Equitable Distribution: Dividing Property in PA
In the United States, there are nine different states that follow community property laws where assets are distributed 50/50. Pennsylvania is not one of these states. While state laws require the distribution of assets to be equitable, there is no requirement for it to be equal. How this actually plays out depends on the unique circumstances in your divorce case.
What Is Equitable Distribution?
The division of property happens in all divorce cases to determine how marital property gets divided up. Under 23 Pa.C.S. § 3501–3502, Pennsylvania specifically requires the equitable distribution of community property.
- 23 Pa.C.S. § 3501: This law clearly defines what will be considered marital property and what is counted as separate (non-marital) property.
- 23 Pa.C.S. § 3502: Under these provisions, the state clearly defines which factors should be used to decide the best way to distribute marital property.
- 23 Pa.C.S. § 3506: This statute requires the court to say the amount of the distribution as well as the reasoning that brought them to that decision.
It’s essential to remember that equitable doesn’t mean equal. The court has to look at all of the factors and circumstances involved to figure out a fair, reasonable way to divide the property.
Which Factors Are Considered During the Equitable Distribution of Property?
Dealing with financial issues during divorce can be incredibly stressful. Your family law attorney can help you understand what to expect from the process. When dividing property, courts have to use the factors listed under 23 Pa.C.S. § 3502 to figure out the best method for property distribution.
- How long the marriage lasted
- Tax consequences of the division
- The age, health, and earning capacity of each spouse
- If non-monetary contributions were made to the marriage, such as caregiving
- Standard of living during the marriage
- Which spouse has primary custody of the children
- Spousal income and employability
- Prior marriages by both parties
Different factors can greatly impact the division of property. For example, if one spouse has a long-term disability that prevents them from working, they may receive a greater share of the property or long-lasting alimony. While alimony orders are rarely permanent, there are situations, such as old age and severe disability, where they can be.
What Is Considered Property?
Anything asset or debt you get before the marriage is considered your own property. However, interest, dividends, or increased value on that property during your marriage can still be considered marital property.
It does not matter which spouse’s name is on the title or the debt. If the debt was incurred or the asset was received during the marriage, it is community property. The following assets are some common examples of things that might be included in the division of property.
- The marital home
- Retirement accounts
- Pensions
- Bank accounts
- Vehicles
- Investments
- Business interests
- Debts
For many families, retirement accounts, like 401(k) plans, are the largest marital assets to distribute. Even though the retirement account may be in the name of just one spouse, the portion that accumulated during the marriage is still marital property. To avoid being taxed on the division of retirement accounts, you’ll generally need a Qualified Domestic Relations Order (QDRO).
How Property Division Works in Practice
In divorce cases, many couples use collaborative processes or mediation to resolve disputes without a trial. No matter how an agreement or decision is reached, it becomes legally binding once the court signs off on it.
Typically, the first step is determining what property is subject to division. The court classifies all assets and debts as either marital property or separate property under 23 Pa.C.S. § 3501.
Then, this property is assigned a monetary value through appraisals, expert testimony, financial statements, or similar methods. Once the marital estate has been valued, the court will review the equitable distribution factors to determine how the property should actually be divided. Once this is done, the judge will either approve the settlement (in cases where a negotiated settlement was agreed on) or the judge will announce their decision.
After the court order or settlement agreement is finalized, each party must take action to carry out the terms. For example, they may need to sign over a title, sell property, divide a bank account, or roll over their retirement funds.
Why You Need a Skilled Attorney on Your Side
Equitable distribution can be challenging, which is why you need professional legal help. If assets are valued incorrectly or you don’t bring up a factor affecting distribution, you may receive a smaller proportion of the marital property than you deserve. Your attorney can help you discover hidden income, value assets, ensure legal compliance, and negotiate a fair settlement.
Get Professional Legal Help
Our Newfoundland-based team is here to help with all steps in the divorce process. From negotiating a settlement to filing your initial divorce papers, we can help you work toward a fair, equitable outcome.
Learn more by reaching out to our experienced legal team today.
