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Equitable Distribution of Property

Equitable Distribution

One of the most important legal issues that a family court deals with during a divorce is how to divide the couple's property. Every state has their own laws governing how to divide this property, with most following one of two schemes: the community property method, or the equitable distribution method. Equitable distribution is the more popular method that courts employ to divide property during a divorce or legal separation proceeding. Unlike community property rules, equitable distribution requires a court to look at a number of factors and variables when deciding which party should get what item of property.

The most important principle to know about equitable distribution is that it does not mean to divide equally. Instead, equitable distribution refers to a division of property that achieves both a fair and comprehensive result for the parties. In other words, the main focus of the decision for property division is based on fairness to the parties. 

Again, the point of analyzing these factors is to achieve some kind of comprehensive and fair result when distribution assets between the parties.  

In some cases, this type of property distribution is not always accurate or favorable.  For instance, it can sometimes be difficult to tell who owned which assets during the course of the marriage.  In such cases, the court may apply equitable distribution principles rather than more traditional rules.   Equitable distribution utilizes a variety of factors to determine the best way to distribute property during a divorce. 

Some Factors Used in Equitable Distribution

Equitable distribution determinations may be done on a case-by-case basis and will depend on the individual facts of each case. When a judge looks to divide marital property during a divorce, they know that each case is different. Thus, the goal of equitable distribution division is to take the specific circumstances into account to put each spouse on as fair of terms as possible once the divorce is final. This may ultimately mean that one spouse will receive a larger share of the marital property. 

The factors that the court considers include:

  • Duration of the marriage;
  • Which spouse will have primary custody and physical care of the children;
  • The current and future financial needs of each spouse, including a potential need for future education;
  • Current financial position and earning potential;
  • Monetary/property contributions of each spouse to overall marital property;
  • Non-monetary contributions to the marriage, such as child-care and labor in/on the family home;
  • Age and health of the spouses;
  • Overall value of each spouse's separate property;
  • Any legal obligations (alimony and child support) one spouse owes from previous relationships; and
  • Adverse behavior by a spouse (debts, affairs, domestic violence).

These are some, but certainly not all of the factors that a family court will consider during the property division phase of divorce proceedings. For a more complete list you will need to consult with an attorney in your jurisdiction. A court will incorporate these aspects and any others that might be related to the distribution of property.  Such principles may also be adapted for similar legal proceedings like a separation or an alimony determination. 

When is Equitable Distribution of Property Appropriate?

For these reasons, equitable division is often an appropriate alternative in instances where child support or spousal support is going to be main issue.  In these types of cases, the court may need to incorporate the various child support needs in the property determination.  As a result, the distribution of property may reflect the position of each party in relation to the child or children.

Also, equitable distribution is dependent on the laws that govern each region.  Some jurisdictions exercise separate property distribution, while another area may enforce equitable concepts.  Thus, property determinations can sometimes be influenced by the area in which the case is filed.

Can the Judge Divide Separate Property?

No. A judge cannot force you to sell separate property for division or otherwise give a portion to the other spouse. What they can do is take the amount of separate property each spouse has into consideration when dividing marital property.

For example, if one spouse has a significant amount of separate property like real estate, cars, etc. when the other spouse has none, the judge may decide to award the latter spouse a larger share of the marital community property in the divorce.

Is Equitable Distribution the Only Way to Divide Marital Property?

No. Whether you live in an equitable distribution or a community property state, you and your spouse have the right to draft your own agreement to divide marital property as you wish. As long as the agreement is written and signed by all parties and fairly negotiated, a judge is likely to honor the divorcing couple's wishes. These two schemes are the default that judges use to divide property when the sides cannot agree on these issues. 

Any marital property agreement must receive the approval of a divorce judge, but as stated above, unless there are facts to indicate duress or any other unfair pressure against one party, the court is likely to honor that agreement.

What is Community Property?

Community property is a term in family law that is sometimes used in cases of divorce or legal separation. Community property generally refers to any property or assets that a couple gets during the marriage and owns together. 

In a divorce or legal separation proceeding, a court will have to determine who owns what property. The court will divide property based on the type of property distribution methods required by state laws. Only a handful of states abide by community property standards.

If the state is a community property state, then the couple's property usually will be split evenly between the parties. Hence the name, “community property,” or “shared property.”

Any property that belonged to a spouse prior to the marriage, or obtained after a divorce or separation, or was given to them as a gift from a third party during the marriage, is considered to be separate property by the court.

In certain instances, however, the court may find that the separate property has been altered enough to become community property. For example, if one spouse was gifted a house before the marriage, but gets married and decides to put the other spouse's name on the deed to the house, then the house will now be considered community property. Those deliberate choices made by the spouse who was gifted the house shows that they intended it to belong to the community (a.k.a. Both spouses) and not to themselves. 

The following nine states have community property laws: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. The rest employ a different framework for property division called “equitable distribution.”

What are Some Differences Between Community Property and Equitable Distribution?

Although it will primarily depend on the laws of a particular state, equitable distribution is the preferred method to use over the community property standard. This is due to the variety of factors involved in making a decision and how those results tend to be viewed as a more “natural” and “fair” way to divide property. 

The downside, however, is that equitable distribution often involves a deeper analysis. This means that the proceedings for a case may take longer and can present greater challenges. 

Community property rulings, on the other hand, are more rigid and sometimes require the court to use set formulas when dividing property. While this may end with “unfair” results, it does make the proceedings less complicated and more straight-forward, so that the parties may predict the outcome beforehand. 

As for any issues pertaining to marital misconduct, such as having an affair, neither community property or equitable distribution of property factor-in these types of matters when determining property rights. 

When is Equitable Distribution Applied?

First of all, the availability of an equitable distribution ruling will depend on state rules.  Some jurisdictions strictly apply traditional rules for property distribution in a divorce.  In that case, equitable distribution principles may not be available during the course of the legal proceedings. 

Also, equitable distribution applications should take into consideration any prenuptial agreements or similar legal documents.  These are basically contracts that need to be enforced on their own.  If a prenuptial agreement is place, the court may need to apply the terms contained in the agreement. 

Contesting Equitable Distribution Rulings

Equitable distribution rulings can sometimes be subject to contestation, especially in clear cases where the court or judge has made an error in calculation.  Divorce proceedings can also involve issues of fraud such as where one spouse hides or conceals assets during trial.  In such cases, the court may need to review some of the decisions made during the hearings. 

How Can A Lawyer Help Me With Equitable Distribution?

Equitable distribution principles can help make property division fairer during a divorce, but they can also make the process somewhat more complex.  If you need assistance with any family law issues, you may need to hire a qualified divorce lawyer for assistance.  An attorney can advise you if equitable distribution is ideal for your claim, and if it's available in your jurisdiction.

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