The term equitable distribution may mean little to you. Meanwhile, you should know that it also applies to splitting up debts. No doubt if you’re ending your marriage, you’ll have concerns. How in the world do divorcing couples divide assets in NJ?
First and foremost, there’s something you need to know. Equitable distribution sometimes accounts for a 50/50 split of assets and liabilities. However, that’s not necessarily the case. New Jersey follows the lead of many other states when it comes to finding equitable, or fair, means of dividing marital property.
Meanwhile, the whole concept might blow your mind. What in the world represents a fair distribution of what you and your spouse acquired during your marriage? Is anything excluded?
Both real and personal property often represent assets subject to equitable distribution. Meanwhile, the law excludes some items, including the following:
- Engagement rings: Viewed as conditional gifts, engagement rings become the property of the wife. After all, she fulfilled the condition by entering into the marriage.
- Inheritance or gifts – Provided you don’t commingle funds you receive as a beneficiary to a will or other gifts, you won’t have to split them with your spouse. The problem becomes when you open a joint account. You’ve now changed your inheritance or gift from separate property to marital property.
- Premarital portion of assets: If you paid into an IRA, pension or 401K before you married, you won’t have to divide up all of your retirement funds. After careful analysis, a determination is made as to what constitutes marital property. That includes equity in a home you bought before you wed.
Determining Equitable Distribution
Equitable distribution represents just one of the major issues confronted by divorcing couples. Somethings seem more intangible than others. For example, what happens if the couple owns a business?
A few things come into play when it comes to deciding how to split up a family business. For one, it may matter if the company existed before the marriage. Does any part of the business have value as a premarital asset?
Experts provide essential services when it comes to equitable distribution. Experienced family law attorneys rely on information provided to them by forensic accountants. Additionally, real estate appraisers place values concerning homes and property subject to division.
Discussions concerning equitable distribution can get heated. All things considered, compromise works best in debates over how things get divided. Your attorney can help you through the process. The alternative means letting the judge make the decision for you.
You Won’t Just Divide Assets
In the meantime, you shouldn’t just have concerns about dividing assets. If your spouse walked into a marriage with tons of credit card debt, there’s a good chance you won’t find yourself paying the bills. If either of you took out a student loan before you married, that also counts as separate debt.
That said, the court takes a look at your accumulated debt as well. Once again, it matters if your outstanding bills relate to household expenses. Are they actually marital debt? Some staples inherently fall in this category, such as the mortgage or rent, food, and utility bills. And, of course, what you spend on your children counts as marital debt.
What about student loan debt incurred after the marriage? In most cases, the courts consider schooling expenses as marital debt. One hopes that further education increases employment opportunities and makes living separately a more economic advantage.
With experience in both the financial world and family law, Sam Stoia negotiates equitable distribution. Have questions? Contact our office and schedule a meeting. We look forward to providing you with experienced legal advice.