Equitable Distribution

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Equitable distribution in divorce is the legal principle of dividing marital property during the dissolution of marriage. The majority of states recognize the principle of equitable distribution, using it when the court must determine how the property will be divided in the event the divorcing couple is unable to reach an agreement. In divorce, the term “equitable” does not mean “equal,” rather it refers to a “fair” distribution of assets. What is “fair” is largely left to the discretion of the judge. To explore this concept, consider the following equitable distribution definition.

Definition of Equitable Distribution

Noun

  1. The fair division and distribution of marital property and debt during a divorce.

What is Equitable Distribution of Marital Property

When a couple files for divorce, the disputes often shift to dividing up the things they own, such as their home, cars, furnishings, and other items. The process goes much more smoothly if the parties can come to an agreement on dividing the marital property, financial assets, and debts. If they cannot agree, the court seeks to make an equitable distribution of marital property and debts. Because some property can be claimed by one party or the other as “separate property,” the issue of what is, and what is not, marital property is the first considered by the court.

Marital property

Marital property is property that was acquired jointly during the course of the marriage. This includes household furnishings, cars, the home, and other real property, as well as financial assets, including bank, investment, and retirement accounts. Debt incurred by the couple during the term of the marriage is also considered marital property, and must be equitably distributed.

Separate Property

Separate property is anything obtained by one party or the other before the marriage, as well as inheritances, and gifts made specifically to one spouse. Additionally, any property agreed by the parties through contract to belong to only one spouse is considered separate property. During the divorce process, separate property remains separate, and is not subject to equitable distribution, though the court may require proof that the property is separate.

What is an Equitable Distribution State

Only a handful of states do not recognize the principle of equitable distribution of marital property during a divorce. These states are considered to be community property states. The community property principle holds that both spouses equally own all property, assets, and debt that were acquired during the term of the marriage, and that such marital assets should be divided equally.

Equal distribution of assets involves making a list of the marital property, assets, and debts, assigning monetary values to everything. The total value of these assets is then divided by two, after which the couple will decide who gets what property to satisfy their portion of the total value. Marital debt is equally distributed in the same manner, although a party may choose to satisfy his portion of the debt by allowing the other party to retain a larger portion of the assets.

In an equitable distribution state, the marital assets are distributed in a manner that the judge determines to be fair. This is often not an “equal” division of the assets.

Determination of Equitable Distribution of Marital Assets

When the couple cannot reach an agreement on dividing up marital property, the court will decide who should get what. Determination of equitable distribution of marital assets requires the court takes into consideration a number of things over and above the assets themselves. These may include:

  • Each spouse’s financial condition and earning ability, both now and in the future
  • Financial needs and liabilities of each spouse, both now and in the future
  • The total value of the property of assets that each spouse holds
  • The amount contributed by each spouse to the marital assets
  • The age and health of each party
  • Obligations of either spouse to pay child support or alimony for another relationship

In states that recognize a “fault” divorce, the judge may consider one party’s responsibility for the demise of the marriage in determining fair distribution of assets. For example, if the husband physically or mentally abused the wife during the marriage, the wife may be awarded a larger portion of the marital assets.

Related Legal Terms and Issues

  • Asset – Any valuable thing or property owned by a person or entity, regarded as being of value.
  • Contract – A written or spoken agreement between two or more parties that is enforceable by law.
  • Distribution of Assets – The dissemination or giving out of assets.