Often people mistakenly believe a divorce leads to an equal sharing of all marital assets and liabilities. However, in equitable distribution, the courts look at the assets and debts a married couple has accumulated after the date of marriage and before commencement of an action to dissolve the marriage. Those assets and liabilities are usually divided equally but not always. Assets that one party acquires before marriage or after commencement of a divorce action are called separate assets and generally are not subject to equitable distribution. Special gifts made explicitly to one party or inheritances given to one spouse during the marriage may fall into that category as well.
The amount that a separate asset appreciates during the marriage is usually subject to equitable distribution. For example, if Jack bought a house prior to marrying Jill, Jack would be entitled to the amount the house was worth prior to the marriage; however, Jill would be entitled to half the amount the house has appreciated during the five years they were married. In some circumstances if the owner of a separate asset co-mingled it by putting it in a joint name with the other spouse, a presumption is then created that the intent was to make it a marital asset (and subject to equitable distribution).
Most retirement benefits are subject to equitable distribution as well. Generally, the portions of a retirement plan which are earned prior to marriage or after separation are considered separate assets. Benefits earned during the marriage regardless of whether they were vested on the date of separation are usually considered marital property and thus are subject to equitable distribution.
Placing a value on certain assets can be vexing. While the value of publicly traded stocks can readily be determined by reviewing the latest stock exchange quote, the value of a closely held on-going business such as a restaurant or auto repair shop can prove to be much more difficult. Usually, accountants and appraisers are hired as experts to help make a determination. Should disputes arise as to what is the actual value is, the court will ultimately make a determination based on the opinions of experts.