Pennsylvania Equitable Distribution Laws
Spouses who wish to divorce often have assets and debts that need to be divided as part of the divorce process. In Pennsylvania, the term "equitable distribution" is the legal term for the process of dividing the marital assets and marital debts. If spouses who are going through the divorce process in PA are unable to agree about the division of their marital assets and marital debts, the spouses may elect to engage in the formal court process for equitable distribution. The decision of whether to negotiate an out-of-court settlement or utilize possibly a trial often involves a cost-benefit analysis.
Separate or Nonmarital Property in PA
Pennsylvania law allows separate or nonmarital assets to generally escape the equitable distribution process. Nonmarital property includes pre-marital assets (property that a spouse brought into the marriage), inheritances received by one party during the marriage, gifts to a spouse other than from the other spouse, property sold or disposed of in good faith during the marriage and property excluded by a valid prenuptial agreement . However, the increase in value during the marriage of nonmarital property may be considered a marital asset if the increase in value was not excluded from consideration in a antenuptial agreement (also known as a prenuptial agreement). Furthermore, if a husband or wife decides to use some premarital or nonmarital funds for a common purpose, such as purchasing a home in joint tenancy, those funds normally will be converted from non-marital property to marital property.
Marital Assets or Marital Property in PA
Marital assets include property and income acquired during the marriage. A home, business owned by the parties, furniture, retirement accounts, other investments and motor vehicles purchased during the marriage are examples of marital assets. In these examples, the particular asset may be considered to be a marital asset even if it was acquired in only one spouse's name as long as it was acquired during the marriage and was not acquired through the use of the spouse's non-marital assets. Some assets may have both a marital and non-marital component. In that case, the non-marital value of the asset is excluded from the PA equitable distribution process.
PA Marital Debts
In addition to dividing property, most couples also have debts to divide. Marital debts are debts that were acquired by the parties after the date of marriage and before the date of final separation. Marital debts include such items as mortgages, loans, credit card balances, tax obligations and judgments. A debt may be a marital debt even if only one of the parties contracted for the debt as long as the debt was incurred during the marriage and was arguably for a marital purpose.
Discovery and Appraisals
Before an agreement can be reached or the parties proceed to a PA family court for equitable distribution, the family law attorneys and the spouses must have documentation proving the value of marital assets, the amount of marital debt, and the incomes of both spouses. Sometimes, both spouses have access to this information and can provide it to their attorneys . In other cases, only one spouse has access to the information and refuses to provide the information to the other spouse. "Discovery" is the term used for the formal legal process of compelling the spouse possessing information about the marital assets, marital debts or income of either party to provide copies of the information to the requesting spouse or their attorney. It is certainly much less expensive for the spouses to agree to informally exchange the documentation in their possession and then provide it to their respective family law attorneys than for the family law attorneys to file the formal discovery requests to the other spouse. However, the formal discovery process may be required if one spouse will not voluntarily exchange information or when one spouse attempts to hide the existence of marital assets and discovery must be completed to uncover the hidden assets.
When real estate, pensions, businesses or other types of assets are involved, it is often necessary to obtain an appraisal by a certified expert to determine the value of the asset. These appraisals vary in price depending upon the asset that is being valued, but are a key component in determining the marital estate to be divided in equitable distribution.
Dividing Marital Assets and Marital Debts
As stated above, equitable distribution is the process of dividing marital assets and marital debts. Because Pennsylvania is an equitable distribution state and not a community property state, our PA family law courts divide marital assets and debts based upon principles of equity, or in other words as it thinks is fair. This division of assets and debts does not necessarily mean that they will be divided on an equal basis.
Under Pennsylvania equitable distribution laws, courts consider a variety of factors and need not weigh the factors equally. This permits more flexibility and more attention to the financial situation of both spouses after the divorce. However, it also makes the resolution of property issues less predictable.
Some of the factors that the Pennsylvania courts consider in equitable distribution include: the length of the marriage, whether either party had previously been married; whether either party has significant non-marital assets including assets excluded by a prenuptial agreement; the age, health, and income of the parties; whether either party contributed to the increased earning potential of the other; the standard of living of the parties during the marriage; the tax consequences of any award and whether either party will be serving as the custodian of any minor children. Fault for causing the end of the marriage is not a consideration in the equitable distribution process.
Pennsylvania Marriage Settlement Agreements
Although divorce may be emotional, most cases do not end up in a contested trial. Usually the parties negotiate and settle such things as division of property, spousal support, and child custody between themselves, often with an attorney's help. It may not be possible to predict with complete precision what a judge would do, but an experienced PA family law attorney can give a range of possible results. With that knowledge, parties often prefer to reach their own agreements rather than go through the monetary and emotional expense of a trial. If an agreement is reached, it may be drafted into what is called a marital settlement agreement also called a property settlement agreement. A marital settlement agreement is a contract between the spouses that divides the marital assets and debts and resolves other issues relating to the divorce including child support, spousal support, alimony, counsel fees and costs, and child custody. It is important for both spouses to fully understand the terms of a proposed marriage settlement agreement before they sign the agreement. Once signed, marriage settlement agreements can be enforced by the PA family court if either party fails to comply with the terms of the agreement. There are only very limited circumstances in which a marriage settlement agreement can be set aside by the court.
Pennsylvania Court Ordered Equitable Distribution
If divorcing spouses cannot agree upon how to divide their marital assets and debts, the spouses will be required to go through the formal court process for equitable distribution. The court process generally requires each party to file an Inventory or in other words a listing of what they believe is the marital assets, marital debts and non-marital property. The local rules of some county courts allow the spouses to obtain a conference before the court regarding equitable distribution immediately after a divorce complaint is filed. Other county courts (such as Allegheny County) prohibit any court conferences or hearings regarding equitable distribution until such time as a divorce decree is ready to be entered which, in a contested divorce, could involve a two year wait for the conference or hearing to be scheduled. No matter which county the case is filed in, generally the court will schedule one or two pre-trial conferences to attempt to mediate the disputed issues in the equitable distribution case. Only once a settlement is not reached in mediation will a trial be scheduled. In many counties, the pre-trial conferences and the trial may be conducted by an equitable distribution master instead of an elected judge. If the equitable distribution hearing is conducted by a master, the master will issue a recommendation to the judge on how the case should be resolved. In this situation, either spouse has the right to file exceptions or an appeal to the recommendation of the master and have the issues reviewed by the family court trial judge.
Enforcement of Equitable Distribution Orders and Marriage Settlement Agreements
In Pennsylvania, Marriage Settlement Agreements are considered to be the same as other legally binding contracts entered into by individuals and will be enforced by the Pennsylvania family law courts. Orders for equitable distribution of marital assets and debts will also be enforced by the family law judges. Failure to comply with a Marriage Settlement Agreement or equitable distribution order can result in the imposition of any number of sanctions including imposition of attorneys' fees, seizure of assets, or incarceration.
Modification of Equitable Distribution Orders or Marriage Settlement Agreements
Marriage Settlement Agreements and PA equitable distribution orders are rarely modified. Generally, modification of such agreements or orders only happens if there has been fraud, duress, coercion, or a mutual mistake in the drafting of the order or agreement.
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Our Pennsylvania divorce lawyers can advise you whether a marriage settlement agreement or the equitable distribution process is best for you. To schedule a consultation click here or reach us by telephone at (412) 281-9906 for our Pittsburgh office, (724) 776-9906 for our Cranberry office, or toll-free at 1(866) PA-DIVORCE or 1(866) PA-CUSTODY to discuss your divorce and equitable distribution options.
Our PA family law attorneys conduct appointments in our Allegheny County lawyers' offices located in downtown Pittsburgh and in Whitehall borough and in our Butler County law office located in Cranberry Township. In some circumstances, telephone appointments are available. Our PA divorce lawyers accept divorce and equitable distribution cases in Allegheny County (Pittsburgh), Armstrong County (Kittanning), Beaver County, Butler County, Somerset County, Washington County , and Westmoreland County (Greensburg). Our attorneys accept divorce and marital property division cases from other Western Pennsylvania counties including Clarion County, Fayette County, Greene County, Indiana County, Lawrence County, Mercer County, and Venango County on a case-by-case basis.
PA Appellate Cases involving Equitable Distribution
Taber v. Taber - In the case, the Pennsylvania Superior Court held that under recently enacted statutes, a posthumous divorce decree (a divorce decree entered after the death of a spouse) would be vacated as having been inappropriately entered by the court; however, the trial court's order for equitable distribution that had been entered prior to the death of the husband would be enforceable against the wife as the husband had filed a Complaint in Divorce and the issue of equitable distribution had been fully litigated prior to the husband's death. The Court further held that the wife would not be entitled to claim an inheritance or other rights under the husband's will or the Estates and Probate Code, but instead her rights would be determined under the equitable distribution order.
Bonawits v. Bonawits - PA Superior Court discusses rules regarding entry of bifurcated divorce decrees allowing entry of decree prior to division of marital assets and debts.
Johnson v. Johnson - PA Superior Court ruled that former wife's award of equitable distribution could not be satisfied through proceeds from sale of ex-husband's home owned as tenants by the entireties with his current wife nor from jointly titled investments owned by the ex-husband and his current wife.
Rimel v. Rimel - The PA Superior Court held that as part of equitable distribution, the trial court is required to apply a Social Security offset of the value of husband's Civil Service Retirement System (CSRS) pension which would consider the fact that husband will not be entitled to Social Security benefits due to his federal government employment. Rimel v. Rimel, 2006 Pa. Super 356
Busse v. Busse - Wife was properly awarded counsel fees in conjunction with her claim for alimony pendente lite (APL) given the discrepancy of the parties' incomes and husband's bad faith in the litigation. Matters of credibility are determined by the trial court and will not be disturbed on appeal unless no facts appear to justify the court's finding. The trial court properly used the date of separation for valuing the parties' business where there were allegations that husband had dissipated the value of the business asset after the parties' separation. Busse v Busse, 2007 Pa. Super. 100
Kraisinger v. Kraisinger - The parties entered into a marriage settlement agreement that provided that husband would make the payments for the mortgage on wife's residence. In addition, the agreement provided that husband would pay $500 per month per child for child support. The agreement also contained a clause indicating that if wife filed to modify her child support, she would be required to pay husband's counsel fees. Wife filed for modification of child support. Husband argued that her child support should not be modified given he was paying both the mortgage and child support. The Superior Court held that although one parent cannot bargain away a child's right to adequate support from the other, an agreement in which one parent releases the other from the duty of support will be enforced so long as it is fair and reasonable, was made without fraud or coercion, and does not prejudice the welfare of the children involved. Here the Court found Husband's mortgage payments to be his obligation under equitable distribution and not support. Therefore, the Court found that wife was entitled to seek modification of support and that the provision for attorney's fees was unenforceable. Kraisinger v Kraisinger, 2007 Pa. Super. 197
PA Superior and Supreme Court cases involving Prenuptial (Antenuptial), Postnuptial, and Marriage Settlement Agreements
Stackhouse v. Zaretsky - Pennsylvania Superior Court discusses validity of antenuptial agreement and postnuptial agreements and the impact upon husband and wife's ante nuptial and post nuptial agreements.
Crispo v. Crispo - Postnuptial agreements or marriage settlement agreements are continuing contract where the duties of the parties are ongoing and the statute of limitations generally does not run. Crispo v. Crispo, 2006 Pa. Super 267.
Kraisinger v. Kraisinger - The parties entered into a marriage settlement agreement that provided that husband would make the payments for the mortgage on wife's residence. In addition, the agreement provided that husband would pay $500 per month per child for child support. The agreement also contained a clause indicating that if wife filed to modify her child support, she would be required to pay husband's counsel fees. Wife filed for modification of child support. Husband argued that her child support should not be modified given he was paying both the mortgage and child support. The Superior Court held that although one parent cannot bargain away a child's right to adequate support from the other, an agreement in which one parent releases the other from the duty of support will be enforced so long as it is fair and reasonable, was made without fraud or coercion, and does not prejudice the welfare of the children involved. Here the Court found Husband's mortgage payments to be his obligation under equitable distribution and not support. Therefore, the Court found that wife was entitled to seek modification of support and that the provision for attorney's fees was unenforceable. Kraisinger v Kraisinger, 2007 Pa. Super. 197
Gates v. Gates - The parties' prenuptial (antenuptial) agreement excluded husband's business valued at $1 million dollars and any increase in value. Husband also inherited $2 million from his mother. Husband was awarded primary physical custody of the parties' minor child arguing in the parties' custody case that wife was mentally unstable. The Superior Court upheld an award to wife of alimony in the amount of $4,000 per month and a total of $27,000 in counsel fees reasoning that Husband's argument of wife's instability in the custody case justified finding her inability to work in the alimony matter. Gates v Gates, 2007 Pa. Super. 281
Johnson v. Johnson - PA Superior Court ruled that former wife's award of equitable distribution could not be satisfied through proceeds from sale of ex-husband's home owned as tenants by the entireties with his current wife nor from jointly titled investments owned by the ex-husband and his current wife.
Sirio v. Sirio - The PA Superior Court reviewed case involving high-income Melzer analysis for child support. PA Superior Court held that the Hearing Officer should have considered the mother's counsel fee request 23 Pa.C.S.A. § 4351 which allows awarded of counsel fees to the plaintiff in a support action. The award of counsel fees because of Father's obdurate, vexatious or dilatory behavior pursuant to section 2503 does not prevent an award of additional counsel fees under section 4351. Sirio v. Sirio, 2008 PA Super 133
Krebs v. Krebs - The Superior Court held that mother was entitled to retroactive modification of the child support order beyond the period that she had a petition for modification filed because father failed in his affirmative duty to report to the court his increase in earnings. The Court also explained that an award of attorney's fees to a plaintiff in a support action may be appropriate in certain circumstances and that the court should consider (1) whether the obligor's unreasonable or obstreperous conduct impeded the determination of an appropriate support order; (2) whether the obligor mounted a fair and reasonable defense in a child support order; (3) whether the obligor's failure to fulfill his moral and financial obligation to support his children required legal action to force him to accept his responsibilities; and (4) whether the financial positions and financial needs of the parties are disparate. Krebs v. Krebs, 2008 PA Super 29
Faust v. Walker - The PA Superior Court held that the domestic relations section is granted the power to issue orders to secure assets to satisfy support obligations and arrearages by intercepting or seizing judgments or settlements. Faust v. Walker, 2008 PA Super 38
Annechino v. Joire - Wife claimed that since the parties' marriage settlement agreement was not incorporated into the parties' Divorce Decree and the pleadings did not include a count for equitable distribution, the trial court did not have the authority to enforce the Property Settlement Agreement and the husband's only remedy is a separate civil action in equity. The Superior Court held that section 3105(a) of the Divorce Code controls which permits any agreement entered related to the divorce action to be enforced by the family courts. Annechino v. Joire, 2008 PA Super 50
Hopkins v. Byes - The PA Superior Court held that the trial court did not err or abuse its discretion by imposing $500 attorney's fees as a sanction for the mother's failure to abide by a custody order, without first ascertaining mother's ability to pay the sanction. Hopkins v. Byes, 2008 PA Super 172
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Disclaimer
The statements in this section are based on Pennsylvania law and have been issued to inform and not advise. The statements are general in nature and individual facts in a given case may alter their application or involve other laws not referred to here.
