One of the most frequently asked questions during a divorce consultation and through the divorce process pertains to the division of marital assets, also known as equitable distribution in New Jersey.
Identifying the assets that are subject to equitable distribution
The first step in asset division is determining which assets are subject to equitable distribution and which assets are not. This can be simple or it can be complex depending on whether you are dealing with premarital assets, commingling of assets, the marital home held in one spouse’s name purchased pre-marriage, businesses, beneficial interests, vested vs. unvested stocks/options, and asset appreciation, for example.
Assets subject to equitable distribution
First, it must be determined what is marital property and what is separate property. Marital property is defined as property acquired (real and personal property) by either spouse or both from the date of the marriage to the divorce filing date. Interspousal gifts are marital property whereas an inheritance would not be.
What are the factors used in determining equitable distribution in New Jersey?
There are many factors used to determine the distribution of assets in the garden state. Some of the key factors to focus on under NJSA 2A:34-23.1 are:
- The duration of the marriage
- Present value of the property
- The debts and liabilities of the parties
- The economic circumstances of each party at the time the division of property becomes effective
- The income and property brought to the marriage by each party
- The contribution of each party to the acquisition, dissipation, preservation, depreciation, or appreciation in the amount or value of the marital property, as well as the contribution of a party as a homemaker
- Tax Consequences
Do you know which assets you want to keep and which assets are better to keep for asset appreciation and tax planning?
Don’t worry, most people are not sure or are puzzled by this question. This is why working with an experienced divorce attorney who understands asset valuations and market liquidity can help you make the right choice concerning your marital assets. While many people believe keeping the marital home is the more cherished position in a divorce case, and while it may be cherished, it does not mean it is the best asset to keep. In fact, it may be the worse asset to keep as homes require major capital additions and lack liquidity. On the other hand, if you can keep your investment account in exchange for your spouse keeping the house, you should keep the ultra liquid investment account (all things being equal). Furthermore, what will your tax ramifications be if you sold the marital home and it was not your first home? The taxes could kill any idea of what you thought you would net in the deal after transaction fees, carrying costs, and taxes.
Can I be forced to sell the marital home?
In short yes, but if you make an agreement, that will be off the table. If you do not make an agreement, you may be able to keep the home if you can buy your spouse out of his or her share.
I made more money than my wife and contributed more than her. Should I receive a larger share than she does?
In New Jersey, a marriage is viewed as a joint enterprise. So even if your wife sat home and watched television all day, she arguably has the same claim to the marital assets as you do.
How are asset values determined? Can the values be refuted?
An easy asset to value is a home. While it may not exactly be the market price, it is a good predictor of what the home will sell for. You can also always hire another appraiser to appraise the property if you do not agree with the price. Some of the harder assets to appraise are: stocks in small companies, stock in partnerships, partnership valuations, privately owned businesses, professional practices, family businesses, rare art, beneficial interests, time shares, and so forth.
When is the asset date cutoff?
The usual date is the date of the divorce filing in terms of which assets to include in the marital pot for equitable distribution purposes. For example, if you have stock options that have not vested during the marriage, they may not be included in the marital pot. Stocks that have vested but have not been exercised may be included in the marital pot despite not being cashed in yet.
In conclusion, asset division/equitable distribution is one of the most hard fought areas of divorce law in America, and New Jersey is no different. If you are going through a divorce in New Jersey or are about to file, contact an experienced divorce attorney.