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Equitable vs Equal: What’s the Difference?

By November 6, 2019Blog
Equitable vs Equal - What's the Difference

The question of who gets what property in a divorce is a big one. Most people expect to divide their assets and debts fairly, but what is fair? And who decides? Well, in some cases, couples decide themselves how to divide their property, perhaps with the help of lawyers or a mediator. In other cases, a divorce court judge makes the decision. What exactly constitutes a fair arrangement depends on the state in which the couple is divorcing. The majority of states require an equitable distribution of assets and debts. The word “equitable” sounds like “equal”, and often couples expect to divide their marital property equally, but the two aren’t necessarily the same thing. Take a look at what you need to know about the difference between equitable and equal division.

 

Equal Division

An equal division of property is easy to define – this is one in which the divorcing couple simply splits everything 50/50. So, if the couple has $50,000 in the bank, each person gets $25,000. If the couple owes $10,000, each person is responsible for $5000 of it. If the couple owns two vehicles of roughly equal value, they each get one vehicle. Items that are impossible to split 50/50, like a house, for example, can be liquidated and the proceeds then divided 50/50.

Equal division is easy to understand, but it may not always be easy to achieve. For example, it may not make sense for a divorcing couple to sell a house, depending on market conditions and circumstances. One solution might be to allow one partner to retain the house and give the other partner more of some other asset, equal to what would have been that partner’s share of the sale of the house, but this may not be possible if, for example, neither partner has a lot of cash on hand or a lot of valuable assets. Other things, like businesses, can be even more difficult to divide equally and it may make even less sense to liquidate them in order to facilitate an equal distribution. Finances can be very complex, and it’s harder than you might think just to draw a line down the middle and split things in half. This is one reason why many states take the approach of equitable distribution instead.

 

Equitable Division

The word “equitable” essentially means “fair,” and a fair division of property is what divorce courts in many states strive for when deciding a divorce. “Fair” and “equal” are not necessarily the same thing at all. For example, if one of the people divorcing has a job with a high salary, and the other person has been a stay-at-home partner or parent for most of the marriage and has been out of the job market for a long time, is it fair to give the partner who has no income an equal amount of debts to pay? If one partner is going to have primary custody of the children – which means primary responsibility for the expenses and necessities involved in raising those children – is it fair for that partner to also have to find a new place to live because the house is being sold? There are many factors to consider, and what’s fair may look different for different couples. Generally speaking, courts generally won’t want to leave one partner without resources to care for themselves or their children if there are enough marital assets to make sure that the partner is provided for.

There are a number of factors that the courts consider when it comes to determining what kind of arrangement is equitable in a divorce. A judge will take into account how long the couple has been married, whether they have children, the value of separate property – that is, property that is not community property but belongs to just one spouse – that each spouse owns, and the degree to which each spouse contributed to earning the marital property. The courts also consider the degree to which each spouse supported the other’s education and earning power. This means that a stay-at-home spouse who took on the responsibility of homemaking and child-rearing deserves something in exchange for making it possible for the other spouse to earn an income.

Divorce court judges also consider the future earning power, needs, and liabilities of each spouse, the ages of each spouse, the liquidity of the marital property, any previous alimony or spousal maintenance obligations that one or both spouses might have, and any prenuptial agreements that may be in place.

One thing that courts typically do not consider when dividing assets is the actual reason for the divorce. For example, if you’re divorce was precipitated by your spouse’s infidelity, you shouldn’t expect the court to financially punish your spouse for those actions. A possible exception might come in a case where one spouse spent a large amount of the couple’s money on their affair – in that case, the final divorce settlement might award the spouse who was cheated on more of the remaining assets because their spouse spent marital assets on an extramarital affair. The same might apply in a case where one partner spent money on gambling or drugs. But it’s not the behavior that might impact the division of assets, it’s the effect that the behavior had on the couple’s finances that makes the difference. Don’t expect the court to punish your ex financially for behavior that didn’t impact your finances.

Couples who are concerned about allowing the court to decide what they get in a divorce may prefer to work out a divorce settlement themselves and simply submit it to the court for approval. In general, if both parties agree to a settlement arrangement, the court will approve it unless it’s wildly unfair to one partner or seems to have been agreed to under duress. A legal resource group like National Family Solutions can help you find the documents and resources you need to negotiate a divorce settlement or to advocate for yourself in divorce court.

 

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