Dividing Assets: New Jersey’s Property Distribution after a Divorce
A divorce separates not only people and lives, but physical assets as well. New Jersey distributes assets fairly by taking into account many, many factors about the previous marriage or civil union, such as what the assets are worth, where they came from, who contributed to them, and much more, as revealed below.
Defining “Equitable Distribution”
Marital property is divided in New Jersey by “equitable distribution.” Equity is a term for fairness and the Court can make any fair allocation and distribution. In making an equitable distribution of property, the court considers these factors:
- The duration of the marriage or civil union;
- The age and physical and emotional health of the parties;
- The income or property brought to the marriage or civil union;
- The standard of living established during the marriage or civil union;
- Any written agreement made before or during the marriage/civil union concerning property distribution;
- The economic circumstances of each party at the time the division of property becomes effective;
- The income and earning capacity of each party, including education background, training, employment skills, experience, length of absence from the job market, responsibilities for children, and time and expense necessary to acquire the ability to enable the party to become self-supporting at a standard of living comparable to that during the marriage or civil union.
- The contribution by each party to the education, training or earning power of the other;
- The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation of the marital property, as well as the contribution of a party as a homemaker;
- The tax consequences of the proposed distribution to each party;
- The present value of the property;
- The need of a parent who has physical custody of a child to own or occupy the marital residence and to use or own the household effects;
- The debts and liabilities of the parties;
- The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union or children; and
- The extent to which a party deferred achieving their career goals.
What is Included in the Marital Estate
What is included for equitable distribution, how much it’s worth, and how it is distributed are the three questions which must then be answered. Think of the “marital estate” as being a pool of assets that consists of everything and anything of value or future value. Property, jewelry, businesses, artwork and retirement benefits are included. It usually makes no difference whether the property is held by the husband, wife, jointly or in the name of a third person(s).
There are three exclusions from equitable distribution:
- An asset which is premarital or can be traced to a premarital contribution. There is a developing classification of things acquired before marriage if it was purchased in preparation for marriage, and these do fall under equitable distribution. An example is a home purchased right before marriage.
- Inheritances received by one party during the marriage.
- Gifts from third persons.
When is the Value of Property Assessed?
The date of the filing of the Complaint for Divorce historically has been the date that assets are valued for purposes of equitable distribution. If the asset increases or decreases in value due to fluctuating market conditions, the gain or loss is taken by both parties when the asset is sold or distributed.
However, if an asset increased in value due to the sole efforts of one party, the gain usually will be given to them. Losses are similarly treated. Recent case law has created several exceptions to the general rule depending upon whether an asset was premarital, active or passive, and whether a non-owner spouse contributed to the increase in value during the marriage.