Division of Property and Debts in Divorce: A Guide to Equitable Distribution

Posted:  May 2, 2023

Going through a divorce can be emotionally and mentally draining, as there are many issues to iron out. For example, decisions regarding the division of marital property and debts will be decided. Also, if the divorced couples have children, a decision will have to be reached regarding who gets to keep the custody of the kids.

While the decision regarding the custody of the children is usually determined by a judge in a family court, marital property and debts do not follow the same route. Instead, it often gets determined by equitable distribution laws.

However, despite how legal equitable distribution is, it is still not as straightforward as one would think because of how complex and contentious the process is.

Therefore, in this blog post, we will show you a detailed overview of equitable distribution, how it works, and how it can impact the distribution of shared marital property in divorce settlements.


What is Equitable Distribution?

When a couple divorces, the next thing would be to divide the property and debts they collectively amassed while in the relationship. However, disgruntlement often happens between the spouses when it comes to the division of these properties and debts, as none of the parties would want to be cheated. Therefore, this is where equitable distribution comes in to ensure a smooth and rather legal division of these properties. Simply put, equitable distribution is a legal principle that aims to divide marital assets and debts fairly and justly between divorced spouses. It should, however, be noted that in this equitable distribution, properties do not just get divided randomly. Instead, factors such as each spouse’s financial contributions to the marriage, who holds custody of the kids, their earning capacity, and their individual needs after the divorce are considered.

Also, as we said earlier, the equitable distribution process can be very complex and highly contentious because neither party wants to be cheated. They would both want a fair share of the marital assets while minimizing their share of the debts. The complexity of this process is why it is always advisable to work with an experienced lawyer who can help you understand your rights and options under the law and negotiate a fair settlement on your behalf.


Factors That Could Affect Equitable Distribution of Marital Property

When it comes to the distribution of marital property and debts, several factors often impact how they are distributed. For a start, the length of the marriage could impact the distribution of marital assets. The consensus is that the longer the marriage, the more likely the assets and debts accumulated during the marriage will be divided equally between the spouses. However, if the marriage only lasted for a short period, the court will likely divide the assets and debts in a way that reflects each spouse's contributions to the marriage.

Another factor is the amount of money each spouse contributes to the marriage. For instance, if a spouse contributes more financially to the marriage, such an individual will be entitled to a larger share of the marital assets, and vice versa.

Also, the earning capacity of each spouse will be considered when dividing the marital property. This includes education, job skills, work experience, and health. A spouse with a higher earning capacity may be awarded a smaller share of the marital assets or a greater share of the debts. Again, it all depends on the circumstances.

In addition to all these, the court may also consider each spouse's needs after the divorce when deciding on equitable distribution. This includes factors such as each spouse's living expenses, their ability to maintain their standard of living after the divorce, and any childcare responsibilities.

Other factors may also be considered, such as prenuptial agreements, each spouse’s age and health, and any history of misconduct or fault in the marriage.


Assets and Debts Not Subject to Equitable Distribution

Properties are of two types; separate property and marital property. The main difference between separate and marital property is that the former is not subjected to division. In the latter, however, the property can be divided. A separate property can not be divided because they are often acquired, inherited, or gifted before the marriage. Examples of separate property may include one’s inheritance, gifts, and property owned before the marriage. It is, however, important to note that a separate property can sometimes become marital property if, and only if, the property in question has been commingled with marital assets or used to pay for marital expenses.


Distribution by Mutual Agreement

If, for instance, the divorced couple does not want to involve a third party in dividing the property, they can come to a mutual agreement about how to split up the assets and debts. This may seem almost impossible because many divorcees do not split on good terms. Hence it will be very hard for them to reach a compromise. But then again, when you critically think about the advantage of this, one would realize that it is not as bad as first feared.

One, and perhaps the significant advantage of this, is that it saves time and money. That is, when the couple reaches a compromise on how to divide the property, it will make it easier for each of them to get on with their lives.  However, if the parties involved can not compromise on the division of the assets, the best thing would be to head to the court and let the judge decide on how the property and debt would be divided.







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