Pennsylvania law requires an equitable distribution of marital property.
In any marriage, a fair and legal division of property is essential for the good of each spouse after divorce. But when the couple is wealthy, sometimes owning a complex portfolio of diverse assets, certain issues arise when they decide to end their marriage.
When divorce becomes a possibility, a spouse in such a marriage should enlist experienced legal counsel as early as possible to begin to analyze the marital estate. Often divorcing spouses can negotiate through their attorneys a settlement agreement in which they work out the division of their property, but if they cannot agree, the judge in the divorce must do so.
In Pennsylvania, the legal standard for property division in divorce is equitable distribution, which means a fair division of marital property, but not necessarily a 50-50 split of each asset or of the assets in total. Rather, the court is to divide the marital estate as it "deems just after considering all relevant factors," but the court may not take marital misconduct into account.
(Nonmarital or separate property remains the property of each spouse separately and individually.)
The Pennsylvania property division statute lists 13 factors that are relevant to this court decision:
- Marriage length
- Prior marriages
- Age, health, income, vocational skills, employability, assets, station, liabilities and needs of each
- Contribution by one spouse to education and career of the other
- Future opportunity to acquire capital assets and income
- Income sources
- Contributions to and dissipations of marital property by each spouse, including homemaker contributions
- Value of property set aside for each
- Marital standard of living
- Economic circumstances of each after divorce
- Tax ramifications
- Expenses of sale or transfer of an asset
- Whether one will have custody of minor children
When the marital assets are of high value and the family is one of wealth, the picture of what an equitable distribution is becomes more complex in three main aspects:
- Inventory: A thorough inventory of all assets can be a formidable task, especially if one spouse is suspected of hiding assets. For example, money can be deposited into offshore accounts or invested in internationally held assets, or assets could be transferred to third parties to get them off the grid for safekeeping. An experienced attorney will conduct discovery in the divorce case to uncover all types of wealth and may need to employ experts to help do so such as a forensic accountant to analyze accounts.
- Valuation: Complex assets can be difficult to evaluate and proper valuation is essential to determining an equitable distribution. A divorcing spouse's legal counsel will have a network of valuation experts to assist. Particularly difficult to value are assets like intellectual property (trade secrets, copyrights, trademarks, brands and so on), closely held businesses, professional practices, executive compensation packages (stock options, equity interests, bonuses and more), complex investments, interests in trusts and others.
- Taxation: Care must be taken in the division to protect spouses from unexpected tax consequences in the transfer or sale of particular assets.
Other assets in wealthy marriages may include:
- Multiple homes and other real estate
- Retirement assets like pensions, IRAs, 401ks and more
- Vehicles and boats
- Collectibles, antiques, jewelry and other expensive personal property
Finally, care must also be taken to account for and equitably divide marital debts and liability, which can have as much impact on future financial security as the assets.
The family lawyers of Testa & Pagnanelli, LLC, represent divorcing clients in marriages of wealth from offices in Philadelphia and Norristown, Pennsylvania.