Equitable Distribution: Marital Assets and Debts

Equitable distribution (ED) is a form of property division between two spouses or former spouses. ED was created in our state in 1981. Before that, if a couple divorced, whoever had an asset, such as a home or vehicle, in his or her name kept it upon the divorce. This was called “title ownership” and it is how assets now continue to be owned unless one of the parties files a claim for ED of marital assets. After a case with particularly harsh consequences to a spouse in a long-term marriage, the system was reformed and an ED statute was written. Unlike some areas of the law, ED laws are fairly new. They are frequently being revised and adjusted. In an ED case, a judge makes a ruling on what property or debt is separate or marital. Judges must generally divide the marital assets equally unless there are extenuating circumstances.

There are numerous complicated variations of ED, particularly when assets or debts are mixed with other assets, debts or accounts; Or, when marital money pays a debt that is a separate debt, for example. But generally, property someone owns before they marry is their separate property. Marital property is property (or debt) created after the marriage and before the separation. The parties in an ED case prepare inventories of assets and debts. Each person states whether they believe the asset or debt is marital, what the value is and who should receive it when the court rules. That leads to a summary prepared for the judge, telling him or her what is disputed. The judge then enters an order ruling what assets and debts are marital, what the values are, and who keeps the asset or debt. If one party gets more of the assets than the other, the judge may order that person to pay what amounts to a “buy out” so the division is equal.