Fair division of assets in divorce can be complex to navigate
One of the most complex aspects of many divorces is distributing assets-and debts-between parties. Pennsylvania is known as an “equitable distribution” state so Berks County residents seeking a divorce should not expect both parties to receive distributions exactly equal in value, but rather what the court considers “fair”.
Factoring equitable distribution
While there is no set formula that courts follow for determining a fair division of assets in a divorce, some standard factors are considered. These include, but are not limited to:
- The length of the marriage
- Each spouse’s ability to earn a living
- The standard of living that the couple jointly created
- Tax implications of any distribution
- Custody of any children
In addition, the court will look closely at what items should be considered separate property as opposed to marital property, essentially determining what is able to be part of the divorce settlement and what is not.
Gray areas regarding separate and marital property
Separate property for a spouse is any asset or debt acquired before the marriage or as a result of a gift or inheritance. It can also include items covered in a prenuptial or post-separation agreement. Marital property is assets that have been acquired during the marriage by either spouse. However, this is not black and white. For example, if an item considered separate property has increased in value or was contributed to with marital funds, then a portion of the asset could be considered marital property and some or all of the value can be included in the divorce process .
With each passing year that a marriage lasts, there is an increased chance of this as couples acquire more assets together over time. Consider these 2012 statistics from the Pennsylvania Department of Health:
- There were 1,007 divorces in Berks county
- There were 36,345 divorces in Pennsylvania
- 49.9 percent of divorces were from marriages that lasted between five and 14 years
- 24.4 percent of divorces were from marriages that lasted between 15 and 24 years
Seeing that most divorces happen during a time when a couple likely has increased their assets together, the division of assets and identification of separate versus marital assets becomes even more complex.
How and when value is determined
Determination of the value of assets can be a point of contention. In Pennsylvania, courts often uses the divorce trial date or a date as close to it as possible as the date by which any value of an asset should be set. In cases with no trial, the standard is to use a date as close to that date when the case was first seen by the court. The date that assets are valued with an impact the overall distribution-either positively or negatively for a given spouse.
Cover your bases
It is important to ensure that no assets are omitted from the divorce settlement. This includes obvious items such as a home, bank account, cars, boats and similar items. However, in today’s society, there can be some unusual assets to consider such as air miles, travel reward points or beneficiary status on insurance policies. It is important to factor in every item to avoid realizing, after the fact, that you may have lost an important benefit.
The process of navigating asset distribution in a divorce can feel like being trapped in a maze. It is important to work closely with an experienced divorce attorney who can guide you through the process. Doing so is the best way to ensure that you are properly protected and receive what is fair and appropriate for you during your divorce.