By Attorney Anna Knych
When clients first approach a lawyer about a divorce, often one key concern is how the property will be divided. Who will get the house? Who is responsible for the credit card debt? Is my retirement up for grabs? In Pennsylvania, this topic is referred to as the “equitable distribution of marital property.”
The general rule that applies to these questions is that all property acquired during the marriage, including assets which are individually titled such as retirement accounts, is marital property and can be divided between spouses. Additionally, the increase in value of non-marital property is also considered marital property. For example, if you had $100.00 in an investment account at the time you married, and at the date of separation that account had increased to $150.00, the marital portion of the account would be $50.00. Assets which are commonly divided in a divorce include homes, retirement accounts, pensions, investment accounts, debts, vehicles, and bank accounts. Smaller items such as furniture, clothing, and tools are also considered marital property, but those items are normally divided by the parties without any involvement by the courts or attorneys.
Under the law, however, some assets are specifically excluded from marital property. Most commonly, property which was acquired prior to the marriage and property acquired after the date of separation is excluded. Property can also be excluded by an agreement of the parties, for example, through a prenuptial agreement. Other exclusions include property acquired by gift or inheritance, and property received as an award or settlement where the cause of action or claim happened prior to the marriage.
Most divorces settle outside of the court system using what is known as a Marital Settlement Agreement (MSA). In an MSA the parties, usually each working with their own attorney, agree on how the marital property will be divided. While this is an emotionally difficult process, and compromise is necessary, dividing the assets through an MSA gives the parties control over the situation and allows them to decide for themselves how their financial lives will be structured going forward. They are, after all, the ones who best understand their own circumstances.
Where the parties are unable to come to an agreement, the court system will decide how the marital property will be divided. The court is required to “equitably” divide the property. This does not mean that the property must be divided 50/50, but instead it means that the property must be divided in a way which is “just”. The court must consider 12 factors in deciding how to divide the property. Those factors are:
· The length of the marriage.
· Any prior marriage of either party.
· The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties.
· The contribution by one party to the education, training or increased earning power of the other party.
· The opportunity of each party for future acquisitions of capital assets and income.
· The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.
· 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.
· The value of the property set apart to each party.
· The standard of living of the parties established during the marriage.
· The economic circumstances of each party at the time the division of property is to become effective.
· 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.
· The expense of sale, transfer or liquidation associated with a particular asset, which expense need not be immediate and certain.
· Whether the party will be serving as the custodian of any dependent minor children.
Every divorce case is unique, and these factors will apply differently in each case. If you are involved in or considering a divorce, it is important to consult an attorney. Walters & Galloway, PLLC has extensive experience representing parties involved in family law cases. Our attorneys will be happy to discuss with you the procedure involved and the specific facts that may be relevant to determining how marital property will be divided in your case.
