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Equitable Distribution in Pennsylvania
A very important issue that arises in almost all divorces in Pennsylvania as well as other states is the division of marital assets. Especially in a marriage where one spouse was the primary bread winner and who supplied most of the assets to the marriage, the issue of dividing the marital property can be very sensitive and difficult to accept.
Pennsylvania is an equitable distribution state. Equitable distribution does not necessarily mean a 50/50 split, but rather what is considered "far" depending upon the circumstances of each spouse as well as other factors that will be discussed below. Marital property includes all property that was acquired during the marriage, regardless of how it is titled (in whose name it is). Gifts from one spouse to another are marital property if they were purchased with marital funds. Generally gifts and inheritances that a spouse receives during the marriage belong to that spouse unless the gifts or inheritance is comingled with the general marital funds. If that is the case, then the gifts or inheritances are considered marital property subject to distribution. Pensions and business interests that were developed by one spouse are considered marital property if they were acquired during the marriage.
Marital property in Pennsylvania is defined by 3501of the PA Statutes as:
Many individuals going through a divorce would like to see some type of accountability for marital misdeeds, whether the misdeeds are adultery, subjecting the other spouse to conditions and behavior that no person could endure, etc. The only time adultery or “misdeeds” are considered by the court relates to the award of alimony. If one spouse can prove that the other spouse committed adultery during the marriage, the spouse committing the adultery is not entitled to alimony. Adultery does not affect the division of marital property in Pennsylvania.
Equitable distribution applies both to marital assets and liabilities. Many of the common assets are the marital home, pensions, savings accounts, stock holdings, 401Ks, etc. Liabilities often include credit cards, mortgages, loans, etc.
It is not uncommon to have a situation where there are only liabilities subject to equitable distribution. The following factors are used to determine what is equitable when dividing marital property:
Equitable division of marital property is defined by statute 3502:
Non-Marital property refers to property acquired before marriage, through inheritance or by gift from a 3rd party, excluded by a valid agreement between parties; property directly traceable to any of these sources. However, any property brought into the marriage that may increase in value, such as real property or 401K plan, the increase in value of the asset is subject to equitable distribution during the duration of the marriage.
Factors to be taken into account in determining the amount of the monetary award to both parties:
1) The contributions, monetary and nonmonetary of each part to the wellbeing of the family:
Consider: Did you concentrate on homemaking and childrearing to the exclusion of generating an income that would have enabled you to bring property into the marital unit? Did you put your spouse through school? Did you bring money into the marriage that you earned when you were single, or that came from an inheritance, etc. and mingle it with family funds?
2) The value of all property interests of each spouse:
Consider: Do you or your spouse have considerable property that the court will consider nonmarital and that can generate an income for you? This will affect any monetary settlement
3) The economic circumstances of each spouse at the time that the award is to be made:
Consider: Are you unemployed? Have you been out of the job market for a number of years? Do you have assets?
4) The duration of the marriage:
Consider: If you have been married for a long time and were totally economically intertwined or interdependent, the court will view settlement differently than if this was a twoyear marriage between individuals with the same earning capacity.
5) The age and physical and mental condition of the parties:
Consider: See #5 above. This situation will be compounded in a long term marriage particularly if the dependent spouse is sick.
6) How and why specific marital property was acquired, including the effort expended by each party in accumulating the marital property:
Consider: Details of acquisition, sources of funds, etc. Are any of these items family heirlooms or an inheritance from one spouse's side?
7) Any award or other provision which the court has made with respect to family use personal property or the family home, and any award of alimony:
Consider: All of these categories are ultimately inseparable and will be factored into the court's decision.
8) Such other factors as the court deems necessary and appropriate to consider in order to arrive at a fair and equitable monetary award:
Consider: Are there children involved? Their welfare and best interests are primary in the eyes of the court. The court will favor their not being moved out of the family home which may mean that the family home will not be sold until the youngest child is 18 years old. This is a very different picture than if there are no children and one of the partners wants to "cash out" of the family home.
Relationship between Monetary Award and Alimony
Alimony may be awarded to either spouse for their support and maintenance after the divorce. It is based on the financial circumstances of the divorcing spouses. The needs of one spouse and the ability of the other spouse to pay are the primary factors in determining alimony. Alimony may be paid in a lump sum of money or the award of some property.
Personal property is also subject to equitable distribution. Many times, personal property can be decided between the parties without court intervention. It is recommended that unless the personal property contains items that have substantial value, the parties should be able to come to an agreement to save substantial court costs and legal fees.
As you can see from the above criteria, many factors go into determining how assets and liabilities are to be divided. Individuals, through their legal counsel, are more likely than not able to negotiate how to divide the property without court intervention. However, if the court is required to intervene, equitable distribution is usually heard by a Master who is appointed by the court to hear such matters.
There is not one way in which equitable distribution is determined. All of the above factors are weighed and used by the attorneys or the master during a hearing to determine what is a “fair” distribution of the marital assets and liabilities. There are also many ways in which the assets and liabilities can be divided. It is best to present your attorney will a complete financial picture to your attorney who will discuss with you all of the options regarding equitably distributing the assets and liabilities acquired during the marriage.
A couple can come to their own agreement about property settlement, which the court will generally accept. The Pennsylvania court will decide if either spouse is entitled to alimony, based on age, physical and mental condition, earning potential, duration of the marriage and standard of living. The court decides the duration of alimony, but support ends automatically if the one receiving it remarries or cohabits.
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