New Jersey is not a community property state. Instead, the state follows an equitable distribution system in which property acquired during the marriage is distributed fairly, though not necessarily equally, in a divorce. The focus is on equity rather than a 50/50 split. Understanding community property vs. equitable distribution is imperative to ensure each party receives a fair distribution of property.
A community property state is one that requires a couple to split marital property equally upon divorce. The 50/50 division does not have to be equitable; it only has to be equal. Only marital property, or property acquired during the marriage, is considered community property.
Property acquired before marriage or after legal separation is considered separate property. Gifts or inheritances to a single spouse are also considered separate property and may not be included in the community property division.
Nine states are currently classified as community property states:
Unlike these states, New Jersey follows an equitable distribution system. This means that the court will divide property equitably in a divorce, not necessarily equally. The goal of the court is to achieve fairness instead of an even 50/50 split.
According to the New Jersey Revised Statutes, the state follows the principle of equitable division when determining how marital property should be divided in a divorce. The court’s goal is fairness, not necessarily an equal division of assets and debts.
Under state law, there is a rebuttable presumption that each party made substantial financial or nonfinancial contributions toward the acquisition of income and property during the marriage. Using this presumption, the court may then look to several criteria set forth by statute to evaluate how property can be equitably distributed between the parties.
A New Jersey court may consider 16 factors in making an equitable distribution of property. New Jersey equitable distribution factors include the duration of the marriage, the age and health of each spouse, the standard of living established during the marriage, and any other factors the court deems relevant.
Factors a court may consider when determining an equitable distribution of property in a New Jersey divorce:
Under most circumstances, it does not matter what the reason or grounds for the divorce were. The court places equal weight on the aforementioned factors.
As in states with community property laws, only marital property is subject to division in the event of a divorce. Marital property is defined as any assets or debts that are acquired during the marriage. This includes any income, real estate, or retirement accounts that were contributed to during the marriage.
Examples of marital property in New Jersey:
Separate property, on the other hand, is property that was acquired before the marriage or after separation. Separate property may also include gifts or inheritances that are given to one spouse. Separate property remains separate, unless it is commingled.
Many couples make the mistake of commingling separate property, such as using income acquired during the marriage to pay the mortgage or make improvements to a home purchased prior to the marriage. Commingling premarital assets with marital property can risk it being converted into marital property and, therefore, subject to division. Individuals with significant separate property should speak with a New Jersey divorce lawyer as early in the process as possible in order to protect their rights and their assets.
As with marital property, marital debts are subject to equitable distribution between the parties. Equal consideration is used to determine a fair distribution of debts that were acquired during the marriage. Courts will consider several factors to determine an equitable distribution of debts in a divorce proceeding, including the nature of the debt and whether any agreements were signed before or after the marriage regarding the distribution of marital debts.
Any debt incurred during the marriage may be considered marital debt, including a loan, credit card debt, or a car lease. In general, the fact that the debt was taken out in one person’s name only does not preclude it from being included as marital debt and therefore subject to equitable distribution.
Couples with substantial investments or business owners may face a unique set of challenges regarding property distribution in a divorce. These cases, often referred to as high-net-worth divorces, usually involve complex asset division that may require a financial expert to ensure a fair allocation of debts and assets. Individuals with these special circumstances are encouraged to speak with an NJ divorce attorney as soon as possible.
Protecting your rights in a New Jersey divorce is often paramount to being able to begin a new chapter. Due to the complexities of NJ marital property laws, legal consultation is strongly recommended.
An experienced New Jersey divorce attorney can help with the division of assets and debts, even in contentious or contested divorces. Evidence often plays a critical role and should be preserved to protect your rights. It is important to maintain detailed financial records, including proof that an asset was acquired before marriage and remained separate property throughout the duration of the marriage.
Filing for a divorce is never easy. Many people immediately wonder how property is divided in NJ? Will I be able to afford my home after a divorce? What is my separate property, and what is subject to division? To answer these questions and more, contact Rozin | Golinder Law today at (732) 377-3367 to schedule a consultation.
Attorneys with the firm can help you understand equitable distribution in New Jersey and how marital property laws may affect you and your family. It is important to act quickly. Divorce proceedings can take months to resolve, depending on the intentions of each party and every second counts when your rights are on the line.
