NEW YORK, NY - Dividing property during a divorce in Manhattan involves detailed legal and financial questions that can determine an individual's financial stability for years to come, particularly when high-value assets such as co-op apartments, business interests, and retirement accounts are at stake. Manhattan property division attorney Richard Roman Shum of the Law Office of Richard Roman Shum, Esq. (https://www.romanshum.com/manhattan-property-division-lawyer/) is providing guidance on how New York's equitable distribution law applies to divorcing couples throughout New York City.
According to Manhattan property division attorney Richard Roman Shum, New York follows an equitable distribution model under Domestic Relations Law Section 236(B), meaning marital property is divided based on what a court considers fair rather than through an automatic equal split. The equitable distribution process follows a structured approach in which the court first identifies all assets and debts, classifies each as marital or separate property, values them with the assistance of appraisers or forensic accountants, and then applies at least 13 statutory factors set forth in DRL Section 236(B)(5)(d). "Equitable distribution does not mean a 50/50 split, and there is no fixed rule in the statute that guarantees equal division," Shum explains.
Manhattan property division attorney Richard Roman Shum notes that one of the most critical steps in any New York divorce is properly classifying assets as marital property or separate property. Under DRL Section 236(B)(1)(c), marital property generally includes assets acquired by either spouse during the marriage and before the execution of a separation agreement or commencement of a matrimonial action. Separate property includes assets owned before the marriage, inheritances received by one spouse, gifts from third parties, personal injury settlement proceeds, and anything designated as separate in a valid prenuptial or postnuptial agreement. However, separate property can lose its protected status through commingling, such as depositing an inheritance into a joint bank account or using premarital savings to renovate a jointly owned home. Once commingled, the burden falls on the spouse claiming the asset is separate to prove its origins through clear and convincing evidence.
Attorney Shum emphasizes that Manhattan divorces frequently involve high-value assets requiring specialized valuation. Real estate in one of the most expensive markets in the world, including co-op apartments, condominiums, and investment properties, must receive current market valuations that account for neighborhood trends, building assessments, and property condition. Business interests and professional practices require forensic accountants who analyze income streams, tangible assets, and goodwill. New York law distinguishes between enterprise goodwill, which is a marital asset subject to division, and personal goodwill tied to the individual owner's skills, which generally is not divisible. "This distinction can mean a difference of hundreds of thousands of dollars when a business or professional practice is involved," Shum adds.
Dividing retirement accounts in Manhattan requires careful attention to both legal and tax requirements. Contributions made during the marriage are marital property, and transferring a portion of one spouse's benefits typically requires a Qualified Domestic Relations Order. Defined benefit pension plans are generally divided using the Majauskas formula established by the New York Court of Appeals in 1984, under which the non-participant spouse receives 50 percent of the benefits multiplied by a fraction representing the years of participation during the marriage over total years of service. The New York County Supreme Court at 60 Centre Street handles contested divorce proceedings in Manhattan, and judges routinely address these challenging valuation disputes.
"Complete and honest financial disclosure is not optional in a New York divorce," advises Shum. Both spouses are legally required to file a Statement of Net Worth listing all bank and investment accounts, real estate holdings, business interests, retirement account balances, and outstanding debts. Failure to disclose assets can result in sanctions, attorney fee awards, or a court reopening the equitable distribution determination after the divorce is finalized. New York's automatic orders take effect upon filing a divorce action, prohibiting both spouses from transferring, hiding, or wasting marital property.
The tax consequences of property division can significantly affect the actual value of what each spouse receives. Transfers between spouses as part of a divorce settlement are generally not taxable events under federal law, but the receiving spouse takes on the original tax basis, meaning capital gains taxes may apply when the asset is eventually sold. Spousal maintenance payments are no longer deductible for the paying spouse under federal law for divorces finalized after December 31, 2018, under the Tax Cuts and Jobs Act. Retirement account distributions through a QDRO follow specific federal tax rules depending on the type of plan and how the transfer is structured.
"Taking early action during a divorce, including gathering financial documents, obtaining independent appraisals for valuable assets, and consulting with a property division attorney before making major financial decisions, can make a significant difference in how property is ultimately divided," observes Shum. Prenuptial and postnuptial agreements, when properly executed under New York law, can simplify the division process considerably by defining which assets are marital and which are separate.
For those facing property division in a Manhattan divorce, consulting with an experienced attorney may help protect financial interests and ensure all marital assets are properly identified, valued, and divided under New York law.
About Law Office of Richard Roman Shum, Esq.:
The Law Office of Richard Roman Shum, Esq. is a Manhattan-based family law firm focused on property division, divorce, child custody, and prenuptial agreements. Led by attorney Richard Roman Shum, the firm represents clients throughout Manhattan and New York City, including Brooklyn, Queens, the Bronx, and Staten Island. For consultations, call (646) 259-3416.
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Email: richard@romanshum.com
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Website: https://www.romanshum.com/
