Property Division Attorneys in Pittsburgh
Equitable Distribution in Allegheny County, PA
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Couples usually enter a marriage with a fair amount of their own property. For example, a person might already own a house or have several bank accounts before marrying their spouse. In family law, we call this "separate property." However, during the course of the marriage, a couple will probably acquire more assets (or even debt) together. While this concept seems fairly simple for couples who stay married, it raises an important question for those who are getting a divorce: Who gets to keep all the stuff?
What Is Equitable Distribution?
If the parties cannot decide how to distribute their property themselves, the court will distribute it for them. How? This answer varies depending on the state you live in. Here in Pennsylvania, our courts use a system called equitable distribution.
Equitable distribution does NOT mean that the property will be split 50/50. Rather, it means that it will be split fairly. In accordance with the principle of fairness, marital misconduct has no bearing on the equitable distribution of property.
When dividing property, courts will instead consider:
- How long the spouses were married
- Whether either spouse had a previous marriage
- Each spouse’s age, health, income, skills, employability, and needs
- Whether one spouse supported the other in obtaining education or training to increase their earning potential
- Each spouse’s medical, retirement, and insurance benefits
- The value of each asset
- The standard of living that the spouses enjoyed while married
- The tax ramifications on each spouse
- Whether one spouse will be supporting any minor children
Marital Property in PA
Equitable distribution only involves the division of "marital property." In Pennsylvania, "marital property" is all property acquired by either party during the marriage prior to the date of separation. So, for example, any income, cars, homes, jewelry, furniture, businesses, investments, artwork, retirement accounts (401k), etc., acquired during a marriage would be marital property. It also includes gifts between spouses during the marriage, as well as any increase in the value of separate or premarital property during marriage. Marital property is distributed without regard to who owns or acquired it. For example, a spouse may be entitled to a car under equitable distribution, despite the other spouse holding title to it.
In contrast, "separate property" is the property acquired both before the marriage and after the date of final separation. For those with prenuptial agreements, the property protected by that agreement would also constitute separate property. A court will not divide the spouses’ separate property, but it may take the amount of separate property a spouse has into consideration when distributing the marital property.
But what about that big inheritance you got last year? Or that huge gift your parents gave you the year before that? Well, the answer is easy. All property acquired by one spouse as a gift, bequest, or inheritance whether before, after, or during the marriage is considered separate property.
Division of Marital Debt in PA
Equitable distribution also involves the division of marital debt, which is any debt incurred by either spouse during the marriage prior to the date of separation. Some common examples of marital debt include credit cards, mortgages, tax obligations, and loans. Like the distribution of marital assets, the equitable distribution of marital debt does not consider who acquired it. So, if your spouse racked up a significant amount of debt while you were married, you may be responsible for paying some of it after equitable distribution.
While individual loans are generally considered marital debt, individual student loans are a different story. If a spouse takes out student loans during the marriage, it is by definition marital debt. Despite this, student loans will usually remain with the student spouse and are not divided between the parties upon divorce. If a portion of the student loans were used to pay for living expenses for both spouses, then only that portion of the debt will be subject to equitable distribution.
When Do I Find Out What Marital Property Is Mine?
In a perfect world, the Judge would tell you at the conciliation, trial, or other court proceeding what marital property you get to keep. However, parties must wait until the Judge issues an order. Once the court considers the various factors set forth above, it will issue an equitable distribution order that fairly divides the marital property between the two parties. Once a court issues an order, both parties are bound by it, meaning that both parties must comply with what the order says. If one of the parties does not comply with the court’s order, the court can enter a judgment against that party or seize property on behalf of the other party.
You & Your Spouse Can Decide
Sometimes parties are able to distribute their marital property themselves without the help of the courts. They do this by executing a Separation Agreement, which is a contract between the divorcing parties that determines post-marriage rights and liabilities. If parties execute a Separation Agreement that distributes all of their marital property, there is no need for equitable distribution and there is no need for the court to get involved.
Parties may also avoid equitable distribution if the division of their marital assets are set forth in a prenuptial agreement. All property that is protected in a prenuptial agreement is shielded from equitable distribution.