Many people talk about divorce and refer to getting “half” or “a fair share”. What those concepts mean when they are actually applied depends on the state where the divorce action is commenced. In reality, the 50 states have two, very different, approaches to dividing marital assets. Forty one states apply the standard of equitable division. Nines states (Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) apply the community property standard. I am going to focus on equitable division as it is the more common approach, and what is applied in the jurisdictions where I work.
Equitable division generally means that the assets of the married couple will be divided up in a way that is deemed equitable within the context of the marriage. A number of factors will be considered to determine what is equitable, those factors vary by state, but normally consider the age and health of each spouse, the current earning capacity of each spouse, the efforts each spouse made during the marriage to earn and preserve assets. Unpaid work within the home, such as caring for children, and supporting a spouse in his or her career is also considered.
For Connecticut specifically the factors are:
“the length of the marriage, the causes for the … dissolution of the marriage … the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties and the opportunity of each for future acquisition of capital assets and income. The court shall also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates.”
Clearly this is not just a 50/50 split. I like the description used by the court in Gervais v. Gervais,276 Conn. 844, 882 A.2d 731 (2005)“[W]e are cognizant that [t]he issues involving financial orders are entirely interwoven. The rendering of judgment in a complicated dissolution case is a carefully crafted mosaic, each element of which may be dependent on the other.” Just like each marriage is different, division of the assets of that marriage will be unique. Every asset, from the house to the car to the IRA to pension, will be considered. Making things even more complicated, in Connecticut an inheritance received during the marriage is considered marital property whereas in New York it would be considered separate.
Equitable division can lead to creative solutions that allow spouses to move through a divorce with relative harmony. The inherent flexibility means that spouses can divide up assets in a way that works for their family, for example maybe one person will keep the house and the other will retain a stake in a family business. If couples can work together, there is the opportunity to find a solution that is specifically crafted to meet that couple’s needs. Of course, if couples cannot work together, this is a harder framework to work in, because there are many factors to be considered.
In considering how to divide up assets very often couples will talk about what is “fair.” I think that determining what is “fair” is not possible, not even for the spouses in the marriage. and certainly not for mediators, lawyers and judges on the periphery. To begin with, no one can really know what the marriage was like for the parties. The sacrifices, the rewards, the highs and the lows are not known to bystanders, and even the spouses can only know their individual experiences. We also cannot know what the future will hold. In the years to come either or both spouses may have significant personal happiness and professional success, or tremendous hardship. In retrospect a divorce agreement may seem more or less “fair.” That is why I prefer to think about what each spouse needs, looking hard at the actual assets and talking about the future in a pragmatic way.
We cannot know the future, but we can do our best to forecast and make a financial plan that relates to income and expenses. This approach also moves away from trying to assign blame and instead focuses on setting up each spouse for the future. Thinking about equitable division within the framework of establishing two people on a new path, with as much support and as little disruption as possible, seems to be a more productive approach. Talking about where each spouse will live, what kind of work they will do, what activities they want to pursue, can make the conversation about equitable division more productive and less fraught. Certainly there are often hard choices, like selling a family home that is too expensive for one spouse to maintain alone, but coming to the decision, or realization, is less painful if it is within a discussion of the finances, rather than within a discussion of fairness.
Equitable distribution is not equal, but in a collaborative divorce, pursued through mediation or with collaborative lawyers, it can lead to a division of assets that creates a foundation for both parties to more forward and have productive lives. The factors considered are many, but can never capture the complexity of a marriage. In the best case scenario those factors are a reminder to the parties to think holistically during this process and to focus on the future.