equitable division of assets

Earlier this year, Mark Ashton, a partner in our Chester County office, wrote about the Pennsylvania Supreme Court decision, Focht v. Focht. This case is significant because it overruled Pennsylvania’s prevailing caselaw addressing how to determine whether a lawsuit and personal injury settlement are marital or non-marital assets. The old law looked to the timing of when the proceeds were received as determinative of whether or not it was subject to equitable distribution. The Focht decision established that it was when the cause of action accrues which determines whether the eventual settlement proceeds or judgment are marital assets or not.

This decision was recently cited in the July denial of an appeal from a Northumberland County decision, Glosek v. Glosek, CV-2005-1695. 

Continue Reading Cases Citing Recent Decision as to When Lawsuit Proceeds Are Marital Begin to Roll In

Historically, we have often been asked about the valuation of jewelry and coins as part of the equitable distribution process. This has never been a very interesting topic over the years as, in most cases, the mark-up on these personal effects is so high that there is often very little value left after the appraiser finishes charging his or her fee. In particular, with the average $500-$1000 piece of jewelry, it is not uncommon for the mark-up to be 10x the wholesale price of the piece involved. This is reflected in a classic dilemma. Take grandpa’s pocket watch to the appraiser for an insurance appraisal and it may be valued at $1,500. Ask the same jeweler for a quote to buy it, and the number could be one-third or less of the insurance value.

This general conclusion is shifting beneath us and merits some further consideration because of recent trends in commodity prices. Gold as a commodity has historically traded in the $300-$400 per ounce range. It remained in that window from January, 2000 pretty much through July, 2004. Since that date the rise in the price of the commodity started upward marching to $600 an ounce by July, 2006. For the next year, it traded in the $600-700 range. But since that date it has taken off to where it trades at more than $1,000 per ounce as this article is written.

Silver and platinum have risen even more precipitously. Silver was the stepchild of the commodities business since the 1980s when the Hunt Family in Texas tried to corner the market and failed. It remained in the $6.00 per ounce range for almost 20 years. But January, 2004 marked a turning point. Silver shifted into a $6.00-8.00 commodity. And two years later in January, 2006, it began a long steep rise that takes it to its current value of $20.42 (3/14/08). Platinum worked in a $400-600 an ounce range from the early 1990s through 2002. But with the arrival to 2003 it rose very steadily to $1300 an ounce by the third quarter of 2007. Since that time, the metal has rocketed off the chart to $2,150 today. That would yield an annual return of 160% if sustained.

So what does this mean to those of us who have granny’s collection of silver service for 12 or $100 worth of pre-1964 coins. It means that these objects may have real value even without considering the artistic consideration of whether the pattern is Williamsburg Shell or something else. If you bought a sterling golf tankard for $100 ten years ago, its smelting value might have been $40 (8oz x $5.00 an ounce). Today that same tankard is worth $152 even if the scrap dealer just throws it in the smelter to melt and sell. As noted above, these kinds of goods have high mark-ups and usually trade at a fraction of retail. But because the metal used is now so valuable, it may be very worthwhile to consider making the investment in an appraisal.

Bear in mind a couple of details that make all the difference. Gold found in retail goods in the US it typically 10, 14, or 18 carat. Gold is usually marked with its composition. This means it is 42%-75% gold and otherwise a composite of other hard metals. Sterling silver is 92.5% raw material so it is typically close to the commodity price. But, one needs to know the difference between silver and silverplate, as the latter is really another metal (typically copper or brass) plated with a microscopic coating of silver. So, unless the piece has hallmarks or otherwise has the word “sterling” embossed in the metal, chances are you are holding a piece of copper or brass, dressed up to look like sterling. It could still be valuable but that would be as art and not metal.

The following is my "Top 7" list of "family law misconceptions" that I frequently hear from new or prospective clients.  The list is by no means exhaustive and assumes that there is no pre or post-nuptial agreement in place which might already address the issue.  Likewise, as other states have different laws and procedures, this list is limited to Pennsylvania.

  1. “There is no alimony in Pennsylvania”.  I am constantly amazed at how many new clients believe that alimony does not exist in Pennsylvania.  Let me set the record straight: alimony is alive and kicking in Pennsylvania.  Section 3701(a) of the Pennsylvania Divorce Code provides that “[w]here a divorce decree has been entered, the court may allow alimony, as it deems reasonable, to either party only if it finds that alimony is necessary.”
  2. “If my spouse committed adultery, I will not be obligated to pay him/her alimony”.  Of the clients who are aware of the existence of alimony in Pennsylvania, many believe that adultery is a bar to a claim for alimony.  Marital misconduct occurring during marriage is only one of 17 factors under §3701(b) of the Divorce Code to be considered in determining whether alimony is necessary and in determining the nature, amount, duration and manner of payment of alimony.  It is not a bar, just a factor.
  3. “It only takes 90 days to get a divorce”.  Under even the best possible circumstances, it will take more than 90 days from the date of filing a divorce complaint until the entry of the decree.  I usually tell people that the best case scenario is 4½ to 5 months, assuming that both parties fully cooperate, there is a signed agreement disposing of all economic issues, the court is not backed up,  and, most importantly, the stars are in perfect alignment.  The worst case scenario could be several years or more depending upon the circumstances.
  4. “My spouse is not entitled to any of my pension”.  Many clients believe that his/her spouse is not entitled to any portion of their pension since they worked for it.  To the contrary, if the pension was acquired or increased in value during the marriage, then it is marital property (in full or in part) and the other spouse has a claim to it.
  5. “My spouse is not entitled to any asset that is titled solely in my name”.  How an asset is titled has very little to do with whether or not it is subject to division and/or distribution in a divorce.  The general rule is that if an asset is acquired or increases in value during marriage, then it is marital property (in full or in part) and the other spouse has a claim to it.
  6. “The marital property gets split 50/50”.  While marital property is often divided between the parties on a 50/50 (equal) basis, the circumstances may warrant a disproportionate division.  Pennsylvania law requires that the marital property be divided in an equitable fashion based upon a consideration of 11 factors set forth in §3502 of the Divorce Code.  "Equitable” means fair, not equal.  Therefore, if the equities weigh in favor of one spouse, he or she will likely receive more than 50% of the marital property.
  7. “If I quit my job, I will not have to pay support”.  This is one of the more popular misconceptions.  Support obligations (i.e. support for a child or spouse) are determined based upon actual income or earning capacity.  If someone quits his or her job without an extremely good reason, their support obligation will be determined or will continue based on their established earning capacity.  A frequent response that I hear when I tell people this is, “then they can just put me in jail.”  That, however, it not a misconception for someone who deliberately takes action to avoid their support obligations.  It may take some time, but under the right conditions, jail may be a reality.