How to Divide Property and Debt Fairly in a Divorce

Dividing property and debt during a divorce can be challenging. It’s not just about determining who gets what; it’s about making sure everything is divided fairly while adhering to Pennsylvania’s specific legal guidelines.  

At Iwanyshyn & Associates, we understand how overwhelming this aspect of divorce can feel, and we’re here to guide you through every step. Whether you’re going through a high-asset divorce or have limited assets and debt, our experienced attorneys can provide experienced advice to make sure your property and debt are divided fairly.  

Understanding Pennsylvania’s Equitable Distribution Laws

In Pennsylvania, marital property is subject to equitable distribution. This means that all assets acquired during the marriage are considered joint property and must be divided fairly between both parties in a divorce. However, this does not necessarily mean that everything will be split 50/50; instead, the court aims for a fair division. 

It is important to note that equitable distribution applies not only to physical assets, such as houses and cars, but also to financial assets, including bank accounts, investments, and retirement accounts. Debts acquired during the marriage are also subject to division. 

Before you divide property and debt, it's essential to identify what constitutes “marital property” versus “separate property.” Marital property generally includes all assets and debts acquired during the marriage, regardless of who’s named on the title or account.  

Separate property usually includes assets acquired before the marriage, inheritances, or gifts given to one party specifically. However, in some cases, separate or non-marital property may also be considered in the division of assets. 

How to Divide Property and Debt During Divorce

If you are facing a divorce in Pennsylvania, there are specific steps you will need to follow to make sure your property and any eligible debts are divided fairly. While these steps may vary depending on whether you are going through a high-asset divorce or have relatively few assets, the general steps you should take include the following. 

1. Inventory All Assets and Debts 

The first step you should take is to create a complete inventory of all your assets and debts, both marital and separate. This inventory should include: 

• Real estate (e.g., the family home) 

• Vehicles 

• Bank accounts  

• Retirement accounts (401(k), IRAs, pensions) 

• Investments (stocks, bonds, mutual funds) 

• Personal belongings (e.g., furniture, jewelry, collectibles) 

• Business interests 

• Outstanding debts (mortgages, credit card balances, student loans, etc.) 

Pennsylvania courts typically require full disclosure of all financial information. Providing an accurate and comprehensive inventory of your assets and debts is essential for ensuring a fair division of property and debts during a divorce. 

2. Determine Marital vs. Non-Marital Assets 

Determine which of your assets and debts qualify as marital property. This step can become particularly complicated if there is disagreement about when certain items were acquired or how they were used. Some common areas of debate include: 

• Retirement savings accrued before and during the marriage 

• Property acquired before the marriage but used as the marital home 

• Businesses started before the marriage but expanded with marital funds 

Your attorney can work with financial experts to ensure accurate valuations, especially for more complex or high-value assets such as pensions, businesses, or investment portfolios. 

3. Evaluate Contributing Factors 

When dividing property equitably, Pennsylvania courts will consider numerous factors, including but not limited to the following: 

• The length of the marriage 

• The age, health, and earning potential of each spouse 

• Each spouse’s income and overall financial situation 

• Contributions made by one spouse to the other’s education, career, or earning capacity 

• The value of each spouse’s separate property 

• The standard of living established during the marriage 

• Custodial arrangements for any minor children 

These factors are weighed in order to reach the most equitable outcome for both parties. For example, if one spouse sacrificed their career to care for the home and children while the other pursued professional success, the courts may award a larger share of marital property to the former spouse. 

4. Negotiate or Litigate 

Whenever possible, try to resolve property and debt division through negotiation or mediation. Reaching an agreement outside of court gives you more control over the outcome and can significantly reduce any emotional or financial strain. 

However, there are times when negotiations break down, and litigation becomes necessary. If this happens, our attorneys are prepared to advocate on your behalf and present a strong case based on the facts and your financial details. Our goal, whether through negotiation or litigation, is to protect your interests and make sure the division is truly equitable. 

Special Considerations When Dividing Property

When it comes to dividing property, several special considerations may apply. While not all of these may apply to your circumstances, it's important to be aware of them to help you make informed decisions.  

• Prenuptial agreements: If you and your spouse have a prenuptial agreement in place, it will likely dictate how your property is divided in the event of a divorce. However, these agreements can sometimes be challenged and invalidated if the terms are deemed unfair or if one party did not fully disclose their assets and debts before signing. 

• Retirement accounts: Retirement accounts often represent a significant portion of a married couple’s assets. Dividing these accounts can be particularly complicated due to tax implications and the need for a Qualified Domestic Relations Order (QDRO). A QDRO allows for the transfer of retirement funds from one spouse to another without triggering tax penalties. 

• The marital home: The family home is another frequent point of contention. Couples must decide whether one spouse will keep the home, whether it will be sold, and the proceeds divided, or some other arrangement. Factors like the presence of minor children, financial feasibility, and emotional attachment often come into play. If one spouse wishes to keep the home, they may need to “buy out” the other’s share or relinquish other assets in exchange. 

• Debts: Debts accrued during the marriage are generally divided just like assets. However, specific considerations may apply depending on who incurred the debt and why. For instance, credit card debt used for family expenses may be treated differently from debt tied to one spouse’s individual purchases. 

Contact an Experienced Family Law Attorney in Pennsylvania

Dividing property and debt during a divorce requires attention to detail and a clear understanding of Pennsylvania law. It’s important to remember that even if you and your spouse agree on some issues, skilled legal representation can make sure you understand your rights and advocate for your best interests. 

At Iwanyshyn & Associates, we are dedicated to securing an outcome that meets your needs, from helping you gather and evaluate financial information to negotiating favorable terms or representing you in court. With offices in Allison Park, we serve clients throughout Pennsylvania, including Cranberry Township, Butler County, Beaver County, and the surrounding areas.  

If you’re facing a divorce and have questions about dividing property and debt, contact us today and schedule a consultation.