What is equitable distribution?
Equitable distribution is a method of dividing property at the time of divorce. All states except for Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin follow the principles of equitable distribution.
If my spouse and I agree on how we should divide our property, do we have to rely on equitable distribution laws?
No. A court will only engage in equitable distribution if a divorcing couple is unable to negotiate a property settlement. If a couple is able to agree on how to divide a portion of their estate, but not the entire estate, the court will step in to distribute the undivided portion.
Is all property subject to equitable distribution?
No. Equitable distribution applies only to marital property. Marital property is all property acquired during the marriage. Marital property does not include, however, property obtained during marriage by gift, bequest, devise or descent, or property otherwise provided for in a written agreement. Such property, along with any assets acquired before or after marriage, is considered the separate property of the acquiring spouse.
Are gifts given to me by my spouse during marriage considered my separate property?
No. While gifts given to one spouse by a third party are considered that spouse's separate property, gifts given by one spouse to another spouse are considered marital property subject to the laws of equitable distribution.
If I hold title to an asset, is that asset my separate property?
Not necessarily. While a court may consider title as evidence of separate property, title in and of itself does not determine whether an asset is separate or marital property.
Does equitable distribution mean that a court divides marital property equally?
No. An equitable division of marital property is not always an equal division. Rather, the court will divide property between spouses in a way that it considers fair. In the majority of cases, a fair division will be an equal (50/50) division. In other cases, however, the judge may decide to award one spouse a greater percentage of the marital property.
How does a court establish a fair division of marital property?
A court will review a number of factors in determining how to divide marital property. For example, a court may consider:
- The financial condition and earning power of each spouse.
- The value of each spouse's separate property, including a spouse's business, business interests, retirement plans, 401(k) plans, stocks, bonds, etc.
- The degree to which each spouse contributed to the acquisition of marital property.
- The degree to which each spouse contributed to the education and earning power of the other spouse.
- Future financial needs and liabilities of each spouse.
- The ages and overall health of each spouse.
- The liquidity of marital property.
- Premarital and prenuptial agreements.
- Spousal maintenance or alimony obligations.
My spouse was unfaithful to me. Will a court consider this and award me a greater percentage of our marital property?
No. A court typically will not consider adultery, alcohol and drug abuse, domestic violence, or involvement in other criminal activities when making an equitable distribution of marital property. A spouse's behavior will be relevant, however, if it impacts the couple's finances. Thus, a spouse who is caught hiding or fraudulently transferring marital assets may be awarded a smaller percentage of the couple's estate.
How and when does a court value marital property?
Marital property is typically valued by its fair market value at the time the marital litigation is filed or commenced. However, because a period of months or years may elapse before a divorce decree becomes final, some states allow the parties to share in the appreciation or depreciation of marital assets between the date of separation and the date of divorce.