Absent a prenuptial agreement, how are liabilities allocated between divorcing spouses?

5. Disposition of property in certain matrimonial actions.

a. Except where the parties have provided in an agreement for the disposition of their property pursuant to subdivision three of this part, the court, in an action wherein all or part of the relief granted is divorce, or the dissolution, annulment or declaration of the nullity of a marriage, and in proceedings to obtain a distribution of marital property following a foreign judgment of divorce, shall determine the respective rights of the parties in their separate or marital property, and shall provide for the disposition thereof in the final judgment.

b. Separate property shall remain such.

c. Marital property shall be distributed equitably between the parties, considering the circumstances of the case and of the respective parties.

d. In determining an equitable disposition of property under paragraph c, the court shall consider:

(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. 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. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse;

(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) whether either party has committed an act or acts of domestic violence, as described in subdivision one of section four hundred fifty-nine-a of the social services law, against the other party and the nature, extent, duration and impact of such act or acts;

(15) in awarding the possession of a companion animal, the court shall consider the best interest of such animal. "Companion animal", as used in this subparagraph, shall have the same meaning as in subdivision five of section three hundred fifty of the agriculture and markets law; and

(16) any other factor which the court shall expressly find to be just and proper.

e. In any action in which the court shall determine that an equitable distribution is appropriate but would be impractical or burdensome or where the distribution of an interest in a business, corporation or profession would be contrary to law, the court in lieu of such equitable distribution shall make a distributive award in order to achieve equity between the parties. The court in its discretion, also may make a distributive award to supplement, facilitate or effectuate a distribution of marital property.

The Domestic Relations Law recognizes that the marriage relationship is an economic partnership. As such, during the life of a marriage spouses share in

[909 N.E.2d 65]

both its profits and losses. When the marriage comes to an end, courts are required to equitably distribute not only the assets remaining from the marriage, but also the liabilities. A trial court considering the factors set forth in the Domestic Relations Law has broad discretion in deciding what is equitable under all of the circumstances. Indeed, when it comes to the equitable distribution of marital property, Domestic Relations Law § 236(B)(5)(d)(13) authorizes the trial court to take into account "any other factor which the court shall expressly find to be just and proper." Consequently, the trial court has substantial flexibility in fashioning an appropriate decree based on what it views to be fair and equitable under the circumstances.

However, during the life of any marriage, many payments are made, whether of debts old or new, or simply current expenses.

[12 N.Y.3d 421]

If courts were to consider financial activities that occur and end during the course of a marriage, the result would be parties to a marriage seeking review of every debit and credit incurred. As a general rule, where the payments are made before either party is anticipating the end of the marriage, and there is no fraud or concealment, courts should not look back and try to compensate for the fact that the net effect of the payments may, in some cases, have resulted in the reduction of marital assets. Nor should courts attempt to adjust for the fact that payments out of separate property may have benefitted both parties, or even the nontitled spouse exclusively. The parties' choice of how to spend funds during the course of the marriage should ordinarily be respected. Courts should not second-guess the economic decisions made during the course of a marriage, but rather should equitably distribute the assets and obligations remaining once the relationship is at an end. With this holding in mind, we review the four issues raised on this appeal.

[…]

This is not to say that every expenditure of marital funds during the course of the marriage may not be considered in an equitable distribution calculation. Domestic Relations Law § 236(B)(5)(d)(13) expressly and broadly authorizes the trial court to take into account "any other factor which the court shall expressly find to be just and proper" in determining an equitable distribution of marital property. There may be circumstances where equity requires a credit to one spouse for marital property used to pay off the separate debt of one spouse or add to the value of one spouse's separate property (see e.g. Micha v. Micha, 213 A.D.2d 956, 957-958, 624 N.Y.S.2d 465 [3d Dept.1995]; Carney v. Carney, 202 A.D.2d 907, 609 N.Y.S.2d 425 [3d Dept.1994]). Further, to the extent that expenditures are truly excessive, the ability of one party to claim that the other has accomplished a "wasteful dissipation of

[12 N.Y.3d 422]

assets" (Domestic Relations Law § 236[B][5][d][11]) by his or her expenditures provides protection. The payment of maintenance to a former spouse, however,

[909 N.E.2d 66]

does not fall under either of these categories.

"As a general rule, where the payments are made before either party is anticipating the end of the marriage, and there is no fraud or concealment, courts should not look back and try to compensate for the fact that the net effect of the payments may, in some cases, have resulted in the reduction of marital assets. . . . Courts should not second-guess the economic decisions made during the course of a marriage, but rather should equitably distribute the assets and obligations remaining once the relationship is at an end" (Mahoney-Buntzman v Buntzman, 12 NY3d 415, 421, 909 NE2d 62, 881 NYS2d 369 [2009]). Liability for marital debt need not be equally apportioned but should be distributed in accordance with general equitable distribution principles and factors (see Minervini v Minervini, 152 AD3d 666, 668, 58 NYS3d 568 [2017]; Lewis v Lewis, 6 AD3d 837, 839-840, 775 NYS2d 387 [2004]). Nevertheless, the burden of repaying marital debt should be equally shared by the parties in the absence of countervailing factors (see Gillman v Gillman, 139 AD3d 667, 671, 31 NYS3d 164 [2016]; Mosso v Mosso, 84 AD3d 757, 760, 924 NYS2d 394 [2011]; Corbett v Corbett, 6 AD3d 766, 768, 775 NYS2d 89 [2004]).

The burden of repaying marital debt should be equally shared by the parties, in the absence of countervailing factors, and any such liability should be distributed in accordance with

[175 A.D.3d 1459]

general equitable distribution principles and factors (see Westreich v. Westreich, 169 A.D.3d 972, 976, 94 N.Y.S.3d 150 ; Minervini v. Minervini, 152 A.D.3d 666, 668, 58 N.Y.S.3d 568; Gillman v. Gillman, 139 A.D.3d 667, 671, 31 N.Y.S.3d 164). It is generally the responsibility of both parties to maintain the marital residence and keep it in good repair during the pendency of a matrimonial action (see Brinkmann v. Brinkmann, 152 A.D.3d 637, 639, 58 N.Y.S.3d 559; Goldman v. Goldman, 131 A.D.3d 1107, 1108, 17 N.Y.S.3d 166; Hymowitz v. Hymowitz, 119 A.D.3d 736, 742, 991 N.Y.S.2d 57; Le v. Le, 82 A.D.3d 845, 846, 918 N.Y.S.2d 561). "Where ... a party has paid the other party's share of what proves to be marital debt, such as the mortgage, taxes, and insurance on the marital residence, reimbursement is required" (Le v. Le, 82 A.D.3d at 846, 918 N.Y.S.2d 561; see Morales v. Carvajal, 153 A.D.3d 514, 515, 60 N.Y.S.3d 228; Goldman v. Goldman, 131 A.D.3d at 1108, 17 N.Y.S.3d 166).

The Supreme Court improvidently exercised its discretion in awarding the defendant credits for 100% of the payments that he made to reduce the principal on marital loans held against a Honda vehicle, a Ford vehicle, a Volkswagen vehicle, and an Albin boat while the action was pending, to be paid from the plaintiff's share of the net proceeds following the sale of each of these items. "The burden of repaying marital debt should be equally shared by the parties, in the absence of countervailing factors, and any such liability should be distributed in accordance with general equitable distribution principles and factors" (Uttamchandani v Uttamchandani, 175 AD3d 1457, 1458-1459, 109 N.Y.S.3d 325). Where a party has paid the other party's share of what proves to be marital debt, reimbursement is required (see Le v Le, 82 AD3d 845, 845, 918 N.Y.S.2d 561; Epstein v Messner, 73 AD3d 843, 845, 900 N.Y.S.2d 454). Here, the court found that these three vehicles and the boat were marital assets subject to equitable distribution. Thus, the defendant is entitled to a credit for only 50% of the payments that he made to reduce the principal on marital loans held against the three vehicles and the boat, to be paid from the plaintiff's share of the proceeds of the sale of each of these assets (see Uttamchandani v Uttamchandani, 175 AD3d at 1459; Le v Le, 82 AD3d at 846; Grasso v Grasso, 47 AD3d 762, 851 N.Y.S.2d 213).

The defendant contends that the Supreme Court incorrectly distributed the marital debt. In general, "expenses incurred prior to the commencement of a divorce action constitute marital debt and should be equally shared by the parties" (Bogdan v. Bogdan, 260 A.D.2d 521, 522, 688 N.Y.S.2d 255; see Sawin v. Sawin, 128 A.D.3d 663, 665, 7 N.Y.S.3d 589; McCoy v. McCoy, 117 A.D.3d 806, 810, 985 N.Y.S.2d 629). However, the court has broad discretion in allocating the assets and debts of the parties to a matrimonial action (see DiFiore v. DiFiore, 87 A.D.3d 971, 974–975, 933 N.Y.S.2d 39 ;

[58 N.Y.S.3d 572]

Corless v. Corless, 18 A.D.3d 493, 494, 795 N.Y.S.2d 273), and "liability for the payment of marital debts need not be equally apportioned but may be distributed in accordance with the [equitable distribution] factors set forth in Domestic Relations Law § 236(B)(5)(d)" (Lewis v. Lewis, 6 A.D.3d 837, 839–840, 775 N.Y.S.2d 387; see DiFiore v. DiFiore, 87 A.D.3d at 974–975, 933 N.Y.S.2d 39). Contrary to the defendant's contention, the court providently exercised its discretion in allocating the parties' credit card debt in proportion to their respective incomes. Furthermore, the court did not improvidently exercise its discretion by awarding the defendant exclusive title to the marital residence and directing that he was wholly responsible for the remaining mortgage debt. The defendant, whose income was nearly three times that of the plaintiff, had occupied the marital home exclusively since the parties separated in May 2013.

Having found insufficient evidence of willful dissipation, we address the allocation of the marital debt. At the time of trial, the marital debt was found to be $16,947.69. This debt had accumulated on various credit cards until defendant, with the assistance of his mother who pledged stock as security, obtained a consolidated loan to pay off the credit cards in April 1998. In light of the duration of the marriage and the proof that the debt was incurred covering the daily living expenses of the parties during the marriage, we find that it should be borne equally. Accordingly, plaintiff's responsibility for marital debt is increased from $1,700 to $8,473.84.