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    • Ann V. Levin
    • Anthony M. Hoover
    • Heather Willis Lewis
    • Sawyer D. Sourbeer
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    • J. Paul Helvy
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      (Financial Director)
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      (Client Relationship Manager/Paralegal)
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      (Paralegal)
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Are Assets and Debts Divided 50/50 in a Pennsylvania Divorce?

Home DivorceAre Assets and Debts Divided 50/50 in a Pennsylvania Divorce?
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Are Assets and Debts Divided 50/50 in a Pennsylvania Divorce?

Are Assets and Debts Divided 50/50 in a Pennsylvania Divorce?

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The quick answer: possibly, but unlikely. There are two reasons why assets and debts are not equally divided 50/50 in a divorce.

First, it is generally not efficient to divide each asset and debt. Dividing each asset results in a high number of transactions and high transaction costs.

Second, the Pennsylvania Divorce Code provides that assets and debts should be equitably divided, not equally divided.

The best way to show a division of assets is by a simple example.

Chart #1 below shows a simplified personal financial statement of a family before a divorce. The chart identifies the asset, the asset value, and the “title owner” of each asset and debt.

Chart #1 – Example of How Assets are Held During the Marriage

Asset Spouse 1 Spouse 2 Joint Asset
House Equity — — $100,000
Cash Savings — — $20,000
Spouse 1 Retirement Savings $85,000 — —
Spouse 2 Retirement Savings — $5,000 —
Credit Card Debt -$10,000 — —
Totals $75,000 $5,000 $120,000
Total Marital Estate $200,000

In Divorce, where the assets and debts are divided, dividing each asset and debt 50/50 would result in 5 transactions, with 5 separate transaction costs. That would not be efficient.

Chart #2 below is a sample 45/55 divorce division of the assets and debts from Chart #1. Spouse 1 receives 45% of the assets and debts, and Spouse 2 receiving 55% of the assets and debts. In Chart #2, we’ll assume the parties agreed to a 45/55 division because Spouse 2 has less income and will need time to increase earnings. Income is not the only factor considered in division of assets and debts, however, it is a factor that is highly considered. We will also assume that each asset is a “marital asset”—when the parties were married, they had $0.00 in assets and debts.

Chart #2 – Example of How Assets and Debts May Be Divided During Divorce Process

Asset Spouse 1 Spouse 2 Joint Asset
House Equity — $100,000 —
Cash Savings $15,000 $5,000 —
Spouse 1 Retirement Savings $85,000 — —
Spouse 2 Retirement Savings — $5,000 —
Credit Card Debt -$10,000 — —
Totals $90,000 $110,000 —
Total Marital Estate $200,000

In Chart #2, there are only 2 transactions to divide the assets and debts: (1) transfer of the house to Spouse 2, and (2) distribution of cash savings.

This example highlights real financial planning issues in divorce. Spouse 2 received the house, and in this scenario, we’ll assume Spouse 2’s number one priority was to keep the house. However, Spouse 2 is what a financial planner would call “house poor,” with minimal retirement and cash savings. Spouse 1 has retirement assets, but if Spouse 1 wanted to purchase a house, Spouse 1 will incur the initial cost of purchasing a house, including closing costs, realtor fees, and a down payment.

The issues identified above require careful consideration of financial planning, and Levin Hoover Family Law Firm regularly works with financial planners to discuss the most productive distribution of assets and debts for a client’s future.

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Levin Hoover Family Law Firm focuses exclusively on family law, including areas such as divorce, child custody, alimony, business valuations, spousal and child support, grandparent custody, prenuptial agreements, mid-nuptial and post-nuptial agreements, asset and debt distribution and more.

    Levin Hoover Family Law Firm

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    View the profile of Pennsylvania Family Law Attorney Ann V. Levin
    View the profile of Pennsylvania Family Law Attorney Anthony M. Hoover
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      Lancaster, PA 17602

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    Keeping You “In The Know”

    • May a spouse transfer an asset to avoid division in a Pennsylvania Divorce?
    • Are you liable for your spouse’s credit card debt in a Pennsylvania Divorce?
    • How is debt handled in a Pennsylvania Divorce?
    • Are Assets and Debts Divided 50/50 in a Pennsylvania Divorce?

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