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EQUITABLE DISTRIBUTION

Equitable distribution is the statutory (legal) means of dividing marital assets and debts upon divorce. In the United States there are three ways that marital property can be divided when the couple divorces. First, if both parties can come to an agreement they will typically be allowed to determine the distribution of their assets and debts (by way of prenuptial agreement or divorce settlement). Second, some states have community property laws which state that, upon divorce, all marital property shall be divided 50/50.

Some states have equitable distribution laws which divide marital property based on equitable distribution principles. In these states, a number of factors will be considered by the courts to determine how to divide marital property and debts upon divorce. The underlying ideology behind equitable distribution is that by evaluating these specific marital factors, the courts are better able to divide property fairly between the two parties.

Equitable distribution may result in a 50/50 split of marital property, or it may favor one party who raises the children, has less earning potential, has given up income opportunities for the sake of their spouse, and more. Equitable distribution applies to all property, income, debts, and other assets that were accrued by either party during the course of the marriage. Separate property is typically secure from equitable distribution in most, but not, all cases. A prenuptial agreement signed before marriage is one way to protect these assets from becoming subject to equitable distribution. In other cases, the party seeking immunity for separate property will have to establish cause for immunity.

While each equitable distribution state has statutory discretion over which factors are considered and which are not, the following is a list of matters that are typically considered when determining equitable distribution. Equitable distribution can be determined based on: the duration of the marriage; the age, physical and emotional health of each party; the income and earning potential of each party; what property each party brought to the marriage; the standard of living that was established during the marriage; the value of child care, homemaking, and paid work; the investment one party made into the education, training, or earning power of the other; each party's current economic circumstances, and other factors deemed relevant by the state family court.

here are currently forty-one states with equitable distribution laws. The family courts in these states have the final discretion over the division of marital property and debts upon divorce. While equitable distribution is more flexible than community property statutes, it is also less predictable. If you are going through a divorce in an equitable distribution state, it is in your best interest to speak with a qualified and experienced family law attorney who can protect and maximize your legal interests in a divorce.

An experienced attorney knows your state's equitable distribution laws and other applicable statutes and how to present the strongest and most favorable case possible.

DISTRIBUTION OF A DISABILITY BENEFIT

If you are getting a divorce, you may be wondering if you will be able to obtain a portion of your spouse's disability benefits as part of the division of property in your divorce. Disability benefits are payments made to a worker when the worker becomes ill or gets injured. They are generally paid by a private insurance company or by the government under a disability insurance policy. In the event of a divorce, state laws vary on whether disability benefits are considered separate property or marital property - this classification is important because how property is classified impacts how the property, including rights to benefits, are treated in the divorce. There are two methods by which that classification is made. The first method looks at when disability pay is received or when the source of coverage was established. The second method is a "purpose analysis" of disability benefits.

TIME BASED ANALYSIS

In some states, courts treat all property acquired during marriage as marital property. This includes disability pay received during marriage. It also includes disability pay received after marriage that is attributed to work or efforts during the marriage. Arkansas, Delaware, Illinois, Louisiana, Montana, and New Jersey take this position. The only question to be answered in these states are the date on which a person became entitled to disability pay.

Other state courts focus on the source of the coverage, that is, marital labor, or work during a marriage, and conclude that disability pay earned through marital labor is marital property. Arkansas, Delaware, Idaho, Maryland, Minnesota, New Mexico and sometimes Texas take this view. In these states, benefits received during marriage because of a disability that began before the marriage is the disabled spouse's separate property because the right to benefits was earned before marriage.

In the replacement approach to disability income, disability pay is marital property only to the extent that it compensates for loss of income during the marriage. Disability pay that compensates for the loss of earnings after a divorce will be considered the injured spouse's separate property, even if the underlying injury happened during the marriage. Alaska, Colorado, Florida, Idaho, Indiana, Louisiana, Maine, Maryland, Missouri, North Carolina, Oregon, Pennsylvania, Rhode Island and Washington take the replacement approach to disability pay.

PURPOSE ANALYSIS

Many state courts look to the purpose of disability benefits to determine whether the benefits or a part of them are separate property. Although marital funds may have paid for a disability plan, disability benefits may or may not be classified as marital property. Disability payments must be carefully examined to determine whether they represent deferred compensation in the nature of retirement or pension income. If so, the disability payments should be categorized as marital property to the extent they are based on labor during the marriage.

A private disability pension may have both marital and separate property components. If the purpose of the disability benefits is to compensate the employee-spouse for lost earnings and personal suffering caused by the disability, then to that extent they constitute that spouse's separate property. If the disability benefits are received instead of retirement benefits based on length of employment and are earned by employment during marriage, they are marital property. In the latter case, the employee-spouse's separate property interest consists only of the portion of the disability benefits based on employment prior to marriage (or after separation), and the portion of the payments that exceed the retirement pension payments that would have been received if the employee-spouse had not been disabled.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.