Equitable Distribution Guide - Dividing the Marital Estate

If you and your spouse have accumulated assets during your marriage, deciding how to divide those assets can hinder your divorce. How is your retirement going to be split when part of it was in the prior to the marriage? Are restricted stocks that don’t vest until after the date of separation going to be divided? Do you know how much your pension is worth and how can you plan for retirement when you’re not sure how much your monthly benefit will be?

Classifying and distributing the martial estate is one of the most complex parts of going through a divorce. We’ve compiled a list of questions to help you gauge the complexity of your case. The more “yes” answers you give, the more likely you need to work with an attorney to ensure you’re getting a fair property distribution:

1) Are you or your spouse self-employed?

2) Do either of you have substantial assets in retirement accounts and/or pension plans?

3) Do either you or your spouse own stocks, stock options, restricted stock units, or deferred compensation or benefit plans?

4) Do you own significant amounts of cryptocurrency?

5) Are you able to access all financial accounts in your name and in your spouse’s name?

6) Have either of you served in the military during the marriage?

7) Do you own significant real property and/or timeshare property?

8) Have you or your spouse accrued significant debt of unknown origin or on expenses that did not benefit the marriage?

9) Has your spouse committed marital waste or made efforts to hide assets from you? (i.e., assets have been wasted on substance abuse, gambling, given away w/o your knowledge or permission, etc.)

Although, not inclusive, the aim of this guide is to give you the knowledge you need to make basic decisions about property settlement during divorce. Whether you decide to litigate, settle, or hire and attorney, hopefully you can do so with a better handle on what to expect.

We’ll start with defining some key terms you hear frequently when dealing with equitable distribution.

Martial Property

You can expect martial property to be divided equally between you and your spouse. Courts do have discretion in some cases to make unequal distributions, but the majority of cases involve equal distributions.

What exactly is marital property?

If you or your spouse acquired property during the marriage and before the date of separation, there is a presumption that that property is marital if it is still owned on the DOS, unless it was acquired:

By devise/descent (i.e., inherited)
By gift from a non-spouse
In exchange for separate property
As passive income or appreciation of separate property

Marital property typically includes monies earned during the marriage in financial accounts, the martial home, personal property purchased with martial funds, and portions of retirement accounts earned during the marriage.

It is key that the property be owned on the date of separation. Frequently clients present scenarios where their spouse had a ton of money in a bank account or retirement account that they depleted prior to the date of separation. If that was done with your knowledge and consent during the marriage in all likelihood, it is not going to be taken into consideration.

Separate Property

All real and personal property acquired before you were married or acquired during the marriage by inheritance or gift. Separate property is not divided and is not included in the marital estate.

Divisible Property

Divisible property is defined as all real and personal property specified below:

Property received after the DOS but before distribution as a result of the efforts of either spouse during the marriage.
Passive income from marital property received after the DOS.
Passive increases and decreases in marital debt. (e.g., financing charges and interest)

Divisible property is divided in the same manner as marital property.

Presumptions

Presumptions are important as they determine what you have to prove in your trial, versus what your spouse has to prove. (i.e., who has the burden of proof)

For marital property, if you establish that it was acquired during the marriage and it existed on the DOS, then the other party has to prove why it shouldn’t be considered martial property.

You also have to prove the value of martial assets on the date of separation. This is key as if you’re unable to prove the value with credible evidence, the property can’t be distributed. While some property is easy to value, things like businesses and pensions require a third party expert to value in most circumstances. Heading into trial without the proper appraisals or stipulations as to values is a huge risk you don’t want to take.

Assets vs Debt

It is imperative to understand that while assets acquired during the marriage and owned on the DOS are presumed to be marital, but debts are not. Debts are martial if they were taken out for the joint benefit of the parties. (i.e., for the benefit of the marriage) The burden to prove debt classification is on the party who wishes the debts to be considered marital. More details on this key point can be found in our article Beware This Key Distinction in Treatment of Marital Assets vs Debts.

If you’re in the midst of a divorce with complex property distribution issues, contact us. We are experienced in settling and litigation complex equitable distribution cases. We have a network of trusted evaluators to properly appraise the values of your marital property. We will ensure you get a fair and equitable split of your marital estate.