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Understanding Equitable Distribution in New Jersey Divorce

Equitable Distribution

If you divorce in New Jersey, one of the first things to understand is the concept of equitable distribution. This is the distribution of property, assets and debt obligations that the court uses when divvying up marital property during a divorce.

As our Freehold divorce lawyers can explain, equitable distribution is not always a 50-50 split. The goal is to divide property in a way that is most fair – not what is most even. It could mean that one party gets all of one thing and the other gets all of something else. It could mean dividing assets 70-30. It truly depends on the individual couple’s circumstances.

Courts will need to determine three main things before equitably distributing property:

  • Which property and/or assets are subject to consideration for distribution.
  • The value of eligible assets.
  • How to allocate them between parties in a way that is most equitable.

Which Assets are Eligible?

Assets that are subject to equitable distribution include things like a marital home, bank accounts, cars, a business, pensions, bonuses, stock options and more. There are some exceptions, but generally, property acquired by either or both spouses from the time of the marriage to the date of the divorce filing is going to be considered for equitable distribution.

Separate property, on the other hand, is usually property that is acquired by one spouse prior to marriage. It can also include property that was acquired during the union if it was an inheritance or gift from a third party. It might also be property that was obtained after the divorce complaint was filed. Keep in mind though: If separate property is improved during the marriage, it could be counted as marital property. Similarly, if one spouse purchased a house prior to marriage but the two of you resided there during your marriage, this can create a grey area that the court will have to carefully consider.

How Much is it Worth?

Examining the value of marital property is the next step of equitable distribution. Sometimes, that’s a fairly simple process: We can look at your bank statements, sales or purchase records, etc. In other cases, though, it’s a bit more complicated. Your divorce lawyer may recommend hiring an appraiser or accountant or tax specialist to ascertain the value of certain benefits, stocks or owned businesses.

Beyond the “book value” (purchase price minus depreciation value) of an asset, there is also the replacement value (how much it would cost to obtain a new version of that asset) and finally the sentimental value. Assigning sentimental value can be complicated because it considers how one or both of you feels about a particular asset. One of you may feel entitled to it, but if the other spouse has sentimental value attached to the asset, the value may go up.

Who Gets What?

New Jersey family law judges have broad discretion when it comes to how assets should be divided in a divorce. N.J.S.A. § 2A:34-23.1 is the state’s equitable distribution statute and spells out the criteria for equitable distribution. Factors that will be considered:

  • The length of the marriage.
  • The physical/emotional health and age of both spouses.
  • The income/property both brought into the marriage.
  • The couple’s standard of living during the marriage.
  • Any written agreements the spouses made before or during the marriage (prenuptial/postnuptial agreements).
  • Economic circumstances of each at the time of property division.
  • Income and earning capacity of both spouses.
  • Contribution of each party to the education, training or earning power of the other.
  • Contribution of each spouse to the acquiring, dissipating, preserving, depreciation/appreciation of the marital property value.
  • Contribution of one spouse as a homemaker and/or extent to which career goals were deferred.
  • Any tax consequences of the proposed distribution.
  • The need of the parent with physical custody of a child to own/occupy the marital residence and/or the household effects.
  • Both parties’ debts and liabilities.

This is by no means a list that is exhaustive. The court can consider any factor that it deems relevant. This is why it is critical to hire a Freehold divorce lawyer who is experienced in property distribution cases, one who will fight to ensure the division is truly equitable and in your best interests.

Contact us at (732) 810-0034 or email us through our website.

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