Pennsylvania doesn't automatically divide marital assets in half. Pennsylvania follows the principle of equitable distribution, meaning that marital property is divided between the two parties according to what is considered fair or equitable in the divorce. Under Pennsylvania divorce law, assets and income acquired during marriage are presumed to be marital property. Common examples include a home, business, retirement accounts, investments, furniture, artwork, and motor vehicles.
In addition, title (the name under which the property is owned) does not necessarily determine the designation of a property as marital or separate. So, for example, if a car purchased during the marriage is in the name of only one spouse, it is generally still considered part of the marital estate by law. One of the most common questions asked by people going through a divorce is: “How are marital assets divided in a divorce in Pennsylvania? Unlike community property states, such as California, where marital property is divided equally (i.e. This type of division is fairly based on the circumstances of the parties.
When deciding what is “equitable” or “just,” the court must consider a list of factors set forth in Pennsylvania law. That list of factors includes, among other things, (i) the relative income or earning capacity of the parties, (ii) each party's contribution to marital property, (iii) each party's separate assets, and (iv) custody of any child. To the surprise of many of our clients, marital misconduct, such as adultery, is not a factor considered by the court in equitable distribution. This is in line with the general guideline of Pennsylvania law in eliminating fault or fault from the divorce process.
The first step to equitable distribution is to identify marital assets and non-marital assets. Not all property owned by a married couple is necessarily “marital property.”. Marital property, in general, is property acquired during marriage. Non-marital property, in general, is property acquired before marriage, after the date of separation, or through gift or bequest.
Non-marital property is not subject to equitable distribution. In order to determine whether an asset is marital or non-marital, several factors must be considered, such as (i) when the asset was acquired, (ii) how the asset was acquired (p. e.g. By purchase, donation, inheritance, etc.
Some assets, such as retirement accounts, may have both marital and extramarital components. Once marital and non-marital assets have been identified, the second step is to value those assets. Assets are normally valued as of the date of equitable distribution. However, under certain circumstances, assets must be valued as of a different date.
For example, non-marital property usually has to be valued from the date of marriage and separation, since the increase in the value of a non-marital asset during marriage is marital property. The value of assets can be determined in several ways. In the case of real estate, a professional real estate appraiser is often necessary. Similarly, for defined benefit pensions, a professional assessment of the pension is often necessary.
The value of assets, such as bank accounts, brokerage accounts and retirement accounts without pensions, can usually be determined from account statements. The parties must ensure that they establish the value of each account starting from the date of marriage, the date of separation and the current value, and to withdraw premarital and postmarital contributions to the accounts. The dissipation of marital property must also be considered when valuing marital assets. Dissipation occurs when one party spends money from a marital account after the separation or when one of the parties that has control of a marital asset, such as a home, does not maintain the asset.
Rather, the goal is for the overall distribution of marital assets to reflect the percentage distribution. Some assets may be divided between the parties (for example,. bank accounts) and some assets may be distributed in their entirety to one party or the other (for example,. In distributing individual assets, the court shall consider the nature and liquidity of each asset, the tax consequences associated with the asset, and the desire of each party to retain all or part of the assets.
Once the distribution scheme has been determined, the assets are divided accordingly. Some assets can simply be divided or distributed, such as bank accounts. Real estate often must be liquidated or title transferred. Qualified retirement accounts are divided using Qualified Domestic Relations Orders (QDRO) to avoid taxes and penalties.
The attorneys at Cooley %26 Handy have extensive experience representing clients in divorce, support, child custody, and family law matters. If you think you need legal advice regarding your divorce or family law matter, we recommend that you contact our office to schedule a consultation. We can help you understand the process and learn about your options. Pennsylvania functions as an equitable distribution state, meaning that marital assets are divided equally between spouses.
This does not mean that the assets are divided equally between the couple. Instead, the Pennsylvania Divorce Code uses a number of factors to determine equity in the property division process. If possible, it's best for spouses to negotiate their own agreement during this phase of the divorce process with the help of their Lackawanna County divorce attorney. .