Equitable Distribution in New Jersey Divorce
During New Jersey divorce proceedings, all assets acquired during a marriage must be accounted for and divided between the divorcing parties. Unlike in other states, the division of a marital estate may not be a simple 50/50 split of shared assets. Division of assets can be a highly debated and an emotionally charged process, one based upon a host of complicated factors.
Under the New Jersey law of Equitable Distribution, each case is judged by its own merits. Though the statutory policy is involved, the presiding judge evaluates each party’s particular circumstance, and based on a multitude of case-specific factors, renders fair division of marital property.
Seeing that each party has expended effort in acquiring what constitutes the marital estate, the law of Equitable Distribution considers a marriage to be an economic partnership. Therefore, each partner is entitled to their due share of marital assets in the event of divorce. Like a business, factors affecting the division of a marital estate include what assets each party brought into the marriage, as well as any shared debt at the time of divorce.
Divisions aren’t determined merely by personal earnings and spending during the marriage, but also by each party’s individual efforts to further the marital enterprise, efforts which include raising children, domestic activity, and emotional support during the marriage. Additional factors affecting the division of the estate include the length of the marriage, the age and health of each party, granting of spousal support, and the resulting living situation of each party after assets are distributed.
Equitable Distribution: A Three-Step Process
New Jersey state law uses a three-step process to determine how to distribute mutual property acquired during the marriage.
Step One: Determine What Property Is to Be Divided
What is considered “marital property?”
Marital property, for the most part, is the property that was brought into the marriage, mutually. This includes any property that was acquired during the marriage, regardless of how it is titled. Property, assets and material goods are all considered to be marital property. If a party doesn’t want to have something included — bank account balance, vehicle, or prized possession — they will have to prove that it was acquired before the marriage was established and it does not contribute to the marriage. Included items can include gifts between spouses and income made by the individual during the marriage.
What is excluded from equitable distribution?
The general rule is that anything that was acquired before the marriage is excluded from the marital assets and should be kept by the party who brought it into the marriage, to include a home or property that was acquired before the marriage and the title was adjusted to reflect both parties during the marriage. Savings and retirement account balances that occurred before the marriage are also exempt, however, funds that are contributed to the retirement account after the marriage, and savings funds that are transferred from joint funds may be included, depending on the judge’s ruling.
The gray area: what could be included?
Marriage is a mutual contract binding two people together, and as such, there are some gray areas when it comes to dividing assets. Engagement rings are generally exempt as they are considered a premarital gift, although conditional upon marriage. However, if the ring was altered, upgraded, traded in, or replaced during the marriage, it is no longer exempt. Savings accounts, even in one spouse’s name may be included if mutual assets were used to fund it but will be assessed on a case-by-case basis.
Step Two: Value the Marital Property
The marital property that is to be divided should have a value assigned to it. Typically, the value is either the face value of assets or the fair market value for material goods and property. The value of the marital property should also include any mutually acquired and individual debts that should be considered in the division.
Step Three: Equitably Divide the Property
Although value was determined in step two, it is important to remember that equitably is not the same thing as equally. The state of New Jersey is not a 50/50 state and does not simply assign half of the assets to each party. A mediator or the courts will take a few factors into consideration when fairly dividing the marital property including:
- Duration of the marriage
- Each spouse’s physical health, emotional health, and age
- Premarital property ownership
- Standard of living that the marriage created
- Prenuptial, postnuptial, or written agreements
- Each spouse’s contribution to the marriage and post-marital responsibilities
- The income-earning potential of each spouse
- The contribution by each spouse to the acquisition, preservation, appreciation, or use of the property
- Tax consequences
- Assets and debts of each party
- Custody status of children
- Circumstances surrounding divorce
- Any other relevant factors
Sometimes, the division of assets may require liquidation prior to pay off mutual debts and refinance any remaining debt (such as a family home) into one party’s name. Divorce decrees and division of assets to not apply to creditors and anything titled in both party’s name means each party is still legally responsible.
Division of assets can be an emotionally charged time in the dissolution of marriage. To ensure that your assets are divided fairly for all parties, it is in your best interest to hire an experienced divorce lawyer. Bart W. Lombardo, Esq. is not only an experienced divorce attorney in New Jersey, but is also a trained mediator and collaborative divorce attorney. Contact him for your free consultation today!
Prenuptial Agreements and How They Affect Your Divorce
A prenuptial agreement is a contract made by two unmarried people who are considering marriage. The contract addresses all of the expectations and obligations that each party is responsible for and becomes effective once the marriage takes place. The main purpose of the prenuptial agreement is to maintain what assets you enter the marriage with in the event of a divorce. It is important to note that prenuptial agreements must be written and signed by both parties to be legally valid. Additionally, a statement of each spouse’s assets must be included with the prenuptial agreement and only what is included in the statement is covered in the event of a divorce. The only thing that a prenuptial agreement cannot dictate is custody of future children and child support for those children.
Prenuptial agreements help to make divorces go quicker and smoother because they address many of the issues that arise in the divorce process and negate the need for intervention in the areas specified in the contract.
If a prenuptial agreement did not accurately express all of the assets of one party or the marriage is found to be fraudulent, the prenuptial agreement will then be unenforceable and will therefore result in more typical divorce proceedings.
If you have previously signed a prenuptial agreement and are now facing a divorce, you can still benefit from having an experienced divorce lawyer on your side through the process. For all of your divorce needs, contact Bart W. Lombardo, Esq. He is backed with 22 years of family law and divorce experience.