When a marriage ends in divorce, the courts are often called upon to make sure that the property or wealth obtained during the marriage is divided up in a way that is fair to both parties. Equitable property distribution is the legal process of dividing and distributing marital property upon the dissolution of the marriage. The equitable distribution process is necessary when the parties to a divorce are having difficulty agreeing on how to split up their property. There are two main components to this legal process. The first component involves categorizing the different kinds of property of the parties; and the second component involves finding a fair way to distribute the marital portion.

Categorizing the property

Categorizing the property of a couple preparing for divorce involves looking at all of the assets the couple owns, and dividing those assets into three piles: the husband’s property, the wife’s property, and the marital assets.

• Separate Property: There are a few straightforward guidelines for determining what is separate property (owned by one spouse only) and what is marital property (owned by the married couple).
  • Property is considered to be owned by only one spouse if it was owned by that spouse prior to the marriage.
  • Anything a spouse obtains after a final separation is separate property.
  • A gift or inheritance that was given only to one spouse is also considered to be separate property.
  • Anything that the parties agree to treat as separate may be deemed to be separate property.
  • There are a few exceptions and other special types of assets that courts may treat as separate property in order to ensure fairness.
  • Separate property does not become part of the equitable distribution.

• Marital Property:  Generally, any property obtained during the marriage is marital property. This is true regardless of the name on the title of the property, and regardless of how much income each spouse has earned during the length of the marriage.
  • Aside from more obvious assets like cars, houses, and savings accounts, marital property may also include intangible interests like stock options, pension plans, insurance policies, and business interests.
  • In Pennsylvania, any appreciation in the value of separate assets that occurs during the marriage becomes marital property. This means, for example, that if one spouse owned a home before the marriage, and the value of the home increased during the marriage, the court will consider the amount of the increase to be marital property.

• Other Considerations: Aside from categorizing the assets, the debts of the parties must also be taken into account. Debts may be jointly or separately owed depending on how and when they were incurred. There are situations where other kinds of property may be treated as marital or separate based on particular factual circumstances. An experienced family law attorney will review the various types of property involved in a particular divorce to help determine exactly which property will be subject to distribution.

Determining the Value of Marital Property

Once the different kinds of property have been categorized, the value of the marital property must be determined so that it can be divided. The value should be appraised as accurately, and as close to the date of the divorce, as possible. The court will look for ways to divide the property in a manner that is fair to both parties. Since every marriage is different, there is no set formula that leads to a fair distribution in every divorce, but there are several factors courts repeatedly rely on to help arrive at a fair outcome. The factors include the health, age, income level, job skills, and employability of each of the parties.

For example, the court may find that an ailing spouse who is unable to work may deserve a higher percentage of the marital property than a healthy spouse with a strong, constant income. On the other hand, if the parties have similar earning capacity and are both in good health, these kinds of factors would be less important to the calculation of a fair percentage.

Additionally, marital assets may be divided differently after a twenty year marriage as opposed to a two-year marriage. If a divorce would leave one party with much more separate property, the court might then consider this imbalance as another factor that would affect the distribution.

Courts also look at the contributions each party has made to the marriage, often considering housework and child-raising alongside of financial contributions. Sometimes the parent with primary physical custody after the divorce may need more of a share of the marital assets in order to maintain care of the children. After looking at all of the factors that may make a difference in each specific case, a judge will come up with a percentage for distribution of the marital property.

There are many other considerations that can affect the outcome of an equitable distribution. Some things might seem important to the parties, but have no influence on a court’s decision. For example, courts in Pennsylvania will not consider marital misconduct as a factor in the distribution, unless the misconduct led to an actual decrease in value of a marital asset. The party who wishes to hold onto the marital home may have to give up several other marital assets in order to meet the court’s determined percentage. And although an equitable distribution is not a taxable event, splitting up the marital assets may have some tax-related consequences.