EQUITABLE DISTRIBUTION
New Jersey is an equitable distribution state.
First, the Court will identify the marital assets and debts. These
are generally assets and debts which were accumulated during the marriage as they exist on the date the Complaint for Divorce is filed.
Assets can include: a home or other real property, rental property, any accounts, stocks, mutual funds, stock options, pensions, retirement accounts, IRA’s, vehicles, businesses, jewelry, personal property, furnishings, etc.
If a party transfers or encumbers an asset, or incurs debt, in contemplation of divorce, same may be considered a dissipation of assets, unless done for a joint marital benefit or purpose, and will be considered, or added back, for purposes of equitable distribution.
Premarital assets and assets acquired by gift and/or inheritance are not considered marital assets if not comingled, and they are passive assets.
If a premarital or exempt asset is an active asset and appreciated in value during the marriage due to the efforts of 1 of the parties, the appreciation can be marital, and the asset will need to be valued.
Assets which appreciate solely due to market conditions are passive and are valued at date of distribution.
Generally, marital assets and debts are equally divided.
If a spouse has a business, it will be necessary to retain a forensic account to determine the value of that business which will be subject to equitable distribution.
Usually, Qualified Domestic Relations Orders (QDRO) will be required to distribute retirement assets. These are Orders which are forwarded to the Benefits Administrator to distribute.
The Court will not decide issues of equitable distribution or order the sale of the home, etc. until final hearing, unless same is needed to preserve assets, i.e. prevent a sheriff sale of a home in foreclosure.
In a settlement, the parties can agree to swap and offset assets i.e the house in exchange for the pension, etc. but if the parties choose to go to trial, the Courts will typically liquidate and split.
At times, if the parties have high school age children, the courts may delay the sale until the children graduate high school.
NJSA 2A:34-23.1 is the NJ statute providing for equitable distribution and states,
In making an equitable distribution of property, the court shall consider, but not be limited to, the following factors:
a. The duration of the marriage or civil union;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage or civil union by each party;
d. The standard of living established during the marriage or civil union;
e. Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage or civil union;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;
o. The extent to which a party deferred achieving their career goals; and
p. Any other factors which the court may deem relevant.
In every case, except cases where the court does not make an award concerning the equitable distribution of property pursuant to subsection h. of N.J.S.2A:34-23, the court shall make specific findings of fact on the evidence relevant to all issues pertaining to asset eligibility or ineligibility, asset valuation, and equitable distribution, including specifically, but not limited to, the factors set forth in this section.
It shall be a rebuttable presumption that each party made a substantial financial or nonfinancial contribution to the acquisition of income and property while the party was married.
