The Economic Impacts of COVID-19: Notes on Equitable Distribution (Part I)
The following is the first in a series of articles exploring the effects of the COVID-19 pandemic and resulting economic crisis on the process of dividing property during a divorce, known as “equitable distribution”.
For people navigating the complexities of a divorce, each day can be unprecedented in emotional and logistical strain. And for a society living under the health and economic stressors of a novel viral pandemic, life can feel rather unmoored as well. Given the great uncertainties and overwhelming urgency of the present, this series of articles seeks to unpack and explain the process of equitable distribution as it pertains to divorce proceedings and within the context of the new realities of the COVID-19 pandemic.
Over the course of a marriage, couples accumulate both assets and liabilities that need to be divided between partners in the event of a divorce. Together, a couple’s assets and liabilities are referred to as the marital estate and often includes cash, investment and retirement accounts, residential and/or commercial real estate, cars, personal property, insurance policies, business interests, and debt of all kinds.
Equitable distribution normally requires that the fair market value of certain assets be determined so that they can be divided between the parties. Even under normal circumstances, this process can be challenging because divorcing couples may not agree on the value of certain property. The value of property can also change over time, either appreciating or depreciating over the course of the marriage. In normal conditions, the evaluation and division of assets in a divorce already includes a degree of uncertainty that often requires the input of a neutral third-party professional. Given the current economic instability, the value of shared assets and thus the process of equitable distribution are likely to be impacted in significant but unpredictable ways, adding even more tension to divorce proceedings.
Similar to the evaluation of assets, divorcing couples must also divide liabilities, like debt, acquired during the marriage. Liabilities are generally measured as of the date of legal separation, or when the parties are living “separate and apart” from one another and no longer share the typical rights and duties of a married couple. In equitable distribution, liabilities are generally divided in proportion to the parties’ ability to bear them. Again, the widespread economic instability created by the COVID-19 pandemic alters a variety of otherwise more stable assumptions that are typical when dividing liabilities. Additionally, the need to quarantine and the limited ability to adjust living arrangements because of public health concerns can complicate the concept of living “separate and apart”.
A divorce under normal circumstances can throw parties’ lives into an upsetting state of uncertainty. Current economic and public health concerns during this pandemic have created a variety of new challenges that only intensify an already stressful divorce process. Follow this series as our attorneys work to anticipate and help you navigate the many unprecedented challenges we now face.