How does property get divided in divorce?
New Jersey is an "equitable distribution state." This means that in a divorce in New Jersey, any property that is acquired during the marriage must be divided in an equitable manner. Therefore, any marital property must be distributed either by a voluntary agreement of the parties or by an order of the divorce court.
What does equitable distribution mean?
Equitable distribution basically is the process as to how marital assets will be distributed. The distribution of marital assets is always very hotly contested and emotionally charged. In many cases, the parties actually become violent when they try to reach an agreement as to how to split up the marital assets.
The main theory of equitable distribution is that a marriage is an economic partnership. Therefore, each spouse is entitled to a share of the marital property.
What are the factors that a court uses to determine the equitable distribution of the marital assets?
There are many factors that a court takes into consideration when it determines how to equitably distribute the marital assets. The factors are the following:
1. The duration of the marriage;
2. The age, physical and emotional health of the parties;
3. The income of property brought to the marriage by each party;
4. The standard of living established during the marriage;
5. The existence of any written agreements made by the parties before or during the marriage concerning an arrangement of property distribution.
6. The economic circumstances of each party at the time the division of property becomes effective.
7. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquired sufficient educational training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage.
8. The contribution by each party to the education, training or earning power of the other.
9. The contribution of each party to the acquisition, dissipation, preservation depreciation or appreciation of the account or value of the marital property, as well as the contribution of the party as a home make.
10. The tax consequences of the property distribution to each party.
11. The present value of the property.
12. 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.
13. The debts and liability of the parties.
14. The need for creation, now or in the future, of a trust fund to secure reasonable foreseeable medical or education costs for a spouse or child.
15. The extent to which a party deferred achieving their career goals.
16. Any other factors which the court may deem relevant.
How does a court determine how to apportion all of the marital assets in a marriage?
Equitable distribution calls for a judge to apportion the marital assets in such a manner that will be equitable and just to both parties under all circumstances. "Equitable distribution" states that each spouse is entitled to a portion of the marital property in relation to his/her contributions during the marriage.
Equitable distribution does not mean an equal division of the marital assets. The court cannot mechanically divide the assets on a 50/50 basis. When determining equitable distribution, the extent of each parties' contribution to the marriage is not measured only by the amount of money that was contributed during the marriage. The court will also evaluate all of the financial and non-financial components of the marriage. Therefore, the efforts of raising the children, making a home and providing emotional support is as essential to the maintenance of the marriage as the economic factors. The trial judge also considers the factors above to help determine how much or how many of the assets should be allotted to each party.
For equitable distribution purposes, does the court take into consideration if only one of the spouses worked during the marriage?
The fact that one spouse may not have worked during the marriage is not particularly important. The whole concept of a marriage in New Jersey is that it is an economic partnership. Unless proven otherwise, the court will presume that both the husband and wife both made substantial financial and/or non-financial contributions to the acquisition of income and property during the marriage.
In a traditional marriage, if the wife did not work during the marriage, the court will then emphasize her marital duties and homemaking chores that she contributed to the marriage. The court will not try to put an economic value on the wife's contributions to the marriage. The most important aspect in an equitable distribution case is to determine what assets were acquired during the marriage. The court will not try to put a value on each person's individual contribution to the marriage.
What assets are considered part of the marital estate for equitable distribution purposes?
Only assets that are "acquired during the marriage" are considered to be part of the marital estate. Any property that was acquired before the marriage is considered to be premarital property, and it is not subject to equitable distribution. "During the marriage," is frequently interpreted as beginning the day the marriage ceremony took place, and ending the day when the divorce complaint was filed.
The concept of a marriage is that it is an economic partnership. Therefore, if the parties have a separation agreement before the complaint for divorce is filed, then the partnership died on the date of the separation agreement, rather than the date when the complaint was filed. Any assets acquired during the marriage would be considered under equitable distribution up to the date of the separation.
In summary, only property that is acquired during the marriage is subject to equitable distribution. However, property that is acquired by one party in contemplation of their marriage before the marriage is also still subject to equitable distribution. The courts recognize that the "partnership" of marriage may begin even before the actual marriage ceremony through the purchase of an assets, such as a home. The spouse who does not have his/her name on the deed may be required to show that they were actively involved in making improvements to the home before and after the marriage.
Additionally, all property that is acquired during the course of the marriage is subject to equitable distribution. This includes real estate, homes, pension proceeds, and any other tangible or real property assets. Even if the property was acquired in one spouse's name, it is subject to equitable distribution as long as it was acquired during the marriage.
How will the marital property be distributed?
All property acquired by the parties during their marriage is subject to "equitable distribution." The purpose of equitable distribution is to achieve a fair distribution of what the parties acquired during their marriage.
"Equitable" does not necessarily mean that the property will be divided one-half to each of the parties. New Jersey is not a so-called "community property" State, where this would necessarily be the case. In New Jersey, there is no initial presumption in favor of an equal division.
The theory is based upon viewing the marriage as a partnership or joint enterprise, so that even if one party technically acquired all of the assets through earned income, while the other was at home and not working outside the home, the court would still recognize that the marriage was, in fact, a partnership and that, but for the fact that the unemployed spouse was at home keeping the household for the family, the employed spouse would not have had the opportunity to earn the income for the marital partnership.
Thus, the identity of the person who actually earned the money becomes largely immaterial and, unless the parties can agree upon a fair distribution, the court would distribute all property in a manner that it deems "equitable."
What property is not subject to equitable distribution?
There are several categories of property not subject to distribution. The major type of asset(s) that is not subject to equitable distribution is property that was acquired before the marriage. Moreover, any property that was acquired by way of an inheritance is not subject to equitable distribution. In summary, any property that was acquired before the marriage, and any property that was acquired by an inheritance is not part of the marital estate.
Unless there is a pre-nuptial agreement, if property is acquired prior to a marriage, it must be kept separately, and it must not be commingled with other marital assets. It is very important to keep premarital assets separate from the marital property. If real property was purchased or inherited prior to marriage - while it may start out immune to claims of equitable distribution - should the property be maintained, improved or prepared with money earned or otherwise received during the marriage, that property might slowly find its way onto the bargaining table.
A very common issue in many divorces is that premarital assets become commingled with marital assets. In many cases, it is not a realistic option to have a person sign a pre-nuptial agreement. However, it is not too overbearing to insist that premarital monies be kept separately and commingled. My philosophy about marriage is to hope for the best, but expect the worst. Don't commingle premarital assets with other marital property. During a divorce case, people become ruthless animals. Protect yourself as best as you can.
If certain assets are titled in my name alone, does this insulate me from any equitable distribution claims by my spouse?
No. This is a widely held misconception. There may or may not be an equitable entitlement to the titled property by the untitled spouse, but keeping the title in one party's name alone accomplishes very little. Buying property in one's own name during marriage accomplishes nothing in terms of immunizing it from any claims of equitable distribution.
How are the marital assets distributed pursuant to a divorce judgment?
After a divorce is over, the parties have to distribute the marital assets according to the terms of the judgment of divorce. In most cases, this is almost as hard to accomplish as it is to reach a divorce settlement. The bottom line is that after a divorce is over the parties are full of rage and hate for each other. Divorcing people is not an easy way to make a living.
The parties and the lawyers should try to work out a reasonable plan to liquidate the marital estate, and to distribute the assets in an orderly and fair manner. However, this goal is rarely accomplished. Liens and judgments are filed. Mortgage payments are missed. Automobiles are smashed in accidents.
If the parties can't reach an accord as to how to distribute the marital assets, then a party may have to file an application for post-judgment relief. Many people are very naive and they believe that once the divorce is complete, then their problems are over. In many cases, there is more work in the post-judgment aspects of the case than there is in the divorce case.
Homes have to be sold. Pensions must be split via a QDRO order. Stocks must be sold. Credit card bills must be paid. It is my advice to my clients to liquidate the marital assets, and to pay off all of the joint debts ASAP. Moreover, I always advise my clients to insist that they be taken off any joint mortgage within six months of the marriage. I have had countless cases wherein a person's credit has been ruined because their ex-spouse did not pay for the mortgage on the former marital home. Thereafter, the home goes into foreclosure. As a result of this disaster, the spouse who does not even live in the marital home any more has his credit ruined. The aggrieved spouse did not even "see it coming" that is credit would be nuked. Sometimes the most awful things that happen to a person hit them when they don't even expect it. Once your credit is ruined your chances of buying a new home are slim to none.
In summary don't expect that your problems will be over once your divorce case is over. In most cases, the distribution of marital assets is never an easy process. It is always a very good idea to keep track if your former spouse is paying the mortgage if you are still listed as a borrower. Don't let your ex-spouse ruin your credit. I have seen this occur countless of times. Don't let yourself become a victim.
