Equitable Distribution is a principle in family law that refers to the allocation of marital property or assets between spouses following a divorce. Also known as “division of property” and “equitable division,” each state uses its own factors and guidelines to achieve a fair allocation of property. Although these considerations vary from state to state, equitable distribution states do not use an equal, 50/50 formula when dividing assets. Each case of equitable distribution of property must be examined individually, and the exact distribution is determined on a case-by-case basis. Alternatively, community property states aim to split marital property equally.
Property and assets accumulated in marriage are divided equitably in 41 states. In cases of equitable distribution, the court acknowledges that certain factors make the parties unequal. A few factors that prevent the court from treating the parties identically is the employability, salary, financial needs as well as age and health conditions of the parties. Factors suggesting fault, such as an affair or domestic abuse, are also taken into consideration in some equitable distribution states.
As part of this process, the assets are divided into two groups: separate property and marital property. Separate property includes assets that were acquired before the marriage or inherited during the marriage. This property is excluded from equitable distribution unless it was put under both spouse’s names. On the other hand, marital property refers to all property accumulated during a marriage or separate property that has increased in value due partly or fully to the efforts of the other spouse. Marital property is carefully divided to lead to a fair result, but not necessarily an equal one.
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Like in cases of equitable distribution, community property states divide assets into two categories: separate property and community property, which is owned by both spouses. In these states, each spouse still keeps his or her own separate property. However, instead of fairly distributing marital property according to specific factors, community property states divide the shared assets equally between the two parties. These states rely on the concept that booth parties are considered to have joint ownership over all marital property, therefore it must be divided into a 50/50 split.
Property division issues after a divorce can be challenging, whether your state follows an equitable distribution or community property approach. Although couples can avoid this if they are able to reach an agreement on division of assets without third party intervention, these issues can be difficult to resolve independently. Fortunately, property division conflicts are often settled peacefully with the help of an experienced divorce attorney.