When Pennsylvania couples are going through divorce, it can be hard to keep a clear head about the future while tumultuous and often painful feelings keep coming to the surface. With almost half of marriages ending in divorce, many people are confronted with similar challenges to decisions about property division.
Taking a hard look at your financial situation as well as evaluating both assets and liabilities is crucial to being able to move forward and, where there are children, provide for them in the future. It will make sense for residents of Adams County and Gettysburg to seek experienced legal counsel to provide advice and support on the best course of action concerning complex property division issues.
How is property divided in Pennsylvania?
In Pennsylvania, marital property laws follow the theory of the equitable division of property. Property is defined either as separate, that is, owned by only one spouse and acquired before marriage, or marital, which includes goods, property, income or other assets acquired during the marriage.
After inventory of all marital assets and debts has been completed, the courts will decide on the equitable division of property. There are many factors involved in the court’s determinations, which may include:
- duration of the marriage and age or health of the spouses,
- the spouses’ relative financial wealth and future earning abilities,
- custodial obligations where there are children
- pensions, retirement and tax implications in property division
What financial assets and debt?
When looking at the combined assets that will have to be split, it is important to think about the tax implications of some of them. Marital property can include cash, savings or checking accounts stock and bonds, or real estate investment trusts (REITs). Not all of these will divide out equally in the future.
For example, a retirement and a money market account of equal value will not remain that way, because the spouse with the retirement account will have to pay taxes on the distributions once they start drawing from it.
When negotiating the divorce settlement, neither debts nor taxes should be overlooked. The parties should discuss how they will settle credit card debt, and decide on the sale or division of the house, vacation properties, or rental or business interests. They may wish to split the proceeds or pay off a mortgage or other joint debt.
If both spouses are filing jointly, one will file as single and so will pay a higher tax rate. Where there are minor children, the custodial parent will get a lower rate from filing as head of household.