The Pennsylvania Divorce Code of 1980, 23 Pa.C.S.A. § 3101 et.seq. (as amended) pioneered the concepts of no-fault divorce, equitable distribution of marital property, and post-divorce alimony in Pennsylvania. The Divorce Code was modified by the Pennsylvania Legislature in 1988 and 2005. Each time, our lawyers have been at the forefront in reshaping the law of our Commonwealth.

Equitable distribution requires the Court to identify, evaluate and distribute marital property. The Divorce Code establishes the presumption that marital property includes "all property acquired by either party during the marriage [without regard to title], including the increase in value ...of any non-marital property acquired [prior to marriage or by gift, bequest, devise or descent]." 23 Pa.C.S.A. § 3501; Aletto v. Aletto, 537 A.2d 1383 (1988)(increase in value of nonmarital property from date of marriage to date of separation). It is the time of acquisition, rather than title, that determines the nature of marital property. Sutliff v. Sutliff, 543 A.2d 534 (1987). By a preponderance of evidence, a party may exclude non-marital property if it falls into one of the nine exceptions enumerated in 23 Pa.C.S.A. § 3501(a). Among the exceptions, the most significant are: (1) pre-marital property; (2) property excluded by prenuptial agreement; (3) gifts and inheritances received during the marriage; and (4) property acquired after separation. 23 Pa.C.S.A. § 3501(a)(1)-(4). A party may be able to "trace" non-marital funds from one account to another during the marriage. Winters v. Winters, 512 A.2d 1211 (1986). Pre-marital, gift or inheritance property placed into joint names, however, is thereby "transmuted" into marital property. Bold v. Bold, 516 A.2d 741 (1986) (gift/inheritance). To overcome the presumption that jointly-titled property is marital, the burden of proof is clear and convincing evidence. Madden v. Madden, 486 A.2d 401 (1985). The marital portion of income streams, such as pensions, trusts, and stock options, includes all income earned from the date of marriage until the date of separation. Berrington v. Berrington, 633 A.2d 589 (1993)(pensions); Solomon v. Solomon, 611 A.2d 162 (1990)(trust income); Macaleer v. Macaleer, ___ A.2d ___ (1999)(stock options). The court may impose a constructive trust upon marital property transferred by one of the parties into the title of a third person. Liciardello v. Liciardello, 570 A.2d 1062 (1990).

To evaluate marital assets, the court generally determines "fair market value." Rev.Rul. 59-60. Although the court utilizes the date of separation to identify marital assets, the presumptive date for valuation is the date of trial. Sutliff v. Sutliff, 543 A.2d 534 (1987). But see Solomon v. Solomon, 611 A.2d 162 (1990)(date of valuation depends upon facts and circumstances of each case). A party who contributes non-marital property to the marital estate may be entitled to a credit, which declines over time, to compensate for the non-marital contribution. Sergi v. Sergi, 506 A.2d 928 (1986). Additionally, a party who utilizes post-separation income to maintain marital assets may be entitled to a credit. Trembach v. Trembach, 615 A.2d 33 (1992)(real estate taxes and mortgage). The value of a marital asset may be reduced by the amount of the recipient's income tax liability only if the divorce or equitable distribution triggers the taxable event, or if the amount and timing of the tax can be reasonably predicted. Hovis v. Hovis, 541 A.2d 1378 (1988). The value of a business includes "goodwill" value if the business is not dependent solely upon the reputation, skills or labor of the proprietor. Butler v. Butler, 621 A.2d 659 (1993); Fexa v. Fexa, 578 A.2d 1314 (1990). Depreciation must be added back to the book value of business assets, just as it is added back to income for support purposes. Hill v. Hill, 584 A.2d 1040 (1991).

After marital property is identified and evaluated, the court must weigh the eleven factors enumerated in 23 Pa.C.S.A. § 3502(a) to determine equitable distribution. Contrary to popular belief, the court does not start with a presumption of a 50-50 distribution. Fratangelo v. Fratangelo, 520 A.2d 1195 (1987). Under § 3502(a)(3), the court must consider the parties' personal monthly "cash flow," including income not disclosed on income tax returns, business perquisites, and depreciation (which is a "paper expense" that should be added back to taxable income). Cunningham v. Cunningham, 548 A.2d 611 (1988). If there is a disparity in the parties' incomes or earning capacities, the court may award a greater share of the marital estate to the dependent spouse under § 3502(a)(6). Zollars v. Zollars, 579 A.2d 1328 (1990). The court should balance the breadwinner spouse's contribution to the acquisition of marital assets against the homemaker spouse's contribution. 23 Pa.C.S.A. § 3502(a)(7); Teribery v. Teribery, 516 A.2d 33 (1986). Where the homemaker spouse also fostered the obligor's education or the growth of the family business, however, she may be entitled to a larger share of the marital estate as "reimbursement equity." Bold v. Bold, 574 A.2d 552 (1990); Johnson v. Johnson, 529 A.2d 1123 (1987). Under § 3502(a)(8), the court should consider the parties' non-marital assets, but not potential gifts from family or inheritances to be received in the future. Wayda v. Wayda, 576 A.2d 1060 (1990); Gruver v. Gruver, 539 A.2d 395 (1988). In evaluating and distributing marital property, the court may make inferences against a spouse who intentionally reduces his income or divests assets to evade distribution. Naddeo v. Naddeo, 626 A.2d 169 (1993); Pacella v. Pacella, 492 A.2d 707 (1985). Also, the court has discretion to distribute property in kind or compel one spouse to buy out the other spouse. Ryan v. Ryan, 596 A.2d 140 (1991).