What is Equitable Distribution?

“Equitable distribution is a principle in divorce law governing the allocation of marital property between spouses. In states that use equitable distribution, courts try to achieve a fair allocation of property based on a list of factors or guidelines set forth by state law.”(1) When you get divorced, community property is generally divided equally between former spouses, while each spouse gets to retain their own separate property. Equitable distribution: In all other states, assets and earnings accumulated during marriages are divided fairly but not necessarily equally. This division is known as equitable distribution. 

Which Factors Impact Equitable Distribution?

Equitable distribution is the theory that some factors make the ownership of property inherently unequal. Some of the factors that make ownership unequal include educational attainment and employability, earnings and spending, financial needs, age, and health of each party. Other factors that are often considered are the standard of living during the union, tax implications and any foreseeable expenses for a spouse or children, potentially medical or educational costs. Some states also examine the cause of the divorce including abuse or infidelity. Equitable distribution does not only consider current factors but forward-looking ones as well. 

Is Anything Exempt from Equitable Distribution?

There are some assets that are exempt from an equitable distribution arrangement, marital property, and separate property. Marital property represents assets acquired during the marriage. Separate property is property that belongs to one spouse. In roughly 9 states common law property exists and allows separate property to be excluded from equitable distribution unless it was placed in both spouses’ names during the marriage. 

Does Equitable Distribution Include All Property?

In distribution, property is divided into two groups: marital property and separate property. Separate property includes assets that inheritances, gifts, or items in their possession before the marriage. Only marital property is subject to equitable distribution. 

Finding the right financial planner and legal representation will protect your assets and you.

(1)https://www.law.cornell.edu/wex/equitable_distribution#:~:text=Equitable%20distribution%20is%20a%20principle,set%20forth%20by%20state%20law.