Equitable distribution is the process by which a couple divides marital assets and debts in divorce. Pennsylvania is an “equitable distribution state,” as opposed to a “community property state.” That means that if a couple cannot come to an agreement on the division of property, a judge will decide how property should be split and attempt to divide things fairly. Equitable distribution does not necessarily mean that property will be divided equally.
The first step of the equitable distribution process involves characterizing a couple’s assets. The court will identify which property is “separate,” and not divisible in divorce. One example may include inheritances received during the marriage. The court will also establish which property is “marital” and vulnerable to distribution.
Although separate property, also called non-marital property, is not transferable in the divorce, any appreciation in value during the marriage is divisible. For example, if one spouse inherits a $500,000 property during the marriage and the home’s value increases to $750,000 during the marriage, that $250,000 increase is typically subject to equitable distribution. Further, if non-marital property is used for a common purpose (such as the down payment on a marital home), it could become marital property.
Common examples of non-marital property include property acquired before the marriage, inheritances and gifts received during the marriage, property acquired after separation, and property excluded from equitable distribution by a pre-nuptial or post-nuptial agreement.
Virtually all other property acquired during the marriage will likely be considered marital property, including a pension or retirement fund earned by one spouse. If property is titled in only one spouse’s name, it will generally be considered marital property if acquired or earned during the marriage.
Because marital and separate property can be comingled, it is important to consult with an experienced Pennsylvania divorce lawyer before characterizing assets.
These days, many couples have more debt than they have assets. Debt is divided the same way as property; debt acquired prior to marriage is separate, and debt acquired during the marriage, including mortgages, tax penalties, and credit card debt, must be distributed. This holds true even if one spouse runs up the credit card bill. Both spouses can potentially be held liable for the repayment.
In fashioning their decision as to what constitutes a “fair” distribution of assets, a court can consider several factors. In Pennsylvania, the fault or misconduct of one of the spouses is not a factor the court will consider in determining the award. Some of the factors courts commonly consider include:
You do not have to let a judge decide who gets what in a divorce if you and your spouse are able to come to an agreement. An experienced Pennsylvania divorce lawyer can help you negotiate a favorable settlement agreement. Coming to an agreement is also much less expensive than going to trial. Parties should memorialize their agreement in writing, which can be incorporated by the court in their final judgment.
Whether you are in a high asset marriage or have substantial marital debt, you need an experienced West Chester divorce lawyer in your corner to make sure that your voice is heard. To speak to a Delaware County equitable distribution lawyer at Eckell Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. call us at 610-565-3700 or complete our convenient online contact form today. With offices located in Media and West Chester, we represent clients throughout Southeastern Pennsylvania, including Chester County, Delaware County, and Montgomery County as well as the surrounding communities of Collegeville, Havertown, Lansdale, Marcus Hook, Phoenixville, and Upper Darby.