Understanding Equitable Distribution
The division of marital assets and debt is a part of every divorce. The state of Pennsylvania applies “equitable distribution” to this process. While the term may seem to imply “equal” or 50/50 distribution, that is actually not the case. Equitable distribution involves assigning assets and debt fairly based on any number of contributing factors including how long the marriage lasted, the earning capacity of each spouse, and the standard of living established during the marriage.
In Pennsylvania, property is either separate or marital property.
This is property acquired before the marriage, received as a gift or inheritance during the marriage, or specifically excluded from marital property in the prenuptial or postnuptial agreement. While most separate property is exempt from equitable distribution upon divorce, there are some cases where separate property that increases in value during the course of the marriage becomes a marital asset subject to division. It should also be noted that property acquired by a spouse during the separation period is usually not considered to be marital property.
Marital property is considered any income and assets acquired during the marriage including but not limited to: real estate, vehicles, furniture, art and collectibles, investments, and retirement funds. Marital assets are distributed whether they are in one spouse’s name or another. Additionally, accounts or investments that existed before the marriage but grew significantly throughout its duration are treated uniquely. The value of the asset at the time of the marriage is considered separate property, while the value of its growth is generally considered to be a marital asset.
Like assets acquired in a marriage, debts are also divided during divorce. Debts like mortgages, loans, credit cards bills, and taxes accumulated from the date of marriage and up and until the final separation date are considered marital debts. Even those that were obtained solely by one spouse may still be subject to equitable distribution.
Determining Equitable Distribution
When couples are unable to negotiate the division of property, child support, alimony and other divorce matters with a “marital settlement agreement,” they must do so in court. There is no one-size-fits-all formula for dividing marital assets and debt in Pennsylvania. It is a complex undertaking based upon the overall financial picture of the marriage and future prospects of each spouse.
The courts will consider a number of factors including:
- How long the couple was married
- If either spouse brought separate assets into the marriage
- Each spouse’s age, health, occupation, income, and earning potential
- The standard of living establishing during the marriage
- The custody arrangements for minor children
Although some spouses might want to penalize their soon-to-be ex for financial or marital wrongdoings, “fault” is not a factor in division of property in divorce in Pennsylvania.
Bucks County Divorce Lawyers at Freedman & Lorry, P.C. Provide Skilled Representation in all Types of Family Law Matters
Couples who want to avoid lengthy and costly court proceedings should seek the counsel of an experienced Bucks County divorce lawyer to advocate for them in negotiating a sound marital settlement agreement. We recommend the best legal course of action regarding the division of assets, alimony, and child support, so you can move toward a brand-new beginning.
If you are contemplating divorce but have concerns about the division or property or any other divorce matters, call 888-999-1962 or contact us online to schedule a free case consultation with the Philadelphia divorce lawyers at Freedman & Lorry, P.C. With offices in Center City Philadelphia and Cherry Hill, we represent clients throughout Pennsylvania and New Jersey. Clients in North Carolina can visit our Pinehurst location.