In the State of New Jersey incident to a divorce, the Court has the power to “equitably” distribute all of the property acquired by the parties during the marriage. In other words, the Court must distribute them fairly. This includes both assets and liabilities (debts). What this does is cause the parties (and the Court) to examine what assets and liabilities the parties have and to allocate them between the Husband and Wife. This is different from some states, which are known as Community Property states, where the presumption is that all property is joint property of both parties.
One of the things that is analyzed in splitting up the parties’ assets is whether or not either party has any inherited asset that he or she retained in their sole name and did not cause to become a joint asset. Generally, an inheritance that one spouse keeps in their sole name, is not later subject to being split and remains in that spouse’s asset.
There are certain factors that a Court will look at in order to determine how assets are “equitably” split between the spouses. For instance, a house. Once the fair market value of the house is determined, usually by an appraisal, the balance of the outstanding mortgages is subtracted in order to determine how much equity exists. That equity then has to be split. If the parties had a long term marriage, and one where they, over time, developed a marital partnership or enterprise and co-mingled their income, assets and debts, then there would probably be an equal split of the equity between the two spouses. If, however, the marriage was of a short duration and one of the parties contributed a disproportionate share of the down payment, then in that event the Court probably would not equally split the equity in the home so that the spouse who did not contribute the bulk of the down payment does not receive a “windfall”. This would further the Court’s goal of an equitable or fair division of the asset.
The Court strives to reach a resolution that is fair and reasonable to the divorcing spouses. The above is just one example of how assets and liabilities can be allocated between divorcing spouses. It must be remembered that each case is factually different from another, and these are only general guidelines. Only after there is a complete review of what the parties acquired during the marriage, can an accurate prediction of what the Court will do be gauged.
Bari Zell-Weinberger is a Certified New Jersey divorce lawyer and partner with the firm of Weinberger Divorce & Family Law Group, LLC. in Parsippany, New Jersey, where she exclusively practices family and matrimonial law.