In advance of getting a divorce, it is typical for people to expect that they will have to divide everything that they own right down the middle. Instead, courts in a majority of jurisdictions try to divide marital property in a way that reaches a fair and equitable result for both parties.
As a divorce lawyer from a firm like May Law, LLP can explain, this doctrine is known as “equitable distribution.” Courts will apply several different guidelines in determining what would be the most equitable way to divide both assets and debt. The guidelines are often codified in statutory law, and courts may also look to precedent from cases with similar circumstances.
Identification of Marital Property
The first thing that a court must do is determine what property is subject to distribution. For the most part, only marital property falls within the scope of what courts may divide. People will leave a marriage with property that they own separately.
Marital property consists of real and personal property in addition to monetary or other intangible assets that a couple acquires during the course of a marriage. Separate property includes what people acquired prior to a marriage as well as gifts.
It is possible for property that a person owns individually to become marital property. For example, commingling personal funds with marital funds or joint use of personal property could convert it into marital property.
Time Is a Key Factor
Time is often a core component of most courts’ analyses. In the case of a longer marriage, people are more likely to be financially dependent on one another, have joint accounts, and own property jointly.
In a relatively short marriage, it is less likely that people will have become very financially intertwined. Extricating oneself from a short marriage would probably not present the same degree of hardship or complexity as a long marriage.
Other Important Considerations
Courts will also consider the respective wealth and earning capacity of both parties. If one spouse has much greater income and assets than the other, the spouse with less may be at a serious financial disadvantage when the marriage terminates. Courts will try to distribute assets in a way that does not unjustly enrich one person while leaving the other with little or nothing.
While courts will apply similar guidelines to all hearings, they recognize that each situation is unique and merits a close evaluation. Nevertheless, it is usually helpful for divorcing spouses to attempt to reach a mutual agreement about property division rather than leaving it up to a third party.