Equitable Distribution in Divorce

Equitable distribution is the legal term used to describe the process of dividing property and debt in a Virginia divorce.  Equitable distribution is one of the most difficult and complex areas of law.  There is literally a 3 volume set of books that focuses only on equitable distribution!

Our Experience

Our divorce lawyer, John Kitzmann, has handled complex equitable distribution disputes in some of the biggest cases in Virginia, involving hundreds of millions of dollars of property.  Mr. Kitzmann, while a lawyer at McGuire Woods, practiced business and corporate law.  Because many divorces involve businesses, Mr. Kitzmann’s business law experience gives him the experience and skill necessary to handle divorces involving businesses.  Mr. Kitzmann has taught other lawyers courses and written articles on equitable distribution.  

Equitable Distribution is a Three Step Process

Equitable distribution is governed by Virginia Code Section 20-107.3 and court cases that have interpreted this statute. 

Investigation

The first step in equitable distribution is to identify all of the property and debt that need to be divided.  Discovering all of the property and debt typically involves a close examination of tax returns, financial records, credit reports, and other documents.  Typically, interrogatories (written questions which a party in a divorce must answer) and request for production of documents (a list of documents that a party in a divorce must produce) are sent to the other spouse.  Furthermore, subpoenas can be served on banks, CPAs, and others to obtain financial information and documents.  If necessary, depositions of the parties, CPAs, or others may be necessary.  

Classification

Each item of property or debt needs to be classified as a) marital, b) separate or c) hybrid.  Marital property and debt can be divided between the spouses.  Separate property and debt will go to only one spouse.  The marital portion of hybrid property can be divided, but the separate portion of hybrid property will go to only one spouse. 

Marital Property and Debt:  With some exceptions, property or debt is marital if it was acquired during the marriage or is titled to both spouses.  

Separate Property and Debt:  Property or debt is separate if it was:

• acquired before the start of the marriage
• acquired after the date the parties separated
• acquired with inherited or gifted money
• received as a gift from someone other than the other spouse 
• inherited 

Hybrid Property and Debt:  Hybrid property or debt contains a marital portion and a separate portion.  Examples:

• If a spouse owned a retirement plan before the marriage with $100,000 as of the date of marriage and then during the marriage contributed another $100,000 to the plan, the $100,000 from prior to the marriage would be marital property and the $100,000 that was contributed during the marriage would be marital property. 
• One spouse owned a business before the marriage.  During the marriage, the spouse continued working in the business and increased the value of the business through her efforts during the marriage.  The amount the value was increased during the marriage due to the spouse’s work would be marital property.  The rest of the value would be separate property.  
• One spouse owned a house prior to the marriage.  During the marriage, the spouse sold her house and she and her husband used the proceeds to buy a new house.  Then, the spouses paid the mortgage on the new mortgage.  In this case, the money from the sale of the original house would be separate property and the amount the mortgage payments reduced the mortgage would be marital property. 

Valuation

Credible evidence of the value of each item of property must be obtained and provided to the court.  An expert appraisal must typically be obtained for the following types of property:

• Businesses
• Real Estate
• Personal property (things like art, jewelry, furniture, etc.)  

If credible evidence is not presented to the court, the court will refuse to equitably distribute that item of property.