The division of a marital estate in Pennsylvania can be a difficult and emotionally draining process. It may be necessary to evaluate and divide assets and debts including real estate holdings, businesses, retirement benefits and pensions. We can help you to safeguard your property by properly evaluating, valuing and dividing your marital property.
Before property can be divided, it must be located and identified. Pennsylvania law requires each party in a divorce matter to provide the other with complete disclosure of financial information. Fines or sanctions can punish hiding an asset or providing false or incomplete information. It may be necessary to use other discovery methods such as depositions and subpoenas to locate any hidden assets.
Once property is identified, it is then characterized as either marital or non-marital property. In Pennsylvania, property acquired during the marriage is deemed marital and each party will be entitled to an appropriate share. Property that is deemed non-marital is presumed to be a party’s separate property and is not subject to division. The classification of property is determined by factual matters like the date of the marriage, date of separation, source of the asset and marital agreements. An argument over any of these facts may change a party’s entitlements or obligations regarding and asset or debt.
Marital property is then valued. Parties may disagree over the value of certain assets. In some cases it may be necessary to use specialists like real estate appraisers or forensic accountants to determine the value of an asset such as a house or business. Dividing certain assets may require specialized services to take advantage of tax laws and to avoid penalties.
Typically, the determination of what constitutes “marital property” becomes a critical issue in deciding an equitable distribution claim. Pursuant to Title 23, Section 3501 of the Pennsylvania Code, “marital property is defined as follows:
(a) General rule.–As used in this chapter, “marital property” means all property acquired by either party during the marriage and the increase in value of any nonmarital property acquired pursuant to paragraphs (1) and (3) as measured and determined under subsection (a.1). However, marital property does not include:
(1) Property acquired prior to marriage or property acquired in exchange for property acquired prior to the marriage.
(2) Property excluded by valid agreement of the parties entered into before, during or after the marriage.
(3) Property acquired by gift, except between spouses, bequest, devise or descent or property acquired in exchange for such property.
(4) Property acquired after final separation until the date of divorce, except for property acquired in exchange for marital assets.
(5) Property which a party has sold, granted, conveyed or otherwise disposed of in good faith and for value prior to the date of final separation.
(6) Veterans’ benefits exempt from attachment, levy or seizure pursuant to the act of September 2, 1958 (Public Law 85-857, 72 Stat. 1229), as amended, except for those benefits received by a veteran where the veteran has waived a portion of his military retirement pay in order to receive veterans’ compensation.
(7) Property to the extent to which the property has been mortgaged or otherwise encumbered in good faith for value prior to the date of final separation.
(8) Any payment received as a result of an award or settlement for any cause of action or claim which accrued prior to the marriage or after the date of final separation regardless of when the payment was received.
(a.1) Measuring and determining the increase in value of nonmarital property.–The increase in value of any nonmarital property acquired pursuant to subsection (a)(1) and (3) shall be measured from the date of marriage or later acquisition date to either the date of final separation or the date as close to the hearing on equitable distribution as possible, whichever date results in a lesser increase. Any decrease in value of the nonmarital property of a party shall be offset against any increase in value of the nonmarital property of that party. However, a decrease in value of the nonmarital property of a party shall not be offset against any increase in value of the nonmarital property of the other party or against any other marital property subject to equitable division.
(b) Presumption.–All real or personal property acquired by either party during the marriage is presumed to be marital property regardless of whether title is held individually or by the parties in some form of co-ownership such as joint tenancy, tenancy in common or tenancy by the entirety. The presumption of marital property is overcome by a showing that the property was
acquired by a method listed in subsection (a).
(c) Defined benefit retirement plans.–Notwithstanding subsections (a), (a.1) and (b):
(1) In the case of the marital portion of a defined benefit retirement plan being distributed by means of a deferred distribution, the defined benefit plan shall be allocated between its marital and nonmarital portions solely by use of a coverture fraction. The denominator of the coverture fraction shall be the number of months the employee spouse worked to earn the total benefit and the numerator shall be the number of such months during which the parties were married and not finally separated. The benefit to which the coverture fraction is applied shall include all postseparation enhancements except for enhancements arising from postseparation monetary contributions made by the employee spouse, including the gain or loss on such contributions.
(2) In the case of the marital portion of a defined benefit retirement plan being distributed by means of an immediate offset, the defined benefit plan shall be allocated between its marital and nonmarital portions solely by use of a coverture fraction. The denominator of the coverture fraction shall be the number of months the employee spouse worked to earn the accrued benefit as of a date as close to the time of trial as reasonably possible and the numerator shall be the number of such months during which the parties were married and not finally separated. The benefit to which the coverture fraction is applied shall include all postseparation enhancements up to a date as close to the time of trial as reasonably possible except for enhancements arising from postseparation monetary contributions made by the employee spouse, including the gain or loss on such contributions.
(Nov. 29, 2004, P.L.1357, No.175, eff. 60 days)
2004 Amendment. Act 175 amended subsec. (a) and added subsecs. (a.1) and (c). See section 5(6) of Act 175 in the appendix to this title for special provisions relating to applicability.
Equitable Distribution Proceedings. Section 1 of Act 4 of 2005 provided that subsec. (c) shall apply to all equitable distribution proceedings pending on or after the effective date of section 1.
After determining the marital property, the Court will decide how to fairly divide the assets between the parties. Pursuant to Title 23, Section 3502, the following factors are typically considered.
3502. Equitable division of marital property.
(a) General rule.– Upon the request of either party in an action for divorce or annulment, the court shall equitably divide, distribute or assign, in kind or otherwise, the marital property between the parties without regard to marital misconduct in such percentages and in such manner as the court deems just after considering all relevant factors. The court may consider each marital asset or group of assets independently and apply a different percentage to each marital asset or group of assets. Factors which are relevant to the equitable division of marital property include the following:
(1) The length of the marriage.
(2) Any prior marriage of either party.
(3) The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties.
(4) The contribution by one party to the education, training or increased earning power of the other party.
(5) The opportunity of each party for future acquisitions of capital assets and income.
(6) The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.
(7) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker.
(8) The value of the property set apart to each party.
(9) The standard of living of the parties established during the marriage.
(10) The economic circumstances of each party at the time the division of property is to become effective.
(10.1) The Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain.
(10.2) The expense of sale, transfer or liquidation associated with a particular asset, which expense need not be immediate and certain.
(11) Whether the party will be serving as the custodian of any dependent minor children.
(b) Lien.–The court may impose a lien or charge upon property of a party as security for the payment of alimony or any other award for the other party.
(c) Family home.–The court may award, during the pendency of the action or otherwise, to one or both of the parties the right to reside in the marital residence.
(d) Life insurance.–The court may direct the continued maintenance and beneficiary designations of existing policies insuring the life or health of either party which were originally purchased during the marriage and owned by or within the effective control of either party. Where it is necessary to protect the interests of a party, the court may also direct the purchase of, and beneficiary designations on, a policy insuring the life or health of either party.
Miller Lyden attorneys are experienced trial attorneys that can assist and in preparing and presenting your equitable distribution claim before a family law judge.