Introduction

In Wen Wen Sun v. Ti Zhou, 2025 NY Slip Op 06217 (App Div, 2d Dept, Nov. 12, 2025), the Appellate Division, Second Department, issued a detailed decision in a contested divorce addressing multiple core issues of equitable distribution and support. The case involved disputes over separate property credits linked to the purchase of the marital residence, the allocation of selling and closing costs, valuation methodology and date for a hedge fund investment company interest, imputation of income and maintenance, child support including deviation above the statutory cap, allocation of carrying charges on the marital home pending sale, counsel fees, and the treatment of future college expenses and a 529 college savings account.

The parties married in 2009 and have one child. The plaintiff commenced the divorce action in 2017. Following a nonjury trial, the Supreme Court, Nassau County (Voutsinas, J.), issued an amended decision in January 2020 and entered a judgment of divorce in January 2021. Both parties appealed from stated portions. The Second Department’s opinion—authored by a panel of Dillon, J.P., Miller, Taylor, and Goldberg Velazquez, JJ.—largely affirmed the trial court while modifying two college-related aspects: it struck a directive for the defendant to contribute to undergraduate tuition as premature and expressly treated the parties’ New York 529 College Savings Plan as marital property to be shared equally.

The decision provides instructive guidance on several recurring matrimonial issues: timing and method for valuing an actively managed business interest; the proof and tracing needed to secure a separate property credit; the consequences of commingling; reliance on Child Support Standards Act (CSSA) pro rata shares to allocate interim carrying costs; and the appropriate handling of college-related financial obligations when the child is years from matriculation.

Summary of the Opinion

• Modified the judgment by:
  • Deleting the directive that the parties pay pro rata college tuition up to a SUNY cap—holding such an order is premature for a child who was five years old at trial.
  • Adding that the New York 529 College Savings Plan for the child is marital property in which the parties share an equal interest.
• Otherwise affirmed, including:
  • A separate property credit of $2,117,650 to the defendant for gift funds used toward the marital residence, based on tracing and intent of the gift-givers (defendant’s parents).
  • Deducting brokerage commissions and closing costs from the gross sale price before applying the separate property credit and distributing remaining equity.
  • Directing the defendant to pay 64.49% of the marital residence’s carrying charges pending sale, mirroring the parties’ CSSA pro rata shares and limited to the sale period.
  • Valuing the defendant’s interest in Ruyi Capital, an actively managed hedge fund investment company, at $607,000 as of the commencement date of the action and awarding the plaintiff 35% of that value.
  • Denying the defendant’s claimed separate property credits for a $500,000 EB-5 investment and $70,000 allegedly traced from a premarital brokerage account, due to commingling and insufficient proof.
  • Imputing income of $300,000 to the defendant; awarding the plaintiff maintenance of $4,000 per month for 17 months; awarding child support of $3,500 per month with a justified upward deviation above the statutory cap.
  • A counsel fee award of $50,000 to the plaintiff.

Analysis

Precedents Cited and Their Role in the Decision

• Equitable distribution standard of review: Santamaria v Santamaria, 177 AD3d 802, and Silvers v Silvers, 197 AD3d 1195, confirm that equitable distribution is largely discretionary and appellate review is deferential, though the Appellate Division’s power after a nonjury trial is as broad as the trial court’s, tempered by witness-credibility deference.
• Separate property credits for marital residence: Sinnott v Sinnott, 194 AD3d 868; Fields v Fields, 15 NY3d 158; Westreich v Westreich, 169 AD3d 972, underscore that a spouse who contributes separate property (including third-party gifts) to acquire a marital asset is entitled to a credit, provided the contribution is traced and remains identifiable as separate in origin.
• Sale-cost deductions and distribution methodology: Torkin v Susac, 236 AD3d 1082; Marino v Marino, 183 AD3d 813, support deducting brokerage commissions and closing costs from the gross sale price before calculating separate property credits and distributing net equity.
• Carrying charges pending sale: Burke v Burke, 175 AD3d 458, supports allocating interim carrying costs in a way that reflects ability to pay and facilitates cooperation to sell the home; mirroring CSSA pro rata shares is a reasonable approach.
• Valuation dates and active vs. passive assets: Lieberman-Massoni v Massoni, 215 AD3d 656, explains courts’ broad discretion to select valuation dates and to treat actively managed assets differently from passive ones; Kurtz v Kurtz, 1 AD3d 214, and Lipsky v Lipsky, 276 AD2d 753, support using the commencement date for active business interests.
• Commingling and separate property rebuttals: Torkin v Susac, 236 AD3d at 1086; Overton v Overton, 118 AD3d 858, establish that property acquired during the marriage is presumed marital and commingling triggers a presumption that must be rebutted by clear and convincing evidence; Glessing v Glessing, 212 AD3d 783, emphasizes credibility deference.
• Counsel fees: Habib v Habib, 227 AD3d 874; Marchese v Marchese, 185 AD3d 571; Domestic Relations Law § 237(a), stress discretion based on equities, parties’ finances, and conduct.
• Maintenance: Domestic Relations Law § 236(B)(6), including subsections (c), (d), and (e)(1), and Torkin v Susac, 236 AD3d 1082, and Sufia v Khalique, 189 AD3d 1499, guide imputation of income where warranted and consideration of statutory factors when payor income exceeds the cap.
• Child support and deviations: Domestic Relations Law § 240(1-b); Torkin v Susac, 236 AD3d at 1087, outline the three-step calculation and permissible deviations with articulated reasons.
• College expenses—prematurity doctrine: Domestic Relations Law § 240(1-b)(c)(7) and Spinner v Spinner, 188 AD3d 748, caution against ordering contributions to future college costs when the child is several years away and there is no evidence of likely costs, interests, or abilities.

Legal Reasoning and Application

The court’s reasoning is anchored in well-settled New York matrimonial principles applied to a complex factual matrix.

1) Separate Property Credit for Marital Residence

The defendant obtained a $2,117,650 separate property credit tied to parental gift funds used at closing. New York recognizes gifts from third parties to one spouse as separate property (Domestic Relations Law § 236[B][1][d][1]). The key is tracing: the funds must be demonstrably linked to the separate source and used for the acquisition. The record showed the balance due at closing came from funds gifted by the defendant’s parents, flowed through the defendant’s individual accounts, and were used to satisfy closing obligations. That sufficed for a dollar-for-dollar credit before equitable distribution of the remaining equity.

2) Sale Costs Deducted Before Applying the Credit

The court affirmed deducting brokerage commissions and closing costs from the gross sale price before separate property credits and distribution. This “net-of-costs-then-credit” sequence aligns with Torkin and Marino. It ensures that transactional costs reduce the overall equity first, avoiding the unfairness of giving a separate property contributor a credit computed on a pre-cost figure.

3) Allocation of Carrying Charges Pending Sale

The directive that the defendant pay 64.49% of carrying costs pending sale was upheld because it was:

• Limited in duration (only until sale),
• Calibrated to the parties’ CSSA pro rata income shares,
• Supported by evidence of the defendant’s ability to pay, and
• Structured to incentivize cooperation to effectuate the sale.

4) Valuation of Ruyi Capital and the 35% Award

The defendant’s interest in Ruyi Capital was valued at $607,000 as of the commencement date, notwithstanding a near-trial valuation of $0. For “active” assets—those whose value is driven by a party’s efforts—courts commonly use the action’s commencement date to prevent post-commencement fluctuations or unilateral actions from skewing distribution. The Second Department deferred to the trial court’s expert-driven valuation and endorsed the 35% distributive share to the plaintiff based on Domestic Relations Law § 236(B)(5)(c) and (d) factors, including the plaintiff’s indirect, nonremunerated contributions to the marriage.

5) Denial of Additional Separate Property Credits (EB-5 and Brokerage Funds)

The defendant’s claim for a $500,000 credit faltered because the court found the funds were intended for a joint purpose—securing permanent residency through the EB-5 program—benefiting both parties. The funds later mixed with marital monies and were placed in joint title, triggering the presumption of marital property upon commingling. The defendant did not rebut that presumption by clear and convincing evidence showing the commingling was mere convenience without intent to gift or create a beneficial interest. For similar reasons, the $70,000 claim allegedly traced from a premarital Scottrade account into an Interactive Brokers account was denied.

6) Maintenance: Imputation and Duration

The trial court imputed $300,000 in annual income to the defendant. Courts may impute income when a party’s account of finances is not credible or when past earnings and earning capacity indicate higher actual ability. With payor income above the statutory cap, the court calculated guideline maintenance and then applied § 236(B)(6)(e)(1) factors—such as present and future earning capacity, marital standard of living, and equitable distribution—to award the plaintiff $4,000 per month for 17 months. The relatively short duration suggests transitional maintenance calibrated to the facts.

7) Child Support: Calculation and Upward Deviation

The court followed the CSSA’s three-step method up to the income cap, prorated the defendant’s share, and then made an upward deviation above the cap, articulating reasons: the family’s marital standard of living, income disparity, and the defendant’s foreign assets. This satisfied the statutory requirement to explain deviations, and the amount ($3,500 per month) was affirmed.

8) College Costs: Prematurity Doctrine

Relying on § 240(1-b)(c)(7) and Spinner v Spinner, the Second Department deemed it premature to fix college contributions when the child was only five at trial and there was no evidence concerning academic interests, ability, likely institution, or costs. The order requiring pro rata contributions up to a SUNY cap was struck. This reinforces a consistent appellate stance against speculative college directives for very young children.

9) 529 College Savings Plan: Marital Property and Equal Interest

Although the trial court did not distribute the 529 plan, both parties identified it as marital property. The Second Department modified the judgment to classify the specific account as marital property and ordered that the parties share an equal interest. This clarifies that 529 accounts accumulated during the marriage must be expressly addressed in the equitable distribution scheme and, absent contrary findings or stipulations, are commonly divided equally—subject to the account’s intended use for the child’s education under plan rules.

10) Counsel Fees

The $50,000 counsel fee award to the plaintiff was upheld under Domestic Relations Law § 237(a), considering the parties’ finances, their conduct, and overall litigation equities. The opinion reflects considerable deference to trial courts on fee awards when grounded in articulated equitable considerations.

Impact and Practical Implications

• College expenses cannot be set far in advance without evidence: Trial courts should refrain from ordering college contributions for very young children. Parties and courts should revisit the issue closer to matriculation when concrete data exist (child’s academic profile, chosen institution, costs, scholarships).
• 529 plans require explicit distribution: Where 529 accounts are built during the marriage, courts should classify them as marital property and specify the division. Equal division is a default-leaning approach when both parties contributed or when account growth occurred during the marriage.
• Active businesses may be valued as of commencement—even if later devalued: The case endorses commencement-date valuation for actively managed interests like hedge funds, blunting tactical or market-driven post-commencement swings that could prejudice the non-titled spouse.
• Separate property credits turn on clear tracing and intent: Crediting a spouse for a parental gift used to acquire a marital residence requires credible tracing and proof of donor intent to benefit only the donee. By contrast, funds intended for joint immigration goals and later commingled in joint title are quintessentially marital.
• Sale costs first, then credits and distribution: The court reaffirms that brokerage commissions and closing costs reduce the gross sale price before applying separate property credits and splitting remaining equity, ensuring that both parties bear transactional costs proportionally.
• Interim carrying costs may mirror CSSA pro rata shares: Using CSSA proportions to allocate temporary home-carrying obligations pending sale can be a sensible, equitable, and administrable approach—particularly where coupled with ability-to-pay findings and a defined endpoint.
• Imputation remains a robust tool: Courts will impute income based on earning capacity, historical earnings, and credibility determinations to prevent understatements of ability to pay maintenance and child support.

Complex Concepts Simplified

• Marital vs. Separate Property: Marital property includes assets acquired during the marriage, regardless of title. Separate property includes assets acquired before marriage, inheritances, and third-party gifts to one spouse. Mixing separate property with marital property often converts it into marital property (commingling).
• Separate Property Credit: If one spouse uses separate property to purchase or improve a marital asset (e.g., the marital home), they may receive a dollar-for-dollar credit for that contribution before the remaining equity is equitably divided. This requires proof (tracing) that the money originated as separate property.
• Commingling: Depositing separate funds into joint accounts or titling assets jointly creates a presumption that the funds are marital. Overcoming that presumption requires clear and convincing evidence that commingling was only for convenience without intent to create a joint beneficial interest.
• EB-5 Investment: The federal EB-5 immigrant investor program allows foreign nationals to invest in U.S. enterprises to pursue permanent residency. When EB-5 funds are used for the couple’s mutual immigration objective and later mixed with marital funds, they can be treated as marital property.
• Active vs. Passive Assets: Active assets change value due to a party’s efforts (e.g., a business), while passive assets change due to market forces (e.g., publicly traded securities). Courts often use the action’s commencement date for active assets and trial date for passive ones, though this is not a rigid rule.
• Valuation Dates: The court may select different valuation dates for different assets based on fairness and the asset’s nature, with broad discretion.
• Child Support Standards Act (CSSA): Child support is calculated using a formula that applies a percentage to combined parental income up to a statutory cap. Above the cap, the court may apply the statutory factors and/or the percentage, and must explain any deviations.
• SUNY Cap: A common rubric where parental obligations for college expenses are limited to the cost of a State University of New York (SUNY) education. Courts must still avoid premature orders when children are far from college age.
• Imputed Income: Courts may assign (impute) income to a party based on earning capacity, past earnings, and credible evidence when reported income is unreliable or understated.
• Maintenance (Spousal Support): When the payor’s income exceeds the statutory cap, the court calculates a guideline amount and then considers statutory factors to decide whether to award additional maintenance and for how long.
• 529 College Savings Plan: A tax-advantaged account for education expenses. Contributions and growth during the marriage are typically treated as marital property. Courts should explicitly distribute these accounts in divorce judgments while ensuring they remain available for the child’s education.

Conclusion

Sun v. Zhou is a comprehensive reaffirmation of New York’s equitable-distribution and support principles, with two salient clarifications for everyday matrimonial practice: (1) future college-expense orders are premature when the child is years away from college and the record is undeveloped; and (2) 529 college savings accounts accumulated during the marriage are marital property that must be expressly distributed—here, in equal shares.

The decision also underscores enduring rules: separate property credits require clear tracing and donor intent; commingling and joint purposes defeat claims of separateness; active business interests may be valued at the commencement date; sale costs reduce equity before credits and distribution; interim carrying charges can mirror CSSA pro rata shares; and imputation of income is an essential tool to ensure fair maintenance and child support awards. Trial courts retain wide latitude, but their choices must be grounded in statutory factors, a developed record, and reasoned explanations—standards that the Second Department found satisfied here in all respects but the premature college directive and the omission of 529 plan distribution.

As such, Sun v. Zhou provides both doctrinal clarity and practical guidance for litigants and courts navigating the complex intersections of asset classification, valuation timing, support determinations, and child-focused educational provisions in New York divorces.