In dividing marital property and debt in a divorce, equitable distribution is the law in most states today. Equitable distribution means that courts must divide marital property in a just manner when considering all the factors. One item many do not realize is how common offsets are in divorce property division.

Dividing marital property and debt in a just manner is more complicated in many cases than may appear. Like a butcher, many assume that courts split all marital property and debt in half.

Thus, if there is a bank account with $100,000 in it, many assume the account must automatically be split in half. Splitting it in half in the eyes of many means that each spouse would get $50,000 from that bank account.

That might seem simple on the surface, but this is not how divorce property division normally works. Take the same case and add the fact pattern that the marital home has $100,000 of equity in it.

One scenario to conclude the case might be for the parties to split the marital bank account and the equity in the house. In this scenario, both parties would get one-half of the money in the bank account and one-half of the equity in the house. In total, each receives $100,000 in marital assets.

However, another common scenario that parties often overlook is an offset. Where there is an offset, the family court judge or the parties divide the assets like a surgeon versus a butcher.

In other words, it might be possible that one party wants all the money in the bank account, while the other party wants all the equity in the house. In this instance, both parties would each be getting the same $100,000 in marital assets. But, instead, one party would be receiving liquid assets in the bank account, while the other is receiving the non-liquid, equity in the house.

The more marital assets and debt that exist in the case, the more complicated offsets can become. To provide for a just division, it often becomes necessary to spreadsheet all the marital assets and debt with a financial expert. Further, valuations are also critical in many cases.

It is true as well that there are often marital assets that are pre-tax, like a Roth IRA, and other assets that are post-tax, like a 401k or IRA. Taxes can undoubtedly complicate the analysis.

Regardless, it is essential not to overlook offsets as is relates to marital property and debt division in a divorce. Offsets are common in divorce. In the end, the critical analysis is whether each party is receiving marital assets and debt of roughly equal value versus dividing every marital asset or debt in half.