New Jersey Divorce Property Division: Understanding How Assets are Valued

Time and time again in the Garden State, one of the most contentious aspects of a marriage dissolution case is New Jersey divorce property division. With that in mind, we present this discussion of some of the key elements of New Jersey divorce property division that you need to understand if you are heading into or already are involved in a divorce. While we do provide this overview, if you have questions about property and debt division in divorce, or if you need appropriate legal representation, the next step is to schedule an initial consultation with our legal team.

Equitable Distribution Standard

 When it comes to New Jersey divorce property division, what is known as the equitable distribution standard is utilized. This standard is designed to ensure a fair (not necessarily equal) division of marital property based on various factors that include:

• Marriage duration
• Economic circumstances
• Contributions of each spouse

Valuation Date 

A date needs to be established on which the value of marital assets will be determined. This is necessary because the value of property of different types can and does change from time to time. Typically, marital property is valued as of the date a divorce complaint is filed with the court. There are some exceptions include passive appreciation of separate property or dissipation of assets, which may adjust the valuation timeline in regard to New Jersey property division.

Classification of Property 

A key element of asset division in a marital dissolution proceeding is the classification of property. There are two primary categories of property in a divorce case:

• Marital Property: Assets acquired during the marriage, regardless of title.
• Separate Property: Pre-marital assets, inheritances, gifts, or personal injury awards (unless commingled with marital assets, e.g., joint accounts or home improvements).

Valuation Methods

Different types of marital assets necessitate alternate valuation methods. These include: 

• Real Estate: Appraisals by licensed professionals  
• Businesses: Income, market, or asset-based approaches; may include enterprise goodwill 
• Retirement Accounts: Present value calculations
• Personal Property: Appraisals for art, jewelry, or collectibles

Debts and Liabilities

As is the case with marital property, marital debts are divided equitably as part of the New Jersey divorce property division process. Examples of the most commonplace types of marital debts are:

• Home mortgage
• Car loan
• Credit card debt

Ultimately, the net value of assets is calculated by subtracting liabilities from gross value.

Expert Testimony

Expert testimony can be necessary in some New Jersey divorce cases in which there are issues regarding marital assets and debts. Examples of professionals who are called upon to provide expert testimony in a New Jersey marriage dissolution case include:  

• Appraisers
• Forensic accountants
• Business valuation experts

Tax Implications

There can be significant implications associated with New Jersey divorce property division. Consideration of capital gains taxes, penalties for early retirement withdrawals, and tax consequences of asset transfers to ensure net-value fairness. (This is another area in which professional assistance beyond legal counsel can be imperative during the course of divorce proceedings in New Jersey.)

Prenuptial/Postnuptial Agreements  

Valid prenuptial agreements entered into before a marriage override default equitable distribution principles. Prenuptial agreements cannot be unconscionable or signed under duress. In addition, in some instances, a valid postnuptial agreement can also govern the manner in which assets and debts are distributed or divided during a divorce.

Economic Circumstances  

Property division can also be at least somewhat dependent upon the economic circumstances of a divorcing couple as well as what the economic state of each party to a divorce is expected to be when a New Jersey divorce case concludes. Courts assess factors like:

• Earning potential
• Age of parties
• Health of parties
• Non-financial contributions of parties

Mediation in a Divorce

Finally, with increasing regularity, mediation is being utilized in New Jersey divorce proceedings. Mediation can be particularly beneficial during a divorce case in regard to issues surrounding child custody and parenting time as well as property and debt division. In point of fact, some courts turn to mediation as a matter of practice if parties are unable to conclude a negotiated settlement of a case on their own. Mediation is conducted by independent third-party professionals. If you have questions concerning divorce and property division, call the Law Offices of Peter Van Aulen at (201) 845-7400 for a free consultation.