Divorce has a profound financial impact on spouses. In addition to paying for legal representation and time in court, they also need to divide their property with one another. Pennsylvania is an equitable distribution state.
A judge attempting to resolve disputes about property division looks at the totality of the marital estate to decide the most reasonable and just way of splitting both marital assets and marital debts. Identifying marital property is a critical early step in that process. Spouses sometimes disagree about what assets are marital and what either spouse can keep as separate. Understanding this distinction can facilitate a less contentious property division negotiation process.
Most property acquired recently may be marital
The marital estate in Pennsylvania includes the income earned by both spouses throughout the marriage and any assets purchased with that income. Spouses also share any debts that they accumulate while married.
The name on account paperwork or on the title for a vehicle does not make that property the separate possession of one spouse. The nature of the funding used to acquire the asset and the timing of the purchase or deposit into the account determine whether it is marital or separate.
Spouses with clear financial records can potentially preserve certain resources as separate. Assets owned before marriage or received as a gift or inheritance may belong separately to one spouse. They may have protected certain assets with a prenuptial or postnuptial agreement. Even a personal injury settlement, with the exception of compensation for lost wages, may belong solely to one spouse.
However, to exclude those assets from the marital estate, they generally need to provide financial records showing that they did not commingle those assets with marital property. Retirement accounts, including accounts started before marriage but partially funded during marriage, are typically marital property. Real estate, including the marital home, is usually marital property. Even if one spouse owned it before marriage, any value appreciated during the marriage may be divisible in a divorce.
Assessing financial records carefully is of the utmost importance for a fair property division settlement. Spouses preparing for divorce often require guidance as they identify marital assets, value those assets and then pursue an equitable property division settlement, and that’s okay.