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Equitable Distribution of Property

In common law property states, property following a marriage is divided by the equitable distribution method. Contrary to widespread belief, “equitable” does not mean equal. Instead, “equitable” means a division of assets according to what the court deems fair under the unique situation of the parties.  
 
Identify and Prepare an Inventory of Assets
 
There are two basic property classification schemes in common law property states, with about half of the states following each scheme. First, under the “dual property” classification, property is classified as either ''separate'' or ''marital.'' Generally, only property that qualifies as ''marital'' is subject to equitable distribution. ''Marital property'' includes all property acquired during the marriage by either spouse, unless it was acquired by gift or devise. Property acquired prior to the marriage, gifts, and inheritance, are generally considered ''separate property.'' Under the ''unitary property'' system, however, property is not classified as marital or separate. Therefore, under the unitary system, the court has the discretion to divide equitably all property, whether marital or separate, owned by the parties at the time of divorce.
 
Under either classification, it is important to get a complete inventory of all property the parties own, as well as a complete history of that property. The date of acquisition alone is not enough for a determination of whether the property is marital or separate.
 
Determine the Value of Each Asset
 
If you do a good job of explaining the uncertain nature of an equitable division and can get the parties to agree on the valuation of the marital property, consider yourself lucky. If not, you will need to obtain appraisals to support your client's claim as to value of each asset. Many jurisdictions have a list of approved appraisers, so be sure to check with your jurisdiction before hiring an appraiser.  
 
Determine the Equitable Entitlement of Each Spouse
 
Although the court’s have broad discretion, they generally adhere to certain local standards in order to determine what is ''equitable.'' Also, in some jurisdictions, there is a presumption that property should be divided equally unless doing so would be “inequitable.” This can, of course, be very subjective.
 
The criteria vary by jurisdiction, but here are some common considerations:
 
(1) Respective age, background and earning capacity of the parties;
(2) Duration of the marriage;
(3) The standard of living of the parties during the marriage;
(4) The money or property each party brought to the marriage;
(5) Present income of the parties;
(6) Property acquired during the marriage by either or both parties;
(7) The source of acquisition of property;
(8) The current value and income-producing capacity of the property;
(9) The debts and liabilities of the parties;
(10) The present mental and physical health of the parties;
(11) The expected continued and future employment potential of the parties;
(12) The effect distribution will have on a party's ability to pay alimony and support;
(13) Gifts made from one spouse to the other during the marriage;
(14) The contributions of each spouse to the acquisition of marital property;
(15) The value of the property set apart for each spouse;
(16) The economic circumstances of each spouse; and
(17) Fault (if a factor in the divorce).
 
Allocation of Specific Assets
 
Finally, the specific assets must be allocated to each spouse. At this point, the court will assign assets, and some will be assigned solely to one of the parties, such as the marital home or a sole proprietorship or partnership.
 
Your Role as Counselor
 
If, instead of leaving the distribution to the court, the parties would have been able to agree upon a division of assets, they would likely have been happier with the outcome of the property distribution part of the divorce action. It is extremely important to spend whatever time is necessary discussing the possible outcomes with your client. They need to be especially aware of their budgetary constraints after the divorce to determine what property is in their best interest to keep or to relinquish. For instance, many wives want to keep the marital home, but it may not be possible to make the house payments with half or less of the income that they had during the marriage. Also, if your client is willing, suggest mediation or set up a meeting with the spouse and his or her attorney to work out as much of the property distribution as possible before resorting to a court order. Even if the distribution is equitable, or even equal, it does not mean that your client will be happy with the property received. The parties, not the judge or magistrate, have to live with the outcome of the distribution. It only makes sense, then, for the parties to decide themselves who will get what property.