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Pennsylvania Property Division
Property Distribution Laws in Pennsylvania
In Pennsylvania the courts generally accept a fair and reasonable property division the parties agree to, but if the parties cannot agree, the property is divided by the Court of Common Pleas within the Judgment of Divorce.
Pennsylvania is an equitable distribution state. The appreciation of separate property is marital. When the parties are unable to reach a settlement, the Court of Common Pleas distributes the marital assets between the two parties in an equitable fashion. Equitable does not mean equal or even half, but rather what is deemed by the Court of Common Pleas to be fair. Property division or equitable distribution can only be made at or after the time of the entry of divorce.
Factors in Equitable Distribution
According to Pennsylvania Consolidated Statutes - Title 23, 3501, 3502, 3505, in awarding property, the court considers:
Generally, marital misconduct occurring during the marriage is not to be considered in equitable division of property. Although marital misconduct is not to be considered, it may be considered in evaluating another of the factors, such as dissipation of marital property.
All marital property will be divided in an equitable fashion according to the court unless agreed to otherwise by the divorcing spouses.
Marital Property vs. Separate Property
Marital property is all property acquired by either spouse during the marriage, including the increase in value, prior to the date of final separation, of any non-marital property. Property acquired by gift, except between spouses, bequest, devise or descent is separate.
Marital property is property acquired between the date of the marriage and the date of the separation. Some other types of property acquired during the marriage are not marital property subject to equitable distribution or division. Most gifts and inheritances that a spouse receives during the marriage belong to that spouse.
Valuing and Dividing Property
First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally it distributes the marital assets between the two parties in an equitable manner. The general rule declares that assets should be valued at the time that they are divided between the spouses. However, the Court has discretion to select any fair valuation date.
The Marital Home
In Pennsylvania as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) from are deducted the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.
From there, couples choose one of three options to divide the equity:
Pensions and Retirement Accounts
Pensions acquired between marriage and separation are usually considered to be marital property. Only the percentage of the pension actually acquired during the marriage is marital property. Some disability pensions, even if acquired during the marriage, may be non-marital property.
In Pennsylvania vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.
Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.
In Pennsylvania the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:
In Pennsylvania if spouses share in each other’s retirement or pension plan, a Qualified Domestic Relations Order must be completed. A QDRO is a written set of instructions that explains to a plan administrator that two parties are dividing pension benefits. The instructions set forth the terms and conditions of the distribution - how much of the benefits are to be paid to each party, when such benefits can be paid, how such benefits should be paid, etc.
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