An important and complex aspect of any divorce is the distribution of assets and debts the couple has accumulated. When the couple is a same-sex couple who have been together since before same sex marriage was legally recognized, this complex process becomes particularly convoluted especially if a large number of assets are involved in the case.
Same-Sex Marriage Legalization
Same sex marriage was recognized as the law of the land by the Supreme Court in 2015 with the decision in the Obergefell case. At that time, it became legal for same-sex couples to marry in all states. However, many states had previously individually recognized same sex marriage. New York legalized same-sex marriage in 2011, and prior to that, a 2008 state court ruling held that New York would recognize same sex marriages that were performed in states where the unions were legal.
Many same sex couples held commitment ceremonies or non-legal weddings before their unions were recognized by the country or their own state, and many couples also simply became life partners without any kind of ceremony or formalization until same sex marriage became a legal option. When a same-sex couple faces divorce, the actual length of their marriage is difficult to determine because of all of these factors.
Division of Assets and Debts in Divorce
When a couple divorces, all of the assets and debts that were accumulated during the marriage must be divided by the court. There are several steps involved in this process. First, the couple must disclose all of their financial information to the court and to each other. All of the assets and debts that were acquired from the start of the marriage to the present date must be examined and determined to be either separate property or marital property (called community property in some states).
In New York, separate property includes:
- Assets and debts the spouses brought into the marriage
- Inheritances that have been received during the marriage
- Gifts that have been received during the marriage
- Personal injury judgments or settlements received during the marriage
- Assets or debts designated as separate in a prenuptial or postnuptial agreement
Once the marital property and debts have been isolated and identified, the court must decide on the valuation of the assets and debts. Next, the court must decide how to divide them between the spouses. New York uses a doctrine called equitable distribution, which means that marital assets and debts are distributed in a way that is fair, but not necessarily a 50/50 split. Some other states utilize a community property model in which community assets and debts are shared completely equally. In determining an equitable distribution of assets, New York courts consider:
- The couple's income during the marriage and at the divorce
- The length of time they have been married and their ages and health
- Whether there are children and if the parent with residential custody needs to remain in the home
- Inheritance and pension rights attributable to the spouses
- Whether either spouse will lose their health insurance as part of the divorce
- Whether spousal maintenance (alimony) is being awarded
- How the spouses supported each other's educations, businesses, or careers during the marriage by acting as a homemaker or at-home parent
- The liquidity of the marital assets
- Each spouse's projected future financial situation
- Whether the spouses own businesses and how easily those businesses can be valued
- The tax consequences the divorce will create
- Whether either spouse has wasted marital assets
- Other factors the court believes to be important
The Added Challenge for Same-Sex Couples
As if a divorce wasn’t complicated enough, there is an added complexity when creating an asset and debt distribution for same sex couples. Many same sex couples have been together as a couple for years before they were legally married in the eyes of the state. The court must then look at the couple's relationship history and consider when they actually essentially became a married couple for practical purposes.
Different judges will handle this in different ways, with some judged recognizing that same sex couples were discriminated against and deserve to have their relationships recognized from the date of inception, not the date the legal system finally began to recognize them.
In general, circumstances of interest include:
- Date cohabitation commenced
- Any breaks in the relationship and the length of those breaks
- Whether the couple held any sort of wedding or commitment ceremony at any point
- Whether the couple entered into a domestic partnership or civil union at any point
- Whether the state recognizes common law marriage and if the couple's relationship could be considered a common law marriage
- How the couple made financial decisions throughout their relationship
- The existence of any written agreement between the spouses (including valid prenuptial or postnuptial agreements as well as non-legally binding cohabitation agreements)
Determining at what date a couple actually became spouses is a challenging inquiry which can involve testimony by the spouses, documents, photographs, and more entered into evidence.
Once the court sets a date at which the marriage is considered to have actually commenced, the next inquiry is determining which assets and debts were acquired since that date and which are considered marital assets and debts. Then the assets and debts can be valued and finally divided. For couples who have been together for decades, this provides an extremely difficult process for the court. It's likely that the assets and debts may be held in various ways – joint names and sole names, as items were added both before and after the legal marriage took place. Unraveling years of commingled assets will take and time and consideration by the court.
The impact of discrimination against same sex couples continues to be apparent as divorces happen. Each state and judge must make decisions about how to fairly distribute the couple's assets and debts. If you are thinking about divorcing, it is imperative that you work with an attorney who fully understands the years of discrimination you've faced and can seek to obtain an equitable outcome that will recognize the true length of your relationship.