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Inheritance and Equitable Distribution: What You Need to Know

In a certain sense, the fact that someone left you money or property invokes a feeling of sadness. That said, you may see it as your ticket out of a tenuous marriage. Meanwhile, you should be aware of the New Jersey laws as they pertain to your inheritance and equitable distribution.

The New Jersey statutes address concerns about equitable distribution of both gifts and inheritance. In fact, NJSA 2A:34-23(h) specifically exempts “property, real, personal or otherwise….acquired during the marriage as a result of intestate succession.”

In case you’re uncertain, intestate succession means that you didn’t necessarily leave behind a will naming you as an heir. You could still inherit proceeds as the result of your familial relationship.

For a moment, you might breathe a sigh of relief. You’re ready to move on with your life and intend to use every penny of your inheritance to start off new. However, it might not be as simple as you think.

The bottom line comes down to what you did with the inherited property or money during the course of your marriage. Did you deposit funds into an account with your spouse? Or, change a deed to reflect joint ownership of real property?

Truth be told, commingling your assets creates prospective havoc. The bottom line is you’ve negated the exemption and made your inheritance part of your marital assets. Guess what that means? Your inheritance just became subject to equitable distribution.

Recent Case Deals with Inheritance and Equitable Distribution

Last week, the New Jersey Appellate Division delivered an unpublished decision in the matter of Rosen v. Rosen. The fact that the court elected not to publish the case suggests that it is not new law. The ruling applies to the named parties.

Allison and Jay Rosen married on March 15, 1986. There is no indication of whether or not they had children together. After filing for divorce, it appears they had limited issues related to equitable distribution. The court oversaw a trial related solely to these concerns.

Ultimately, the judge entered a dual judgment granting the parties divorce on November 6, 2017. That order divided the parties’ assets and debts.

A little more than a month later, the court entered a supplemental order. That said, Jay Rosen took issues with a particular provision of the judgment. More specifically, he objected to Allison receiving proceeds form Leonard Rosen Family, LLC.

Husband Received Inheritance

Jay’s father died while he was still married to Allison. He and his two brothers inherited various assets as part of their inheritance. The three subsequently converted a trust to an entity they named Leonard Rosen Family, LLC.

The three brothers each maintained one-third interests in the Rosen entity. It provided some income to each of them in equal shares. When Jay received his portion, he would sometimes co-mingle the distributions in accounts he maintained with his wife.

On some occasions, Jay used the money to pay for family expenses. Notably, Allison never acquired a right to ownership of the Rosen entity owned by the three brothers.

Notwithstanding, the trial court judge ruled on the distribution of marital assets. This including allotting 55% of the distributions Jay received from the Rosen entity.

Jay disagreed with the lower court ruling saying, “his ownership interest in Rosen derives from an asset acquired through inheritance.” As far as he was concerned, any income he received from the entity was exempt from equitable distribution.

When the matter was brought up on appeal, the New Jersey Appellate Division agreed. Allison never acquired ownership rights to any portion of the Rosen entity. It was therefore immune from equitable distribution.

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Inheritance and Equitable Distribution: What You Need to Know

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