Most people believe that the concept of equitable distribution means assets, debts, etc. are all split down the middle — 50/50. Because people misunderstand equitable distribution laws, they worry more than they need to when it comes to financial survival as a single person. That’s why so many struggling couples stay together rather than split — because they think they would struggle even more after the fact.
So what gives?
“Equitable” is most accurately defined not as equal, but as fair. Sure, you might bypass these legal restrictions using arbitration (or not) to come to an arrangement with your soon to be ex-spouse. Why punt the ball to a judge if you’re capable of making those decisions for yourselves? And in fact, it’s always better to keep the decisions away from court. You never really know what will happen inside those doors.
But in fact, judges will look at a long list of variables and factors before making a decision about how to best allocate assets to a divorcing couple. Many states distinguish between marital property and separate property — and in doing so, they consider how long you’ve been a couple. For example, marital property is any wealth and assets accumulated during your time together. Separate property is everything you brought to the marriage. It was yours before you ever decided to make a vow.
Are you worried that a potential inheritance could be split down the middle during a divorce? Usually, you have nothing to worry about. What your friends or family leave you after they’re gone is yours to keep. If you’ve already had your spouse sign titles for that inheritance, though, then you probably won’t be allowed to keep it all. The same goes with monies from lawsuits.
Divorces become more complicated as time goes on because the number of assets increases. You might own a home together, multiple vehicles, and you may have had children. All this will force the court to take a harder look at your assets and how they can be fairly split. Is one spouse the breadwinner while the other manages the house? That could further complicate matters in a way that won’t benefit the primary moneymaker. Child support and alimony are big possibilities.
Where most people might worry regards retirement funds. Do you have a 401(k) or IRA with a lot of money? It’s subject to the concept of marital property and equitable distribution just like all of those big-ticket items.
We don’t mean to scare you! But there’s a reason why most divorcing couples choose to try to avoid court at all costs. It’s not where you want these decisions made. Keep the power in your own hands for the best outcome.