This is why you won’t be Robbed of your Property in a Pennsylvania Divorce
Divorce is not just emotionally trying; it is also financially taxing. And one of the most emotionally charged issues in a Pennsylvania divorce is how the debts and assets of the marriage will be disposed.
Pennsylvania is one of the states that share assets of a marriage between the spouses after dissolution. The court has discretion, to distribute the property based on some guidelines.
The reasoning for this is to make sure that one of the spouses won’t feel robbed at the end of the process. This is especially when they both contributed to the assets in the marriage.
There’s no uniform procedure to this distribution. Some states use the “50-50” approach while others use the “equitable distribution” approach. Pennsylvania is one of the states with the equitable distribution approach.
Pennsylvania is an “equitable distribution” state
Equitable distribution means that the court would try to distribute the assets fairly.
This does not mean that the court will distribute the assets evenly, or on a 50-50 basis. Rather, the court will try to achieve a distribution that is as fair as possible, taking several factors into consideration. Due to this, the result of the court’s distribution may not even be equal or even at all.
Many states prefer to use the “community property” approach, also known as the 50-50 approach. This means that the court would divide the couples’ property and debt evenly.
This won’t consider who incurred more debt or made more money during the marriage.
Fortunately, this doesn’t happen in Pennsylvania. In Pennsylvania, the court ensures that it considers the earnings and debt of each party when dividing the property.
What property is the court concerned with?
It’s important to understand that the Pennsylvania courts are not interested in every single piece of property or debt associated with the names of the parties.
The court will only consider three types of property or debt. These are marital property, separate property and marital debt. Let’s take a deeper look at each of these below.
All the assets and income acquired by spouses over the course of their marriage is what is known as marital property. This property may include the marital home, cars (even if they’re in the name of one spouse), investments, art, retirement funds etc.
Once it is shown that the assets were acquired during the marriage, then the court considers it as marital property.
This marital property forms the base of the assets distribution that the court will then embark upon when the time for distribution arises.
This is property that came before the marriage. It covers all income and assets that were already acquired or owned by either of the spouses before they entered into the marriage or after separation.
Separate property here includes inheritance left to one spouse, property given by gift to either spouse, property acquired after separation and any assets that are protected by a pre-nuptial agreement. This property is usually left untouched by the court.
Although, any increase in value of those assets that occurred over the course of the marriage may be considered as part of marital property.
Any debts that were acquired during the course of the marriage, from the date of marriage to date of final separation, will be considered as marital debt. This would include debts incurred by individual spouses on their own as long as the debt was incurred during the course of the marriage.
This means if your spouse racks up a large credit card balance or student loan debt, then you will also be responsible for the debt. How much of the debt you will be saddled with now depends on the factors that the court will consider in distributing the property.
How does equitable distribution work?
Generally, the parties to the divorce can determine how they want to distribute the debts and assets of the marriage by themselves. They can do this by way of agreement outside the court.
Once they have agreed on how they intend to share the property, they can then submit the agreement to the court. If the court considers the agreement to be fair and appropriate, it will include the agreement in its divorce decree.
If there is no agreement, the court will take up the responsibility of distributing the shared assets and debts of the marriage equitably. Here’s the procedure that the court will follow:
This is the process of finding out and classifying which property or debt is considered marital. In order to aid the court in this task, the parties would be required to disclose all their income, assets and debts at the time of filing the complaint.
Sometimes, parties may not be so truthful on the forms. In these instances, it is not unusual to see one party lending assistance to the court in order to identify assets that belong to the other party.
Assign monetary value
After the court is satisfied that all the assets and debts of the marriage have been discovered, it will then assign a monetary value to the property.
The essence of assigning this monetary value is to enable the court come to a reasonably equitable distribution of the assets and liabilities accrued during the course of the marriage.
After finding all marital property and assigning them a value, the court would proceed to distribute the property between the parties in an equitable fashion. In doing this distribution, the court would take the following factors into consideration:
- The duration 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
- The value of the property set apart to each party.
- The standard of living of the parties established during the marriage.
- The economic circumstances of each party, including Federal, State and local tax ramifications, at the time the division of property is to become effective.
- Whether the party will be serving as the custodian of any dependent minor children.
Let a qualified lawyer help you
Even though the court will try its best to distribute the marital property as equitably as possible, you still need an experienced divorce lawyer to protect your interest in the proceedings.
An experienced lawyer will know exactly what facts to bring to the attention of the court to help present your case properly before the court. If you’d like to know more about how equitable distribution in Pennsylvania works, please get in touch with us.