Equitable Distribution vs. Community Property: Why New York’s Approach Matters

Equitable distribution vs. community property: the basic difference

Community property is a system in which property either spouse acquires during the marriage, while living in a community-property state, is generally treated as belonging to both spouses. Property owned before the marriage, and gifts or inheritances received by one spouse, are generally separate.

IRS Publication 555 lists nine community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. It also notes that Alaska, Tennessee and South Dakota have laws allowing a “community property” election. How community property is divided at divorce depends on each state’s own law.

Equitable distribution is New York’s system. Under DRL § 236(B)(5)(c), “Marital property shall be distributed equitably between the parties, considering the circumstances of the case and of the respective parties.” Equitable means fair in light of the statutory factors. The statute sets no default percentage, so the result can be equal or unequal.

What counts as marital property in New York?

Marital property is “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held” (DRL § 236(B)(1)(c)). Whose name is on an account or deed does not decide the question.

Separate property is not divided. Under DRL § 236(B)(1)(d), it includes:

• property acquired before the marriage;
• property acquired by inheritance, or by gift from someone other than the spouse;
• compensation for personal injuries;
• property acquired in exchange for separate property, and the increase in value of separate property, “except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse”; and
• property described as separate in a valid written agreement between the spouses.

The spouse claiming that property is separate carries the burden. The Court of Appeals has explained that the statute creates a presumption that “all property, unless clearly separate, is deemed marital property,” which the titled spouse must rebut (Fields v. Fields, 15 N.Y.3d 158 (2010)). Account statements, closing papers, estate records and gift documentation can make the difference.

Pension rights acquired between the wedding and the start of the divorce action are marital property, even if they have not yet matured (Majauskas v. Majauskas, 61 N.Y.2d 481 (1984)); see divorce after 50 on retirement assets and trusts and equitable distribution.

Licenses, degrees and careers: the change that took effect in 2016

Enhanced earning capacity is the increase in a spouse’s future earning power from a professional license, a degree or career growth. In O’Brien v. O’Brien, 66 N.Y.2d 576 (1985), the Court of Appeals held that a medical license earned during the marriage was marital property subject to equitable distribution.

The Legislature changed that rule in a 2015 amendment (Ch. 269, L. 2015) that applies to matrimonial actions commenced on or after its effective date in January 2016. DRL § 236(B)(5)(d)(7) now provides: “The court shall not consider as marital property subject to distribution the value of a spouse’s enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement.”

The same paragraph adds that the court “shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse.” A spouse who supported the other through school or career-building can still have those contributions weighed when marital property is divided.

The 16 factors New York courts weigh

In deciding an equitable distribution, the court must consider these factors under DRL § 236(B)(5)(d):

1. the income and property of each spouse at the time of the marriage and at the time the action was commenced;
2. the duration of the marriage and the age and health of both spouses;
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;
5. the loss of health insurance benefits upon dissolution of the marriage;
6. any award of maintenance;
7. any equitable claim to, interest in, or direct or indirect contribution to the acquisition of marital property by the spouse without title, including contributions as a spouse, parent, wage earner and homemaker, and to the other spouse’s career or career potential;
8. the liquid or non-liquid character of the marital property;
9. the probable future financial circumstances of each spouse;
10. the impossibility or difficulty of valuing any asset or any interest in a business, corporation or profession, and the economic desirability of keeping it intact, without any claim or interference by the other spouse;
11. the tax consequences to each spouse;
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. whether either spouse has committed acts of domestic violence against the other, and the nature, extent, duration and impact of those acts;
15. in awarding possession of a companion animal, the best interest of the animal; and
16. any other factor the court expressly finds to be just and proper.

The court must “set forth the factors it considered and the reasons for its decision,” and the parties cannot waive that requirement (DRL § 236(B)(5)(g)).

Where appropriate, the court must also consider how a barrier to remarriage affects these factors (DRL § 236(B)(5)(h)). A barrier to remarriage includes a religious restraint that remains because the other spouse withholds a voluntary act, such as a Get; see our guide to New York’s Get law.

How the division is carried out

Valuation dates

A valuation date is the date used to measure an asset’s value. As soon as practicable after the action begins, the court sets the valuation date or dates for each asset, which “may be anytime from the date of commencement of the action to the date of trial” (DRL § 236(B)(4)(b)).

Case law distinguishes passive assets from active ones. A passive asset whose value moves with the market, such as an investment account, may be valued at trial (Lieberman-Massoni v. Massoni, 215 A.D.3d 656 (2d Dep’t 2023)). An active asset whose value depends on a spouse’s efforts, such as a business, is generally valued at commencement (Halley v. Craven, 236 A.D.3d 512 (1st Dep’t 2025)).

Distributive awards

A distributive award is a payment from one spouse to the other in place of dividing a particular asset. The court makes one where an equitable distribution “would be impractical or burdensome” or where distributing an interest in a business, corporation or profession would be contrary to law, and it may also use one to supplement or carry out a distribution (DRL § 236(B)(5)(e)). It is one way a court can deal with a family business or professional practice; see protecting your business in divorce.

Why New York’s approach matters in your divorce

Because the outcome turns on facts rather than a fixed formula, classification and proof matter. For example, suppose one spouse owned a $100,000 brokerage account before the marriage and never added marital funds to it. If it grew to $150,000 only because the market rose, the account and its growth would generally remain separate property. If the other spouse’s contributions or efforts were partly responsible for the growth, part of the increase could be marital (DRL § 236(B)(1)(d)(3)).

Spouses can also decide the division themselves. A negotiated settlement can divide marital property equally or unequally. Before or during the marriage, a prenuptial or postnuptial agreement can include a “provision for the ownership, division or distribution of separate and marital property,” if it is in writing, signed by both spouses and acknowledged in the form required to record a deed (DRL § 236(B)(3)). See our guide to prenuptial agreements in New York.

Finally, the division is meant to be final. An equitable distribution award cannot be modified based on a change of circumstances (Manuella v. Manuella, 242 A.D.3d 870 (2d Dep’t 2025)).

Frequently Asked Questions

Is New York a community property state?

No. New York is an equitable distribution state. Marital property is divided equitably, considering the circumstances of the case and the statutory factors in Domestic Relations Law § 236(B)(5)(d), and equitable does not necessarily mean equal. The IRS lists nine community-property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Does equitable distribution mean a 50/50 split in New York?

Not necessarily. The statute requires an equitable division and sets no default percentage. The court weighs factors such as the length of the marriage, each spouse’s age and health, contributions as a spouse, parent, wage earner and homemaker, future financial circumstances and wasteful dissipation, and it must explain its reasons. Spouses can also agree on their own division in a settlement.

Is property I owned before the marriage divided in a New York divorce?

Generally, no. Property acquired before the marriage is separate property, as are inheritances, gifts from someone other than your spouse, and compensation for personal injuries. Growth in separate property stays separate except to the extent it is due in part to your spouse’s contributions or efforts. Because property acquired during the marriage is presumed marital, you must be able to prove what is separate.

Is a professional degree or license marital property in New York?

Not in divorces commenced on or after the January 2016 effective date of a 2015 amendment. The court may not treat the value of enhanced earning capacity from a license, degree, celebrity goodwill or career enhancement as marital property. In dividing marital property, though, it must consider a spouse’s direct or indirect contributions to the development of the other spouse’s enhanced earning capacity during the marriage.

When does marital property stop accumulating in New York?

Marital property is property acquired during the marriage and before a separation agreement is signed or a matrimonial action is commenced, so later acquisitions are generally not marital. Valuation is a separate question: the court sets valuation dates anywhere from commencement to trial, and passive assets whose value moves with the market may be valued at trial.

Equitable distribution depends on facts and documents, so it pays to organize records early. Joel Yacoob handles contested and high-net-worth divorces and drafts prenuptial agreements for Neuhaus & Yacoob. You can start your case online or call (718) 975-1123.

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This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. The law changes and every situation is different; consult a lawyer about your own circumstances.