Dividing Martial Property in Pennsylvania: An Introduction to
Equitable Distribution

As part of the divorce process in Pennsylvania court can divide martial property between the parties. This process is known as "equitable distribution" and it is a specific legal claim that needs to be raised in a divorce action by one of the parties. Otherwise, if a divorce decree is entered before a claim for equitable distribution is raised, each spouse will forever lose his or her claim to property owned or controlled by the other spouse, which can have serious consequences for the financially inferior spouse.

Unlike in community property states such as California, where marital property is divide evenly (i.e. 50% - 50%), in Pennsylvania courts divided marital property "equitably." That means that the court will consider a variety of factors in deciding how to divide the marital property and the property may be divided unevenly (i.e. 60% - 40%). The complete list of factors that the court is supposed to consider in deciding how to equitably divide marital property are set forth in 23 Pa. C.S. § 3502. Those factors include, among other things, the relative earnings or earning abilities of the parties, the contribution of each party to the marital property, each party's separate property, and the custody of any children. To many peoples' surprise, marital misconduct, such as adultery, is not a factor considered by the court. That is in keeping with the general direction of Pennsylvania law in removing "fault" or blame from the divorce process. In short, the court will decide what is "fair" based on the factors enumerated in 23 Pa. C.S. § 3502 and will then divide the marital property accordingly.

The process of equitable distribution can be broken up in to three steps. The first step is the identification all of the marital assets and non-marital assets that the parties own or in which they have an interest. The second step is valuing the assets identified. The third and final step is to determining how the assets should be divided under the factors set forth in 23 Pa. C.S. § 3502.

To establish which assets owned by the parities are marital property and which assets are separate property, a party's attorney must determine, among other things, how the asset was acquired (e.g. by purchase, gift, inheritance, exchange, etc,), how the asset is titled, whether a separate asset has been commingled or combined with a marital asset (as in the case of separate money used for a down payment on a home jointly owned by the parties) and whether there have been both premarital and post-separation contributions to a separate assets (usually in the case of retirement accounts and pensions).

Once the parties' marital and non-marital assets are identified, the current values of the assets and/or the marital portions of the assets are determined in a variety of ways. For real estate a professional appraiser may be necessary or, in the case of a sale, the market will determine the value. For pensions, professional pension valuations are necessary. In the case of businesses, it is often necessary to hire a professional business evaluator. The value of assets such as bank accounts, brokerage accounts and non-pension retirement accounts can usually be determined from the account statements, but parties must be sure to establish value of each account as of the date of marriage, as of the date of separation and the current value, and to back out and pre- and post-marital contributions to the accounts. Dissipation of marital assets must also be considered to properly value marital assets. An example of dissipation is if one party spends money from a marital account post-separation. Dissipation can also occur where a party in control of a marital asset, such as a home, fails to maintain the asset.

Finally, after the martial assets and non-martial assets are identified and valued, the scheme for the distribution of the assets must be determined. The first step is to determine the proper percentage distribution to each party based on the factors set forth in 23 Pa. C.S. § 3502. Once the percentages are determined, then a scheme for distributing the assets can be formulated. Each party does not necessarily receive their percentage of each asset. Rather, the goal is to have the overall distribution of assts reflect the percentage distribution deemed proper. Some assets may be divided between the parties (e.g. bank accounts) and some assets may be distributed in their entirety to one party or the other (e.g. real estate). In distributing the individual assets, the court will take into consideration the nature and liquidity of each asset, the tax consequences associated with the asset, and each party's desires to retain all or part of the assets.

After the distribution scheme is determined the assets are divided accordingly. Some assets may simply be divided or distributed, such as bank accounts. Real estate often needs to be liquidated (sold) or title transferred. Retirement accounts are divided through qualified domestic relations orders (QDROs) to avoid taxes and penalties.

The attorneys at Cooley & Handy have extensive experience representing clients in divorce, support, child custody and family law matters. If you believe you need legal advice concerning your divorce or family law matter, we encourage you to contact our office to schedule a consultation. We can help you understand the process and know your options.

Disclaimer: The information contained in this article is for general informational purposes only and should not be construed as legal advice. If you are seeking legal advice concerning a divorce or any other matter, please contact us by telephone or e-mail to schedule a consultation.

Marital Property: In general, "marital property" is any property obtained by either party during the marriage, except by gift or inheritance, even if the property is separately titled (listed or owned in one party's name alone) and any increase in value during the marriage on separate property (e.g. property owned before the marriage). The question of whether a particular asset is marital property can become fairly complicated. For example, see our related article Valuing the Marital Component of a Premarital Asset Contributed to the Marriage.

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