One of the most important things to consider when going through a divorce is “what happens to our assets and debts?” The division of marital assets and debts is referred to as Equitable Distribution. Here “equitable” means fair rather than a 50/50 split, so it’s important to note that the court has discretion to determine what is equitable or not. It is also made without regard for child support or alimony.
When making an Equitable Distribution of property the court usually follows a three-step process:
- They classify property as “marital,” “divisible,” or “separate.”
- Marital property is presumed to be all property acquired during the marriage by either or both parties and owned by either or both parties on the date of the separation.
- Separate property is any property acquired before the marriage or after the separation by either party.
- Divisible property accounts for passive decrease or passive increase in value of your marital property after the date of separation.
- They calculate the net worth of the property.
- They distribute the property in an equitable manner.
An Equitable Distribution must be filed before a judgment for absolute divorce is entered. (The judgment is entered when it is reduced to writing, signed by the judge and filed with the clerk of court). The failure to assert a claim for equitable distribution prior to the entry of a divorce judgment will bar the right to assert an equitable distribution claim except in certain narrow circumstances. Here are some factors that the court takes into consideration when determining whether the division is equitable (though this is certainly not an exhaustive list):
- Your income, property, and liabilities
- Any obligations for support from a prior marriage
- Duration of the marriage
- Age, health (physical and mental) of both parties
- Acts of either party to maintain, preserve, develop, waste, neglect, or devalue marital or divisible property after separation
- Need of the parent who has custody of the children
