The distribution of marital and divisible property and debts is referred to as equitable distribution (hereinafter referred to as “ED”). You and your spouse are free to settle this claim on any terms which are acceptable to both of you. If you cannot agree and your case proceeds to trial, the judge will resolve the claim in four steps, as follows:
- Identification: The judge will identify all assets and debts as of your date of separation (i.e., the date you and your spouse stopped living together under one roof) and will determine what property has accrued from the date of separation through the date of trial.
- Classification: The judge will classify each item of property as marital property, separate property, or divisible property. The judge will classify debts as marital debts, separate debts, or divisible debts. These are legal terms which will be explained to you by your attorney. The judge can only distribute marital and divisible property and debts. The judge has no power to distribute separate property and/or separate debts.
- Valuation: The third step is to determine the net value of the assets and determine the amount of the debts. Net value is the fair market value of the assets less the amount of any debts which are liens upon it. Fair market value is the price which a willing buyer would pay to a willing seller under the circumstances where they are acting voluntarily and not as the result of any pressures. Fair market value is not replacement cost. In some cases the value is obvious, such as the balance of funds on deposit in a bank account. In other cases, value is not clear and it may be necessary to obtain an appraisal of the value by a qualified appraiser. Appraisals are often needed to determine the value of real estate, furniture and household goods, jewelry, closely-held businesses, and vested benefits under pension plans.
- Distribution: The fourth step is the actual distribution of assets and debts. There is a presumption that an equitable distribution is a division of assets and debts in two shares of approximately equal net value (this does not mean that each asset is divided in half; it means only that the total of the assets distributed to one party is approximately equal to the total value of the assets distributed to the other party). However, the court may distribute the property in an unequal fashion and give one party more than half of the total net value of the assets. There are thirteen statutory factors which the court may consider in deciding whether the property division will be equal or unequal. You and your attorney will discuss which, if any, of those factors apply to your case. These factors do not include marital misconduct and are largely based on economical factors.
There are many documents which will be helpful in completing an affidavit for ED that is required, including income tax returns, bank statements, and real estate documents. Note that the instructions to the ED affidavit require each party to provide certain documents to the opposing party. Failure to do so may compromise your position later.