In Pennsylvania Divorces, equitable distribution is the mechanism that the Court must follow when dividing marital assets. This means that the courts divide marital property based on the principles of equity.  The court will consider 13 factors when deciding how to fairly divide a marital estate.

1. Identifying the Assets

One of the first steps after identifying the assets owned by the parties is to determine whether the asset is “marital” or “non-marital”. 

Marital Assets

A marital asset is one that was acquired during the marriage. 

Non-marital Assets

A non-marital asset is (1) an asset that was acquired by one spouse before marriage, (2) an asset acquired by one spouse through gift or inheritance, or (3) an asset that was acquired by one spouse after separation. 

2. Valuing the Assets

Next, the asset must be valued. Sometimes months or even years pass while the divorce is being finalized.

Marital Assets

A marital asset will be valued at the time of equitable distribution.  For example, if Husband and Wife open an investment account during the marriage, and that account was valued at $100,000 at the time of separation but $200,000 at the time the Divorce is finalized, the court would use $200,000 as the value of that asset for purposes of equitable distribution.

Non-marital Assets

Non-marital assets are treated very differently. If the non-marital asset was a pre-marital asset, the increase in value from the date of marriage until the date of separation, or until the time of equitable distribution (whichever results in a lower number) is the marital value. For example, if Wife has a pre-marital investment account that was valued at $100,000 on the date of marriage, at $200,000 on the date of separation, and $300,000 at the time of equitable distribution, the marital value of that account is $100,000, and the other $200,000 is Wife’s pre-marital asset that is not subject to equitable distribution.

If the non-marital asset was acquired by one spouse through an inheritance or a gift at some point during the marriage, the same analysis is done as with the pre-marital assets, however, the first valuation date is the date that the spouse acquired the asset rather than the date of marriage.

Post-separation Assets

An asset that was acquired post-separation will have no marital value unless marital funds were used to acquire all or part of the asset, in which case the post-separation asset could be considered marital. 

Another complicating factor is when a non-marital asset is comingled with a marital asset.  Depending on the facts, that could cause some or all the non-marital assets to become marital assets.