Dividing a Marriage
Equitable Distribution -
In order to evaluate and divide the marital estate, Pennsylvania courts rely on Equitable Distribution, or ED. Factors taken into account include each parties' ages, work histories, education, earning capacities, disabilities, and separate estates. Ultimately, the Court's goal is to ensure that both parties are able to support themselves after the divorce.
When determining which assets are marital and which are non-marital, the Court judges the contributions and intentions of the parties as shown by their actions during the marriage. Even if a home is solely in one party's name versus another's, the Court will be more interested in whether it was purchased before, during, or after marriage, and where the funds came from to purchase the home, maintain the home, or pay the mortgage.
The most important factor in Equitable Distribution is in its name, it is intended to be equitable or fair. Marriage is seen as a mutually beneficial relationship where each party's contributions whether financial, practical or emotional help to build the assets of the couple.
Like with custody, the Court will start at a 50/50 division and move from there. The majority of cases in Pennsylvania fall somewhere between 50/50 and 60/40. The exceptions are going to come in when one spouse is not able to support him or herself. Spouses who are disabled or who have never worked and are incapable of finding a job with a decent wage will be more likely to receive a larger share of the marital estate because they won't be able to support themselves without it. The Court will rarely expect a retirement age divorcee to find a full time job for the first time. That being said, the Court prefers for people to stand on their own two feet and does not take kindly to the implication that an able individual can't support him or herself simply because they haven't had to do so before. A common phrase heard in the Courts is "Walmart is always hiring."
Division of Inherited Property -
As with any other marital asset, the intent behind the use of inherited property is the key factor in determining fair division. For example, if a spouse puts inherited funds in a joint account, or uses the inherited funds for marital purposes, those funds can be considered marital. On the other hand, a spouse who puts assets in an account solely titled in his or her name, or in trust for the benefit of themselves or their children, may be protected from having to divide those assets as a part of equitable distribution of the marital estate. In the end, proceedings for the division of marital assets are intended to fairly divide the estate such that each respective party can maintain their current standard of living. If a spouse never had any part of a marital asset, then it is not considered part of their prior standard of living, and therefore not divisible.
The Marital Home -
You or your spouse may choose to stay in the marital home until the divorce is finalized. Both spouses have a right to choose this option unless they are removed by order of Court. Although cohabitation can result in financial savings, it may also create a high-stress environment for all parties involved.
To remove your spouse from the residence, you would need to file for what is called "exclusive possession" of the home. Exclusive possession is merely the right to live in the home undisturbed by the other party. This does not, necessarily, have any effect on your financial interest in the home when it is time to divide the marital assets.
There are generally two ways to deal with the marital home as an asset in Divorce. The FIRST is to sell the home and split the net proceeds. The difficulties here tend to arise in choosing a realtor and deciding whether a low-ball offer is good enough or not. If the home is in need of repairs or refurbishment prior to listing for sale the parties can agree to split the costs or the party with more liquid assets on hand can pay for the work and be reimbursed out of the final proceeds. The SECOND is to have one of the parties refinance the home to remove the other from the mortgage and "buy them out" of their interest in the equity in the home. This frequently requires an appraisal so the parties can figure out what a fair buy out would be. If refinancing is impossible or unfeasible the party keeping the house can compensate the other spouse with a larger share of another asset. At the end of the day the goal is to find a fair division not to split every asset down the middle.
Retirement Assets
Dividing retirement assets in a divorce can be tricky. Each company and each retirement account is different. Some plans will pay a lump sum to the non-beneficiary spouse while others will only pay out as an annuity after retirement. Many retirement accounts will require what is called a QDRO. QDRO stands for Qualified Domestic Relations Order. The QDRO is generated from either the Court's order in ED or the parties agreement and is submitted to the retirement plan administrator. It provides directions on how the plan should be split. There are several companies and firms who do nothing but produce QDROs for Divorce attorneys and their clients.
These firms can also be used when there is a question as to how much of the retirement plan is marital. The standard consideration is that the spouse should be entitled to any contributions by the other spouse and/or his or her employer and any growth between the date of marriage and either the date of separation or the date of divorce. That means that, if you contributed to the plan before you got married, those contributions would remain yours entirely. Everything else would be divisible. This is relatively simple when there have been no significant transitions. However, when the parties have made withdrawals from the account, when part of the value is a roll over, or when the account has changed hands this can become complex and require outside expertise.
Your attorney will need to look at detailed statements to determine the value of any retirement asset and to determine what part of it may or may not be considered marital for the purposes of the divorce. A regular recommendation I make to people who aren't ready to move forward with divorce but are think about it is to quietly copy all of the important papers and statements. In this day of electronic statements it can be important to download or print a copy for your records as many banks will charge you for statement copies. As always the more prepared and organized a client is the less expensive their legal bills are in the end.
As with everything, you should always consult experts to make sure that you are considering all of the complications. I recommend to all of my clients that they discuss any proposed divisions not only with me but with their accountant and/or financial planner. Remember that, although most attorneys are well versed in the different issues involved with marital assets, they are not tax experts or financial planners. Consulting an expert in each area will ensure that nothing is overlooked.
