While all may be fair in love and war, what about in divorce? If you and your soon-to-be ex-spouse cannot determine how to uncouple your assets, the Court will do it for you. When it comes to dividing property, state laws vary on the best procedure. In 9 of the 50 U.S. states, assets and debts are divided 50/50 as per community property laws. However, Pennsylvania is one of the other 41 states that follow equitable distribution. This means your marital estate is divided fairly or equitably, but not necessarily equally. How is equitable distribution determined in a PA divorce?
Read on to find out.
RELEVANT FACTORS IN DETERMINING EQUITABLE DISTRIBUTION IN PA DIVORCES
Written into the PA Divorce Code are 13 factors used to help decide how spouses will split up their property. These include:
- The length of the marriage
- Any prior marriage of either party
- The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties
- The contribution by one party to the education, training or increased earning power of the other party
- The opportunity of each party for future acquisitions of capital assets and income
- The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits
- The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as a homemaker
- The value of the property set apart for each party
- The standard of living of the parties is established during the marriage.
- The economic circumstances of each party at the time the division of property is to become effective
- The Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain
- The expense of sale, transfer or liquidation associated with a particular asset, which expense need not be immediate and certain
- Whether the party will be serving as the custodian of any dependent minor children
It is important to note the Court is not limited to these factors, and that neither fault nor marital misconduct are taken into account when determining what is equitable.
WHAT ELSE FACTORS INTO EQUITABLE DISTRIBUTION?
If you signed a prenuptial agreement prior to getting married, this document will determine what assets will be considered in equitable distribution. Otherwise, all that you’ve amassed together, prior to separation, becomes part of your marital estate. This can include:
- Property – vehicles, real estate, items in your home
- Assets – retirement and investment accounts, home equity, cash and bank accounts
- Debts and liabilities – mortgage, vehicle loans, credit card debt, taxes, medical bills, and even pending lawsuits
If either spouse owns a business, this will be included in the marital estate.
When you seek divorce representation, your attorney will conduct discovery, looking several years back into financial records and accounts, sometimes utilizing the support of a forensic accountant. This process will include a “deep dive” into all your existing assets to create an accurate picture of the full marital estate, including business valuation and cash flow, possible hidden accounts, and more. If there are any disputes over when money was made, lost, or moved, a forensic accountant will prove to be an invaluable resource to keep things equitable and fair.
Another thing to consider is how assets like real estate are valued. Property is assessed at the present, current, and fair market value. Items like furniture, collectibles, and electronics would be assessed similarly. To determine a home value, typically, an appraisal takes place. This number is factored in, as well as the potential cost of sale, which ranges from 3.5% to 7% minus the mortgage and any liens. After the proper calculation, we can determine the “net equity” of the home.
EQUITABLE DISTRIBUTION IS COMPLEX
When you’re going through the darkest moments of your life, you want to know you can come out strong on the other side and with what’s rightfully and fairly yours. No marriage is the same, and you deserve the full attention of a team to help you in your unique situation.
