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Equitable Distribution in Pennsylvania Divorce: What to Know
What is Equitable Distribution?
Equitable distribution is the legal doctrine Pennsylvania Courts use during the division of marital property, i.e., property acquired during the marriage, and marital debts during a divorce. Specifically, the equitable distribution process means marital property is “fairly” divided during a divorce. The value of non-marital property on the date of marriage is not subject to equitable distribution.
This article by the Philadelphia divorce mediators at Peaceful Separation and Divorce explains how equitable distribution works in the state of Pennsylvania.
Differences between Equitable Distribution and Community Property States
States which utilize the community property approach divide marital property evenly, i.e., 50/50, during a divorce. Equitable distribution jurisdictions divide marital assets “fairly” between divorcing spouses. Specifically, courts presume marital assets should be evenly divided but depart from this presumption to ensure marital property is “fairly” divided, which can change the percentage of the marital estate each party receives.
Factors That Influence Equitable Distribution
Courts do not arbitrarily divide those assets considered marital property . Instead, Courts use several factors to determine how to “fairly” divide marital property. Of note, Courts do not consider misconduct by either spouse.
Length of Marriage
This factor tends to favor the spouse who has a lower earning capacity. Specifically, the lower-earning spouse has a stronger claim to marital property in a long-term marriage. This is because the lower-earning spouse is less likely to obtain additional assets following the dissolution of the marriage.
Age and Health of Both Parties
Pennsylvania courts consider this factor because one of the spouses may be afflicted with a long-term illness which leaves them unable to work. Accordingly, an ill spouse will likely need extensive medical treatment. Additionally, older spouses who can work may require additional time and resources to improve/rebuild their vocational skills.
Income and Previous Debts of Both Parties
Courts want to ensure each spouse will be able to provide for themselves. Courts evaluate each spouses’ income and debts to determine their potential earning capacities following the divorce. Additionally, courts also consider each spouses’ education and vocational skills.
Marital and Non-marital Assets of Each Party
While the spouses may have significant marital property, especially in long-term marriages, courts also consider non-marital property. Non-marital property is not subject to equitable division and includes items such as inheritances, gifts, and premarital financial investments. Even though not subject to division, if one party has significant separate assets, the percentage distribution of marital assets can be altered.
Existing Prenuptial Agreements
A prenuptial agreement is a contract the spouses’ sign before the marriage. A prenuptial agreement can simplify a divorce by specifying how marital assets are divided. A court is bound by the terms of a prenuptial agreement as long as it is valid, i.e., signed by both spouses, negotiated in good faith, and it contains adequate disclosure of assets and their values. .
Tax Implications
Courts also consider the tax consequences of transferring or selling marital property. Additionally, Courts previously considered the tax consequences regarding alimony, i.e., paying taxes and taking deductions. As of 2019, alimony is no longer regarded as taxable income to the recipient, nor is alimony deductible by the paying spouse.
Child Custody Arrangements
A non-custodial parent is obligated to pay child support to the custodial parent. In some cases, child support payments may not be sufficient following the spouses’ divorce. Accordingly, the spouse with primary physical custody may be entitled to a more significant distribution of marital assets. This would be true if a child has unusual medical expenses, for example, that are not covered by health insurance.
Contributions Made Towards the Advancement of Others’ Education, Occupation, or Income.
Very often, one spouse will support the other while they pursue an advanced degree. Alternatively, one spouse may cease working to take care of the marital home and children, allowing the other spouse to advance their career. Courts take these contributions into account when deciding how to distribute marital assets fairly.
Standard of Living During the Marriage
A divorce does not mean a person should be forced into poverty. People become accustomed to a particular lifestyle during a marriage. Courts consider this factor when dividing marital assets.
Resolving Issues of Property Division Through Mediation
While marital property is equitably divided by a Court, an alternative to litigation is mediation. Mediation is an alternative dispute resolution process which is faster and less expensive as opposed to litigation and also allows people more control regarding the outcome of disputed issues. People who elect mediation choose a neutral mediator who guides them through a non-confrontational process of reaching an amicable agreement regarding property division.
If You Or A Loved One Needs Assistance With Equitable Divorce In Pennsylvania, Schedule An Appointment With Peaceful Separation & Divorce Today!
Pursuing a divorce can be a frightening and stressful process and it doesn’t have to be a contentious process. For personalized support from an experienced divorce mediation lawyer, contact Peaceful Separation & Divorce to explore mediation as a cost-effective and collaborative way to resolve property division issues.
