Property Distribution

The definition of property for the purposes of divorce constitutes real estate as well as pension and retirement plans, investments, and every other form of tangible and intangible assets.

In order to discuss “property distribution,” it is first important to understand what “property” is. Property, for purposes of divorce, is EVERYTHING. Not just real estate; it includes pensions and retirement plans, except for Social Security, automobiles, savings, investments, household furnishings, cash values of whole life insurance policies, and every other form of tangible or intangible assets.

Property distribution in divorce in Pennsylvania is widely misunderstood. To begin with, Pennsylvania is not a “community property” state. It is an “equitable distribution” state. When Pennsylvania’s “no-fault” divorce law went into effect in 1980, it drastically changed the system for property distribution which had existed prior to that time. Before then, “title” or “ownership” of the property had been the relevant factor, and jointly-owned property was divided 50-50 when the parties divorced.

The 1980 Divorce Code made “title” or “ownership” essentially irrelevant, for all “marital property” (property purchased or acquired by EITHER PARTY during the marriage, with some exceptions). So, if property is not divided by title, or 50-50, how is it divided in relationship to divorce? The easy answer to the question is that if the parties agree on property division, then it is divided in whatever way they agree. In that case, someone, usually a lawyer, writes up an agreement for property distribution and both parties sign it.

What happens if the parties do not agree? In that case, the court will divide or distribute marital property between the parties in a way it finds would be fair. There are 17 factors listed in the divorce code which the court may take into account to determine what is “fair,” including the ages of the parties, their relative earning capacities, health, amounts of non-marital property they own, care for the children of the marriage, etc.

What the courts then do is assign or distribute the marital property between the parties. The value of assets is normally set off against the value of other assets, so that one party may get, for example the marital home, and the other party the corresponding value of a pension or retirement benefit. The courts almost never require that the property be sold and the proceeds divided, unless there is no other way to accomplish property division.

If the court decides to award alimony to the lesser-earning (or non-earning) spouse, the award of alimony would also affect the court’s determination as to the fair division of property.

The valuation of the marital and non-marital assets is often a complex issue, particularly when there is a family business or there are other assets which are difficult to put a value on for property division purposes. Whether for settlement or litigation purposes, Shah Law Group knows the experts to employ to help their clients through this process.