One of the most common fears people face in divorce is losing all or most of their property or assets. If you're going through a divorce, whether amicable or contentious, it is essential to speak with an experienced divorce lawyer about how to best protect your assets while arriving at an equitable settlement. Here's an overview of what you need to know about protecting assets in a Pennsylvania divorce.
Marital Assets vs. Non-Marital Assets
The first step toward protecting your assets is understanding the difference between marital property and non-marital (separate) property and identifying to which category your assets belong.
Marital property in Pennsylvania generally refers to the property and assets a couple acquired during the marriage. It can include tangible items such as real estate, vehicles, cash, jewelry, furniture, or artwork, or non-tangible items such as bank accounts, retirement accounts, life insurance policies, investments, a business, or intellectual property. In divorce, courts have the authority to divide marital property and distribute it between the couple.
Non-marital or “separate” property refers to property or assets one spouse acquired prior to the marriage, after the date of separation, or through inheritance, or as a gift from someone outside the marriage. In most cases, each spouse retains their non-marital property upon divorce.
To protect their assets, each spouse should create a list of marital and non-marital property immediately after separation. Although it may seem straightforward, you and your ex may disagree on when an item was purchased, whether it was gifted to one spouse or the couple, or to whom an item belongs. The process can be further complicated because separate property can sometimes evolve into marital property if the couple has treated the item as marital property. For example, if a spouse owned a bank account prior to marriage, but both spouses made deposits and withdrawals from it during the marriage, the account may have become marital property.
A non-marital asset can also become “commingled.” If a spouse created a pension or retirement plan during the marriage but continued to contribute to it after separation, the plan is partially marital property and non-marital property. You may need an expert, such as an actuary, to determine the marital property portion of the commingled item.
It's also important to understand that if the value of the separate property increases during the marriage, the increased amount may be considered marital property. Thus, if one spouse owned real estate before the marriage, and the property's value rose by 50 percent during the marriage, the non-owning spouse may be entitled to a share of the increase.
When it's unclear whether an asset is marital or separate property, or you believe your spouse is wrongly or fraudulently classifying an item, you should talk to an experienced divorce lawyer as soon as possible. A skilled lawyer can help protect your interests and ensure that the assets are fairly categorized and distributed.
Equitable Distribution in Pennsylvania
After the property has been categorized as marital or separate property and the couple cannot reach a settlement, the court will determine how to distribute the marital property. Pennsylvania is an equitable distribution state. This means the court divides the assets–and debts–based on principles of fairness. The approach differs from community property states, which divide marital assets 50/50 between the spouses.
Pennsylvania courts must carefully consider a range of factors to determine how to divide the assets fairly. These factors include:
- The length of the marriage
- The income of both spouses
- The economic circumstances of each spouse
- Whether either spouse has been previously married
- The age of both parties
- The health of both parties
- How much each spouse contributed to the marital property through their respective roles
- Which spouse will have custody of any dependent children
- The standard of living established during the marriage
- Any prenuptial or post-nuptial agreements
- The employability of both parties
- The amount of non-marital assets each party has
Note that even though the court will not give non-marital assets to the other party, it will consider the value of non-marital property to determine a fair distribution of the marital property. It's also worth noting that fault or marital misconduct does not come into play when determining equitable distribution.
Tips for Protecting Assets During Divorce
You can best protect your assets during divorce by being proactive and organized. Make a comprehensive list of all you and your spouse own, and categorize it as marital or non-marital property. If necessary, collect proof that a particular item is separate or marital.
Next, obtain an independent professional valuation of each piece of property, whether marital or separate, so that you clearly understand each item's worth. Knowing the value of each piece of property can help you negotiate a fair settlement or help the court make a reasonable, informed decision.
Consider which marital assets you want to keep and which you are willing to give up. In making this decision, think about why you want to keep the item, the tax implications of keeping it, and whether you can actually afford it. You may want to keep an asset because you don't want your spouse to have it, but keeping it may put you in a weaker financial position.
Do not hide marital assets to keep them from your spouse, as this is unethical and illegal under Pennsylvania law. Hiding assets may consist of transferring money from a joint account to one under a different name or an offshore account, transferring a business to another person until the divorce is finalized, physically hiding an object, or using other means to conceal the property.
If you believe your spouse is hiding assets, you should urgently speak with a reputable divorce lawyer. Your lawyer can help legally track the items and take action to prevent your spouse from trying to hide others.
Pennsylvania Family Law Attorney
Dividing assets is one of the most challenging aspects of the divorce process. You need an experienced lawyer to help ensure that you receive all to which you're entitled. Attorney Joseph Lento has helped numerous individuals protect their assets and receive fair settlements or judgments. To get more information about how Attorney Lento can help you, contact the Lento Law Firm at 888-535-3686 or schedule an appointment online.