overcome presumption must demonstrate that such property is separate property. See, Steinberg v. Steinberg, 59 AD3d 702, 704. Defendant overcame presumption that funds deposited into business account of company he formed during marriage were marital by presenting evidence that the source of funds was separate property. See, Tsigler v. Kasymova, 73 AD3d 1159, 1160. Increase in value of separate property is considered separate property except to the extent that such appreciation is due, in part, to contributions or efforts of the other spouse. See, DRL § 236[B][d]. Supreme Court erred in granting plaintiff a distributive share where plaintiff failed to show that defendant's separate property appreciated in value during marriage.
Gately v. Gately, 113 A.D.3d 1093, 978 N.Y.S.2d 502 (4th Dep't 2013):
"Marital property is broadly defined as 'all property acquired by either or both spouses during the marriage' (Price v. Price, 69 N.Y.2d 8, 11, quoting Domestic Relations Law § 236[B][c]) …. '[S]eparate property which is commingled with marital property or subsequently titled in the joint names of the spouses is presumed to be marital property' (Chiotti v. Chiotti, 12 AD3d 995, 996; see Richter v. Richter, 77 AD3d 1470, 1471; DiNardo v. DiNardo, 144 A.D.2d 906, 906)." Party seeking finding of separate property has burden of rebutting presumption of marital property and defendant failed to meet this burden of proof. See, Frost, 49 AD3d 1150, 1151; Haas v. Haas, 265 A.D.2d 887, 888.
Bennett v Bennett, 13 A.D.3d 1080, 1082 (4th Dep't 2004):
To overcome this burden of proof, the property in question needs to be traced back to a source which defines the property as being separate property. In Bennett v Bennett, Plaintiff argued he made a payment towards the acquisition of his marital home with separate property he received from an inheritance from his mother. Since the marital home was acquired during the marriage, it was presumed to be marital property. The court held that the Plaintiff failed to trace the source of funds used to purchase the marital residence to Plaintiff's inheritance.
Hymowitz v Hymowitz, 119 A.D.3d 736 (2d Dep't 2014):
If a party fails to trace sources of money claimed to be separate property, a court may well treat it as marital property. In Hymowitz v Hymowitz, the court held that Plaintiff failed to establish that funds used during the marriage to acquire his business, BSH Park Row, LLC, were his separate property.
B. Commingling Marital with Separate Property
? Separate and marital property are commingled when one spouse deposits his/her income earned during the marriage into an account funded before the marriage.
? “There is a presumption that assets commingled with other property acquired during the course of the "marriage are marital property...[and] [t]he party seeking to rebut that presumption must adequately trace the source of the funds.” (Pullman v Pullman, 176 AD2d 113, 113 [1st Dept 1991]).
Overton v. Overton, --A.D.3d --, -- N.Y.S.2d -- (2d Dep't 2014)(2014 WL 2745146)(2014 N.Y. Slip Op. 04471)(June 18, 2014):
Titled spouse may seek to rebut presumption that commingled funds became separate property by tracing source of funds. See Masella v. Masella, 67 AD3d 749, 750; Massimi v. Massimi, 35 AD3d 400, 402. Plaintiff established that $38,786 in her bank accounts was her separate property by providing documentation that she received such total amount as gifts and inheritances, which are considered separate property. See, DRL § 236[B][d]. However, any money in account above $38,786 and being disputed must await trial for resolution.
Foti v. Foti, 114 A.D.3d 1207, 979 N.Y.S.2d 914 (4th Dep't 2014):
Parties filed joint federal tax return in which defendant reported her interest in various real estate entities and management companies as tax losses. Party to litigation may not take position contrary to position taken in an income tax return. See, Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, 422, 881 N.Y.S.2d 369, 909 N.E.2d 62. Although defendant established that her father gifted various real estate entities and management companies to her as separate property (see generally, Allen v. Allen, 263 A.D.2d 691, 692, 693 N.Y.S.2d 708), there is an issue of fact whether defendant thereafter commingled her interests in such entities with marital property given the filing of the parties' joint federal tax return. See generally, Richter v. Richter, 77 A.D.3d 1470, 1471, 908, N.Y.S.2d 518; Haas v. Haas, 265 A.D.2d 887, 888, 695 N.Y.S.2d 644.
Carney v Carney, 202 A.D.2d 907, 908 (3d Dep't 1994).
The court ordered that the property known as “Decker Pond Inn” be sold, and the plaintiff sought a credit for his separate property he claimed to have used in its acquisition. During the marriage, the plaintiff deposited his separate funds into a joint account prior to purchasing Decker Pond Inn. The court denied the plaintiff any separate property credit from the sale proceeds of Decker Pond Inn because  the record clearly shows that both parties intended Decker Pond to be marital property, and for it to be treated as such in all respects;  plaintiff’s act to commingle his separate property with assets in a martial account created the presumption that the separate property was then converted into marital property (court cites to Glazer v. Glazer, 190 A.D.2d 951, 953, 593 N.Y.S.2d 905; Pullman v. Pullman,176 A.D.2d 113, 114, 573 N.Y.S.2d 690; Di Nardo v. Di Nardo, 144 A.D.2d 906, 907, 534 N.Y.S.2d 25); and  plaintiff could not “specifically trace the source of the funds used” for the purchases listed.
C. Transmuting Separate Property into Marital Property
1. Financial Accounts
While the act of depositing separate funds into a joint account creates a presumption of an intent to convert those funds into a marital asset, this presumption may be rebutted. The party claiming the funds to be separate bears the burden of rebutting the presumption. In order to rebut the presumption, the party seeking to have the asset classified as separate must prove, by clear and convincing evidence that the commingling of funds was solely for his or her own convenience.
Failure To Rebut Presumption of Marital Property
In Campfield v. Campfield, 95 A.D.3d 1429, 1430, 944 N.Y.S.2d 339, 340 (3d Dep't 2012), the wife (W) inherited a farm property ( P) from her father, which was used as her marital residence with her husband (H). Prior to the divorce action, W conveyed the farm property to herself and H as tenants by the entirety; this created the presumption that P was marital property. W failed to show conveyance was solely for ‘mere convenience’, and thus did not overcome the presumption. The court held that she transmuted her separate property into marital property by virtue of the deed giving an undivided one-half interest to plaintiff.
Imhof v. Imhof, 259 A.D.2d 666, 686 N.Y.S.2d 825 (2d Dep't 1999) - "Separate property can be transmuted into marital property when the actions of the titled spouse demonstrate his intent to transform the character of the property from separate to marital [ . . . .] Here, there is every indication that the husband intended to commingle his funds by depositing the proceeds of the sale of his separate property into joint accounts and by sharing the proceeds for family and business purposes."
Geisel v. Geisel, 241 A.D.2d 442, 659 N.Y.S.2d 511 (2d Dep’t 1997) - By placing the assets in both parties' names as joint tenants with the right of survivorship, the husband demonstrated his intent to transform the character of the asset to marital."
Rosenkranse v. Rosenkranse, 290 A.D.2d 685, 736 N.Y.S.2d 453 (3d Dep’t 2002) –“While an inheritance acquired by one spouse during a marriage and retained separately from marital funds would be considered separate property, the transfer of these assets into a joint account raises a presumption that the funds are marital property to be disbursed among the parties according to the principles of equitable distribution. This presumption cast[s] the burden on defendant to establish, by clear and convincing proof, that the joint account was created only as a matter of convenience [citations omitted]. Defendant conceded that he placed his wife's name on the accounts with the express purpose of making those funds available to her, for her convenience, not his. Thus, Supreme Court properly held that defendant failed to rebut the presumption and we find no reason to disturb the court's determinations regarding the distribution of assets."
Gundlach v. Gundlach, 223 A.D.2d 942, 636 N.Y.S.2d 914 (3d Dep't 1996) - "Although compensation for personal injuries is, as defendant alleges, usually considered separate property, a presumption that each party was entitled to an equal share of the deposit arose when defendant deposited the settlement money into a joint account (see, Banking Law §675[b]; Krinsky v. Krinsky, 208 A.D.2d 599, 600, 618 N.Y.S.2d 36; Giuffre v. Giuffre, 204 A.D.2d 684, 685, 612 N.Y.S.2d 439). This presumption cast the burden on defendant to establish, by clear and convincing proof, that the joint account was created only as a matter of convenience (see, Krinsky v. Krinsky, supra; Giuffre v. Giuffre, supra). Defendant failed to meet this burden. The evidence of various transfers from the joint account into and out of other accounts confirms plaintiff's testimony that all of the parties' money was handled jointly, regardless of the source."
Diaco v. Diaco, 278 A.D.2d 358, 717 N.Y.S.2d 635 (2d Dep’t 2000) - "The Supreme Court properly found that the plaintiff commingled separate funds with marital funds, and that he failed to overcome the presumption that those assets available for distribution constituted marital property."
Chambers v. Chambers, 259 A.D.2d 807, 686 N.Y.S.2d 199 (3d Dep’t 1999) - "Defendant concedes that the amounts sought by him were placed in a joint account and then later placed in certificates of deposit or other accounts in his own name. In such instance, a party will not be credited for separate property if he fails to establish by clear and convincing evidence that the account was created only as a matter of convenience."
Presumption of Marital Property Rebutted Because Separate Property Placed In Joint Names Merely As A Matter of Convenience.
In re Richichi, 38 A.D.3d 558, 832 N.Y.S.2d 57 (2d Dep't 2007)
The courts in matrimonial cases often rely on In re Richichi, to determine if the presumption that separate property has been "transmuted" into marital property by placing title in joint names has been "rebutted" because title was changed for "mere convenience" with no donative intent.
In re Richichi The Objectant (the decedent's daughter) appealed an order which established that certain joint accounts were part of decedent's estate. The accounts in question were set up as joint accounts bearing Objectant’s and her father’s names. Objectant relied on a general rule in banking law stating “the deposit of funds into a joint account constitutes prima facie evidence of an intent to create a joint tenancy.” In reliance on this rule, Objectant hoped to obtain sole possession of the accounts, and prevent a probate court from distributing their respective balances as assets of the decedent's estate. The court held that the presumption established by this general rule can be rebutted either by direct or circumstantial evidence demonstrating there was no intent to form a joint tenancy; or that the deposits were made solely for convenience. The court held that in this case the presumption was rebutted by both mere convenience, as well as evidence demonstrating the decedent did not intend for a joint tenancy of the accounts. The court established mere convenience by citing to explicit provisions within decedent’s will and a subsequent agreement signed by Objectant; both instruments stated that said accounts were established solely for convenience. Furthermore, the court held that decedent’s will indicated each of his children were to have an equal share and a joint tenancy would make that impossible. If Objectant retained the accounts (which reflected a substantial bulk of the estate) the decedent's children couldn’t possibly be given equal shares relative to what Objectant would receive.
Krinsky v. Krinsky, 208 A.D.2d 599, 618 N.Y.S.2d 36 (2d Dep’t 1994) - "As the wife correctly asserts, the husband's one-half interest in a joint account which he held with his father should be deemed a marital asset. It is well settled that both depositors named on a joint account presumptively have an undivided one-half property interest in the moneys deposited [.... ] That presumption may be refuted by direct proof or substantial circumstantial proof, which is clear and convincing and sufficient to support an inference that the joint account had been opened in that form only as a matter of convenience."
McGarrity v. McGarrity, 211 A.D.2d 669, 622 N.Y.S.2d 521 (2d Dep’t 1995) - "The husband testified at trial that he inherited in excess of $250,000 from his mother and his brother. The major portion of those inheritances was received subsequent to the parties' physical separation. The husband deposited certain of these funds into the parties' joint accounts. As a result, the wife argues, these funds were transmuted into marital property, of which she is entitled to her equitable share. The husband sufficiently traced the funds from his inheritances to deposits into the parties' joint bank accounts. Moreover, he established that he simply deposited the money into whatever bank account was most convenient, whether near his office in Manhattan, or near the marital residence. Significantly, the bulk of the inheritance money was not received by the husband until after the parties were living separately, thus demonstrating the absence of any donative intent by the husband despite the wife's continued access to the accounts."
Giuffre v. Giuffre, 204 A.D.2d 684, 612 N.Y.S.2d 439 (2d Dep’t 1994) - "Pursuant to Banking Law §675(b), when one spouse places separate property in a joint account, a presumption arises that the parties are entitled to equal shares of the account. See, Di Nardo v. Di Nardo, 144 A.D.2d 906, 534 N.Y.S.2d 25. However, this presumption may be overcome when a spouse creates a joint account as a matter of convenience, without the intention of creating a beneficial interest, and when the funds for the account came solely from that spouse's separate property."
Brugae v. Brugae, 245 A.D.2d 113, 667 N.Y.S.2d 180 (4th Dep’t 1997) - "The court did not err ... in finding that money deposited by defendant in the parties' joint bank account constitutes her separate property. Defendant established that the joint account was used only as a conduit for the transfer of her capital interest from one business owned by her family to another, thus rebutting the presumption that, by depositing the funds into a joint account, separate property was transmuted into marital property."
The Mere Use by the Party of His or Her Separate Account or Funds To Pay Joint or Marital Expenses Does Not Itself Convert the Separate Account Into a Marital Asset.
Spencer v. Spencer, 230 A.D.2d 645, 646 N.Y.S.2d 674 (1st Dep’t 1996) - "The fact that the plaintiff may have made withdrawals from his separate account to pay marital expenses does not alter this conclusion, as there was insufficient evidence of commingling to conclude that this account was transmuted into marital property."
The Presumption of Marital Property not Extended to Subsequently-Received Inherited Funds Deposited into Individual Bank Accounts.
Feldman v. Feldman, 194 A.D.2d 207, 605 N.Y.S.2d 777 (2d Dep’t 1993) - ". . . the fact that a portion of the husband's inherited funds were deposited into a joint account does not support the further inference that the husband intended to treat all subsequently-received funds, which were placed in his individual bank accounts, as marital property."
The court in Haas v. Haas, 265 A.D.2d 887, 695 N.Y.S.2d 644 (4th Dep't 1999), held that the lower court erred in determining that $25,000 withdrawn by defendant from joint savings account constituted her share of an inheritance and was her separate property. Defendant had deposited her inheritance money in a joint savings account, a portion of which was used for marital purposes to purchase furniture, and the remaining balance of which she transferred to a separate savings account in defendant's name. The court held that defendant's inheritance money she deposited into a joint account remained marital property even though she redeposited the balance of the joint account into her separate account.
2. Marital Residence
The presumption of marital property in financial accounts is sometimes similarly applied to real property. In the matter of Schmidlapp v. Schmidlapp, 220 A.D2d 571, 632 N.Y.S.2d 593 (2d Dep’t 1995), the court determined that the marital residence was fully transmuted to marital property when the wife transferred title to herself and her husband as tenants in the entirety, notwithstanding the fact that the unimproved lot was the wife's separate property prior to the marriage.
However, most cases involving a marital residence give a credit for separate property even if title is in joint names. When the transmuted asset is real property, the courts tend to unanimously factor into the calculation any separate contribution towards the attainment of that asset. That portion of a down payment, for example, which is comprised of separate assets, is typically backed out of the value of the property and returned to the party who contributed the separate asset, even when the property is deemed marital.
In Pelcher v Czebatol, 98 AD3d 1258, 1259 (4th Dep't 2012), the court awarded a credit of $149,000 in connection with separate property used towards the purchase of the parties’ marital residence.
Fields v. Fields, 15 N.Y.3d 158, 931 N.E.2d 1039 (2010)
The principal issue raised in this matrimonial case was whether husband's one-half interest in the parties' residence—a Manhattan townhouse that husband purchased during the marriage and where the parties lived for nearly 30 years—was marital property. The Court of Appeals held that the value of husband's one-half interest in the townhouse constituted marital property subject to equitable distribution but gave the husband a $30,000 credit for the downpayment he made from his separate property.
Husband and wife, who were 60 and 69 years old, respectively, were married in 1970 and they have a son who was born in 1973. In 1978, the parties decided to purchase a home on the Upper West Side of Manhattan, selecting a five-story townhouse with 10 apartments and a basement. Wife agreed to the acquisition of the townhouse only if husband consented to certain preconditions because she believed that working outside the home and caring for their son, together with maintaining the townhouse, would be too burdensome. Because of wife's reticence, husband decided to purchase the townhouse with his mother's assistance.
Husband paid $130,000 for the townhouse, making a $30,000 down payment from funds he received from his grandparents—half in lieu of a bequest and half on loan, which his mother agreed to repay. The balance of the purchase price was paid through two mortgages held jointly by husband and his mother. From 1982 to 2001, husband and his mother managed the townhouse as a formal partnership. They deposited rent proceeds into a partnership bank account and made mortgage payments from that account. But the partnership bank account was not used exclusively for the building's income and expenses; husband acknowledged that he commingled marital funds in the account. In September 1978, husband and wife moved into the townhouse. Husband paid rent to the partnership for the basement apartment until 2002; he used his income from employment to make rental payments. Wife also paid rent using her wages while she was living in apartment 3.
The court held that husband's interest in the townhouse, less the $30,000 down payment, was properly categorized as marital property subject to equitable distribution. The husband purchased the townhouse during the parties' marriage, the couple continuously lived in the townhouse and raised their son in the home, and the wife made direct and indirect contributions to the upkeep of the townhouse. Rejecting husband's assertion that his interest in the townhouse should be viewed as separate property, the court explained that “[t]he fact that the marital residence can also be used to generate income ... does not therefore reclassify marital property into separate property” (id. at 304, 882 N.Y.S.2d 67).
Diaco v. Diaco, 278 A.D.2d 358, 717 N.Y.S.2d 635 (2d Dep’t 2000) - "However, in the exercise of our factual review power, we modify the defendant's equitable share in the marital residence from $72,250 to $50,667 to properly reflect the plaintiff's contributions to that asset, and the parties' circumstances. We note that the house was purchased by the plaintiff and his father in 1966, and was placed in the parties' names in 1979. The plaintiff, by placing the marital residence in both names, changed the character of the property to marital property (see, Schmidlapp v. Schmidlapp, 220 A.D.2d 571, 632 N.Y.S.2d 593). However, each item of marital property need not be distributed on an equal basis (see, Coffey v. Coffey, 119 A.D.2d 620, 501 N.Y.S.2d 74). In view of the plaintiff's contributions of separate property, and the circumstances of the parties, an award to the defendant of one-third of its value is appropriate (see, Butler v. Butler, 171 A.D.2d 89, 574 N.Y.S.2d 387; Denholz v. Denholz, 147 A.D.2d 522, 537 N.Y.S.2d 607)."
Koehler v. Koehler, 285 A.D.2d 582, 727 N.Y.S.2d 913 (2d Dep’t 2001) - Where the parties took title to the marital residence as joint tenants before they were married, and where the wife paid for the house solely with her own funds, it was improper for the court to adjudge the property to be marital property and direct that it be sold. Nevertheless, any appreciation in the value of the property may be deemed marital property. In Koehler, the court determined that even where real property was titled jointly in the parties' names, the husband's lack of any contribution to the property precluded a distribution of the asset, and effectively returned to the wife her 100% investment of seed money into this marital asset.
Coffee v. Coffey, 119 A.D.2d 620, 501 N.Y.S.2d 74 (2d Dep’t 1986) - Where the husband conveyed the marital residence held as separate property to himself and his wife as tenants by the entirety, the husband was entitled to the value of such residence at time of conveyance as a credit for the contribution of his separate property to creation of residence as a marital asset, and the wife was entitled to one-half of increase in current value of house due to addition to house made after conveyance and to one-half of appreciation in value of original structure attributable to her efforts as homemaker and parent.
Carr v. Carr, 291 A.D.2d 672, 738 N.Y.S.2d 415 (3d Dep’t 2002) - Husband awarded $195,000 credit for down payment and payments on principal of mortgage made with non-marital funds.
Gonzalez v. Gonzalez, 291 A.D.2d 373, 737 N.Y.S.2d 111 (2d Dep’t 2002) - "The record indicates that the appellant contributed $54,000 in separate property to the purchase of the residence. The Supreme Court thus erred in failing to give her a credit for that amount prior to the equitable distribution of the asset."
Robertson v. Robertson, 186 A.D.2d 124, 588 N.Y.S.2d 43 (2d Dep’t 1992) - "The marital residence, an apartment, was purchased after the parties' marriage and was therefore subject to equitable distribution. It is undisputed that the wife contributed $45,633.75 in separate property toward the purchase of the apartment. The trial court thus erred in failing to give her a credit for that amount prior to the equitable distribution of the asset."
Daisernia v. Daisernia, 188 A.D.2d 944, 591 N.Y.S.2d 890 (3d Dep’t 1992) – Real property was deemed a gift to the wife alone from her parents, where the husband’s name was added only as a matter of convenience to enable the parties to obtain a construction loan.
McSparron v. McSparron, 190 A.D.2d 74, 597 N.Y.S2d 743 (3d Dep’t 1993) Where money and assets contributed by Wife’s mother during the marriage was co-mingled in parties’ joint account or used to purchase jointly held property, such use evidenced intent to gift to both parties.
Barnes v. Barnes, 106 A.D.2d 535, 483 N.Y.S.2d 358 (2d Dep’t 1984) - "the facts of this case strongly oppose granting the husband any share in the marital premises or household furnishings therein. At best, defendant's contributions and efforts, both economic and noneconomic, to the acquisition, maintenance and appreciation in value of the marital residence were minimal."
Butler v. Butler, 171 A.D.2d 89, 574 N.Y.S.2d 387 (2d Dep’t 1991) - Where wife's separate property constituted approximately 86% of down payment for marital residence and husband's separate property constituted approximately 14% of down payment, it was appropriate, upon the sale of marital residence after eighteenth birthday of parties' child, for each party to receive a dollar-for- dollar credit equivalent to amount of their original contribution of separate property, with remainder of proceeds being divided, after satisfaction off mortgage, 75% to wife and 25% to husband.
Friederich v. Savaae, 138 A.D.2d 955, 526 N.Y.S.2d 411 (4th Dep’t 1988) - "the trial court correctly determined that the original value of the marital residence ($55,000), purchased by the parties as joint tenants prior to their marriage, is separate property. Thus the sum of $55,000 is to be divided equally between the parties and the remainder is to be distributed in accordance with the formula established in the judgment."
Varga v. Varga, 288 A.D.2d 210, 732 N.Y.S.2d 576 (2d Dep’t 2001) "Subtracting the outstanding mortgage balance of $69,000 from the appraised value of the home of $124,800 leaves $55,800 in total equity. The defendant's $50,000 separate contribution towards the purchase price of the marital residence is to be subtracted from this amount, resulting in the sum of $5,800. The plaintiff is then entitled to a one-half interest in this sum, amounting to an award of $2,900."
Burgio v. Burgio, 278 A.D.2d 767, 717 N.Y.S.2d 769 (3d Dep’t 2000) - "... the residence was constructed prior to the marriage, and evidence that defendant assisted in the cleanup of the property and that payments were made on plaintiff's mortgage during the marriage will not support a transformation of the marital residence into marital property. Defendant's interest in such property is therefore limited to her equitable share of (1) the moneys received by the parties as wedding gifts and used to repay plaintiff's separate debt of $2,000 to his siblings, and (2) the marital funds used to pay the mortgage on the residence."
Recouping Marital Funds Used to Benefit a Separate Residence
Marlinski v. Marlinski, 111 A.D.2d 1268, 974 N.Y.S.2d 200 (4th Dep't 2013)
Husband was entitled to "recoup" his equitable share of marital funds used to reduce the mortgage and to make improvements on the wife's separate residence, which was used as the marital residence throughout the marriage.
Alessi v. Alessi, 289 A.D.2d 782, 734 N.Y.S.2d 665 (3d Dep’t 2001)
The court declined to award any portion of an increase in value in real property, finding that there was no transmutation of the asset, but did indicate that the non-titled spouse was entitled to a return of her share of marital funds contributed towards the mortgage on the property. "plaintiff offered no competent evidence and Supreme Court made no findings concerning any enhancement of the value of this property as a result of plaintiff's efforts during the marriage. Under the circumstances, plaintiff's interest in that property is limited to her equitable share of the marital funds applied toward repayment of the mortgage on the residence, which we determine to be 12 payments of $290 or $3,480."
Mica v. Mica, 275 A.D.2d 765, 713 N.Y.S.2d 545 (2d Dep’t 2000) - "The Supreme Court also properly credited the plaintiff in the amount of $4,050 for his separate contribution to renovations on the marital residence prior to the marriage, since the defendant also received a credit for her separate contribution towards the purchase of the marital residence."
Friedman v. Friedman, 309 A.D.2d 830, 766 N.Y.2d 82 (2d Dep’t 2003) – Finding that the Supreme Court should have credited the Husband with fifty (50%) percent of the amount that he paid to reduce the principal balance of the mortgage on the parties’ marital residence.
Calandra v. Calandra, 303 A.D.2d 704, 757 N.Y.S.2d 574 (2d Dep’t 2003) - Husband was credited with half of the mortgage and home improvement loans that he paid on the marital residence.
Beece v. Beece, 289 A.D.2d 352, 734 N.Y.S.2d 606 (2d Dep’t 2001) – Supreme Court should have credited the Husband with his fifty (50%) percent share of the amount he paid towards the mortgage while the parties were separated.
D. Active v. Passive Appreciation
The Appreciation in Value of a Separate Asset May Also Become Marital Property if the Increase Was Due to the Direct Efforts of the Titled Spouse (and the Indirect and/or Direct Efforts of the Non-Titled Spouse).
Separate property may increase in value during the marriage. This increase in value may itself be considered a marital asset subject to equitable distribution between the parties. The long-standing law in connection with this concept was first elaborated by the Court of Appeals in Price v. Price. The court held that an increase in value of a separate asset may become marital property if that increase was due, in some part, to the direct or indirect efforts of the non-titled spouse.
Price v. Price, 69 N.Y.2d 8, 511 N.Y.S.2d 219 (1986) - "an increase in the value of separate property of one spouse, occurring during the marriage and prior to the commencement of matrimonial proceedings, which is due in part to the indirect contributions or efforts of the other spouse as homemaker and parent, should be considered marital property."
Hartog v. Hartog, 85 N.Y.2d 36, 623 N.Y.S.2d 537 (1995) - "In Price v. Price, this Court set forth the (active/passive) test, which established the guidelines for determining whether the appreciation in a titled spouse's separate property has been transmuted into marital property based on the indirect contributions of the nontitled spouse (69 N.Y.2d 8, 511 N.Y.S.2d 219, 503 N.E.2d 684, supra; Domestic Relations Law §236[B][d]; [d] )."
The Court of Appeals in Price and Hartog established what has since become known as an "active/passive test" in determining whether the increase in value should be considered a marital asset. In short, this test requires the non-titled spouse seeking distribution of the increase in value to demonstrate that the increase occurred as a result of some active contribution, either directly or indirectly, to that increase in value, and that it did not occur as a result of "passive" market forces. Active contributions must be demonstrated to have had a direct causal link to the increase in value.
Clark v. Clark, 117 A.D.3d 668, 985 N.Y.S.2d 276 (2d Dep't 2014)
Supreme Court erred in granting Wife a distributive share of husband's separate property business because she failed to demonstrate that the value of husband's business increased during the marriage.
Zielinski v. Zielinski, 289 A.D.2d 1017, 735 N.Y.S.2d 302 (4th Dep’t 2001) - "The court properly concluded that one half of the appreciation of plaintiff's interests in the businesses during the marriage was attributable to plaintiff's efforts, not to unrelated factors such as inflation or other market forces, and thus constituted marital property."
In Wegman v. Wegman, 123 A.D.2d 220, 509 N.Y.S.2d 342 (2d Dep’t 1986) the wife was awarded a share of the increase in value of her husband's separate 25% ownership interest in the business. The evidence presented was that the value of the husband's interest appreciated considerably during the parties' marriage, that the wife "contributed to the appreciation of that interest and she is therefore entitled to an award of a percentage of the appreciation of that separate asset, having shown that her direct and indirect contributions to the marital relationship were causally related to the enhancement in value of the business." The court reasoned that the wife "was required to totally support her husband and herself until January 1949 and always contributed all of her earnings toward the expenses of the household. She claimed she had suggested new products to be sold and sought out new employees, including her cousin's husband, who had worked in a medical laboratory. She also stated that she entertained large numbers of business guests on an average of twice per month, doing all of the planning, preparing, and cooking herself. She testified that she obtained investors from among her acquaintances and became active in civic affairs in order to meet people who might be helpful to her husband in his business." The court found this to be a significant contribution towards the growth of the husband's business interests and the increase in value thereof.
In the matter of Spencer v. Spencer, 230 A.D.2d 645, 646 N.Y.S.2d 674 (1st Dep’t 1996) the court held that the wife's indirect contribution as housewife and homemaker were a sufficient indirect contribution to the appreciation of brokerage account, which the husband had inherited. The court held that "the appreciation of this account, due to the plaintiff's management during the marriage, must be credited to the defendant, who is entitled to a fifty percent share of such appreciated value during the marriage as part of the marital estate. [. . . .] Here, the plaintiff used his experience in accounting and taxation to manage the investments in the inheritance accounts with his son. Since the defendant indirectly contributed to the appreciation of this asset by handling the household matters, thereby permitting her husband the freedom to devote energy to his financial endeavors (Price, supra, at 16, 511 N.Y.S.2d 219, 503 N.E.2d 684), her contribution should be given consideration in the distribution of the appreciated value of this asset."
A Non-Titled Spouse's Active Management of a Separate Asset Does Not Always Result in Any Increase in the Value being Deemed Marital Property Because The Non-Titled Spouse Made No Direct Or Indirect Contribution or Failed to Demonstrate a Nexus.
In the matter of Elmaleh v. Elmaleh, 184 A.D.2d 544, 584 N.Y.S.2d 857 (2d Dep’t 1992), where the husband claimed that the value of the wife's interests in real property increased during the marriage, and where he had managed the properties on a full-time basis for nearly 20 years, he was denied distribution of any portion of the increase in value because he failed to demonstrate the manner in which his contributions resulted in the increase in value and the amount of the increase which was attributable to his efforts. The evidence at trial established that the increase in value was caused by an upturn in the real estate market.
A Titled Spouse's Active Management of a Separate Asset does not always Result in the Appreciation being Deemed Marital Property.
Lawson v. Lawson, 288 A.D.2d 795, 732 N.Y.S.2d 753 (3d Dep’t 2001) - Court held that the appreciation in the value of husband's interest in his two real estate holding companies, that husband owned with his relatives, was passive despite wife's claim that husband did some bookkeeping, prepared estate succession computer program involving one company, developed computer data base, and discussed business matters regarding companies with his mother from time to time.
The Court Sometimes Suggests that the Increase in Value Is Presumed Marital from the Date the Separate Asset Is Transmuted To A Marital Asset.
Rugen v. Rugen, 289 A.D.2d 218, 734 N.Y.S.2d 465 (2d Dep’t 2001) - "Contrary to the plaintiff's contentions, the Supreme Court properly applied the relevant factors of Domestic Relations Law §236(B)(5)(d) when it awarded her 50% of the appreciation in the marital residence from May 2, 1990, the date that the residence was transformed from the defendant's separate property into marital property, through January 21, 2000, the date of the trial."
III. RESPONSIBILITY FOR MARITAL DEBT
Marriage is viewed as an economic partnership where spouses share in profits and assets of the partnership as well as in the losses and liabilities incurred in pursuit of marital wealth. Gelb v. Brown, 163 A.D.2d 189, 558 N.Y.S.2d 934 (1st Dep't 1990).
Liabilities, as well as assets, are valued and allocated between the spouses. Savage v. Savage, 155 A.D.2d 336, 547 N.Y.S.2d 306; see, e.g., Cook v. Cook, 237 A.D.2d 891, 656 N.Y.S.2d 1000.
IV. USING SEPARATE PROPERTY FOR CHILD SUPPORT
Ashley v. Worsell, 66 A.D.3d 1256, 888 N.Y.S.2d 233 (3d Dep't 2009)
Initially, the father was ordered to make monthly child support payments in the amount of $50 and, seven years later, that obligation was increased to $58 per month. Prior to that modification, the father—in 2001—was involved in a work-related automobile accident from which he received a $100,000 settlement for his workers' compensation claim. In 2006, after becoming aware of this settlement, the mother commenced the first of these proceedings seeking an increase in child support. Court found that the proceeds he received as a result of this award were used to supplement his income and pay for routine expenses. As such, for child support purposes, they should be counted as income and, in part, be used to support his child
Walker v. Gilbert, 39 A.D.3d 1112, 835 N.Y.S.2d 743 (3d Dep't 2007)
Trial court did not abuse its discretion in increasing father's child support obligation for quadriplegic son by awarding lump sum portion of father's personal injury settlement award, in light of circumstances including the child's extraordinary medical complications that were becoming more acute, mother's dedication of virtually her entire life to care for the child, father's abandonment of his parental responsibilities, and the father's rapid dissipation of settlement without regard to his child and without explanation as to where some large amounts of money had gone.
Boyette v. Wilson, 291 A.D.2d 908, 738 N.Y.S.2d 272 (4th Dep't 2002)
Family Court erred in failing to consider that portion of respondent's personal injury award consisting of lump-sum payments at five-year intervals, including the initial lump-sum payment of $500,000, in determining respondent's child support obligation.
Cody v. Evans-Cody, 291 A.D.2d 27, 735 N.Y.S.2d 181 (2d Dep't 2001)
Respondent left her three children and the petitioner in Westchester County and moved to Arizona. The petitioner obtained sole custody of the parties' three children. Non-custodial mother's inheritance was required to be considered in computing her child support obligation; child support award based solely on mother's wages was unjust and inappropriate in light of her $130,000 inheritance available to her when she left family residence, and standard of living maintained by family during marriage was made possible because father's modest income was supplemented by mother's inheritance, and the children benefitted from fact that their mother's inheritance was used to pay taxes and mortgage on family residence.
Webb v. Rugg, 197 A.D.2d 777, 602 N.Y.S.2d 716 (3d Dep't 1993)
It is not necessary that the court be able to impute income from an asset in order to consider it as a resource. Once the amount of basic child support obligation is found to be unjust or inappropriate, all resources may be considered, in whatever manner the court deems reasonable. In a given set of circumstances, the court may determine that it is appropriate to require a parent to reinvest or liquidate certain assets to provide for his or her children.