What is equitable distribution?
Equitable distribution is a process by which a court determines and distributes the spouses’ marital assets, debts, and property (real, personal, tangible, intangible, liquid, and non-liquid).
How does the court equitably divide property?
Equitable distribution is a three-step process. First, the court determines title, ownership, and value and of property and debts. For example, who is listed on the deed to the house, title to the vehicle, or owner of the bank account? This shows ownership. Valuing high dollar assets sometimes requires the use of an expert. For example, you might need an appraiser to appraise a house or an accountant to value a business.
Second, the court must decide whether the property or debt is marital, separate, or hybrid (called “classification”). There are three classifications for property and debts: marital, separate, and hybrid (a combination of separate and marital). People often think ownership determines classification, but that is not true. For example, a car’s title is in one spouse’s name, but it could be marital, separate, or hybrid property. To determine classification, the court must review the source of the funds to purchase the property, when the property was purchased, any change to its ownership since it was acquired, and how value was added since its acquisition, among other information.
For example, if you purchased the car during the marriage with money you earned from the job you held during the marriage, the car is marital. If, however, you purchased the home before the marriage, but did substantial remodeling during the marriage, it would likely be hybrid (the marital portion is the added value during the marriage). Finally, perhaps you were given 10 shares of a stock prior to your marriage, you have not touched it or traded it during the marriage, then the stock is likely separate.
Third and finally, the court distributes the marital property and debts between the parties in a just and fair way. The distribution may be made by transfer, division, or by lump sum payment between the parties after considering 11 statutory factors, which include the monetary and nonmonetary contributions of each spouse to the well-being of the family, the duration of the marriage, the age of the spouses, and how and when marital property was acquired, among other factors.
One of the hardest pieces of information for clients to understand is that equitable does not necessarily mean equal. In many cases, however, property and debts are distributed at or close to 50/50.
When does the court equitably divide the property?
Typically, equitable distribution takes place at the same time as a divorce. Equitable distribution can also occur before a divorce when the parties enter a separation agreement. In a separation agreement, the spouses usually waive equitable distribution by the court because, by agreement, the spouses have divided their property. In rare circumstances, the court will reserve equitable distribution in the final decree of divorce, which allows either spouse to bring that matter to the court after the divorce is finalized.
Equitable distribution is a complex issue
The foregoing is a summary of Equitable Distribution in Virginia. Equitable Distribution is one of the most complex issues in Family Law. Classifying and valuing one’s property and debts can be a difficult task, which is why having an experienced Family Law Attorney represent you is important. A Family Law Attorney will also fight for distribution of the property that is most beneficial to you.