Distributing assets as part of a divorce can be highly contentious. Emotions are often connected to objects and property. One party may not be able to bear the thought of not having something, or worse, the spouse getting it. Who gets what is best handled like every other divorce dispute: as calmly, professionally, and reasonably as possible. However, too often, that’s easier said than done.
If you have highly valuable assets, like investments, art, automobiles, or real estate, the process is more complex because their value, which can be disputed, must be determined. You also need to determine the tax impact on a party obtaining an asset. The higher and more complex your income, the more difficult this may be.
But the same laws about property division will cover you and your spouse whether you have a million or a thousand dollars in the bank, a vacation home in Hawaii, or a ten-year-old camper trailer.
What’s at Stake?
Marital property is subject to division, nonmarital property is not. Generally, marital property is acquired by either party during the marriage. It also covers the increased value of nonmarital property. Clarification of which property is what is spelled out in Pennsylvania statute (35 Pa.C.S.A. §3501(a)). In divorces with high-end assets, the stakes are greater when deciding which category applies to property.
How Would Assets Be Divided?
Under state statute (35 Pa.C.S.A. §3502(a)), the general rule is that if one or both parties request it, the judge will:
“…equitably divide, distribute or assign, in kind or otherwise, the marital property between the parties without regard to marital misconduct in such percentages and in such manner as the court deems just after considering all relevant factors. The court may consider each marital asset or group of assets independently and apply a different percentage to each marital asset or group of assets.”
The relevant factors include:
- How long the marriage lasted
- Whether either party was married before
- The health, age, “station,” source and amount of income, job skills, employability, liabilities, and needs of the parties
- Whether one party contributed to the training, education, or improved earning power of the other
- Each party’s opportunity for acquiring capital assets and income in the future
- The parties’ sources of income, including different insurance policies and other benefits
- Each party’s role in the acquisition, preservation, depreciation, or appreciation of the property, including a party’s contribution as a homemaker
- The standard of living developed during the marriage
- The parties’ economic circumstances when the property is divided
- The tax impact of distributing or dividing an asset
- The cost of selling, transferring, or liquidating an asset
- Whether a party will be the custodian of a dependent minor child
Some of these factors may be critical for you, while others won’t matter. Each case is unique.
Negotiation is Usually Better Than Litigation
Like all divorce issues, if you can’t reach an agreement the issue can be litigated, and the court will decide. Negotiation, and failing that – mediation, gives you some control over how the assets are handled. You give that up when the judge makes the decision.
Negotiation of asset division is often linked with other issues like paying or receiving alimony. You may give up your claims to some assets in exchange for higher alimony or a greater share of liquid assets. For instance, if you choose to walk away from a valuable asset, perhaps your spouse will now pay the entire amount of the cost of your kids’ private and college educations, instead of splitting the cost.
Selling an asset may be better than a drawn-out tug of war, especially if it has appreciated over time. Starting your life over may be more difficult when your assets are tied up emotionally with your spouse. Maybe taking the money and running are better ways to begin again.
If you’re thinking about or plan to divorce your spouse, asset division is one of many things you must consider. Contact us here at Karen Ann Ulmer, P.C., so we can answer your questions and discuss how we can help you.