Dividing Assets in a Divorce – Coverture Fraction

The Coverture Fraction (also called the Time Rule Formula) is a mathematical formula that is sometimes used to calculate the marital and non-marital portions of certain types of assets in a divorce, including pensions and stock options.  The denominator of the fraction is the total earnings period, often expressed in number of days.  In the case of a pension, it usually is the amount of time from the date of entry into the plan to the calculation date, which may be termination of employment, the date of divorce, or other relevant date.  In the case of stock options, the denominator time period is often date of grant to vesting date.  The numerator of the fraction is the time period, e.g. number of days, from the beginning date to date of marriage, date of marriage to end date, beginning date to date of divorce, or date of divorce to end date.    For example, if an employee began earning a pension on Day 1, got married on Day  500, and terminated employment on Day 783, the total earnings period (denominator) would be 783 days, the pre-marital portion would be 500 days, and the marital portion would be 283 days.  The formula to calculate the percent that is pre-marital is 500/783 (63.86%) and the marital portion is 283/783 (36.14%).  In my experience, this formula is commonly used to calculate the marital and non-marital portion of pensions but not other retirement assets, such as 401(K) and IRA accounts.    For division of stock options, restricted stock and the like, we use the coverture fraction in certain circumstances but also must consider the purpose for which the asset was granted (past, present, or future performance) and other qualitative factors, specifically addressed in Newman v Patton (692 S.E.2d 322; 286 GA 805, GA Supreme Court 2010).

Each case is different and the facts and circumstance of each case must be considered before employing any particular mathematical formula or rule for division of assets.  This article is intended to provide a description of the coverture fraction methodology that may or may not be appropriate to use in individual situations.