Equitable Distribution is the division of marital property that takes place after a divorce. Equitable does not mean equal; it means “fair and just.” Equitable Distribution takes into consideration all factors that go into making a marriage work, including but not limited to:
- The Economic Factors Test (income, debt, earning potential)
- The Non-Economic Factors Test (age, health, station in life)
- Marital Fault
- Marital Conduct that Affects the Value of Marital Property
The Importance of Equitable Distribution
Equitable Distribution is important for several reasons. Whether you are the party who wants to hold onto your property or you are fighting to get what you are entitled to, Equitable Distribution is important because it affects your future. Equitable Distribution takes into consideration all marital property and divides it considering these factors:
- All Property Acquired During the Marriage
- All Property Received as Gifts or Inheritances or Both
- The Liquidation Value of Your Businesses
How Equitable Distribution Works
Equitable Distribution includes all marital assets, which means anything acquired during the marriage, no matter if it is Community Property or Separate Property. Moreover, it takes into consideration the following assets:
- Gifts and inheritance that are received by either spouse during the marriage
- Premarital assets, which are considered Separate Property.
- Debts, which are considered Separate Debt
- Anything purchased out of marital funds during the marriage
- Business income and loss, rents and royalties received by either spouse during the marriage.
- Retirement accounts that were either started during the marriage or were built with marital funds.
Equitable Distribution is a complicated process that must be reviewed on a case-to-case basis. It changes from state to state and even county to county depending upon how judges in each jurisdiction have determined Equitable Distribution. This is a complicated process and the assistance of a qualified Equitable Distribution attorney may be of assistance to you. Equitable Distribution can avoid costly litigation that can involve all sorts of legal wrangling from both sides resulting in added expense, time, and frustration. It is an important aspect during a divorce proceeding and should not be overlooked by either party.
States With Equitable Distribution
Some states apply Equitable Distribution and others do not. Equitable Distribution is applied in those states that have adopted the divorce codes from the 1970s, which provided for Equitable Distribution as a default method of dividing property. Equitable does not mean equal. Equitable Distribution is considered fair and just, taking into consideration all factors that go into making a marriage work. Equitable Distribution states include:
- Georgia (limited to real estate)
- Idaho, Kansas/Missouri (limited to family farms)
- Louisiana (limited to family farms)
- Massachusetts, New Jersey (limited to marital assets)
- New Mexico
- North Carolina (limited to marital property)
- Ohio (limited to marital property)
- Rhode Island (limited to marital property)
- Texas (limited to community property only)
- Wyoming (limited to marital property)
Negotiating for Equitable Distribution
It is important to remember that Equitable Distribution does not mean equal, and Equitable Distribution doesn’t just happen in court. Equitable Distribution occurs through negotiations between the parties with the assistance of their attorneys and/or neutral judges. The following are examples of Equitable Distributions:
- Spouses receive an equitable ownership interest in the marital home
- Spouses receive an equitable division of assets accrued during the marriage
- Ex-spouse receives cash payment each month for support
Court-Ordered Equitable Distribution
Despite negotiations between parties, Equitable Distribution can still be determined by a judge. This means that an Equitable Distribution, which your attorney negotiates with the opposing party’s attorney, can still be determined by a judge without taking into consideration what you or your spouse initially agreed upon. Equitable Distribution is not a streamlined process and a judge may make decisions that do not coincide with an Equitable Distribution agreement between parties. Equitable Distribution is a practice decided by each state and the particulars of Equitable Distribution can vary from state to state.
Remedies for Unjustified Dissipation or Non-equity Division of Property
If you feel that your spouse has dissipated marital property or has not agreed to Equitable Distribution, then you may file a Complaint about Equitable Distribution. This type of Equitable Distribution complaint is also used to address the division of property where the division is unjustified. Unjustified Dissipation or Non-Equity Division of Property can fall under one or more of the following:
- Unjust Enrichment
- Constructive Fraud
If the court finds that the Equitable Distribution was not justified, then a judge may award you a monetary value of the dissipated property, return of marital property to you, or any other relief deemed appropriate.
Equitable Distribution is an important part of the divorce process and needs to be addressed. Equitable Distribution, which can also be determined by a judge if parties cannot agree, does not mean equal distribution and may not be what you agreed upon with your attorney. Equitable Distribution varies from state to state. It is possible that Equitable Distribution, which you negotiated with the opposing party, could be determined by a judge.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.