How is Marital Property Different from Community Property?
In Pennsylvania, marital property is divided in a process known as equitable distribution. The method prescribed by the Divorce Code is a “dual classification” equitable distribution scheme because marital property is distinguished from nonmarital or separate property (terms which are used interchangeably). In other jurisdictions governed by an “all-property” equitable distribution scheme, the divorce courts do not distinguish between marital and nonmarital property.
Pennsylvania does not recognize community property, which is a method by which married persons may hold title to property in certain jurisdictions, creating mutual fiduciary duties between spouses and usually resulting in an equal division upon divorce. See, Drake v. Drake, 555 Pa. 481, 489-490, 725 A.2d 717, 720-721 (1999); Wilcox v. Penn Mutual Life Ins. Co., 357 Pa. 581, 55 A.2d 521 (1947). Instead, married persons in Pennsylvania may hold joint title to property as tenants by the entireties (“per tout et non per my”), which cannot be severed by partition or attached by creditors of an individual spouse. See, Fazekas v. Fazekas, 727 A.2d 1262 (Pa.Super.1999). Entireties property ceases to exist upon marital dissolution, 23 Pa.C.S. § 3507(a), and unlike community property, is not presumed to be divided equally.
Pennsylvania is in the minority of jurisdictions where the increase in value of separate property is subject to equitable distribution, regardless of whether the appreciation is active or passive. In most states, the appreciation of separate property due to inflation or market forces is not divided in equitable distribution. This approach was advocated in the early days of the Pennsylvania Divorce Code. See (Hon.) Emanuel A. Bertin, Equitable Distribution: Preparing the Case for Settlement or Trial 92-94 (PBI 1982). The Superior Court soon took a different view. Aletto v. Aletto, 537 A.2d 1383 (Pa.Super.1988); Anthony v. Anthony, 514 A.2d 91 (Pa.Super.1986).
The preceding is an excerpt from a new book published by the Pennsyvlania Bar Institute (2010), entitled “Slicing Up the Pie: Equitable Distribution in Pennsylvania” (David Ladov, Editor).