Pennsylvania property division and marital property

Pennsylvania divides marital property equitably, which does not mean equally and does not mean by contribution. It means a judge weighs thirteen listed factors and picks a percentage, and the statute gives that judge permission to pick a different percentage for each asset in the same case.

The percentage is rarely where Pennsylvania divorces are actually won. The fight one level down is which pile an asset belongs in and what it was worth on a particular day, and Pennsylvania's answer to that second question is stranger than most states'.

How is property divided in a Pennsylvania divorce?

Under section 3502(a), on the request of either party the court equitably divides, distributes or assigns the marital property between the parties, without regard to marital misconduct, in whatever percentages and manner it deems just after considering all relevant factors. The same sentence lets it consider each marital asset or group of assets independently and apply a different percentage to each.

"Without regard to marital misconduct" is doing real work there. An affair does not move the property number in Pennsylvania. It can move alimony, which the alimony chapter explains, but not this.

The thirteen listed factors, numbered 1 through 11 with two inserted, are:

1. The length of the marriage

2. Any prior marriage of either party

3. The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each party

4. The contribution by one party to the education, training or increased earning power of the other

5. The opportunity of each party for future acquisitions of capital assets and income

6. The sources of income of both parties, including medical, retirement, insurance or other benefits

7. The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker

8. The value of the property set apart to each party

9. The standard of living established during the marriage

10. The economic circumstances of each party when the division becomes effective

11. The federal, state and local tax ramifications associated with each asset, which need not be immediate and certain

12. The expense of sale, transfer or liquidation associated with a particular asset, which also need not be immediate and certain

13. Whether the party will be serving as custodian of any dependent minor children

The court has to show its work. Section 3506 requires the order to set forth the percentage of distribution for each marital asset or group of assets and the reason for the distribution ordered. A judge who has to write down why tends to go with the side that brought better records.

What counts as marital property in Pennsylvania?

Almost everything acquired during the marriage, plus something extra that surprises people.

Section 3501(a) defines marital property as all property acquired by either party during the marriage, and then adds the increase in value of non-marital property that was owned before the marriage or acquired by gift, bequest, devise or descent.

Eight things are carved out:

• Property acquired before the marriage, or acquired in exchange for property acquired before it

• Property excluded by valid agreement of the parties, entered before, during or after the marriage

• Property acquired by gift (except a gift between spouses), bequest, devise or descent, or acquired in exchange for such property

• Property acquired after final separation until the date of divorce, except property acquired in exchange for marital assets

• Property sold, granted, conveyed or otherwise disposed of in good faith and for value before the date of final separation

• Veterans' benefits exempt from attachment, unless the veteran waived part of military retirement pay to get them

• Property to the extent it was mortgaged or otherwise encumbered in good faith for value before the date of final separation

• Any payment from an award or settlement for a cause of action that accrued before the marriage or after final separation, whenever the payment arrives

Then comes the presumption, and it is broad. Under section 3501(b), all real or personal property acquired by either party during the marriage is presumed marital regardless of whether title is held individually, in joint tenancy, in common, or by the entirety. You overcome it by showing the property was acquired by one of those eight methods, which in practice means showing the paper trail.

Is separate property really safe in Pennsylvania?

The asset is. Its growth is not.

This is the piece that catches people who did everything right. You inherit $300,000, keep it in an account in your own name, never add a dollar of marital money, and never put your spouse's name on it. The $300,000 stays yours. Everything it earned during the marriage is marital property and gets divided.

Section 3501(a.1) sets out how the increase is measured, and it has a thumb on the scale. You measure from the date of marriage, or the later date you acquired the property, to either the date of final separation or a date as close to the equitable distribution hearing as possible, whichever of the two produces the lesser increase. If the property lost value, that decrease offsets increases in your own non-marital property and nothing else, so you cannot use a bad year on one asset to shrink your spouse's share of a good year on another.

Working out that number takes account statements covering the whole marriage, not the last twelve months, which is why the disclosure chapter treats records as the real work of a Pennsylvania divorce.

What happens when separate money gets mixed with marital money?

You are back to tracing, and the burden is on the party claiming the money is separate. The presumption in section 3501(b) does not care whose name is on the account, so a pre-marital deposit that has been mixed with a decade of paychecks and withdrawals is marital unless somebody can follow it through.

Pennsylvania does not give you a statutory formula for this the way it does for pensions. What it gives you is the presumption, and the practical consequence is that the spouse with the documents wins the argument.

Why does the date of separation matter so much in Pennsylvania?

Because four different rules hang off it.

• It ends the accumulation of marital property. Property acquired after final separation is non-marital unless it was acquired in exchange for marital assets.

• It is one of the two endpoints for measuring the increase in separate property. A separation date that lands before a good market year can be worth a lot.

• It closes the coverture fraction on a pension. Under section 3501(c), the marital portion of a defined benefit plan is allocated solely by a coverture fraction, and the numerator is the number of months worked while married and not finally separated.

• It sets the as-of date for the inventory. Rule 1920.33(a)(3) requires the inventory to describe the marital assets and liabilities as of the date of separation.

And separation in Pennsylvania does not require anybody to move out. Section 3103 defines it as cessation of cohabitation whether living in the same residence or not, which is exactly why the date is arguable. The grounds chapter covers how the dispute gets resolved.

What about debts, the house, and pensions in Pennsylvania?

• Debts. They are marital property too. Section 3501 speaks of property acquired during the marriage, and the inventory rule asks for marital liabilities alongside marital assets, so a credit card balance run up during the marriage is part of the estate being divided.

• The marital home. Under section 3502(c) the court may award one or both parties the right to reside in the marital residence during the case or otherwise. After the decree, section 3507 converts property you held as tenants by the entireties into a tenancy in common in equal one-half shares unless the order says otherwise, and either of you can then sue to have it sold and the proceeds split.

• Pensions. Pennsylvania is unusually rigid here. Section 3501(c) says the marital portion of a defined benefit plan is allocated solely by a coverture fraction, whether the plan is being split by deferred distribution or by immediate offset. The benefit the fraction applies to includes post-separation enhancements, except those arising from the employee spouse's own post-separation contributions and the gain or loss on them. The high-asset chapter covers what that means when the pension is the biggest number in the case.

Can you divide property before the divorce is final in Pennsylvania?

You can ask. Section 3502(f) lets the court, on the request of either party, enter an order at any stage of the proceedings providing for an interim partial distribution or assignment of marital property.

That is worth knowing when one spouse controls everything liquid and the other is funding a lawyer out of a checking account. So is the possibility of an award of interim counsel fees, which the chapter on what a Pennsylvania divorce costs covers.

If the order is entered and your former spouse simply does not comply, section 3502(e) gives the court nine tools, running from entering judgment and awarding interest on unpaid installments through ordering a sale, attaching wages, awarding counsel fees, and holding the party in civil contempt for up to six months in the county jail.