Equitable Distribution in a Pennsylvania Divorce

Is Pennsylvania a Community Property State?

No. Pennsylvania divides marital property under the theory of "equitable distribution". (Pa. C.S.A. - Title 23 - Chapter 35 § 3502.) Community property states attempt a 50-50 distribution, as best as possible. Equitable distribution states divide property based on a determination of what's fair under the circumstances of each case.

You might find it interesting to learn more about the differences between equitable distribution states and community property states.

Is All Property Subject to Equitable Distribution?

Not necessarily. Pennsylvania marital property laws characterize property as either "marital" or "non-marital". (Pa. C.S.A. - Title 23 - Chapter 35 §3501.) Marital property is subject to distribution; non-marital ("separate") property is usually exempt.

Under Pennsylvania divorce law, assets and income acquired during the marriage are presumed to be marital property. Some common examples are a house, business, retirement accounts, investments, furniture, art, and motor vehicles. And, title (the name under which property is owned) doesn't necessarily determine a property's designation as marital or separate. So, for example, if a car purchased during the marriage is in only one spouse's name, generally the law still considers it part of the marital estate.

Some examples of separate property are:

• property acquired before the marriage
• inheritances and gifts received during the marriage (except gifts between the spouses)
• property excluded from the marital estate by a valid prenuptial or postnuptial agreement
• property acquired after the spouses separate
• certain specific veterans' benefits, and
• any payment received as a result of an award or settlement of a claim (such as an auto accident case) which accrued prior to the marriage or after the date of final separation, regardless of when the payment was received.

For the most part, Pennsylvania law allows separate property to escape the equitable distribution process. However, it's important to remember that if the value of separate property increases during the marriage, the amount of that increase can be considered a marital asset. You'll often see this with certain retirement plans.

Commingling (mixing) separate property with marital property can cause those non-marital assets to lose their protected status. For example, taking money from a pre-marriage bank account and placing it into a joint account with your spouse. As a general rule, if you want to protect your separate property from distribution in a divorce, don't use that property for anything related to the marriage.

Do Divorce Courts Also Divide Debts?

Yes. Debts that accrue after the date of the marriage and before the spouses separate are normally considered marital debts, and must also be divided in a divorce.

Both spouses are responsible for them, even if only one of the spouses incurred them. Marital debts typically include items such as mortgages, loans, and credit card balances. A judge will determine how to best split up the debt between the spouses.

Because equitable distribution is based on fundamental fairness, in certain situations a spouse could make the argument that it would be unjust for the court to hold that spouse responsible for a portion of a particular debt. You might see this where the other spouse racked up significant gambling debts.

Be aware that creditors aren't usually bound by your divorce judgment. So if your spouse is supposed to be paying off a credit card after the divorce, but then defaults on those payments, you could be on the hook. Pennsylvania law states that when a spouse incurs a marital debt for items necessary for the support and maintenance of the household (food, clothing, and such), both spouses are responsible, and a creditor can sue both. But if the creditor gets a judgment against both, it has to try to collect first from the spouse who actually incurred the debt. If that spouse doesn't have enough property to satisfy the judgment, the creditor can then try to collect from the other spouse. (Pa. C.S.A. - Title 23 - Chapter 35 § 4102.)

If you can, use marital property to pay off as much debt as possible at the time of divorce, to avoid post-judgment problems.

Note that a spouse isn't liable for debts the other spouse incurred prior to the marriage. (Pa. C.S.A. - Title 23 - Chapter 35 § 4101.)

Dividing Marital Assets and Debts

For a court to divide property, it first needs to know the property's value. With some items, such as a bank account, that's fairly easy to ascertain. But with others, like a house, business, or a pension plan, you'll probably need the help of appraisers, forensic accountants, or actuaries.

When making its decision on distributing property, a court will look at a variety of factors, and give them whatever weight it sees fit. Some of these are:

• the length of the marriage
• whether either spouse was married previously
• each spouse's role in the acquisition, preservation, depreciation, or appreciation of the marital property, including the contribution of a spouse as homemaker
• the economic circumstances of each spouse at the time the division of property is to become effective
• the spouses' ages, health, income, and employability
• whether either spouse contributed to the other's education, training, or increased earning power
• the standard of living established during the marriage
• the tax consequences of any award, and
• whether either spouse will have custody of any dependent minor children.

The equitable distribution statute also authorizes the court to award to one or both of the spouses the right to reside in the marital residence, either during the divorce or afterwards.

And, when making decisions about property division, Pennsylvania courts won't consider either spouse's "fault" in causing the divorce.

What Is an Equitable Distribution "Master"?

This usually refers to an attorney appointed by the court to handle certain aspects of the divorce before the case gets to a judge. (Pa. C.S.A. - Title 23 - Chapter 33 § 3321.) The judge will determine the extent of the master's role, which may include taking testimony from the couple. The master then provides the judge with a record and transcript of the testimony, and also makes recommendations to the court on the various issues that were addressed.

Divorce Settlement Agreements

Most divorce cases don't end up in a trial. Spouses are ordinarily able to negotiate and settle the issues in their divorce, often with the help of their attorneys or a qualified mediator.

There's no guarantee as to how a judge will decide the issues in your case, but an experienced attorney can advise you of the possible results. Armed with that knowledge, couples often prefer to reach their own agreements rather than endure the stress, uncertainty, and expense of a trial.

The terms of the agreement will be memorialized in a divorce settlement agreement (sometimes referred to as a "property settlement agreement" or a "marital settlement agreement"). This is a written contract between the spouses which resolves most or all of the issues in their divorce, such as alimony, child custody, child support, and the division of property. The terms of the agreement will become part of the final judgment of divorce.

Is There a Statute of Limitations on Divorce Settlement Agreements?

Not to be evasive, but the answer is: it all depends. As indicated in the preceding section, divorce settlement agreements are written contracts and, as such, certain obligations in the agreement may be subject to a statute of limitations. If one party to the agreement fails to meet that obligation, the other will then have four years to seek a remedy from the court. (Pa. C.S.A. - Title 42 - Chapter 55 § 5525.) If that's not done, the injured party could be out of luck.

A detailed discussion of this issue is beyond the scope of this article. But if you have questions, be sure to contact a knowledgeable family law attorney in your area.