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Divorce Law

New York Equitable Distribution Law

New York Law Relating to Claims for Equitable Distribution of Appreciation of Separate Property

Frequently, one or more of the assets that is at issue in a divorce was owned by one of the spouses prior to the date of the marriage, or was acquired by a spouse during the marriage as an inheritance. In such circumstances, the asset constituted separate property of the titled spouse on the date that he or she acquired title. However, the other (non-titled) spouse may have a legitimate claim, under equitable distribution, to the subsequent appreciation of such property. This is particularly true when the asset in question is a marital residence or a business whose increase in value during the marriage resulted from the joint efforts of the parties during the marriage.

Under New York law, it is well settled any appreciation in the value of separate property due to the contributions or efforts of the non-titled spouse will be considered marital property. Price v. Price, 69 N.Y.2d 8, 511 N.Y.S.2d 219 (1986). This includes direct contributions (e.g., financial contributions toward the property) as well as non-financial contributions. With respect to marital residences, non-financial contributions may include personally maintaining the property and/or making improvements.

Even in cases involving relatively modest contributions by the non-titled spouse, courts have issued substantial equitable distribution awards. This is particularly true in cases that involve a non-titled spouse's claim to appreciation in a marital residence. For example, in Johnson v. Chapin, 12 N.Y.3d 461, 881 N.Y.S.2d 373 (2009), the Court of Appeals upheld the Appellate Division's ruling that the wife was entitled to a 25% interest in the appreciation of the marital residence, notwithstanding the fact that she made no financial contribution, and was only minimally involved in renovations. Similarly, in Chan v. Chan, 267 A.D.2d 413, 701 N.Y.S.2d 114 (2nd Dept. 1999) an award to plaintiff of 25% of the appreciation in the value of the marital residence as upheld based on minimal contributions that included "contributions as homemaker and mother" and working "outside the home." Id.

Awards to a non-titled spouse in the range of 25% of appreciation represent the lower end of appreciation awards - a percentage that is awarded in situations where a party is unable to demonstrate substantial contributions. In situations where a party demonstrates a substantial involvement in the maintenance and/or substantial financial contributions, courts have awarded 50% of appreciation to the non-titled spouse. Lagnena v. Lagnena, 215 A.D.2d 445, 626 N.Y.S.2d 542 (2nd Dept. 1995)(non-titled husband awarded 50% of appreciation).

The definition of an "indirect contribution" to separate property is subject to a "liberal approach" that encompasses a spouse's contribution toward the marriage as a whole. Wood v. Wood, 119 Misc.2d 1076, 465 N.Y.S.2d 475 (Supr. Crt., Suffolk Cty. 1983)("when a marriage ends, each of the spouses, based on a totality of the contributions made to it, has a stake in and right to a share of the marital assets accumulated while it endured").

In summary, a potential claim by a non-titled spouse to appreciation of an otherwise separate asset must be assessed on the basis of the particular circumstances and facts in each case, including the non-titled spouse's efforts and contributions toward the marital relationship as a whole.


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