Divorce Lawyer: Division of Assets or Equitable Distribution
In some ways, the end of a business partnership and divorce are parallel events. Both represent a break-up with the intention of moving forward. No doubt this will necessitate a division of assets. For New Jersey couples involved in a divorce action, this means following the principles of equitable distribution. This same doctrine applies to the dissolution of civil unions as well.
Equitable distribution seeks to fairly divide assets and debts between the parties as reasonably as possible. New Jersey is not a community property state. Therefore, married couples in the process of divorce should not arbitrarily anticipate a fifty-fifty split of marital property.
The division of assets or equitable distribution are often focal points in a divorce settlement or litigated matter. For parties with a high net worth, this can be a crucial issue.
Marital Property v. Separate Property
When divorcing spouses meet with their prospective attorneys, each should be prepared to submit a list of marital assets and debts. Additionally, there is the issue of what constitutes separate property.
Inheritance is an example of separate property that may be acquired during a marriage. If your mother or father left you a sizeable estate, you are not obligated to split assets with your spouse. That said, comingling the funds into a joint account makes them part of the marital estate. Your legacy would no longer be separate property.
Meanwhile, personal injury awards and settlement are often a subject of controversy when it comes to equitable distribution. If the damages are intended to reimburse lost wages or pay for medical bills, they become marital assets. However, money received for pain and suffering and physical and mental disabilities are not divided with the uninjured spouse.
Real estate or other assets acquired before marriage are often viewed as separate property. Once again, issues may arise concerning the exemption from equitable distribution. For example, a spouse may make a claim if he or she shows evidence of contributing to mortgage payments or marked improvements to the property.
Notably, engagement rings are not subject to equitable distribution because they are considered conditional gifts given before marriage. Once the couple weds, the ring becomes the sole property of its owner.
Division of Assets
Dividing property in a divorce is more complicated than it may seem on first review. Appraisals are often necessary to determine value. Too often, debates over the division of assets become contentious and therefore difficult to settle.
Equitable distribution is determined based on the criteria defined in NJSA 2A:34-23.1:
- The duration of the marriage or civil union
- Each party’s contribution to the education, training or earning power
- Individuals’ ages and health
- The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker
- Each party’s income or property before the marriage or civil union began
- Prospective tax consequences subsequent to division of property
- Parties’ standard of living together
- Property’s present value
- Written agreements such as prenuptial or postnuptial agreements
- The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects
- Economic circumstances anticipated after the division of property
- Couple’s outstanding debts and liabilities
- 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 acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage or civil union
- Need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, a partner in a civil union couple or children
- The extent to which a party deferred achieving their career goals.
Meanwhile, the court may entertain other factors it deems appropriate in making findings concerning equitable distribution. In best case scenarios, the parties will work with their attorneys and make their own decisions concerning the division of assets/
Assets Subject to Equitable Distribution
In determining assets subject to equitable distribution, the Law Offices of Sam Stoia works with clients and solicits expert opinion as appropriate. This may include forensic accountants or business valuation experts, as well those with expertise in real property or personal property appraisals. Some of the items that may fall under the category of division of assets include:
- Real property, including the marital home and other properties
- Bank Accounts
- Retirement plans, including pensions, deferred compensation 401K plans, etc.
- Business interests, including professional practices, construction companies, etc.
- Assets that have been transferred overseas or other foreign countries
- Hidden Assets
You should also know that family pets are considered marital property under the law and therefore subject to equitable distribution.
Learn More About Equitable Distribution
Without question, equitable distribution of marital assets means a great deal to divorcing couples. At the Law Offices of Sam Stoia, we provide our clients with informative and realist advice concerning the process.