Reblog: In Pennsylvania, What Happens if We Divorce Without Dividing Our Property?

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Most couples can agree to get a divorce, but few can agree on how to divide their property.  As a result, equitable distribution in Pennsylvania can be very costly and require the assistance of an attorney and experts, such as real estate appraisers and forensic accountants.  Many couples, therefore, either choose to not or cannot afford to utilize equitable distribution.

What happens to the marital property then?  Who owns the property?  Who can possess the property?

The answer is enunciated in 23 Pa.C.S. § 3507(a), but understanding the statute requires an understanding of the legal terms it employs.  The two terms are “tenancy of entireties” and “tenancy in common.”  When a husband and wife purchase/receive property, they own it as “tenants by the entireties.”  Essentially, they own it jointly and there is an automatic transfer of the property from one spouse to other upon the death of one spouse.  Prior to the conclusion of equitable distribution, the court can step in and divide this property between the spouses “equitably,” based on the factors in 23 Pa.C.S. § 3502.  Once the divorce is concluded, however, the property converts to “tenancy in common,” and the ex-spouses own it as “tenants in common.”  Tenants in common are more of partners.  They own the property equally in separate shares.  One tenant in common could sell his or her share or will it any one they want.  The property will not automatically pass from one tenant in common to the other.

The conversion of the property can cause issues if either party wants to pursue their share of the property in court.  At any time, either party could file for the sale of the property, so that the proceeds can be divided equally between the parties.  This could be to the detriment of one party if in equitable distribution the could had the power to grant them 60% of the equity in the property, but now, because of the divorce and conversion, the court is capped at 50% of the equity.

This also creates the risk for unfair surprise and a lot of financial uncertainty.  For example, if both spouses own a house, divorce without pursuing equitable distribution, and one spouse voluntarily moves out of the home, at any time that ex-spouse could file an action with the court to force the sale of the other ex-spouses home.  The house will either be sold or the ex-spouse residing in the house will need to buy-out the other ex-spouse.  These are only some of the negative consequences of not pursuing equitable distribution.

The best alternative to a nasty fight over property is to reach an agreement on how to divide the property between of you.  If this occurs, it is strongly recommended that even you hire an attorney to prepare a property settlement agreement rather than simply divorcing without addressing your property issues.  Failure to do so could be disastrous or cause issues with lenders.  The property settlement agreement can properly avoid the surprise and financial uncertainty described above.

If you have any questions regarding the division of marital property, please contact me directly at mhovey@gmail.com  Thank you.

Reblog: Does Pennsylvania Have Legal Separation?

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A common question from new clients is, “does Pennsylvania have legal separation?” The answer yes, but how it is achieved differs from other states. The goal of this article is to explain, in general terms,legal separation in Pennsylvania. Three follow-up articles will focus on how a couple can become legally separated, how legal separation affects each spouse’s property rights, and how legal separation affects the couple’s marital rights.

In some states, in order to obtain legal separation from your spouse, you are required to file with the appropriate court. The story I use to illustrate how this works is that of Holly Lahti of Idaho. In January 2010, Ms. Lahti won half of the $380 million Mega Millions jackpot. At the time of the drawing, Ms. Lahti and her husband, who had a violent history, were separated. Nevertheless, at the time of the drawing, neither party had filed for divorce, so they were not legally separated. As a result, Ms. Lahti’s husband is likely entitled to a portion of her $190 million winnings. Upon learning of this news, her husband remarked, “That’s awesome! I won’t have to pay child support!” (See “Mystery Surrounds $190 Million Idaho Lottery Winner,” USA Today).

In Pennsylvania, however, you are NOT required to file any documents with the Court. According to 23 Pa.C.S. § 3102, separation occurs when the parties cease “cohabitation, whether living in the same residence or not.” Unless proven otherwise, legal separation is presumed to commence no later than when the divorce complaint is filed and served.

The Superior Court, however, has defined cohabitation as “the mutual assumption of those rights and duties attendant to the relationship of husband and wife.” Thomas v. Thomas, 483 A.2d 945 (Pa.Super. 1984). This definition means that you and your spouse can be separated while living in the same home and, conversely, you can live in separate homes, but still not be legally separated.  The filing for divorce is typically not required to qualify for legal separation.

As a result, there is no clear test for determining whether a couple is separated. The courts review each separation on a case-by-case basis. The court consistently considers certain factors, however, including: (1) whether the parties still live together; (2) whether the parties maintained a social life as husband and wife; (3) whether the parties have continued sexual relations; (4) whether the parties have separated their finances; and (5) if the parties still live together, whether they continue to share the same bed. Compare Mackey v. Mackey, 545 A.2d 362 (1988), with Britton v. Britton, 582 A.2d 1335 (1990). No one factor controls.

The court has explained that the reason for such a loose examination of separation is to avoid discouraging reconciliation between the spouses. The court explained that a stringent test for separation could have a “chilling effect” because “estranged spouses would be reluctant to attempt a reconciliation if a failed attempt to re-establish the marital relationship causes” a delay in the overall divorce procedure. As a result, the court is there to resolve issues of separation without getting in the way of married couples working through a difficult, emotional divorce.

The Divorce Code states, however, that is presumed that separation occurs at the latest at the time when the divorce complaint is served on the opposing spouse. See 23 Pa.C.S. § 3102 Nevertheless, it must be noted that this is merely a presumption and can be rebutted by competent testimony and evidence to the contrary.

Understanding when you legally separate from your spouse is extremely important because it can directly impact your property rights related to both marital property and, like Ms. Lahti, post-separation property, as well as your procedural rights under the divorce and your entitlement to support. As a result, if you are considering a separation from your spouse (even if you are not interested in a divorce), I recommend reviewing the on this topic and then consulting with an attorney to understand your rights and obligations.

If you have any questions on legal separation, please contact me directly at mhovey@gmail.com.  Thank you.