Equitable distribution is the process of dividing a couples' marital assets and liabilities in connection with a divorce.
The parties' assets and liabilities are characterized as marital and non-marital assets.
The legal characterization of assets and liabilities becomes complicated when finances are co-mingled during the marriage.
The court has signficant discretion to determine what is properly considered martial and nonmarital assets and liabilities for purposes of equitable distribution. All assets and liabilities must go through the same analysis: identification of all the parties’ assets and liabilities, classification as nonmarital or marital property, then valuation and distribution of the significant marital assets and liabilities.
After dissolution proceedings have commenced, both parties are required to fill out a financial affidavit. This affidavit lists the parties' martial and nonmarital assets and liabilities and provides a current valuation or amount owed for each. Generally, all assets and liabilities acquired or incurred by either spouse subsequent to the date of marriage and not specifically established as nonmarital assets or liabilities are presumed to be marital assets and liabilities.
Martial Property
Marital property may include the following:
(a) real estate,
(b) businesses,
(c) deposit accounts (checking and savings),
(d) insurance policies,
(e) securities,
(f) pensions,
(g) 401k 503B, IRAs and other retirement accounts,
(h) intellectual property (trademarks, patents, copyrights),
(i) vehicles,
(j) jewelry, art, or other collections;
(k) household furnishings; and
(l) pets.
Martial Liabilities
Marital liabilities may include the following:
(a) mortgages;
(b) car loans;
(c) credit card accounts; and
(d) other debts.
Most assets or debts acquired during the marriage are considered marital and are subject to equitable distribution.
Partition of Marital Assets
If a party wants the court to require the sale of real or personal property with the parties to split the proceeds, that party's petition should include separate counts for partition of real property and partition of personal property.
Nonmarital Assets and Liabilities
Nonmarital assets and liabilites include the following:
(a) assets acquired and liabilities incurred by either party prior to the marriage, and assets acquired and liabilities incurred in exchange for such assets and liabilities;
(b) assets acquired separately by either party by means other than interspousal gift, bequest, devise, or descent, and assets acquired in exchange for such assets;
(c) all income derived from nonmarital assets during the marriage unless the income was treated, used, or relied upon by the parties as a marital asset;
(d) assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for such assets and liabilities;
(e) any liability incurred by forgery or unauthorized signature of one spouse signing the name of another.
Separation or remarriage by a spouse may affect the classification of property as marital or nonmarital, and the values attributed to the assets and liabilities.
Distribution of property must be equitable but it does not have to be equal. The court considers many factors including length of marriage, each party’s individual circumstances, and their contribution to the marriage.
