DEFINITION of ‘Equitable Division’
A legal theory that guides how property acquired during the course of a marriage should be distributed between the two parties in the case of a divorce. Equitable division takes into account a variety of factors when dividing assets and debts including how long the parties were married, the needs of each of the parties, and the financial contribution each party made during the marriage.
INVESTOPEDIA EXPLAINS ‘Equitable Division’
Dividing up property during divorce proceedings is often a complicated endeavour, and different legal theories treat this division differently. Community property theory holds that property should be divided equally, since both parties are considered to have joint ownership of all property (both assets and debts). Equitable division theory differs from this approach substantially.
Rather than treat each party as equal, equitable division holds that a variety of factors make the ownership of property inherently unequal. Factors that make the parties unequal include educational attainment and employability, how much each party earns and spends, what the financial needs of each party is, and how old and healthy each party is. The theory also takes into account the causes of the divorce, including whether one party was abusive or committed infidelity.
Property is often divided into two groupings. The first group is separate property, which is property that belongs to one spouse. Examples include property that was acquired before the marriage or inherited before or during the marriage. Some states allow separate property to be excluded from equitable division. The other group, marital property, represents property that was acquired during the marriage.
Most states in the United States follow equitable division theory during divorce proceedings. If the parties in a divorce cannot agree on how to divide their property during arbitration the divorce may go to court, with a judge ultimately deciding how to divide up any property.