When a couple of files for divorce, they will have to decide how to divide their marital property. The court will divide the property into three main steps: classification, assessment, and actual distribution. In each step, the court will consider all relevant circumstances to determine how the property should be divided. You may visit the division of marital property Scranton PA. Now here are some general guidelines for property division:
The divorce court must divide marital property
The divorce court must decide how to divide your property to ensure that each party gets an equitable share. There are three main types of property: real estate, personal property, and intangible property. The court treats debts similarly. In deciding how to split your debts, the court must first categorize each asset and liability as marital or separate. After establishing these distinctions, the court must assign ownership and responsibility for each asset and liability per the laws of equity.
The court considers various factors in determining how to divide your marital property. For example, what was your earning power during the marriage? The marriage length and the parties’ financial circumstances also factor into the decision-making process. Aside from these factors, the age and health of the parties play a role. Moreover, if one spouse contributed more to the marriage, the court might be inclined to award that individual a larger share of the property.
The divorce court must divide marital debt
The courts divide marital debt based on your income and spending habits. If one of you contributed more to the household than the other, the court might award you with less responsibility for the debt. The court also considers whether you and your spouse co-signed any mortgages, car loans, credit cards, etc., so be sure to share this information with your spouse. You and your spouse must work together to sort through the debt during the divorce.
In an ideal divorce case, you and your ex-spouse may agree on dividing the debt and assigning responsibilities to each of you for specific obligations. However, there may be times when the divorce court must intervene to decide how to divide your debt. In these cases, the court will weigh the income and assets of each spouse, as well as other factors in a fair distribution of marital property.
The divorce court must divide retirement accounts
If your marriage ends, a retirement account is one of the most valuable assets you will likely split between the two of you. Some laws govern how retirement accounts will be divided, and if you fail to follow these rules, you could face a financial nightmare. A QDRO, which stands for Qualified Domestic Relations Order, is required in the case of a 401(k) or another similar retirement account.
A 401(k) is a better asset to split than a pension because you know the account’s value. For example, if you have $100,000 in a 401(k), you can transfer that amount to your ex-spouse’s IRA. This is a tax-free transfer of money. You can even transfer part of the money to your spouse’s IRA if you wish, as long as you follow specific rules.
The divorce court must divide personal goodwill
A divorce judge must divide personal goodwill in the marital estate to be fair to both parties. Personal goodwill is the future earning capacity associated with an individual’s name, reputation, skills, and abilities. This goodwill is primarily tied to a person’s skills and knowledge. In service businesses, this type of goodwill represents the future earning potential of an individual. Divorce courts should not divide personal goodwill because it is not marketable.
In most jurisdictions, personal goodwill cannot be divided. That is because the value of personal friendship is oriented toward the business operator. It cannot be transferred or sold and therefore is not marital property. However, a small minority of states allow the court to deviate from the presumptive division of the marital estate. The case of Schneider illustrates the potential for double dipping.