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FAQs: Equitable Distribution

New Jersey is an equitable distribution state. Equitable distribution describes how courts divide up marital property when a couple decides to divorce. The court will divide marital property in a manner that is equitable and fair, which does not always mean a 50-50 split. The following are frequently asked questions about equitable distribution in NJ:

What Property is Subject to Equitable Distribution in NJ?

Marital property is subject to division upon divorce in New Jersey. Any property that is acquired during marriage is marital property. This is true even if the property is titled only in one spouse’s name. Therefore, if the parties purchased a home during the marriage using marital funds, then even if that house is titled in only one person’s name, the other spouse would have an equity interest in the home.

Non-marital property is not subject to equitable distribution in NJ. Obviously, this is property acquired before the marriage, but it can also be property inherited during the marriage, or property gifted to a spouse by a third-party.

This is not a hard-and-fast guarantee, though. If one party has non-martial property but then commingles it with marital property, that could convert the character of the property and make it subject to division. For example, if one spouse receives a cash inheritance from a relative, that would be non-marital property. However, if they deposit this inheritance into a joint checking account full of other marital money, then the other spouse may end up acquiring an interest in those funds nonetheless.

There is also something called the “contemplation of marriage doctrine.” This allows property that was purchased prior to the marriage, even with one party’s money and in their name alone, to be included in the marital estate if it can be shown that the property was purchased ‘in contemplation of marriage.’

How Does the Court Decide Which Spouse Gets What Property and is Fault a Factor?

N.J.S.A.2A:34-23 list 16 factors that the court will use in determining the division of property. However, fault is not factor in determining equitable distribution in NJ unless it involves waste. Therefore, even if one spouse is a no-good cheater, this will not affect how the court decides to award the marital property.

What if Only One Spouse Worked Outside the Home During the Marriage? How Does That Affect Equitable Distribution in NJ?

The short answer is, it doesn’t really. New Jersey courts consider marriage to be an economic partnership. The presumption is that both husband and wife made significant economic and or non-financial contributions to the estate during the marriage. If the wife stayed home, raised the children and maintained the household, this would have contributed to the marital property in that the husband was allowed to focus more energy on his career and ability to contribute financially to the family.

How do I Ensure the Property is Actually Divided Once the Divorce is Final?

It is crucial to obtain an attorney to make sure your property is accurately divided in accordance with the divorce decree. Most divorce decrees will require an exchange of 'closing documents' to effectuate the conveyance of property. If homes need to be sold or transferred, then deeds will need to be drafted and recorded in the appropriate county office. Sometimes, if retirement accounts are split, a qualified domestic relations order (QDRO) must be drafted and filed. QDRO's can be incredibly complex documents, but they are essential to make sure the property is distributed properly upon the final divorce. Car titles may need to be transferred over, and very often mortgages must be refinanced. Once the judge makes his or her decision about the equitable distribution of property, that is only the first step in beginning to finalize your divorce.

What Happens to a Couple’s Debt?

Equitable distribution in NJ deals not only with assets, but also with debt. In fact, in many cases, often the only thing the parties have to divide between themselves is the debt. Most of the time, to make things easier, the debt will follow the property. However, courts will often consider making the party with the greater income take on a higher percentage of the debts. In extreme cases, the marital residence may be sold, and the equity applied to outstanding liabilities of the parties. Once the divorce is final, each party should make every effort to remove their name from debt awarded to the other spouse. Otherwise, someone's credit could get ruined because their ex-spouse has failed to pay down the loan. Lenders will go after anyone whose name remains on the loan. A divorce decree ordering a debt in someone's name will only go so far to protect the other spouse. Dividing up the marital estate fairly is complex and fact-intensive. Most of the time, a court will require substantial evidence to prove the nature and value of the property in question. If you need to talk to a New Jersey divorce attorney about how equitable distribution in NJ could affect you, call the Law Offices of Peter Van Aulen at 201-845-7400 for a consultation.

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