PA Equitable Distribution of Marital Assets
An issue in any divorce is the question of how the parties should go about dividing their property.
Any asset and/or debt that is acquired by either spouse during the marriage is considered “marital property.” All marital property is subject to division when the parties get divorced. Any asset and/or debt that is acquired by either spouse after the parties separate is not marital property, and belongs solely to the party who acquired the asset or debt. Equitable Distribution answers the questions of “who gets what” from the marital estate. While every case is different, here is a general outline of the types of issues that come up when considering how to divide the parties’ assets.
The marital home is often the primary asset owned by the parties. Other common types of assets include retirement accounts, investment accounts, bank accounts, automobiles, and anything else that is of value that was acquired during the marriage. It does not matter if the asset is titled only in one party’s name; it is considered marital property if it was acquired during the marriage.
Some Common Questions About Equitable Distribution in Pennsylvania
What factors are relevant in determining how to divide up a marital estate?
The manner of dividing the assets in a divorce is based on a variety of considerations. The division of property can have serious tax consequences for the parties, and depending on the types of assets that exist, it may be beneficial to receive one type of asset from the marriage versus a different asset. Properly evaluating the assets of the marriage, and deciding how the assets should be divided, is a complicated process that requires careful attention to the nature of the assets and the facts of the case. The specific factors affecting equitable distribution of the marital assets can be found in the Pennsylvania Divorce Code.
How does a retirement account get divided for equitable distribution purposes?
A common asset that is subject to division in a divorce is a retirement account belonging to one of the parties. These retirement accounts most commonly include 401(k), IRA, and a variety of types of pension accounts. Depending on the type of retirement account involved, there are a number of different ways that the account can be evaluated and divided between the parties. It is important to collect documents regarding these accounts early in the divorce process and provide them to your attorney.
A 401(k) is typically the easiest form of retirement account to evaluate because the specific value of the account is usually readily available from the retirement plan administrator. Statements for 401(k) accounts will usually delineate the employer’s and employee’s contributions, as well as the “growth” on the account. In the event that a party to the divorce has made contributions to their 401(k) account since separating from their spouse, then the value of those contributions made during the parties’ separation is subtracted from the account’s value for purposes of determining the marital value of the account.
There are a number of types of pension accounts which follow a variety of different rules regarding vesting rights, vesting timelines, rights of former spouses, and distribution calculations. By way of example, private companies may have pension plans which accrue and calculate benefits in ways that differ significantly from government-supported pensions such as a military pension, civil service pension, or Pennsylvania State Education Retirement Systems (PSERS) pension. Proper calculation of the marital portion of these pension accounts takes careful consideration of a number of different values and factors.
Dividing a retirement account is most commonly accomplished with the use of a Qualified Domestic Relations Order, or “QDRO.” The QDRO will state that a portion of the retirement account is being severed and apportioned to the spouse who doesn’t own the retirement account. The QDRO is signed by a Judge and is then sent to the retirement plan’s administrator for the retirement account to be divided in accordance with the terms of the QDRO.
Is fault a factor when determining how to divide a marital estate?
Not directly. Pennsylvania is a no-fault state, and therefore, the conduct (or misconduct) of a party during the marriage is not taken into consideration when arriving at a fair distribution of the estate. The only conduct that would act as a factor is intentional dissipation of marital assets by an individual.
In Pennsylvania, is credit card debt subject to equitable distribution?
In Pennsylvania, credit card debt accumulated during the marriage is treated like any other marital debt. Whether titled in both parties’ names, or in only one of the parties’ names, credit card debt accumulated during the marriage is subject to equitable distribution between the parties. Often a party to a divorce will claim that they “knew nothing” about the accumulation of debt, and/or that they never had access to the credit cards that were utilized. When credit card debt can be shown to be attributed to one parties’ spending on non-marital, personal expenses that would not have been agreed to, then the Court may apportion that part of the debt to the party who accumulated it.