What Is Equitable Distribution?
Fair distribution aims to consider each party's needs and the facts of the case, not what is equal. The courts determine the division of property on a case-by-case basis.
Family courts divide property in one of two ways. One method is equitable distribution. The other is community property. Most states divide marital property according to what's equitable or "fair" for both parties during a divorce.
This article addresses how courts divide assets between a couple during their divorce case.
Community Property vs. Equitable Distribution: The Basics
Community property is all property acquired from the date of marriage to the date of separation. There are nine community property states, including California, Arizona, and Texas. Community property is subject to a roughly 50/50 split in a divorce. The property is divided equally regardless of other factors of the separation. The courts do not care which person contributed more to the marriage, separate property, etc.
Separate property is owned by one spouse or in one spouse's name, typically before the marriage. Separate property is non-marital property and not divided like community property. One way to determine separate property is through a prenuptial agreement or postnuptial agreement. But state laws determine limited property obtained during the marriage as separate property. Some examples include personal injury awards, gifts, or inheritances. Marital property is any property acquired during the marriage. This includes any property acquired by either spouse. In community property states, marital property is the same as community property. In fair distribution states, the courts determine what marital property is.
Courts take a much more delicate approach to property division in states with equitable distribution laws. These states try to consider what would be the fairest for each spouse. This includes consideration of separate property as well as marital property and the needs and means of each spouse. Consider if one spouse gave up their career to stay home and raise children. They now have a difficult time earning a living after the divorce. In this instance, the court may award that party a larger part of the marital property. If one spouse was abusive or otherwise at fault for the divorce (even in a "no-fault" divorce), the court order may award them a smaller portion of the assets.
Determining What's Equitable: Factors Considered
In all states, the divorcing couple can reach an agreement on their own (subject to court approval) before the courts intervene. This may occur in a collaborative environment or through the parties' attorneys. Suppose the parties cannot agree on the division of marital property. In that case, the courts will use their discretion (within the parameters of state marital property law) to reach a resolution. The courts generally consider the following factors when dividing assets under fair distribution:
- Duration of the marriage
- Which spouse has primary custody of minor children
- The financial needs and liabilities of each spouse, present and future (any alimony or college degree costs)
- The financial well-being and earning power of each spouse, present and future (including bank accounts)
- The amount contributed by each spouse to the combined marital assets
- Pensions or retirement accounts earned by either spouse
- Non-monetary contributions to the family (such as child-rearing, unpaid work at home, etc.)
- Marital debt accumulated during the duration of the marriage (such as credit card debt)
- Age, health, and special needs of each spouse
- Child support (or spousal support) obligations of either spouse for previous relationships
- The total market value of separate property
- Marital misconduct by each spouse
Note that premarital property is not included in the fair distribution. Personal property owned before the marriage is not considered part of the marital estate. Only assets acquired during the marriage are part of the marital estate and are subject to equitable division of assets.
Is Your Marriage Subject to Equitable Distribution of Property? Talk to an Attorney
The divorce process is a complicated process for most people. Maintaining a cool head to make the right decisions for you and your family can be difficult. The fair distribution of marital property can be complex and add stress to your divorce. Divorce lawyers can help you navigate divorce law and state family law. If you're getting divorced in an equitable distribution state, your best option is to work with a local divorce attorney.
Can I Solve This on My Own or Do I Need an Attorney?
- You may not need an attorney for a simple divorce with uncontested issues
- Legal advice is critical to protect your interests in a contested divorce
- Divorce lawyers can help secure fair custody/visitation, support, and property division
An attorney is a skilled advocate during negotiations and court proceedings. Many attorneys offer free consultations.
Don't Forget About Estate Planning
Divorce is an ideal time to review your beneficiary designations on life insurance, bank accounts, and retirement accounts. You need to change your estate planning forms to reflect any new choices about your personal representative and beneficiaries. You can change your power of attorney if you named your ex-spouse as your agent. Also, change your health care directive to remove them from making your health care decisions.