What is Equitable Distribution?
In every divorce case, the parties’ assets and liabilities must be divided. Assets are anything of value such as real properties, bank accounts, jewelry, artwork, collectibles, automobiles, boats, business interests, stocks, and retirement accounts. Liabilities are monies owed such as mortgages, credit card debts, car loans, and IRS debts.
First, the court determines what non-marital assets and liabilities, if any, each party has and sets those assets and liabilities aside for the party to whom they belong. Then, the Court identifies and values the marital assets and liabilities and fairly divides them amongst the parties though a process known as equitable distribution. Whether an asset or liability is marital or non-marital in nature generally depends on when and how the asset or liability was acquired or incurred, as the case may be.
Non-Marital Assets and Liabilities
More specifically, non-marital assets and liabilities include: (1) those acquired/incurred by either party before the marriage, (2) those excluded from being considered marital pursuant to the written agreement of the parties (such as a pre-nuptial, post-nuptial, or marital settlement agreement), (3) assets given to either party (by gift, inheritance, bequest, or devise) by a non-party (meaning someone other than his/her spouse), (4) all income derived from non-marital assets during the marriage unless the parties treated, used, or relied upon that income as a martial asset during their marriage, (5) Any liabilities incurred by one party by forging or otherwise using the unauthorized signature of the other spouse. In some instances, assets and/or liabilities that were acquired and/or incurred in exchange for non-marital assets and liabilities can also be considered non-marital.
Marital Assets and Liabilities
All assets and liabilities that are obtained after the date of marriage and are not specifically established as being non-marital are presumed to be marital. Moreover, sometimes assets or liabilities that were originally non-marital become marital, at least in part, due to commingling.
How Assets and Liabilities are Divided
The Court must equally divide all of the marital assets and liabilities, unless an unequal distribution is justified after considering all of the following factors: (1) each party’s contribution to the marriage by way of homemaking and contributing to the care and education of the children, (2) each party’s financial circumstances, (3) length of the marriage, (4) any interruption suffered by either party to his/her personal career and/or education, (5) each party’s contribution to the other spouse’s education or career-building, (6) the desirability of either party retaining any particular asset (such an a business interest) free of any interference or claim from the other party, (7) Each party’s contribution to the incurrence of the parties’ marital and non-marital liabilities and the acquisition, enhancement in value, and income production of/from the parties’ marital and non-marital assets, (8) the desirability of either party retaining exclusive use and possession of the marital home for herself/himself or any of the parties’ dependent children if same is financially feasible (until the child’s emancipation or until the exclusive use and possession is otherwise terminated by the Court), in the best interest of either party or the child, and such an award of exclusive use would be equitable, (9) any intentional dissipation, waste, depletion, or destruction of marital assets by either party after the date on which the petition for dissolution of marriage is filed or in the 2 years prior to said date, and (10) any other factors necessary to do equity and justice between the parties.
When is Equitable Distribution Decided?
Ordinarily, the issue of equitable distribution is decided at the end of the case. However, the Court may partially distribute the parties’ assets and liabilities if extraordinary circumstances exist and either party files a sworn motion requesting same. The Court will appropriately credit any partial distribution that was made when it enters its final ruling on equitable distribution at the end of the case