Equitable Distribution

In a divorce, the assets and debt of the parties need to be divided up. The division is called equitable distribution. The starting point of the analysis is to determine whether the assets and liabilities are marital or non-marital. We say the determination is whether they go into the “marital pot.”

“Marital assets and liabilities” include:

Assets acquired and liabilities incurred during the marriage
The enhancement of nonmarital assets resulting either from the efforts of either party during the marriage
Interspousal gifts during the marriage
Retirement, pension, profit-sharing, annuity, deferred compensation, and insurance plans and programs accrued during the marriage
All real property held by the parties as tenants by the entireties are presumed and the other spouse has the burden to show that there was no gift
All personal property titled jointly by the parties as tenants by the entireties are presumed and the other spouse has the burden to show that there was no gift

“Nonmarital assets and liabilities” include:

Assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities
Assets acquired separately by either party by noninterspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets
All income derived from nonmarital assets during the marriage unless the income was treated, used, or relied upon by the parties as a marital asset
Assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities, and
Any liability incurred by forgery

Another important and sometimes confusing concept

is the cut-off date for what is marital/non-marital (eg. What is the actual asset and liability going into the pot to be divided) and the date of valuation for each asset and liability (eg. What value should we be using for each of these assets and liabilities going into the pot).

The date of identifying assets and liabilities and the date for valuing assets and liabilities can and often are two separate dates.

The cut-off date for determining assets and liabilities to be identified or classified as marital assets and liabilities is:

The earliest of the date the husband and wife entered into a valid separation agreement,
such other date as may be expressly established by such agreement, or
the date of the filing of a petition for dissolution of marriage.

In contrast, the date to use to value the asset is one that is just and equitable by the judge. Often the date of filing is used, but sometimes it’s date of separation or the date of trial or the signing of a mediation or marital settlement agreement.

To this point in the analysis, we have only gotten to what goes into the marital pot to be divided. The court starts its analysis with a 50/50 division of the marital assets. Although generally the court divides the marital estate in half, in some circumstances the court may make an unequal division, although an unequal division may not be typical or easy. The court looks to a list of statutory factors and supporting facts to determine if it is going to divide the marital pot unequally. The factors the court will consider include:

The contribution to the marriage by each spouse
The duration of the marriage
The interruption of personal careers or educational opportunities of either party
The desirability of retaining an asset, such as a business by one spouse
The desirability of retaining the marital home by one spouse
The intentional dissipation of assets by a spouse

As you can see, equitable distribution can be confusing and complex. An attorney at Hughes Law Group is your best resource in helping to explain this complex area of the law.