Stang v Lange (2007 NY Slip Op 52134(U))

Stang v Lange

2007 NY Slip Op 52134(U) [17 Misc 3d 1124(A)]

Decided on September 28, 2007

Supreme Court, New York County

Drager, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

The issues in this matrimonial action are equitable distribution of the marital property, child support, maintenance and attorney fees. A trial was held on April 11, 12, 13, 18, 19, 20, 21; May 2, 3, 4, 5, 9, 10, 11; August 8, 9, 10, 11; November 8, 9,14, 15, 16, and 17, 2006. The parties submitted post-trial briefs on March 30, 2007 and reply post-trial briefs on May 11, 2007. During the trial, Defendant (the "Husband") presented evidence to establish the grounds for the divorce on the theory of constructive abandonment [DRL § 170 (2)]. The parties entered into a stipulation resolving the issues of custody and parental access on September 23, 2005.

The parties married on February 22, 1999. The husband was 40 years old and the Plaintiff (the "Wife") 36 years old. It was the husband's first and the wife's second marriage. The parties have two children, born May 11, 1999 and June 10, 2002. The wife commenced this action in July 2003.

The wife graduated from Smith College and holds an MBA from the NYU Stern School of Business. Prior to the marriage, the wife was employed fourteen years in the finance industry. She worked primarily as a fixed income analyst for commercial banks, but had become a portfolio manager for Neuberger Berman, LLC ("Neuberger Berman") by the time the parties married.

The husband attended Columbia College and took post graduate courses at Columbia and Hunter College in computer hardware design and language programming. He initially worked as a computer programer, but in 1983 began working as a research analyst for the investment firm Legg Mason Wood Walker, Inc. ("Legg Mason"), and then Neuberger Barman in 1990. In April 1995, the husband became a portfolio manager for a hedge fund, S Squared Technology Corp. ("S Squared"), and worked for that entity throughout the marriage. [*2]

By the date the parties married, the husband had worked a total of fifteen years in the investment field, specializing in the research and analysis of the personal computer sector of the technology industry. His move to S Squared presented a sea change in his career since in this new position, rather than engaging in research, he managed investments in the technology industry sector.

The husband testified that prior to the marriage, he developed and implemented an investment strategy at S Squared. In April 1998, he concluded that the market for technology products, which had been depressed, had finally bottomed out. He believed that an expansion in earnings for a group of companies, some of which he had been following for years, would likely occur and he put into effect an investment plan to reap the benefits of these increased earnings. He acquired positions in 64 technology companies while their stock prices were still depressed. He began purchasing these stocks in 1998 and continued buying shares in 1999 and 2000 (see below for more detailed discussion).

Initially, his strategy proved overwhelmingly successful, resulting in his receipt of extraordinary bonuses. Because of positions he took in the portfolios he managed, the fund benefitted from the enormous profits earned during the period now commonly referred to as the technology bubble. On March 4, 1999, ten days after the parties married, he received a bonus of $3,100,000 (the "March 1999 Bonus"). In March 2000, shortly after the parties' first anniversary, he received a bonus in the amount of $14,323,122 (the "March 2000 Bonus"). In October 2000, 20 months after the parties married, he received a bonus in the amount of $4,316,556 (the "October 2000 Bonus").^[FN1]

Notwithstanding their good incomes prior to the bonuses, and even after the receipt of the bonuses, the parties lived a relatively modest lifestyle. At the time of the marriage, they resided in Manhattan in a two bedroom, one bathroom rental apartment. However, they spent most weekends in Southampton, New York where the husband owned property. They rarely traveled and did not dine out at fancy restaurants with any frequency Most of their free time was spent in Southampton, even off season.

After the birth of their first child, the wife stopped working outside the home. Both parties agreed to this arrangement. She was assisted by a housekeeper and nanny. Prior to the birth of their first child, the husband worked long hours and frequently traveled on business. After the child was born, he testified that he spent more time at home and traveled less often. However, he still worked relatively long hours.

In 1999, the parties agreed that they did not want to raise their child in Manhattan, and ultimately decided to live in Southampton year round. They began to look for a house that would better accommodate their needs as a year-round residence than the property they used as their vacation home. On October 10, 2000 they acquired two pieces of property, purchased in the [*3]name of Patient Faith Farm, LLC, a limited liability company wholly owned by the husband ("Patient Farm").

One of the properties consisted of 9.6 acres located at 21 Southway Drive ("Southway"). This property contained an existing main house with a view of Shinnecock Bay, a dilapidated motel and a pool. They gut-renovated the main house to use as their primary residence. They did not demolish the motel structure. Directly across a small road was the second piece of property, 52 Westway Drive ("Westway"), consisting of .38 acres of undeveloped land fronting on Shinnecock Bay.

Prior to purchasing the properties, the parties had serious discussions about this investment since the Southway property would require major construction work. The husband expressed his concern that in purchasing these properties, they were committing a major portion of their assets to the project and had to be sure that they agreed on a long term commitment to the project and to living in Southampton. The wife agreed. They purchased the properties for $2,912,500. The husband presented evidence that after renovations, the total cost for acquisition and construction was $6,441,111.

Towards the end of 2000, the husband began to experience a reversal in his financial

fortunes. In March 2000 many parts of the technology stock market crashed and, according to the husband, his 1998 investment thesis became ineffective. He claims there was a shift in the dynamics of the technology industry from the pre-internet PC era into the internet era, an area of the industry he had not fully appreciated. As a result, the portfolios he managed suffered severe losses and, by the parties' second anniversary, he was no longer eligible for a bonus.^[FN2] In an effort to regain his success, he hired consultants to assist in revising his investment strategy. However, although he continued to work for S Squared past the commencement date of this action and until April 2004, the portfolios he managed never earned sufficient profits to enable him to again receive a bonus.

Along with the financial reversals, the husband became depressed, anxious and, at times agitated. The wife testified to episodes when he was listless. As an example, she testified about how he spent an entire weekend without getting dressed or showering.

To support the family, the parties began to use some of their capital. The wife suggested that they sell some of their real estate. She also suggested that the husband consider quitting his job. She offered to return to work if he quit, but he did not leave his job and she did not look for a job. [*4]

By the spring of 2003, the tensions the parties faced caused them to engage in more serious arguments and fights and the wife consulted a divorce attorney.^[FN3] After some additional incidents in June and early July 2003, the parties separated.

ASSETS AND LIABILITIES

Before deciding the appropriate distribution of the assets and liabilities of the marriage, the court must first determine what constitutes marital and separate property, as well as the value of the property. [DRL §§ 236B (1) (d); (4) (b); (5)].

THE HUSBAND'S S SQUARED BONUSES

One of the most hotly litigated issues in this case is to what extent, if any, the bonuses received by the husband as a result of his employment at S Squared constitute separate property. It is his position that all or most of each bonus is his separate property. The wife contends that the bonuses were either transmuted into marital property or were always marital property. The husband received three bonuses during the marriage that are in issue.^[FN4]

On March 4, 1999, ten days after the parties married, S Squared paid a bonus of $3,100,000 to the husband based on his management of portfolios for the year 1998. The net amount of the bonus after tax withholdings was $1,952,409 ^[FN5].

The wife concedes that the proceeds of this bonus, if separately maintained, would be the husband's separate property. The husband argues that the entirety of the proceeds of this bonus should be deemed separate property. The husband points out that the wife acknowledges that this bonus was derived from pre-marital earnings. The wife concedes that portions of the bonus retain separate property status, but maintains that other portions of the bonus were either spent or transmuted into marital property. The court finds that the wife's analysis is correct. Most of this bonus was not maintained in separate accounts. The proceeds were spent or used to acquire or increase the value of other assets. Although the court may appropriately find a portion of those [*5]other assets to have a separate property component arising from this bonus, the analysis must be based on assets existing at the time of the commencement of the action. Thus, the court makes no finding with respect to the March 1999 Bonus as a whole, but will consider whether any portions of other assets of the marriage, derived from this bonus, should be treated as separate property.

In October 2000, S Squared paid a bonus of $4,316,556 to the husband (the "October 2000 bonus"). The husband testified that this bonus was based on gains in portfolios managed by the husband where the fiscal year ended June 30, 2000 (with the gains measured form July 1, 1999 to June 30, 2000). According to the evidence presented by the husband, only a fraction of this bonus remained for the parties. First, the bonus was reduced by the sum of $857,000 which S Squared determined was an amount overpaid to the husband in his March 2000 bonus. In addition, substantial tax withholdings were required because insufficient tax withholdings were taken from the March 2000 bonus. Accordingly, only $253,965.94 remained for deposit into the husband's BONY Checking-3 account.

It is the husband's position that the March 2000 bonus and the October 2000 bonus are largely his separate property. He claims that these bonuses were derived from the positions he took in the shares of 64 companies based upon a thesis he developed and started implementing in April 1998. He began research on 60 of these companies before the marriage. He first began to research 14 of these companies when he worked for Legg Mason between 1983 to 1989 as a research analyst. He then began research on 19 of the companies while at Neuberger Berman between 1990 and 1994, and another 27 of the companies while at S Squared before the [*6]marriage, between 1995 and 1998. He concedes that he first researched 4 of the companies while at S Squared during the marriage.

The husband also presented evidence regarding his extensive research efforts and knowledge base developed about companies in the technology sub-sector on which he focused dating back to 1983. He proffered evidence regarding the particular specialty he developed with respect to the pre-internet personal computer technology sub-sector during his employment prior to and while working for S Squared. Not only had he conducted research from secondary sources, but his employment enabled him to visit facilities and meet with the officers of numerous technology companies enabling him develop a thorough understanding of the evolution of this particular sub-sector. He also testified about how he literally took apart computers to determine the manufacturers of component parts to help him assess future investment opportunities.

The evidence clearly revealed that much of the husband's research and knowledge about this technology sub-sector pre-dated his employment at S Squared and the marriage. Indeed, the husband's interest in technology and the stock market dated back to his childhood. His knowledge of the particular technology sub-sector concerning pre-internet personal computers was honed over his years of employment as a research analyst at various brokerage firms. Although he had only limited experience trading stock, it is obvious that he was hired by S Squared in 1995, five years prior to the marriage, to trade stock for this hedge fund because of his specialized knowledge.

Moreover, the husband contends that the size of the bonuses were the direct result of his pre-marital efforts at S Squared. Specifically, he argues that he tripled the size of portfolios he managed prior to the marriage, setting the groundwork for the large bonuses received. He also claims that prior to the marriage, he negotiated with the CEO of S Squared the very favorable terms by which the bonuses were ultimately calculated (However, the wife presented evidence to suggest that some of these negotiations occurred during the marriage. Moreover, no one from S Squared testified to corroborate the husband's testimony regarding how the bonuses were calculated). And finally, the extraordinary market conditions of 1999 resulted in the large bonuses from the gains of the portfolios he managed. He argues that the bonuses were therefore largely derived from his pre-marital efforts and/or passive market conditions.

The husband's forensic accountant financial expert opined that there is a separate property component to the bonuses earned by the husband during the marriage that is subject to valuation. To determine the value of this separate property, the husband's financial expert testified that he used a "coverture-like analysis," using as the start of the period to be valued the approximate date when the husband first began to study each particular company that ultimately became one of the 64 companies in which the husband invested while at S Squared. The valuation period spanned periods of time even before the husband began to work at S Squared and trade shares of that particular company. To capture and quantify what the husband claims to be the pre-marital components of these bonuses, the husband's financial expert analyzed the bonuses by reviewing the individual stock performance of each of the 64 companies the husband [*7]traded during the particular performance measurement period and each stock's respective contribution to the overall bonus amount for that period. The bonuses were then allocated into marital and separate property components. This was done by applying to each stock's contribution to the bonus a time-based coverture fraction with (i) the denominator being the number of days between July 1 of the year the husband claimed he first commenced research on a particular company and the date the particular bonus period concluded, and (ii) the numerator of the fraction being the number of days between July 1 of the year the company was first researched through the date of marriage (to determine the separate property percentage) or from the date of marriage through the date the bonus measurement period concluded (to determine the marital property percentage).

The husband's financial expert stated that he fixed the July 1st date of each year for the commencement of the calculation in an effort to be fair to both parties. The husband's financial expert relied on the husband's statement of when he began studying a particular company. Since the husband's research often began many years before the valuation was done, he was often unable to give a specific date on which he began the research. However, he claimed he was able to remember the year.^[FN6] The husband's financial expert used the mid-year point, contending that on some occasions the husband might have begun the research earlier in the year, and on other occasions later in the year. By always using a mid-year point, he favored neither side.

The husband's financial expert testified that he employed a time-based fraction as the recognized methodology used to delineate between items of value that were acquired during the marriage but were due to pre-marital efforts [e.g. DeJesus v. DeJesus, 90 NY2d 643 (1997); Majauskas v. Majaunskas, 61 NY2d 481 (1984)]. He testified that, "Having been a securities professional myself, having my Series 7 and 63 licenses, and having been part owner of a wealth management company, I understand the investment cycle. The investment cycle starts with the identification of companies, significant research, the performance of significant due diligence with respect to these companies followed by a decision to pull the trigger and buy when market conditions are ripe for that decision. . . The coverture fraction, then naturally for me would start on the date that company was first identified and first researched, and ending with the date of the performance period which underlies the bonus. It's during that period of time, at least in my opinion, that - - in this case - - Mr. Lange earned the bonus." (Tr. 11/14/06 at 36, 38. Emphasis added.).

The problem with the husband's financial expert's analysis is that it assumes a path leading inexorably from the identification of and research about a company to the purchase of the stock and the end of the performance period underlying the bonus. But the husband could not earn that bonus until he was employed to trade stock for S Squared. It is only in 1995, when he was hired by S Squared that the ability to achieve the end goal of the bonuses became possible. Until then, the husband had been investigating technology companies almost [*8]exclusively as a research analyst, unrelated to trading stock for clients. His experience and knowledge may well have been relevant to his obtaining the job at S Squared, but could not serve as a basis for him to earn the S Squared bonuses until beginning in 1995. Application of a coverture fraction might then have been fair to determine the separate property portion of the bonuses earned from the date of employment at S Squared to the date of marriage. However, the husband offered no evidence to support the value of such a separate property analysis.^[FN7]

Moreover, it is both arbitrary and subjective to use as the beginning date of the analysis, as the husband's financial expert did, the year the husband claimed he began to research a company. Without documentation, it is impossible to verify the husband's assertion that he began to focus on certain companies years ago. In addition, The husband's financial expert's reliance on a July 1st date in any given year to begin the valuation, though seemingly well intentioned, is admittedly a fiction because it is impossible in many instances to identify specifically when the husband began to research a company. Furthermore, the determination that the analysis should start on a date when the husband claimed he first investigated a company is capricious. Why not start the analysis on the date the husband got his first job as an analyst in the technology field or when he began to dabble in studying technology as a high school student?

More seriously, the husband's financial expert made no effort to discern the amount of time the husband spent researching stock prior to 1995. His analysis assumed the husband spent an equal amount of time over many years researching each stock. No evidence was offered to support this assumption. Furthermore, The husband's financial expert failed to take into account that the husband was conducting research for other employers prior to 1995 and was paid for his efforts.

In sum, the court finds that the husband's financial expert's analysis lacks credibility. Not surprisingly, none of the cases relied on by the husband suggest application of a coverture fraction without a fixed starting point of either date of employment or date of marriage. Moreover, as pointed out by the wife's forensic accountant expert, the husband's "coverture-like" analysis in the manner applied by the husband's financial expert has never been used to value an employment bonus earned during the marriage in any other case nor established as a generally accepted accounting principle.

The court rejects the husband's analysis that portions of the October 2000 and March 2000 bonuses are separate property. The concept of "marital property" is created and specifically defined by statute. It means "all property acquired by either spouse or both spouses during the marriage and before . . . the commencement of a matrimonial action, regardless of the form in which title is held. . . . Martial property shall not include separate property." [DRL § 236B (1) (c)]. The concept of "separate property" is also created and defined by statute. As is relevant here, separate property means "property acquired before marriage . . . (or) property [*9]acquired in exchange for or 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" [DRL § 236B (1) (d) (1), (3). Emphasis added.] "(O)ur statute recognizes that spouses have an equitable claim to things of value arising out of the marital relationship and classifies them as subject to distribution by focusing on the marital status of the parties at the time of acquisition." O'Brien v. O'Brien, 66 NY2d 576,583 (1985) (Emphasis added); Price v. Price, 69 NY2d 8 (1986). Here, not only were the bonuses received during the marriage, but largely resulted from financial gains that accrued during the marriage. The entirety of the October 2000 bonus was based on a period of time during the marriage and almost 89% of the March 2000 bonus (relying on the husband's assertions) was derived from financial results achieved during the marriage ($12,791,790). The court concludes that the bonuses, in their entirety, are marital property. However, this finding does not preclude the court from considering whether the husband's pre-marital efforts should affect the distribution of the assets in this case. See, e.g., Kohl v. Kohl, 24 AD3d 219(1st Dept. 2005).

The parties concur that this piece of real estate is the husband's separate property and agree that its value is $1,492,967.

The parties concur that this brokerage account is the husband's separate property and agree that its value is $1,955,369. This asset consists of $503,832 deposited by the husband prior to the marriage; $600,000 from the March 1999 bonus and a transfer of pre-marital funds from a Neuberger Berman account held by the husband.

The parties concur that the following retirement accounts are the husband's separate property. Although of little consequence, they disagree on the proper value of these accounts. The court concludes that the correct valuation is as of the date of the commencement of the action.

The parties concur that the following retirement accounts are the wife's separate property and, as with the husband's separate retirement accounts set forth above, are valued as of the date of commencement of the action.

In 2001, the parties purchased the Westway and Southway properties in Southampton. The money used to purchase the properties came solely from the bonuses received by the husband in 2000. The wife made no financial contribution to the purchase of the properties. Relying on The husband's financial expert's analysis, the husband argues that a portion of the value of these properties should be deemed his separate property. For the reasons already stated, the court rejects that analysis and finds that these assets are marital property.

These pieces of property, purchased together, are separated by a small road. The Southway property is 9.6 acres. At the time of the purchase by the parties it consisted of a dilapidated main house and a motel, as well as a pool. The motel had not been used for years and the property had been on the market for a long time. The parties basically gut-renovated the main house (but did not expand it beyond its existing footprint). The motel rooms remain as they were when the property was purchased. The main house has views of Shinnecock Bay.

The Westway property is directly across the road from the Southway property. It is .38 acres in size and fronts on Shinnecock Bay.

The properties were appraised as of April 2006, the date of trial, by the neutral appointed expert, John B. Carson of Hampton Appraisal Service Corporation. Mr. Carson concluded that the highest and best use of each property was as a single-family dwelling. He testified that the Southway property was worth $7,000,000 and that the Westway property was worth $1,325,000. He employed the sales comparison approach. He recognized that the Westway property is a pre-existing, non-conforming lot in a subdivision. However, he assumed that, notwithstanding present code limitations, a single family home could be built on it. The attraction of the lot is that it is on the beach. He acknowledged that if the lot could not be improved, its value would be less. As for Southway, he noted that the property is unique and made adjustments because of certain aspects related to the property. For instance, the existence of the dilapidated motel rooms affected the value of the property. Moreover, notwithstanding the renovations completed by the parties, the main house did not have the kinds of amenities often found in comparable properties (e.g., media room, gym, wine cellar, finished basement).

Mr. Carson indicated that he had first valued the properties in 2004 at which time he appraised the Westway property as worth $1,200,000 and the Southway property as worth $5,000,000. The increase in value was due to market forces. He noted that the value of property in the area had increased by about 12%, but that a leveling of values developed in the summer of 2005.

Mr. Carson did not consider whether the value of the Southway property might increase if it was subdivided. In his opinion, the highest and best use of the property was as a single family residence. He noted that any subdivision might affect the views from the main house. He [*10]also noted that development of the Westway property might affect the water views of the main house on the Southway property.

Both parties presented additional experts regarding the value of the properties. The wife contended that the Southway property could be subdivided and that doing so would greatly increase the value of that property. The wife presented the expert testimony of a real estate appraiser and consultant, who valued only the Southway property. He concluded that a subdivision of the Southway property would result in its highest and best use. He determined that it could be subdivided into six lots, two vacant lots with water views, three vacant inland lots, and the sixth lot being the water view lot with the main house. Taking this subdivision into account, he opined that the value of the Southway property is $8,100,000.

The husband presented two experts with respect to the value of the real estate. Robert Smith, a licensed surveyor, presented evidence with respect to how many lots could be created if the Southway property was subdivided. A potentially significant issue with respect to the ability to subdivide this property existed if Indian artifacts were found during an excavation (the parties knew of this possibility at the time they purchased the property). If such artifacts were found, the subdivision might not be able to proceed or would be limited. Although it was not possible to determine if such artifacts existed without core testing of the grounds, the property was in an area designated by the town as likely to contain artifacts.^[FN8] Mr. Smith concluded that five lots, including the lot with the existing house, could be generated without likely Indian artifact issues. Of these lots, only one additional lot would have a water view. Even apart from consideration of the Indian artifact issues, Mr. Smith testified that the subdivision conceived of by the wife's expert was not feasible due to zoning restrictions.

In addition, the husband presented the testimony of a real estate appraiser expert based in Manhattan, who admitted to having little experience valuing property on the east end of Long Island. He concluded that the highest and best use of the property was as a subdivision. Relying on discussions he had with real estate brokers on the east end and their research, his personal inspection of comparable properties, and discussions with Mr. Smith, the husband's real estate appraiser expert initially concluded that the value of the property is $6,800,000. He later modified that conclusion, based on the issues attendant to the Indian artifacts, to $6,000,000. However, the husband's real estate appraiser also opined that a present-day buyer, might well consider buying the property for use as a single-family resident with only the possibility of at some time subdividing the property.

After consideration of all of the evidence, the court concludes that the most reliable opinion as to the value of the properties came from the neutral appraiser. In considering expert opinion, it is important not to lose sight of actual facts. Although each side contends that a [*11]subdivision would result in the highest and best highest use of the property, the reality is that no real estate developer engaged in subdividing land on the east end of Long Island was interested in purchasing this property for that purpose. The undisputed evidence by Mr. Smith (who the court found to be credible) and the testimony of the husband, indicated that both properties had been on the market for some period of time before the parties bought them. There was no evidence that they became involved in a bidding war against a potential developer. One would assume that if subdivision of this water view property in Southampton was economically viable, a commercial enterprise would have purchased the property well before the parties became interested in it.

Moreover, the court concludes from the various expert opinions that setting a value on a potential subdivision of the property is far too speculative. The court finds that the opinion of the wife's expert is suspect because he could not explain how he determined that six lots could be created from the site or where those lots would be situated. The husband's experts, although satisfactorily indicating how five lots could be created, could not clearly delineate how the location of houses might affect the value of those lots. Furthermore, it is impossible to know what might be the economic impact on the value of any subdivision if Indian artifacts were found on the property. The fact that in completing their own renovation of the main house the parties did not go beyond the building's original footprint suggests that they were concerned about the possibility of finding Indian artifacts on the land.

There is no evidence that at the time the parties purchased the properties they gave serious consideration to the possibility of subdividing it. If that had been the case, they would not have put so much effort into renovating the main house of the property before planning the subdivision..^[FN9] Moreover, the parties would have taken immediate steps to demolish the motel rooms. The court concludes that the most accurate value of the Southway property is as a single-family property as stated by Mr. Carson. The court found his impartial explanation of how he reached his valuation figure credible. Accordingly, the court accepts Mr. Carson's valuation of the property as $7,000,000.^[FN10]

Neither party questioned Mr. Carson's value of the Westway property. Accordingly, the court finds the value of that property to be $1,325,000.

The parties concur that the following assets are marital property or part marital and part separate property. The parties further agree to the separate and marital property components of [*12]these assets, if relevant.

The parties agree that this account should be valued as of the date of commencement of the action. Its value on that date was $8,150 of which $3,392 is the husband's separate property and $4,758 is marital property.

The parties agree that this account should be valued as of the date of commencement of the action. Its value on that date was $32,723 of which $6,592 is the husband's separate property and $26,131 is marital property.

The parties agree that this account should be valued as of the date of commencement of the action. Its value on that date was $4,080, all of which constitutes marital property.

The parties agree that this account should be valued as of the date of commencement of this action. Its value on that date was $16,409, all of which constitutes marital property.

The parties agree that the value of these vehicles, as of the date of trial, is $20,195, all of which constitutes marital property. They further agree that the husband shall retain possession of these vehicles.

The parties agree that the value of this vehicle, as of the date of trial, is $16,715. They further agree that the wife shall retain possession of this vehicle.

Each party has possession of marital furnishings. The husband's furnishings are in the Southampton residences and an apartment he rented in Manhattan. The wife's furnishings are in an apartment she rented in Manhattan. Neither side proffered evidence as to the value of these furnishings. The parties agree that they will each retain possession of any furnishings they now hold.

The parties agree that a certain amount of jewelry was purchased during the marriage and is now in the wife's possession. The husband testified at trial to the purchase price of various items of jewelry, totaling $47,600. The wife offered no contrary evidence. Accordingly, the court accepts the husband's valuation and finds the jewelry worth $47,600. The parties agree that the wife shall retain the jewelry. [*13]

The parties agree they possess music equipment worth $44,750. The wife claims that this equipment is marital property; the husband claims it is separate property. The husband offered no evidence to establish his separate property claim. The court finds the property is marital. The parties agree that the husband shall retain the music equipment.

With respect to the following assets, the parties agree on the valuation date and the value of each asset. They disagree either on whether some portion is separate property, and if so, how much.

The parties agree that the total value of this asset as of the date of commencement of the action is $25,243. Of this amount, the husband claims that $17,988 is his separate property, whereas the wife claims that only $17,222 is the husband's separate property. The difference arises from the husband's analysis granting him a separate property component for all funds received from the S Squared marital bonuses. The court rejected that analysis. Accordingly, the court finds that of this account, $17,222 is the husband's separate property and $8,021 is marital property.

Both parties agree that this account should be valued as of the date of commencement of this action and that its value is $728,643. The husband opened this account prior to the marriage. On the date of marriage, this account held $12,217. This amount is the husband's separate property. All of the remaining funds deposited into this account came from deposits from the marital property bonuses. Although some of the deposits were from the March 1999 bonus, the evidence offered at trial indicates that all of the bonus money was co-mingled and most of the March 1999 bonus was spent or transferred to other accounts. Accordingly, the court finds that $716,426 of the funds in this account on the date of commencement of this action is marital property.

These accounts were established by the husband to pay for the construction and renovation of the Southway property. Both parties agree that the accounts should be valued as of the date of commencement of this action and that the value of the checking account is $14,533 and the value of the money market account is $102. The funds for these accounts were derived from the bonuses received from S Squared. The husband's claim for separate property components of, respectively, $11,045 and $78 based on The husband's financial expert's analysis is rejected for the reasons set forth above. Accordingly, the court finds that the $14,533 and $102 in these accounts on the date of commencement of this action is marital property.

The parties agree that this account should be valued as of the date of commencement of this action and that at that time the account held $219,820. The funds for this account came [*14]primarily from the March 2000 bonus. The husband's claim of a separate property component based on The husband's financial expert's analysis is rejected for the reasons set forth above. Accordingly, the court finds that the $219, 820 in this account on the date of commencement of this action is marital property.

SG Partners, LP

This entity is a portfolio of technology stocks managed by all of the portfolio managers of S Squared. The husband acquired his interest in this asset as a limited partner prior to the marriage. He made no contributions to this asset during the marriage. On the date of marriage, the husband's interest in this asset was $720,985. It grew in value to $1,340,613 at the time this action commenced. The husband made no additional contributions to this account during the marriage. The husband argues that this entire asset is separate property. The wife counters that the husband along with three other portfolio managers at S Squared managed this portfolio. It is her contention that the increased value in this asset was in part the result of the husband's efforts and, therefore, is marital property. She also contends that this asset continued to increase in value after the commencement date to a total value of $1,531,773. She argues that the increased value of this asset to the date of trial, $810,788, is marital property.

The court concludes that this asset began as the husband's separate property. Prior to and during the marriage, the husband with three others actively managed this portfolio. Accordingly, even though the husband made no additional contribution to the asset during the marriage, the increased value of this asset is marital property. However, in accordance with the wife's own analysis, since the increased value of this asset accrued due to the husband's active management of this asset, the valuation date of this asset is as of commencement of this action. Accordingly, $619,628 ($1,340,613 - $720,985) is marital property and $720,985 is the husband's separate property.

On October 6, 2000, the husband transferred $500,000 from the BONY checking-743 account to Leaf Investment Partners, L.P. ("Leaf"). The initial investment was made after the husband received the March 2000 bonus. This entity was managed solely by the son of S Squared's President and was created for investment in small capitalization technology stocks. The money was invested outside of S Squared. The husband invested no additional money into this entity and played no part in managing its investments. Therefore, this is a passive asset. The husband withdrew the money from Leaf in three installments, two in May 2004 and the third in August 2004, for a total of $889,514. The husband claims that a portion of this asset is his separate property in reliance on the theory presented by The husband's financial expert which this court has rejected. Accordingly, this asset is marital property valued in the amount of $889,514.

S Squared 401 (K) account

When the husband began working for S Squared in 1995, he joined the fund's 401 (K) retirement plan. As of the date of trial, the stipulated value of the account was $108,154. In a post-trial stipulation, dated September 11, 2007, the parties agreed that the marital portion of this [*15]account is $55,159. The remaining amount of $52,995 is the husband's separate property.

As of the date of commencement of this action, $370,000 remained unpaid by S Squared because of an erroneous deduction from the October 2000 Bonus. When the husband was fired from S Squared in April 2004, he requested payment of this amount and received, net of taxes, $208,309 (the "July 2004 S Squared Payment") which he deposited in the BONY Checking-743 account. The husband claims he spent this money for the parties' living expenses after he lost his job with S Squared. He remained unemployed through trial. He claims it should not be included in the distribution of assets. In the alternative, he claims the wife should receive only a fraction of these funds pursuant to The husband's financial expert's analysis. The wife claims the entire amount is marital property. The court rejected The husband's financial expert's analysis and concurs with the wife's assessment that this amount is marital property. The husband offered no proof that he specifically expended these funds. Accordingly, the $208,309 of this payment is marital property.

The parties agree that the wife held this brokerage account with Schwab prior to the marriage. The parties further agree that its value as of the date of commencement of this action was $1,531,286. The court finds that the date of commencement is the correct valuation date.

As of the date of the marriage, the account held $43,234 which the husband concedes is the wife's separate property. During the marriage, the wife transferred $107,815 from a pre-marital Neuberger Berman account into the Schwab account. The husband concedes that this amount is also the wife's separate property. In addition, the parties stipulated that the wife held $77,889 in a pre-marital Neuberger Berman account that she transferred into the Schwab account. Thus, $228,938 of the total account is the wife's separate property.

The husband contends that most of the remaining $1,302,348 is his separate property, in accordance with The husband's financial expert's theory, as it was all derived from his bonuses. He testified that he transferred $550,000 from his 1999 bonus to the wife's brokerage account. The remainder came from his 2000 bonuses. The husband gave this money to his wife, thereby transmuting it into marital property. Moreover, the court rejects The husband's financial expert's analysis and finds that the $1,302,348 is marital property.^[FN11]

The parties agree that the correct valuation date of this asset is the date of trial and that it's value on that date was $186,155. In a post-trial stipulation, dated September 11, 2007, the parties agreed that $26,062 of this asset is marital property. The remaining amount of $160,093 [*16]is the wife's separate property.

The husband contends that the parties' 2003 joint federal tax return reflected a capital loss carryover resulting from prior losses incurred of funds held in the wife's Schwab-031 account that she will be entitled to use against both short term and long term capital gains going forward. The parties used a portion of this loss carryover for their 2004 joint tax return. The husband contends that there remains a value of $597,375 from this carryover that the wife will be able to use against capital gains on her future tax returns. The husband claims that since the losses relate to accounts titled in the wife's name, he cannot share in the use of this loss carryover. However, since the wife deposited into this account the bonus money the husband gave to her, he should receive a share of the benefit the wife will receive from the loss carryover.

The wife does not argue that the loss carryover exists. However, she contends that placing a value on this asset is too speculative. Whether the carryover has any value going forward depends on what gains, if any, the wife earns. The wife correctly points out that no evidence was presented at trial with respect to valuation of the carryover. Both sides agree that the only real evidence presented about the carryover is contained in the tax returns; no expert analysis regarding any potential valuation of this asset was offered. Accordingly, since insufficient evidence was presented with respect to any value of this carryover, it is not subject to distribution.

In sum, the court finds the following assets to be entirely marital property or to have a marital property component. The value of the marital property of these assets subject to distribution is as follows:

[*17]STATUTORY FACTORS

Marital property must be distributed equitably upon consideration of the circumstances of the case and the respective parties. DRL § 236 (B) (5) (c). The court has considered each of the factors set forth in DRL §236 (B) (5) (d) to the extent applicable in reaching its decision.

This was a short marriage of less than 4 ½ years duration. The parties are middle-aged and of good health. Each party entered the marriage with assets, although the husband held assets of greater value. The wife holds an MBA and the husband is a college graduate with post-graduate training. Each party had an established career in the financial industry prior to the marriage. However, at the time of the commencement of the action, neither party was employed. The wife left the workforce after the first child of the marriage was born in 1999, shortly after the parties married. The husband was fired from his job in April 2004 as a result of his failure to make money as a portfolio manager at S Squared. However, his lack of investment success began earlier, in 2000. The husband had worked at S Squared since 1995. He did well and earned bonuses into 2000. But by the end of 2000 his investment strategies had begun to fail and his earnings declined precipitously.

The evidence revealed that the assets acquired during the marriage were derived from the husband's bonuses received in 1999 or 2000. Although largely transmuted into marital property, the wife acknowledged that the 1999 bonus was earned primarily before the marriage. The two 2000 bonuses were based on earnings largely within the first year of the marriage. The evidence supports the wife's contention that the husband actively traded stock for the portfolios he managed during the marriage. However, the record is clear that the bonuses were the result of investment strategies that were devised by the husband and put into place prior to the marriage. It is also evident that the husband developed his investment strategies as a result of the many years he had work as a research analyst studying the personal computer sector. He concluded that companies in this sector were undervalued. He took positions to take advantage of an anticipated increase in value of the stock of these companies. His analysis proved correct. But even more significant, as a result of the positions he took, the husband was able to benefit from, but did not predict, the extraordinary market forces of the technology bubble that occurred immediately prior to and during the first year of the marriage. However, without the knowledge he had acquired over approximately fifteen years, and the investment strategies he put into place before the marriage, he would not have been able to profit from those market forces. [DRL §§ 236B (5) (d) (1), (2), (13)].

The prospect of the husband ever again earning the kind of money he received in his S Squared bonuses is purely speculative. The husband had never before worked as a trader; his prior work experience was almost exclusively as a research analyst. The wife's own employment expert acknowledged that there is a high burnout factor for stockbrokers and hedge fund managers due to the heavy pressures brought to bear in trading stock for the benefit of other people. It is unclear if the husband has the stamina to successfully engage in such activity again. It is also unclear whether another hedge fund or brokerage firm would hire him as a trader given his ultimate lack of success at S Squared. Although the wife claimed that the husband was [*18]working on other investment strategies and was merely awaiting the end of this litigation to pursue them, there was insufficient evidence to support her contention. The husband has expressed a reluctance to return to the financial industry. But the evidence revealed that he could re-enter that industry as a financial analyst and earn a very good living. Even if he chooses to explore a different career, he will be able to draw on income from his assets to assist in his support.

Based on the testimony of both career counselors, the wife is readily able be able to return to the workforce. She earned a good living prior to the marriage, but not anywhere near the realm of earnings the husband acquired from his bonuses. There will be assets she will receive from which she can draw additional income to support herself. [DRL § 236B (5) (d) (8)].

Each party made contributions to the marriage. Although each party had a career before the marriage, their partnership was fairly traditional with the husband as the breadwinner and the wife a stay-at-home mother. Plainly, the husband contributed extraordinary earnings in the first two years of the marriage. He also earned a salary during the remainder of the time the parties lived together. He willingly invested his money in an effort to secure the parties' financial future and pursue their stated dream of living in Southampton. He generously gave money to his wife and purchased jewelry for her. He also helped care for the children of the marriage, more than typically found in a traditional marriage. The wife took care of the home and children, but she had help in doing so from a nanny and a housekeeper, a well as the husband. Given her educational background and prior jobs, she was able to participate in meaningful discussions about her husband's work, although there was no evidence that she assisted in his investment strategies and she had no direct involvement in the husband's work. She did not entertain clients and had limited contact with his work colleagues. She never entertained his business associates at home. She helped maintain some of the family's personal finances, but these efforts were quite limited. Both parties participated in the purchase of Southway and Westway. They each worked on the renovation project of the Southway property. However, all of the funds for this project came from the husband and he was very active in supervising the construction. The wife reviewed the bills submitted by the contractor. [DRL § 236B (5) (d) (6)].

The custodial parent, the wife, does not need to occupy the marital residence. Indeed, she sought to relocate to Manhattan to resume her career. [DRL § 236B (5) (d) (3)]. There are no pensions; the retirement accounts that were acquired during the marriage are subject to distribution. Each party will receive assets acquired during the marriage that will help secure their financial futures. [DRL § 236B (5) (d) (4)]. The court has considered the issue of maintenance and the interplay between the need for maintenance in light of the distribution of the marital assets (see below). [DRL § 236B (5) (d) (5)].

Although the most valuable marital asset is real estate, there are also significant liquid assets available for distribution. There has been no difficulty in evaluating any component of the assets. [DRL §§ 236B (5) (d) (7), (9)]. The only significant tax consequence caused by the distribution of the assets has already been addressed in the discussion of the tax loss carryover (see above). Although the tax carryover was not valued, the wife may receive a benefit in the [*19]future if she can apply it against any capital gains. As discussed below, the court has considered certain potential tax implications in the distribution of the real estate. [DRL § 236B (5) (d) (10)].

There has been no wasteful dissipation of the assets by either spouse. However, the court notes that the wife began this action only months after the parties moved into their new Southampton home, after assuring the husband that she was aware of the long term commitment they were undertaking in purchasing and renovating the Southway property. While the husband's emotional distress may have become more evident in 2003, the wife conceded that she begun to think about a divorce as early as 2001. In addition, more than just seeking a divorce, the wife also wanted, and obtained, the right to relocate back to Manhattan, causing additional financial expenditures. Moreover, each party expended enormous amounts of money pursuing valuations of limited utility at trial. Fortunately, the parties' property has increased in value and there are substantial assets available for distribution. No transfer or encumbrance of any asset was made in contemplation of this action. The court has also considered its award of counsel fees (see below) in deciding the equitable distribution of the assets [DRL §§ 236B (5) (d) (11), (12), (13)].

DISTRIBUTION

It has been held that there is no "strict mathematical formula" in determining the appropriate distribution of assets. Rather, the decision "rests in the discretion of the trial court and will depend on the circumstances of (the) particular case." Butler v. Butler, 171 AD2d 89, 90 (2d Dept. 1991). Taking into account all of the factors set forth above, the court finds that each party is entitled to a distribution of the assets, but that this marriage does not warrant an equal split of the marital property. The brevity of the marriage and the means by which the assets were acquired warrant a finding that the husband should receive a greater portion of the assets. Kohl v. Kohl, supra. This is not a case where the work and struggles of the marital economic partnership culminated in the parties' financial rewards. Rather, the wife became the fortuitous beneficiary of significant financial successes achieved largely within the first year and a half of the marriage. The court is convinced from all of the evidence that the bonuses acquired by the husband although marital property, were largely the result of his efforts prior to the marriage. They are the summation of his intense, fifteen year exploration of a portion of the computer industry. He was able to capitalize on the expertise he developed when given the opportunity to work as a portfolio manager at a hedge fund. However, he was also the beneficiary of unusual and not fully predicted market forces that resulted in the extraordinary bonuses he received. At the same time, the court recognizes the wife's contributions, including the care for the two young children of the marriage. Fortunately, there are sufficient assets to provide a level of financial security for each party. In addition, the court concludes that it is appropriate to distribute the assets in different proportions for the reasons given below. Equitable distribution does not mean equal distribution and there is no requirement that each asset be divided equally between the parties. Arvantides v. Arvantides, 64 NY2d 1033 (1985); Naimollah v. DeUgarte, 18 AD3d 268 (1st Dept. 2005).

This asset, valued at $1,325,000, was purchased with the husband's bonus money. The wife made no direct contribution to the purchase of this asset and no direct contribution to the husband's acquisition of his bonus. No construction was done on this property. The increased value was solely as a result of market forces. However, the wife made indirect contributions in her care of the husband and the children of the marriage. The court awards 80% of the value of this asset to the husband ($1,060,000) and 20% of the value of this asset to the wife ($265,000).

As with Westway, this asset was purchased with the husband's bonus money. The wife made no financial contribution to the purchase of this asset and no direct contribution to the husband's acquisition of his bonus. However, unlike Westway, the parties actively worked to increase the value of this asset and both parties contributed to that effort. Both parties participated in the design of the renovation and oversight of the construction effort. Each party contributed in the indirect support of being the other's spouse and raising the children. The court notes that although receiving the benefit of the use this house, the husband has been fully responsible for its upkeep over the course of this litigation. The court awards 65% of the value of this asset to the husband ($4,550,000) and 35% to the wife ($2,450,000).

The husband will retain ownership of both pieces of property (which are presently held by Patient Faith Farm). An additional reason for the appropriateness of this distribution is that the husband will bear any costs associated with selling the properties (e.g. broker fees, taxes) or any costs associated with developing the properties. It is conceivable (but speculative) that he may benefit from increased values, but the wife will have the immediate benefit of having her cash distribution now.

The marital portion of these assets total $59,399. All of this money was derived from the husband's bonuses. However, these accounts appear to be the source of the family's daily expenditures. The court awards 50% of these assets to each party ($29,699.50).

The marital portion of this asset totals $716,426. All of this money is derived from the husband's bonuses. It appears that this money merely accrued as the parties' savings. The wife made no direct contribution to these funds. The court awards to the husband 80% of the value of this asset ($573,141) and 20% to the wife ($143,285).

The total value of these assets is $14,635. These accounts are used to maintain the Westway and Southway properties, which has been the husband's responsibility. The court awards 100% of these funds to the husband ($14,635). [*21]

The total marital portion of this asset is $219,820. The source of these funds was the husband's March 2000 bonus. Any increase in value of these funds was from market forces. The court awards to the husband 80% of this asset ($175,856) and 20% to the wife ($43,964).

The marital portion of this asset is $619,628. This asset is the increased value of funds deposited in this portfolio prior to the marriage. However, because the husband participated in the management of this fund, the court deemed it marital property. The husband, however, did not solely control the investments of this fund. He was one of four portfolio managers. But he played an active role in the management of the fund during the marriage. The court has considered the wife's indirect contribution in caring for the children while the husband worked. The court awards to the husband 75% of this asset ($464,721) and 25% to the wife ($154,907).

The marital portion of this asset is $889,514. This asset is derived from an investment of $500,000 from the husband's March 2000 bonus into this fund. The husband played no part in the management of the fund. The court awards 80% of this asset to the husband ($711,611) and 20% to the wife ($177,903).

The marital portion of this asset is $55,159. The source of these funds was from the husband's salary at S Squared. He played an active role in the acquisition of this asset. Moreover, this asset was acquired from the day-to-day work performed by the husband during the marriage. The wife played an indirect role in its acquisition by her care of the children. The court awards to the husband 50% of this asset ($27,579.50) and 50% of this asset to the wife ($27,579.50).

This asset is valued at $208,309. It was a final payment on the March 2000 bonus made to the husband after the commencement of the action. At the time the husband was fired in April 2004, after the commencement date, he negotiated with S Squared to obtain payment of this asset. The court awards 80% of this asset to the husband ($166,647) and 20% to the wife ($41,662).

The value of the marital portion of this fund is $1,302,348. All of this money is derived from the husband's bonuses. Of this amount, $550,000 came from the husband's 1999 bonus which, the wife concedes, would have been the husband's separate property if he had maintained it in his separate account. On the other hand, the husband gave these assets to his wife during the marriage. The court awards 50% of this asset to each party ($651,174).

The value of the marital portion of this asset is $26,062. Neither party played any direct [*22]part in the increase of the value of this asset. The court awards 80% of this asset to the wife ($20,850) and 20% to the husband ($5,212).

In addition to these distributions, the husband shall retain two automobiles and music equipment for a total value of $64,945 and the wife shall retain one automobile and jewelry for a total value of $64,315. They will each also retain the home furnishings they presently possess.

In sum, the wife will receive $4,006,024 as a distribution of the marital property. She will also retain her separate property totaling $436,741 and the $64,315 in assets of personal property, for a total of $4,507,080. In addition, the wife will enjoy whatever benefit she may be entitled to receive from the tax loss carryover. Of the wife's share of the marital property to be provided by the husband $651,174 shall come from his share of the wife's Schwab-0031 account, $5,212 from the wife's Lehman Savings Plan and $8,205 from the wife's Chase Checking account-691 for a total of $664,591. The wife already holds in her accounts marital property totaling $680,227 (Schwab-0031: $651,174; Lehman Savings Plan: $ 20,849; and Chase Checking-691: $8,204). After subtraction of these amounts from the wife's share of the marital property, the husband shall pay to the wife to satisfy the remaining distribution of marital property owed to her the amount of $2,661,206 ($4,006,024 - 664,174 - 680,227). The husband shall therefore receive as his distribution of the marital property $8,430,276. He will also retain his separate property totaling $4,594,570 and the $64,945 in assets of personal property for a total of $13,089,791. The husband shall pay to the wife $1,331,206 within 30 days of this decision, $1,000,000 within 120 days of this decision, and the remaining $330,000 within six months of this decision.

MAINTENANCE

The court may award maintenance where justice requires, having regard for the standard of living established during the marriage, the lack of sufficient income and property to provide for the reasonable needs of the recipient, and the ability to pay by the other party, as well as the circumstances of the case and the respective parties. DRL § 236 (B) (6) (a). This court has considered each of the factors set forth in DRL §236 (B) (6) (a) to the extent applicable in reaching its findings.

As previously noted, this was a short marriage of only 4 ½ years duration. Prior to the marriage, the wife had obtained her MBA degree and had a successful career in commercial banking. The wife is now 43 years old and in good health. In February 2003 the parties moved to Southampton, New York, as had been contemplated by them since 2001. However, when this action began in July 2003, the wife made known her desire to relocate back to New York City. Her stated reason for this relocation was to enable her to resume work and become financially independent. As part of the resolution of the custody issues of this case, the wife was allowed to relocate back to New York City in August 2006. Even accepting the wife's contention that she could not look for work until she moved back to the city, she has had a year to conduct a job search. The testimony phase of this trial concluded November 17, 2006 freeing her from court appearances. Although the children of the marriage reside primarily with the wife, both attend [*23]school. Accordingly, the wife has been free from any impediment to resume her career in New York City, as she requested, since November 2006. [DRL § 236 (B) (6) (a) (2), (3), (4) (6)]

The wife's own employment expert, Edwin S. Mruk, of Mruk & EMA Partners International, testified that, in his opinion, the wife would be able to obtain a job within six to nine months of beginning her search and that she would be able to earn over $200,000. The husband's employment expert, Lee Miller, of Advanced Human Resources Group, Inc., testified that, in his opinion, the wife would be able to obtain employment within six months of beginning her search and could earn $350,000. Both experts testified that she is an attractive candidate with excellent references. There is no indication that her time away from the workforce will reduce her earning capacity. [DRL § 236 (B) (6) (a) (3), (5)]

The court has considered the manner in which the parties lived during the marriage, and finds no basis to award support because of the marital lifestyle. Not only was this a very short marriage, but the parties did not live extravagantly. Shortly after their marriage, the wife gave birth to their first child and she became pregnant again relatively soon thereafter. Perhaps as a result of the children, their vacations were spent in the United States. To the extent they went anywhere besides Southampton, they visited relatives. They did not frequently dine out at expensive restaurants. Most of their free time was devoted to buying and renovating their new Southampton home.

The court also notes that the wife has been receiving support from the husband for four years during this litigation. Although for much of this time, the wife was required to reside in Southampton, she was not precluded from exploring career options. Even if she did not want to work before both children attended school, she was free to take courses to enhance her career goals and to maintain and develop business contacts in light of her professed interest in returning to the workforce. Moreover, the court has taken into consideration the fact that the wife will receive significant assets from the distribution of the marital property. The proceeds of these assets will provide her financial security in addition to her own earnings. [DRL § 236 (B) (6) (a) (1)] Furthermore, she will be the indirect beneficiary of the child support awarded in this case.

For all of these reasons, the court denies any further award of maintenance. The existing pendente lite award of maintenance in the amount of $4,000 per month, shall end upon the husband's payment of the first ordered distribution of assets as set forth above.

The husband shall continue covering the wife on his health insurance policy until entry of the divorce judgment. The husband shall cooperate with the wife to enable her, if she so desires, to apply thereafter for COBRA under his policy at her own expense.

CHILD SUPPORT

In determining an award of child support, a court shall be guided by the provisions of the Child Support Standards Act (DRL § 240 (1-b)). In the first step of the analysis, the court must determine the income of each parent. [*24]

As of the conclusion of the trial, neither party was employed. Each party presented expert testimony with respect to the future employment prospects of each spouse. At the time of the marriage, the wife was working as a bond portfolio manager for Neuberger Berman. She testified that her base salary was $190-195,000, although there was some evidence that the wife's income may have been higher. It was certainly likely that if she had stayed with the position, she would have been eligible for a bonus that would have significantly increased her income. However, most of her experience had been as a research analyst. Her own employment expert opined that it was more likely she would find a position as an analyst and anticipated that she could earn in the range of $175,000 to $225,000. The husband's employment expert agreed that the wife could easily find work as a research analyst, but opined that the wife could earn $350,000, including base salary and bonus. He based his conclusion on a review of employment surveys and discussions with recruiters. Both experts concluded that the wife is an attractive job candidate and would have little trouble finding employment, notwithstanding her absence from the job market. For all of these reasons, the court imputes employment income to the wife of $275,000. The court will not deduct FICA or New York City taxes since it has no basis to do so. In addition, the court attributes an additional $25,000 income to the wife attributed to investment income derived from her assets.^[FN12] Thus, her total income for consideration by this court for child support purposes is $300,000. [DRL §§ 240 (1-b) (b) (ii); (v); (vii) (G), (H)].

The husband testified that he wishes to undertake an entirely new direction in his life. He claims that in light of his experience at the hedge fund, he is no longer interested in employment in the financial industry. He is working on computer software projects, although it is unclear if those projects will evolve into commercially successful endeavors. He also manages his own stock portfolio.^[FN13] The husband's employment expert opined that, in light of the losses suffered by the husband at S Squared, it is unlikely that he could again find work at a hedge fund as a portfolio manager. He believed the husband would more likely find employment as a research analyst, earning approximately $350,000. However, this conclusion was based on what the average analyst is capable of earning, providing no gradation for a person with specialized analytical knowledge.

The wife's employment expert opined that the husband would be able to obtain employment as a hedge fund manager earning potential $2.5 to 3 million and as a manager of a mutual fund earning $1.7-2 million. The court finds that it is difficult to predict if the husband could again work as a hedge fund manager. The wife correctly points out that notwithstanding the losses he sustained, the husband continued to work at S Squared until 2004. However, the wife's own testimony supports the conclusion that the husband's emotional state seriously deteriorated after he sustained the losses at the fund. It is therefore hard to predict whether he [*25]could again enjoy significant success in the pressure-filled work atmosphere of a hedge fund. At the same time, the court finds that the husband lacks credibility in suggesting that he will not return to work in some capacity in the finance industry. The husband has devoted his life to studying the market. His own witness, Jill Hauser, a research analyst colleague, testified to the husband's original research regarding valuation of technology stock. The technology sector has not disappeared. The court does not doubt that the husband is capable of refreshing (if he has not already done so) his knowledge of the industry and can again provide useful advice as an analyst, whether for a hedge fund or other financial investment entity. Moreover, in light of the fact that the husband has two young children to support, he cannot minimize his responsibility to them by reducing his earning potential.

The court concludes that of the various career tracks available, it is most likely that the husband could readily gain employment as a highly sought after research analyst in the computer technology sector, a field of great interest to investors. According to the husband's testimony, in the early 1990s he earned, on average, $300,000 when he last worked as a research analyst.^[FN14] The court has also considered the husband's earnings at S Squared, less the bonuses he received. From all of these factors, the court concludes that it is reasonable to impute income of $450,000 to the husband for work as a research analyst specializing in the technology sector. The court will not deduct FICA or New York City taxes since it has no basis to do so. In addition, the court imputes interest income derived from the husband's liquid investments in the amount of $150,000.^[FN15] Accordingly, the court finds the husband's income for child support purposes to be $600,000. [DRL §§ 240 (1-b) (b) (ii); (v); (vii) (G), (H)].

The court concludes that the combined parental income for purposes of DRL § 240 (1-b)(c) is $900,000 The prorated responsibility between the parents for child support obligations is 67 % for the husband and 33 % for the wife. On the first $80,000 of combined income, applying a child support percentage of 25% [DRL § 240 (1-b) (b) (3) (ii)], the Husband's annual obligation would be $13,400 for basic child support.

However, since the combined parental income exceeds $80,000, the court must decide whether to make an award based on the additional income and, if so, whether to apply the [*26]statutory formula and/or rely on the factors set forth in DRL § 240 (1-b)(f). See, A.D. Scheinkman, McKinneys Practice Commentaries, C 240:27A.; DRL §240 (1-b)(c)(3). Where the court awards support above $80,000, irrespective of the statutory method used, the court must articulate a rationale for its determination. Matter of Cassano v. Cassano, 85 NY2d 649 (1995); Anonymous v. Anonymous, 12/8/99 NYLJ 27, (co.6) affd, 286 AD2d 585 (1st Dep't. 2001).

The court finds that an award based on income above $80,000 is appropriate. Given the combined parental income, the children would have enjoyed a very comfortable lifestyle had the marriage not ended. However, the court further concludes that the award should not be based on the full combined parental income. Kosovsky v. Zahl, 272 AD2d 59 (1st Dep't. 2000). It is not necessary for either parent to commit all of his or her income to meet the needs of the children, even recognizing the parties' substantial assets. The court also notes that the husband enjoys substantial access to the children, thereby decreasing some of the wife's expenditures for the children's benefit. Finally, the court is aware that it has of necessity imputed income to both parents. For these reasons, the court concludes that $375,000 shall be the total combined marital income subject to basic child support consideration.

The court also determines that it is appropriate to apply the statutory percentage formula to the amount over $80,000. Even upon consideration of the paragraph (f) factors, the court concludes that reliance on the statutory percentage formula is neither unjust nor inappropriate. Although the parties have significant assets, they led a relatively modest lifestyle. Much of their free time was spent in Southampton, a pleasure the children will still be able to enjoy. Although it appears that one of the children may have special needs, there are sufficient assets to allow both children to attend private school and receive any medical or psychological assistance they need. However, the court has considered that there will be significant "add-on" costs for each child and the wife will be required to contribute to those costs. A significant basic child support will help enable the wife to support the daily needs of the children and contribute to their "add on" costs. The court concludes that each party has the ability contribute financially to meet the children's needs. Use of the statutory formula allows those needs to be met in proportion to the money available to each party.

Applying the statutory formula to the total combined income of $375,000, and attributing to the non-custodial husband his pro rata obligation of 67%, the court finds the Husband's annual child support obligation to be $62,812 with the monthly basic child support obligation to be $5,234. This amount shall be paid in two equal installments by the husband on the first and fifteenth date of each month. In light of the support payments previously made, this support payment shall commence with October 1, 2007.

With respect to "add-on" costs, one of the children attended private school in Southampton before this action began. They each now attend private schools in Manhattan. It appears that at least one of the children has special needs that may make attendance for that child at a private school in his best interests. It appears that the parties agree that the children should continue in private school and have the means to enable them to do so. Commencing with the [*27]2007-08 academic year, the husband shall pay 67% and the wife 33% of the costs of private school and related expenses, including books, computers, school supplies, and tutoring if necessary.^[FN16] The parties have given no evidence of any costs needed for religious education.

The husband shall maintain the children on his health insurance policy and shall pay 100% of this cost. Commencing October 1, 2007, each party shall contribute to any non-reimbursed medical costs, with the husband to pay 67% and the wife to pay 33% of these costs. These costs shall include medical, dental, ophthalmology and mental health treatments.

Commencing with the 2007-08 academic year, the husband shall contribute 67% and the wife 33% of the costs of the children's extracurricular activities, including after school, weekend and summer activities.

The husband shall contribute 67% and the wife 33% of the costs of the children attending a private university or college, including tuition, room and board, books, computers, and reasonable transportation costs for four round trips between home and school each year, if such costs are necessary. It is appropriate to determine this cost at this time so that the parties can save money to meet the needs of the two children. Clearly it is the desire of both parties that the children attend private colleges given that the parties themselves attended private colleges and the children now attend private schools. As each child attends college, if the school is away from home, the husband may apply to the court for a reduction in basic child support if the parties cannot themselves reach agreement on an appropriate reduction. Furthermore, if either child otherwise becomes emancipated in accordance with the Child Support Standards Act, the husband may apply to a court for a reduction in child support payments if the parties themselves cannot reach an agreement.

The husband shall pay 67% and the wife 33% of the childcare costs incurred by the mother, provided she is actually working outside the home. The wife must provide proof of the child care costs and that the wife works. The costs will be limited to childcare expenses for up to 40 hours per week if warranted by the wife's work schedule. The husband's obligation for childcare costs will cease when the youngest child turns 12 years old. The wife may apply to the court for childcare costs if she can show that she is working at home to earn income and needs childcare to enable her to perform that work and if the parties cannot themselves reach agreement. Each party shall be responsible for any babysitting costs either incurs beyond the costs necessary for the wife to attend work as set forth in this paragraph.

The husband is entitled to a credit for any "add on" child support costs he has paid for which the wife now owes a contribution. If the parties cannot otherwise agree on how that credit shall be addressed, the husband shall deduct the agreed upon amount from the final distribution [*28]of assets payment.

Each party shall be entitled to take one of the children as a deduction for tax purposes.

The husband shall maintain a life insurance policy for the benefit of each child in the amount of one million dollars until that child is emancipated.

ATTORNEY FEES

The wife seeks an award of attorney fees. She asserts that she has expended $1.37 million dollars for attorney and expert fees and court reports. The court awarded $100,000 in pendente lite fees.

The case began in July 2003. Eight trial days were expended before the parties reached a settlement on custody. Twenty-three days were spent on the trial of the financial issues.

The decision to award counsel and expert fees is left to the sound discretion of the court. Indigence is not a requirement. DeCabrera v. DeCabrera-Rosete, 70 NY2d 879 (1987). "The issue of counsel fees is controlled by the equities and circumstances of each particular case and the Court must consider the relative merits of the parties and their respective financial positions in determining whether an award is appropriate. (citations omitted)" Hackett v.Hackett, 147 AD2d 611 (2d Dept. 1989). An award of counsel fees is appropriate where there is a disparity of income and earnings capacity. Merzon v. Merzon, 210 AD2d 462 (2d Dept. 1994); Denholz v. Denholz, 147 AD2d 522 (2d Dept. 1989).

The court finds that each party was at fault in the amount of time expended on this case. The length of the custody trial was necessitated, in part, by the wife's decision to seek to relocate to Manhattan with the children, notwithstanding the extraordinary expenditures made by the parties to enable them to live year round in Southampton and having severed their ties to Manhattan only months before she left the marriage. However, the husband also unreasonably delayed the ultimate resolution of that portion of the case by questioning some of the professional assessments of the children's needs.

Each party also contributed to the lengthy financial trial. The husband pursued a theory with respect to a separate property claim unsupported by any case law or accepted accounting principles. On the other hand, the wife pursued an analysis of a potential subdivision of the parties' real estate where her own expert failed to provide a modicum of meaningful evidence to support his suggested subdivision. An inordinate amount of trial time was taken up each party giving convoluted answers to simple questions. [*29]

Although the husband is leaving the marriage with the greater portion of the assets, the wife will leave the marriage with over $4 million derived from the marriage and over $450,000 of her own separate assets. After payment of the distribution to the wife, the husband will receive only one million dollars more than the wife of the marital property. Moreover, the wife was granted her request to return to New York City to resume her career enabling her to earn substantial income. This is not a case where the disparity of income or assets warrants an award of all of the wife's litigation expenses. However, without some award of attorney fees, the wife will be left with a reduction of the assets awarded to her and the court's purpose of providing each party with financial security will be defeated. But the wife must bear a significant portion of the costs she incurred and the court finds she can afford to do so. Moreover, the court has considered the substantial support payments the husband has already paid to the wife. Accordingly, the husband shall pay $250,000 in additional attorney fees to the wife's attorney, $100,000 to be paid by the husband to the wife's attorney within 30 days of the date of this decision and $150,000 to be paid to the wife's attorney within 120 days of the date of this decision.

ORDERED, that the husband shall pay to the wife $2,661,206 as distribution of the marital property not already held by the wife. The husband shall pay to the wife $1,331,206 within 30 days, $1,000,000 within 90 days and $330,000 within 120 days of the date of this decision and order, without notice of entry; and it is further

ORDERED, that the husband shall retain possession and ownership of the Westway and Southway properties (which are presently held by Patient Faith Farm, LLC, a limited liability company wholly owned by the husband); and it is further

ORDERED, that, pursuant to the parties' stipulation, the husband shall retain possession and ownership of the music equipment, the home furnishings in the Southampton residences and his New York City apartment, and the 2003 Ford SUV and 1999 Jeep automobiles. Pursuant to the parties' stipulation, the wife shall retain ownership of the jewelry in her possession, the home furnishings in her New York City apartment, and the BMW 330 automobile; and it is further

ORDERED, that, subject to the distribution to the wife of her share of the marital property, each party shall thereafter retain ownership and control of any accounts in his or her name and the funds held therein. Any remaining accounts in their joint names shall be closed and the funds transferred to the husband upon his payment of the final distributive award to the wife; and it is further

ORDERED, that the wife's application for maintenance is denied, except that the $4,000 pendente lite maintenance award shall continue until the husband makes the first payment of the distributive award of $1,349,638 at which time the pendente lite maintenance award payments shall cease; and it is further [*30]

ORDERED, that the husband shall continue the wife's coverage under his health insurance policy until entry of the divorce judgment. The husband shall cooperate with the wife to enable her, if she so desires, to apply for COBRA under his policy at her own expense; and it is further

ORDERED, that the husband shall pay basic child support in the amount of $5,234 each month, to be paid in equal installments on the first and fifteenth date of each month. This order of support shall commence October 1, 2007; and it is further

ORDERED, that, commencing with the 2007-08 academic year, the husband shall pay 67% and the wife shall pay 33% of the costs of private school, and related expenses, including books, computers, school supplies, and tutoring if necessary; and it is further

ORDERED, that the husband shall maintain the children on his health insurance policy and shall pay 100% of that cost. Commencing October 1, 2007, the husband shall pay 67% and the wife shall pay 33% of any of the children's non-reimbursed medical costs, including medical, dental, ophthalmology and mental health treatments; and it is further

ORDERED, that, commencing with the 2007-08 academic year, the husband shall pay 67% and the wife shall pay 33% of the costs of the children's extracurricular activities, including after-school, weekend and summer activities; and it is further

ORDERED, that the husband shall pay 67% and the wife shall pay 33% of the costs of the children attending a private university or college, including tuition, room and board, books, computers, and reasonable transportation costs for four round trips between home and school each year, if such costs are necessary; and it is further

ORDERED, that as each child attends college, if the school is away from home, or if a child becomes emancipated in accordance with the provisions of the Child Support standards Act, the husband may apply to the court for a reduction in basic child support if the parties themselves cannot themselves reach an agreement on an appropriate reduction; and it is further

ORDERED, that the husband shall pay 67% and the wife shall pay 33% of the childcare costs incurred by the wife, provided she is actually working outside the home. The wife must provide proof to the husband of the childcare costs and that the wife works. The costs will be limited to up to 40 hours each week if warranted by the wife's work schedule. The father's obligation for childcare costs will cease when the youngest child turns 12 years old. The wife may apply to the court for childcare costs if she can prove that she is working at home to earn income and needs childcare to enable her to perform that work and if the parties themselves cannot themselves reach agreement. Each party shall be responsible for any babysitting costs either incurs beyond the costs necessary for the wife to attend work as set forth herein; and it is further

ORDERED, that the husband is entitled to a credit for any child related expenses he has [*31]already paid and which the wife has now been ordered to pay. If the parties cannot otherwise agree on the manner in which the credit shall be paid, the husband shall deduct the agreed upon amount from the final distribution of marital assets payment; and it is further

ORDERED, that the husband shall maintain a life insurance policy for the benefit of each child in the amount of one million dollars until that child is emancipated and it is further

ORDERED, that each parent shall be entitled to take one of the children as a deduction for tax purposes and shall cooperate to enable this arrangement.

ORDERED, that the husband shall pay $500,000 in additional attorney fees to the wife's attorney, $250,000 to be paid by the husband to the wife's attorney within 30 days of the date of this decision and $250,000 to be paid by the husband to the wife's attorney within 120 days of the date of this decision, without notice of entry.

This opinion constitutes the decision and order of the court.

Dated: September 28, 2007