Myths about the divorce process are especially abundant when divorce, the law, and money intersect. Here are four of the most common misconceptions that we encounter frequently in our family law practice in Bucks County, Pennsylvania.
Assets Are Always Divided 50/50
Pennsylvania equitably divides marital estates. Many divorcing spouses believe “equitable” means “equal,” but it does not. The equitable distribution process often results in one spouse receiving a larger percentage of the marital estate based on a variety of factors that must be weighed and analyzed.
Some of the factors that come into play as assets (and debts) are divided between spouses are the duration of the marriage, the relative earning power of each spouse, and health needs that might affect a spouse’s future earning potential. Of course, a detailed analysis of the assets each spouse brought into the marriage—pre-marital assets—also is performed.
Assets in Your Name Are Not Subject to Division
Our clients are often surprised to find that keeping assets titled separately does not insulate them from division as part of a divorce proceeding. Generally, title is irrelevant, although there are some exceptions, such as when one spouse has received an inheritance bequeathed to him or her alone and preserved separate from the marital funds.
Given this fact, it can be a tedious process to identify which assets are considered marital by law and which are excluded from the marital estate. Yet, with the right legal counsel and a realistic understanding of how to isolate as much of your assets’ value from the marital estate as possible, you can ensure a positive outcome for your case.
A Business Begun Before the Union Isn’t a Marital Asset
A common myth that small business owners often subscribe to is the belief that the existence of a business before the marriage entirely removes its value from the marital estate. The reality for business owners who divorce in Pennsylvania is that a complex analysis of the value of the business in question will need to be performed to determine how much of the company’s value will be subject to distribution.
A sophisticated knowledge of business valuations, appraisals, and taxation is needed in these situations. As part of the analysis, a hypothetical liquidation of the business needs to be conducted. A miscalculation of value can result in a difference of tens, if not hundreds, of thousands of dollars. Complex business valuations must be performed by qualified professionals and analyzed by attorneys who understand the sophisticated nature of not only the valuations themselves, but the tax consequences of actual and hypothetical liquidations.
Legal Fees Will Consume Large Portions of the Marital Estate
While it is true that Pennsylvania law regarding the division of assets is complex, your marital estate is not predestined to be unduly consumed by the cost of legal representation. There are four (usually more, in higher-asset cases) people involved in any divorce negotiation: two divorcing spouses and two lawyers. In a best-case scenario, two spouses with realistic expectations will retain the services of two experienced and pragmatic attorneys, who, with their deep knowledge of the law, will cut to the heart of the dispute to work toward a fair resolution. When this occurs, cases can be resolved with the litigants never having to see the inside of a courtroom.
If litigation is required to divide the estate, ensure the attorney advocating for you has a fee structure that is fair, charging only for work that is actually performed. Beware of non-refundable retainers and be sure to read every line of your attorney’s fee agreement before signing it. As I share with clients and in a book I co-authored entitled Stress-Free Divorce, the best representation you can have is from a legal professional who genuinely wants to maximize the value of your marital estate and will aggressively pursue that end.
If you have questions about divorce or equitable distribution in Pennsylvania, call the experienced Pennsylvania family law attorneys at Williams Family Law at 215-340-2207.