In an equitable distribution state, property and debt are divided between divorcing spouses based on the principle of equitable distribution. Equitable distribution does not necessarily mean an equal 50/50 split; instead, the division aims to be fair and just based on several factors. The specific rules and factors considered may vary depending on the state. Read below for some general guidelines about this method of dividing things with divorce.
Marital vs. separate property
The first step is to identify the marital property and separate property. Marital property generally includes assets acquired during the marriage, while separate property typically includes assets brought into the marriage, received as gifts, or acquired through inheritance. Marital property is subject to division, while separate property is typically retained by the owning spouse.
Factors concerning equitable distribution
Equitable distribution states consider several factors when determining how property and debt should be divided. These factors may include:
- Duration of the marriage
- Contributions as a homemaker or caregiver
- Each spouse's income, earning capacity, and employability
- Age and health of each spouse
- Custodial responsibilities for children
- Any existing prenuptial or postnuptial agreements
- Tax implications of the division
- Any dissipation of assets or misconduct during the marriage
Evaluation and valuation of assets
The divorcing spouses will need to value the marital assets. This may involve appraisals and other valuation methods to determine the fair market value of assets such as real estate, businesses, investments, vehicles, and personal belongings. For instance, a real estate appraiser is usually required to accurately value the family home.
Division of assets
Once the assets are valued, the court or the spouses negotiate and decide how to divide them. The goal is to achieve a fair outcome considering the factors mentioned above. The division can be done in various ways, such as allocating specific assets to each spouse, selling assets and splitting the proceeds, or providing compensation through other assets or financial means.
Division of debt
Marital debt may include mortgages, loans, credit card debt, and other financial obligations incurred during the marriage. The court or the spouse determines how to allocate and divide the debt between them based on factors such as each spouse's ability to pay, the purpose of the debt, and other relevant considerations.
Consult with a family lawyer familiar with the laws in your state. They can provide guidance and help navigate the process to achieve a fair and reasonable division of assets and debts.