Property Settlement and Equitable Distribution

Identifying which items each party has an ownership interest in is the initial inquiry when addressing the matter of property distribution.  Generally, property owned by a spouse before the marriage, or gifts or inheritances acquired by one party during the marriage, are considered “separate property” and will not be subject to distribution.  If the parties to a divorce cannot agree as to how the “marital property” should be distributed, a court will engage in a process called “equitable distribution.”  This process requires a court to assess the value of all marital property, and either assign particular property to each spouse, or to grant a monetary award in lieu thereof.  Having an expert forecast one’s exposure before beginning this process is critical, as retirement, pension, and deferred compensation benefits may even be subject to division.

A couple contemplating divorce must not only consider marital assets for distribution, but marital debts as well.  Any debts incurred by either party during the course of marriage are statutorily presumed to constitute marital debt.  This can be of particular concern to those who have negative equity in property (i.e. an “upside down” or “underwater” loan).  In some situations, a court may order a forced sale of the property.