What Is Equitable Distribution in Divorce?

• Dividing your property in divorce
• Which states are equitable distribution states?
• Examples of equitable distribution

One of the most critical aspects of divorce is the division of marital property, which can significantly impact the financial stability of both divorcing people. 

You may have heard the term “equitable distribution.” In the majority of states, it plays a crucial role in the divorce process. In fact, 41 states are equitable distribution states.

But what exactly is equitable distribution in divorce? It is a legal principle that seeks to divide marital assets and debts fairly between the spouses, considering a variety of factors such as income, contributions to the marriage, and future financial needs.

Dividing your property in divorce

When determining the distribution of property, judges in equitable distribution states consider relevant factors, including the following:

The length of the marriage

Longer marriages may result in a more even distribution of assets, whereas shorter marriages might favor the higher-earning spouse or maintain pre-marital asset ownership.

Contributions of each spouse

This includes financial contributions, like each person’s income, and non-financial contributions such as time and energy spent homemaking, child-rearing, and supporting a partner's career or education.

Income and earning potential

Courts may consider current income levels, future earning potential, and any disparities between spouses when dividing assets.

Child custody and support

If one spouse is awarded primary custody, they may be entitled to a larger share of marital assets to promote the children's well-being.

Age, health, and employability

The court may consider the age, health, and ability of each spouse to earn a living when allocating assets.

Do you live in an equitable distribution state?

Nearly every state is an equitable distribution state. However, you do not live in an equitable distribution state if you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin.

Living in an equitable distribution state means that you may not have to split your marital assets exactly down the middle. You will, however, have to be prepared for a fair distribution of marital assets, which means you may not get everything you want.

Examples of an equitable distribution

Example 1: Sarah and Tom

Sarah and Tom have been married for 15 years and have two children together. Sarah has been the primary breadwinner, working as a software engineer, while Tom stayed at home to care for the children and manage the household.

During their marriage, they purchased a home, accumulated savings and retirement accounts, and acquired a few debts, such as a mortgage and car loans.

In their equitable distribution process, Sarah and Tom agree that:

• Tom will keep the family home. He will have primary custody of the children and needs a stable environment for them. Sarah agrees to pay off a portion of the remaining mortgage balance as part of the settlement.
• They will divide their savings and retirement accounts. Sarah will receive a larger share to account for her higher income and contributions to those accounts during the marriage.
• Sarah will pay spousal support for a fixed period of time. This will help compensate for Tom's lower earning potential and non-financial contributions as the primary caregiver. This is arranged with the understanding that Tom will work toward financial independence.
• They will each be responsible for half of the outstanding car loan balances. The reasoning: They will each keep one of the vehicles.
• Tom will receive a portion of Sarah's future pension payments. This will account for his role in supporting the family during the marriage.

Example 2: Emily and Alex

Emily and Alex were married for five years with no children. Both had successful careers, Emily as a marketing executive and Alex as a physician. They maintained separate bank accounts throughout their marriage but jointly purchased a condominium and vacation real estate.

In their equitable distribution process, Emily and Alex decide to do the following:

• Sell the condominium and vacation real estate. They will divide the proceeds based on their respective contributions to the down payments and mortgage payments. Since Alex made a larger financial contribution, he will receive a higher percentage of the proceeds.
• Keep their individual retirement accounts and investments. They contributed to them separately and maintained them as individual assets.
• Divide their joint credit card debt equally. They both contributed to the expenses incurred during the marriage.
• Refrain from seeking spousal support. Both have comparable incomes and earning potential.
• Maintain ownership of their respective cars. The cars were purchased before the marriage and are considered each spouse’s separate property.

Hello Divorce has a goal to help people who are going through an emotionally tumultuous time in divorce. We offer cost-effective plans to help you get to your new life quickly. We also provide lots of a la carte services and free resources, like this free property division download. Contact us to discuss your options and learn how we can support you.