Two people who live together in an intimate relationship are unmarried cohabitants, absent a ceremony and a marriage certificate. They may have children and make purchases with separate or joint money, but because common law marriage in Pennsylvania was abolished in 2005, they will never be considered married.
If a couple had created a common-law marriage before 2005, then that couple is still considered married, but remember gay marriage wasn’t legal in 2005. Now that same-sex marriage is lawful, there exists the possibility that a same-sex couple who lived under the conditions of a common-law marriage before 2005 may be able to receive retroactive status.
This is important because marital property only applies to couples who are married — seems simple enough. But, it can often be anything but simple. Pennsylvania is an “equitable distribution” jurisdiction, meaning that the marital assets are divided up in a manner that is deemed to be fair. No 50-50 split or communal property.
Think of a marriage-divorce scenario in three segments of time: (1) before the marriage, (2) during the marriage, and (3) from the date of separation and afterward, including up until the date of distribution of marital property and the inevitable divorce decree.
Nonmarital property is what an individual brings to the marriage, or property such as a gift from a non-spouse or an inheritance received during the marriage. Marital property is what a couple acquires together, usually from joint funds, or receives as a joint gift or from effort, like work or investments. The increased value of all nonmarital property during the marriage also becomes marital property.
For example, if you were given a painting from your father before you were married that was purchased for $1,000, but five years into your marriage, the artist became famous and at the date you and your spouse separated, the value of the painting increased to $10,000, that $9,000 increase in value would be considered marital property, subject to equitable distribution.
You received a $5,000 check as a birthday present from your mother, and it was just for you — if you deposited the check into your own personal account, it is nonmarital property. But if you deposited it into your joint marital account, then it would be considered marital property. These examples are relatively simple, but the process of determining marital property is complicated, and hiring an experienced family law attorney is recommended.
Let’s look at a more complicated situation. You and your spouse are both 40 years old. You are a stay-at-home spouse who cares for three children and the home, and your spouse is a neurosurgeon at a local university medical center, making $525,000 a year. You have been married for 15 years, but now your spouse has moved out of the family home and is paying all expenses for the home and support for you and your children. Maybe that seems to work, but the divorce is looming and an inventory of all assets and debts is necessary. All debts and liabilities, whether separate or joint, come into play.
A very big asset — other than the house — exists in this example, and that is the spouse of the neurosurgeon’s pension and retirement benefits. At 40, the neurosurgeon is likely not in pension pay status, meaning detailed analyses and calculations need to be performed, accepted by both parties and/or the Court and equitably distributed. If the neurosurgeon were the business partner at a private practice instead of being employed by a hospital, business value would also need to be calculated.
The point is that marriage and the property rights of each spouse are more complicated than some may realize. Divorce is never simple; don’t be lulled into believing it is.
TIP 1: If one party lives in Pennsylvania and the other party lives in another state, like New Jersey, consult an attorney in both states, or an attorney who practices in both, to see if there is an advantage to filing for divorce in one state or the other.
TIP 2: Pensions and businesses are significant assets that should not be overlooked.
TIP 3: Debts and liabilities are part of the equitable-distribution analysis. Think about the mortgaged marital home that has lost value and is underwater. Now the mortgage balance is greater than the current market value. While upsetting, it is a debt issue that needs to be addressed.
TIP 4: Maybe you never entered into a prenuptial agreement, but if your spouse is amenable, working out a lot of your marital property rights through a postnuptial agreement is something to consider.
TIP 5: Make sure your current life insurance beneficiary or beneficences are who you want them to be and make timely changes as desired, unless court-ordered or otherwise prevented.
TIP 6: Prepare a written inventory of all your personal and marital property as well as all your personal and marital debts and liabilities. Be honest and thorough, and do not dissipate or damage any assets intentionally.
This column only addresses the tip of the iceberg. Be aware that each marriage is unique and the equitable distribution aspect of each divorce is unique as well.