Three Step Process to Dividing Marital Assets

In Pennsylvania, dividing the marital assets in divorce is called equitable distribution.  There’s a common misconception that equitable distribution means everything gets split 50/50.  That’s not true.  In fact, the court frequently gives more than 50% to one side, and in rare cases, can award the total marital assets to just one spouse.

Dividing the marital assets consist of the following 3 Step Process:

Step 1.              Identifying the Marital Assets and Debts;

Step 2.              Valuing the Marital Assets and Debts; and

Step 3.              Dividing the Marital Assets and Debts.

Below I provide you with the information on the process so that you are able to learn about and protect your legal rights when it comes to dividing the marital assets in Pennsylvania.

Step 1.  Identifying the Marital Assets and Debts

Marital assets and debts are all the assets and debts acquired from the date of the marriage to the date of separation.  Anything acquired before the marriage and after the date of separation are not marital assets and debts.

Typical marital assets and debts consist of the following:

1. Real estate;
2. Mortgage on real estate;
3. Pensions;
4. 401ks;
5. Bank accounts;
6. Any and all investments;
7. Businesses;
8. Personal property like all the contents of the house;
9. Credit card debt;
10. Appreciation in value on non-marital property.
11. Life Insurance; and
12. Health Insurance

This list is not meant to include everything, but to just give you a general understanding.  If you have something that’s not on the list, talk to your lawyer about it to determine if it is a marital asset or debt.

What is the Date of Separation?

Date of separation can be the date that one of you filed for divorce or anytime you started living separate lives either financially, emotionally, or intimately.  You can live in the same house and still be separated long before anyone files for divorce.  The date of separation is an important matter and you should consult with a lawyer before agreeing on that date.  When the spouses can’t agree on the date of separation, the court will look at the facts and circumstances of the particular case and make a decision.

Doesn’t Matter Who Owns the Assets

It doesn’t matter if the name of the assets are only in the name of one of the spouses.  That doesn’t mean it’s not a marital asset.  If the asset was acquired during the marriage and before the date of separation, then it’s a marital asset regardless of whose name is on it.

Eight Types of Property that are NOT Marital Property

 According to Pennsylvania law, the following 8 types of property are NOT marital property:

1. Property acquired prior to marriage;
2. Prenuptial and postnuptial agreements that state the property that is not marital
3. Inheritances and Gifts;
4. Property acquired after the date of separation as long as the property was not bought with marital property.
5. Property disposed of in good faith before the date of separation.
6. Some veterans’ benefits are excluded from martial property
7. Good faith mortgaging of property before the date of separation.
8. Proceeds of a lawsuit that happened before the marriage or after the date of separation.

Step 2.  Valuing the Marital Assets and Debts

The court generally will use the concept of fair market value to determine the value of marital assets.  That means if you were to sell the asset, what would someone be willing to pay, and that amount is the value.  To know for sure, you’d have to sell the asset.  But when you don’t plan to sell the asset, and one spouse is buying out the other spouse’s share, then different valuation methods can be used.

In some cases, the value of the marital assets and debts will be determined on the date of separation, in other cases on the date when the assets are distributed, and in other cases somewhere in between.

Here are some general thoughts on the matter.  If the marital home is not going to be sold, then appraisers from both sides will have to determine a value minus the mortgage.  If the marital home is going to be sold, then the sale value minus the mortgage.  Bank accounts typically are valued on the date of separation.  Investment accounts typically on the date when the assets are divided between the spouses minus any post separation contributions.  Retirement accounts through a Qualified Domestic Relations Order.  Credit card debt generally on the date of separation.  If the spouses can agree on the value of any particular asset, then that’s the value.

Step 3.  Dividing the Marital Assets and Debts

Whether the court decides to divide the martial assets 50/50, 60/40, 70/30 or somewhere in between, the court must consider and base its opinion on the following 11 factors:

(1)  The length of the marriage.

(2)  Any prior marriage of either party.

(3)  The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties.

(4)  The contribution by one party to the education, training or increased earning power of the other party.

(5)  The opportunity of each party for future acquisitions of capital assets and income.

(6)  The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.

(7)  The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker.

(8)  The value of the property set apart to each party.

(9)  The standard of living of the parties established during the marriage.

(10)  The economic circumstances of each party at the time the division of property is to become effective.

(10.1)  The Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain.

(10.2)  The expense of sale, transfer or liquidation associated with a particular asset, which expense need not be immediate and certain.

(11)  Whether the party will be serving as the custodian of any dependent minor children.

Sound complicated?  Only because it is.  And that’s why you need a good lawyer to handle your case.

Want Peace of Mind and a Complete Evaluation of Your Case? 

Call (610) 347-5683 NOW or Click HERE to Schedule a Consultation with Chester County Pennsylvania Divorce & Family Law Attorney, Michaelangelo L. Dippolito.  Click HERE to see the attorney’s background.

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