At most initial interviews we listen to what clients tell us to be the history of the marriage and the asset pool we are addressing and attempt to predict an equitable distribution result. Sometimes our predictions are very accurate; sometimes they are not. Perhaps because they are bashful, many clients do not stop to ask us, why is it that the marital estate is not being equally divided in an equitable distribution proceeding in Pennsylvania. A very fair question indeed since a lot of money can compose the difference between an equal (50/50) split and the seemingly extreme 60/40 split.
Pennsylvania adopted equitable distribution of marital property in 1980. Before that, all property was divided based upon title. If I owned something it was mine and you had no claim. If it was in your name, it was yours even if I paid for it, built it, played in it or whatever else. If property was jointly held, that property was to be divided equally.
The 1980 amendments (which remain the law today) were intended to make for an “equitable distribution”. Title to property no longer really mattered. If it was acquired during the marriage, the property was marital without regard to who held title. The 1980 law also set forth approximately 10 factors that the Court was to consider in deciding how to divide the property between spouses. This is in contrast to the law in community property states (mostly in the Southwestern US) where property is always divided equally.
The factors have been amended in 1988 and again in 2005. But some are more important than others. The two biggest factors are ordinarily the length of the marriage and the earnings disparity between the parties. The longer the marriage, the more the earnings disparity comes into play.
Most people today are married when they are young and there is not a large disparity in incomes. As the marriage progresses, it is fairly common for one party to put a focus on family while the other sustains a focus on career. The result is often that after several years of marriage one spouse out-earns the other by a factor of 1.5-4x. Often the family oriented spouse comes through the divorce with a history of no employment for several years.
The disparity in the division of assets ordinarily favors the spouse who is at the economic disadvantage from an income viewpoint. In a 20 year marriage if one spouse is earning $125,000 a year because the focus remained on career while the other is earning $30,000 a year, a court will look at this and focus on the fact that coming out of the lengthy marriage, the advantaged spouse has 3x the ability to accumulate future assets before retirement and, often, the most productive years are behind both of them. If the couple is 50 years of age, the spouse with the $120,000 earnings can reasonable anticipate on another $1,800,000 in income before retirement on a pre-tax basis. The spouse making $30,000 is looking at an earnings potential more in the $450,000 range. That is a pretty large spread and, in the minds of most hearing officers and judges, it more than justifies a split in favor of the disadvantaged spouse. Typically, folks with this kind of earnings history might have a marital estate of $350-500,000. The difference in affording a 60/40 split rather than 50/50 would be $35-50,000 in terms of the shift in equitable distribution, an amount that the advantaged spouse can make up by reason of the earnings disparity in a little more than 1 year. Historically, this kind of case has not resulted in any significant alimony award. But that trend is changing as we are seeing Courts look more favorably upon alimony as a supplemental remedy. Court ordered alimony is modifiable and terminates upon remarriage or cohabitation. Our impression is that alimony is being viewed with more favor because of its modifiability. In the past, a 50 year old with a solid earnings record in the 100,000+ range was viewed as having reliable earnings for the rest of his or her career. Today, that is no longer a certainty as employers tend to thin the herds of employees by resort first to the most expensive ones. If the payor spouse loses a job the alimony can be modified or extinguished. We are seeing more conservative distributions (not as disparate) but they appear to come coupled with lengthier and greater alimony awards.
In most cases, equitable distribution awards actually reference all of the factors found in the Divorce Code. But length of marriage and relative earnings are the big two followed by a sizable non-marital estate and/or the role of a parent as primary caretaker. The other factors are in play but they tend to be the tail and not the dog in the process of dividing a marital estate.