As the country re-emerges from the Covid-19 pandemic and the New York courts re-open, there will be a surge in divorce filings. Even the strongest of marriages will be strained after couples were confined together for the duration of the stay-at-home orders, suffered a loss of income, endured an endless stream frightening headlines, all while living in fear of a deadly illness.
The divorce rates in China surged in the aftermath of the coronavirus. One Chinese attorney noted that couples, confined at home together, “The more time they spent together, the more they hate each other.”
Now a Good Time to Divorce
Apart from the emotional and psychological reasons to divorce, the current economic environment may make it an advantageous time to file for divorce. For some, there may be no cheaper time to end the marriage.
Incident to the divorce, all marital property is equitably distributed or divided. If one party owned a business, the marital portion of the business would be equitably distributed in the divorce based on its value on the date of commencement of the divorce.
Marital Business May Have A Reduce Value
Assuming that the business has been non-operational since mid-March when the stay-at-home orders were imposed, the business would not be as profitable as it was before the pandemic. Even if the business was operational, revenue is likely down.
With lowered profits and revenue, the value of the business would be less. Therefore, the amount that the owner spouse would have to pay the non-owner spouse as a “buy-out” would be substantially discounted from its pre-Covid-19 value.
Child Support and Maintenance Payments May Be Lower
Maintenance and child support awards will likely be affected, as well. While maintenance and child support payments in New York are calculated using the income reported on the last filed tax return, Courts may be willing to consider the parties’ current incomes given the high unemployment rate.
Though courts often view a sudden reduction in income during a divorce action with a high degree of cynicism, judges may now be open to hearing arguments that a party’s post-pandemic income has substantially decreased or eliminated. If proven, support or maintenance would not be based on a party’s prior income, but on the new financial reality.
If you have questions regarding your post-pandemic divorce, please call us for a consultation.