One aspect of divorce and making determinations of support is the division of the spouse's marital property. Throughout a marriage, most spouses acquire a number of properties together. Cars, homes, assets within the home, interests, estates, money, and even debts are all considered "marital property." When a marriage can longer continue, one of the terms of divorce and support that will be discussed is how to distribute the property between the two spouses. There are multiple aspects to how property may be divided, and spouses may want to consider discussing support and property distribution together to ensure fairness. If a settlement does not occur, a judge may make a decision on how the property is to be divided instead.
What Is Marital Property?
When a court refers to "marital property" for division between spouses, there are certain and specific guidelines that the property must fall within in order to be divided. Again, marital property can come in several forms. Both a physical car and the loan accompanying it can be considered marital property if it was obtained during the marriage. However, not everything will always fall under this umbrella. "Separate" property is property that will not be considered for distribution. Although one spouse's separate property will not be distributed to the other spouse, it may be considered when determining how to distribute the marital property.
Separate property can include a number of things. Typically, separate property includes a spouse's property before marriage, any property that the spouse acquires while separated, any inheritance or gift intended for and received by that spouse, and any property excluded by a prenuptial or postnuptial agreement. Separate property is never given to the other spouse except in the case of a settlement not determined by the court. When in doubt, it is best to consult an attorney as to whether or not certain property can be considered separate.
Marital property is made up of everything the spouses acquired together during the marriage. This can include physical property such as a house, a car, or furniture. It can also include non-physical things such as bank accounts, investments, or retirement savings. On top of this, debts will be distributed as well. This can include the mortgage on the home or a loan for a car. The court will typically not consider who's name property is recorded in when distributing property, so long as the item was accrued during the marriage.
Separate Property Can Become Marital Property
Property that was originally held separately by a spouse can become marital property under certain circumstances. If one spouse significantly improved the property, or if the property was commingled together with marital funds, it can lose its status as separate property.
For example, if a person receives an inheritance from a relative, it would be separate property. However, if that inheritance was deposited into the couple's joint marital account where both parties used it equally, the inheritance might lose its characterization as separate property. Similarly, if one spouse owned a house prior to their marriage, it would likely be separate property. But if their spouse spent a significant amount of money improving the house, they could be owed some portion of their investment as marital property.
In Pennsylvania, when negotiations for property fail, the standard that the judge will use to determine how to divide property between two parties will be that of "equitable distribution." However, the name of this doctrine is not based upon an absolutely even split between the two parties; instead, it relies on what the court deems is "fair" for both spouses. "Fairness" is up to the judge overseeing the case, and it may not always be an even split between the two spouses. There are several factors a judge, or designated court representative will consider when determining equitable distribution, some of which include:
- Prior marriages: Prior marriages will give the court an indication of a spouse's assets and if things were split fairly in the past.
- Overall health of both spouses: Health and age will all play a role in a court determining the needs of each spouse for a fair division.
- Income of both spouses: Information about spousal income will provide the court with an idea of how each spouse will perform financially after the division and which spouse is more likely to struggle.
- Custody of children: If one of the spouses is receiving primary or sole custody of the children, the court must also factor in how the children will be affected when determining property division. The ages and specific needs of the children will also be considered.
- Length of marriage: The court can use the length of marriage to determine the degree of how entitled each spouse is to the marital property.
- Both spouse's non-marital assets, including assets protected by prenuptial agreement: Assets outside of the marriage are considered for the sole purpose of giving the court an idea of what each spouse has on their own.
- The standard of living established during the marriage: The court may examine the standard of living throughout the marriage and is likely to attempt to divide assets in a way that allows both parties to maintain it.
These factors and more are likely to come into play when the division of property is left up to the determination of the court. However, the division of property does not always need to be resolved at the discretion of a judge or a court official. Instead, many spouses will prefer to work out and accept a settlement.
In addition to physical and financial assets, couples must also agree on how to split up marital debts. In Pennsylvania, any debts that are accrued during a marriage are considered marital debts, even if only one spouse incurred the debt. For instance, if a couple purchased a home during their marriage, but only one spouse was on the mortgage, the non-signing spouse could still be responsible for paying the mortgage debt after a divorce. Similarly, a spouse could end up paying for credit card bills, auto loans, or other debts that are only in their former spouse's name.
Like with distributing property, a judge will use equitable distribution to fairly assign the debt. This may mean that the house with the higher income is assigned more of the couple's debt to pay or that one person receives more property but also more debt.
What Does Not Affect Property Division
There are some factors that will not affect how property is divided between spouses. First, evidence of affairs or other misbehavior on the part of either spouse has no effect on how property will be split between the spouses. The court will split the property fairly according to each party's circumstances, regardless of who was at fault for the demise of the marriage. Pennsylvania law prohibits judges from taking marital misconduct into consideration when equitably dividing assets.
Second, courts will also not consider alimony or spousal support payments when dividing property. Alimony is a separate determination based on one spouse's need and the other spouse's ability to pay. A judge may consider many of the same factors when deciding alimony, the amount of alimony payments that one party receives or pays will not be a factor in how the judge decides to equitably distribute the property. Unlike the division of property, however, a judge may consider evidence of an affair or other evidence of fault in the marriage when determining alimony payments.
Mediation and Settlements
While taking a spouse to court over property division is one way of resolving the issue, many spouses prefer to settle the matter outside of a courtroom. Often, divorcing couples and their attorneys will engage in mediation as a way to divide property on their own without oversight by the judge.
To begin a mediation, both parties select a neutral, third-party individual to act as their mediator. A professional mediator may be a retired judge, an attorney, or someone outside of the legal profession. During the mediation, parties go back and forth, negotiating their wants and demands through the mediator. At the end of a successful mediation, the mediator will draft a proposed settlement agreement.
Settlement can be negotiated between attorneys and parties in order to determine the best course of action. Parties using mediation can frequently avoid the restrictions between separate and marital property and can negotiate their own agreement when dividing property through a settlement, so long as both spouses agree to the way the property is being divided. It is important to consult with an attorney regarding all matters of property division, as the settlement may be a better option than taking the entire case to the courtroom. On the other hand, if a settlement is not agreeable or fair, an attorney can advise the spouse on what the chances are in court.
If you or a loved one is currently involved in a property division case or other matter of Family Law, contact attorney Joseph D. Lento today. The experienced Pennsylvania Family Law Team at the Lento Law Firm can help you know what to expect and will help you negotiate the settlement you deserve. Call 888.535.3686 and schedule your appointment today.