The phrase “fair and equitable” is primarily used in two practice areas: bankruptcy law and family law. It’s also misunderstood by clients — almost more so than any other legal term on our books. Mostly, that’s because many people confuse the word “equitable” with “equality” or “equal.” And these are very different concepts. So what does fair and equitable actually mean?
For simplicity’s sake, let’s pretend for a moment that the word “fair” is just tacked on for no reason. According to The Law Dictionary, the legal definition of “equitable” is: “just, based on fairness and not legal technicalities; refers to positive remedies (orders to do something, not money damages) employed by the courts to solve disputes or give relief.”
To be perfectly clear, the word equitable has very little to do with the word equal. For example, equal distribution of marital properties means each divorced spouse gets an equal cut of the assets. If the former couple had $1 million in a joint account, it gets sliced down the middle, and each party walks away with $500,000.
Equitable distribution works differently.
Many different factors could go into making a divorce equitable: the amount of time that the couple was married, retirement, earning potential, children, taxes, etc. Two parents with roughly the same earning potential who agree to split childcare 50/50 and each spend equal amounts of time with their children might benefit from an arrangement that is both equal and equitable simultaneously.
But this usually isn’t the case. Let’s say one parent is the breadwinner. They make a million dollars a month. The second parent makes $500 a month. An equitable solution is the solution that best serves both parents based on their needs — not what is technically fair or equal.
For example, say you give a kid who scraped their knees a Band-Aid. You give another kid a Band-Aid after they broke their arm. This distribution of resources is not equal — but not equitable. The kid with the broken arm needs a cast.