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Equitable Division of Marital Property FAQ

Note: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.

With the termination of the martial relationship, the assets and liabilities of the "partnership" must be divided. This chapter deals with questions that frequently arise in this context.

From representation in divorce matters with related economic claims to difficult child custody or support disputes, I offer legal advice directed to your specific situation and needs. Contact my office online or call 866-942-0074 to schedule a complimentary 30 minute consultation to discuss your concerns today. My office, located near the Allegheny Valley exit of the Pennsylvania Turnpike and the Harmarville exit of the Route 28 Expressway, provides a convenient environment in which to discuss your family law needs.

What is martial property?

In general, marital property is all property acquired by you or your spouse jointly or individually from the date of your marriage until the date of final separation.

Typical examples include:

• Home equity;

• Other real estate equity;

• C.D.s money markets, etc.;

• Bank accounts;

• Stocks, bonds, mutual funds, etc.;

• Cash value of life insurance;

• Vehicle equity;

• Furnishings and personal property;

• Pension or profit plans, IRAs, Keoghs, 401(k) or SEP plans; and

• Ownership interest in an ongoing business enterprise.

What is not marital property?

The following items are excluded by statute from the definition of marital property:

• Property acquired by either party before marriage. (Except the increase in value of that property during marriage until separation is marital property);

• Property acquired by gift or inheritance. But note that gifts between the spouses are marital assets. The increase in value of the gifted property during marriage until separation is marital property;

• Property excluded by agreement between the parties entered into before, during or after the marriage;

• Property acquired after final separation so long as it was not acquired by using marital assets;

• Property which was sold in good faith and for fair value prior to the date of final separation;

• Certain veterans benefits; and

• Property to the extent it has been mortgaged in good faith and for fair value before separation.

Decreases in the value of non-marital property can be offset against increases in value of other non-marital property.

My spouse handled all or most of our financial affairs and kept me in the dark. How will I possibly find out the full extent of the assets?

There are many ways in which you and your attorney will be able to develop information about your assets. To the extent that there are joint assets, such as bank accounts, stock accounts, etc., you can obtain copies of statements from the institutions involved. You also have a right to jointly filed tax returns which can reveal much about assets.

In the process of litigation, you also have access to formal procedures whereby you can learn of assets owned by the other party or, which are exclusively in their control. You are permitted to submit written questions known as interrogatories to the other side. These questions can deal with assets, income and information relevant to the economic claims that may be raised in the litigation. The other side must answer these questions or they will be subjected to sanctions. Also, you may required the other side to produce specific documents that are relevant to these issues and you may also be able to take testimony under oath (depositions) from persons with relevant knowledge of these issues.

The procedures are designed to allow each party to have a full and accurate picture of the marital assets so that responsible and intelligent decisions can be made as to their distribution.

How is the date of separation determined?

This is a question of fact. It may be the date that you physically separated and began to reside in separate households, or if cohabitation ceased while you still lived in the same house, the finder of fact could select the date that such cohabitation ended. A presumption exists that the parties separated at least as of the date of filing the complaint.

What is an equitable distribution?

An equitable distribution is a legally binding division of the marital assets. It is important to note that equitable distribution does not necessarily mean equal. An equitable distribution is one that takes into account the personal situation of each of the parties as they embark on their separate lives and which takes into account whether either of the parties is so disadvantaged compared to the other party that a distribution of a larger share of the marital property to that party is justified.

What are the factors considered in determining an equitable distribution?

Any relevant fact may be considered. However, the Divorce Code provides that the following list of factors should certainly be considered along with any other relevant factors specific to your case.

• The length of your marriage;

• Prior marriages of either of you;

• The age, health, income, vocational skills, employability, separate property, liabilities and needs of each;

• The contribution of either of you to the education or training of the other;

• The projected opportunity of each of you to acquire assets and income in the future;

• The source of income of each party;

• The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of marital property, including contributions of a homemaker;

• Your standard of living while you lived together;

• The tax consequences of any proposed distribution;

• The expense of sale, transfer or liquidation associated with a particular amount; and

• Whether either of you will be the primary custodial parent of your child(ren).

Is the marital misconduct of my spouse a factor that may be considered in determining an equitable distribution?

No. This is specifically prohibited by statute.

Do we have to rely on the Court to equitably divide our property?

Absolutely not. The vast majority of cases are resolved by agreement between the parties. This is usually a comprehensive agreement that addresses the other economic issues discussed in this book as well. Such an agreement can be enforced the same as an Order of Court.

Who values the assets?

Some assets are easily valued such as the balances in bank accounts, or the value of stocks, bonds or mutual funds. You may have to hire a professional appraiser to value other assets. Examples where professionals may be needed are:

• Real estate fair market appraisals;

• Pension plan present value appraisals;

• Valuation of a privately owned corporation, partnership or sole proprietorship; and

• Antiques, collectibles and jewelry.

If the parties cannot agree to the value of an asset, each side may present its evidence as to value to a fact-finder who determines the value to be assigned to an asset.

What is the date used for the valuation of marital assets?

Valuation is usually made as close as possible to the date of distribution of the property. A Court has discretion, however, to select a different date if a different date would better result in economic justice for the parties.

We have debts as well as assets. Will the equitable distribution agreement or order assign responsibility for payment of our marital debt?

Yes. The same factors are considered as those that govern the distribution of the assets.

What are typical equitable distribution percentages?

They vary depending upon the circumstances of each case. There is no presumption that the estate is to be divided equally between the parties.

Will we have to sell the house?

Home equity frequently represents the largest or one of the largest assets of the marriage. The Court has the authority to compel the sale of the marital residence, but a number of factors will have to be considered:

• Do either of the parties particularly desire to receive the home as part of their distribution?

• If so, are there other assets that could be awarded to the other party to balance out such an award?

• Does one party have the ability to buy out the other's interest via a remortgage or other means?

Other methods of disposition of the real estate are also available to the parties. Typical examples are:

• One party is awarded the property and gives the other party a second mortgage for the amount of that person's interest in the property; and

• When younger children are involved, the custodial parent is sometimes given the right to occupy the residence with the child(ren) until a definite date in the future. At that time, usually, after the youngest child is expected to be out of the home, it is agreed that the house will be sold and the proceeds divided.

Will a court make an equitable distribution award before the divorce decree has been entered?

No. Courts will require that the divorce decree be entered at the same time or before the Court equitably divides the marital property. Remember, however, that parties are free to enter a marital property settlement agreement. Such an agreement can be entered at any time regardless of whether or not the decree has been issued.

I receive social security benefits. Are these benefits subject to equitable distribution?

No.

If my case cannot be settled and must be tried, will a judge hear the case?

Not necessarily. The judge assigned to your case has options of hearing your case personally or assigning a lawyer referred to as a "master" to take the testimony in your case. The master makes written findings of fact and recommends an Equitable Distribution Order to the judge. The judge then acts on the recommendation.

I was injured in an accident before we were separated, but I did not settle my accident claim until after we separated. Are my settlement proceeds marital property?

Yes. As long as your claim arose before separation, the settlement proceeds will be marital property regardless of when those proceeds are actually received.

How is the value of pension benefits determined?

The valuation and division of pension benefits is one of the most complex issues of equitable distribution. In general, there are two basic types of benefits. There are "defined contribution" pensions and "defined benefit" pensions.

A defined contribution pension is one in which a specific sum of money is placed into the employee's pension account each year. This is typical of the pension plans of many employers today. It is usually a simple matter to value a defined contribution plan. One can simply look at the most recent annual benefit statement to determine the value of the employee's pension account.

Defined benefit pensions are more complex. These are the types of pensions that promise to pay an employee a certain monthly benefit for life commencing at retirement. The monthly benefit payable is usually determined by a formula that often involves age at retirement, years of employment and income level attained. It is frequently necessary to hire experts to calculate the "present value" of the right to receive that stream of monthly payments in the future. For equitable distribution purposes, it is appropriate to use the present value of the benefits when those benefits are to be offset against another asset.

If I am entitled to a portion of my spouse's pension benefits because those benefits are marital property, how will I receive my share?

Generally, two distinct methods for equitable distribution of pensions have been established in Pennsylvania. The first is called the "immediate offset" method. Under this method, the benefits are divided at the time of equitable distribution by assigning a current value to the marital portion of the pension and awarding a share of that value to a party. You are either awarded separate assets that have a value equal to your share of the pension benefits, or there may actually be an award of a portion of the pension benefit to you by means of a Qualified Domestic Relations Order (QDRO). Under the provisions of a QDRO, your spouse's pension plan actually sets up an account for you equivalent to that of the benefits awarded to you. This is a relatively complex topic that should be discussed in greater detail with your attorney.

The second method of distribution of pension benefits is referred to as the "deferred distribution" method. Under this method, a current value is not assigned to the pension benefits. Rather, the Court retains continuing control over the case until the pension benefits are received. At that time, the Court divides the benefits.

With the termination of the martial relationship, the assets and liabilities of the "partnership" must be divided. This chapter deals with questions that frequently arise in this context.

Contact my office to schedule your complimentary 30 minute consultation during which you will learn how I can help you now.

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Eric C. Rome, Attorney at Law
Jeffrey Building, Suite 101
897 Route 910
Indianola, PA 15051
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At the law office of  Eric C. Rome, Attorney at Law, I am pleased to offer dedicated representation to clients throughout Pittsburgh, the Fox Chapel area, Oakmont, Aspinwall, Hampton, Shaler, Cheswick, Springdale, Tarentum, West Deer, Penn Hills, Monroeville, Plum, Gibsonia, North Hills, New Kensington, Kittanning and Butler; as well as Allegheny County, Westmoreland County, Butler County and Armstrong County, Pennsylvania.