New Jersey Divorce Lawyers Experienced in Equitable Distribution
Equitable distribution is the process that the New Jersey Courts use to divide marital assets and liabilities in a divorce. In determining the distribution of assets, the Court must consider the 16 different factors under the Statute, which is N.J.S.A. 2A:34-23.1 in determining what a fair or equitable distribution will be. The weight that a Court gives to each of these factors under the Statute is within the discretion of the trial judge:
Duration of the Marriage [ expand ]
The first factor is the duration of the marriage or civil union, which is important because if you are dealing with a short-term marriage, it may not be fair to equally divide marital assets depending upon the circumstances in a particular case. It is more likely for a Court to equally divide marital assets in a long-term marriage, which could be characterized as a marriage in excess of 10 years. This is not to say that all assets in a long-term marriage are automatically equally divided between the parties. There may, perhaps, be a business interest that may be divided other than equally depending on the factors in a case.
Age, physical and emotional health [ expand ]
The age, physical and emotional health of the parties is another factor for the Court to consider. There could be extenuating circumstances in a case that would make it fair to disproportionately distribute assets between the parties [for example – disproportionate distribution of retirement assets if one party is much older than the other party].
Income and Property [ expand ]
The Court must also consider the income or property brought to the marriage by each party. Assets brought to the marriage are known as premarital assets. When there are premarital assets brought to a marriage, it may be necessary for the Court to obtain values for these assets as of different points in time, especially if one party is making a claim to assets brought to the marriage by the other party. The party making a claim to the other spouse’s premarital assets may allege that during the marriage, they took active steps that caused an increase in the value of his/her spouse’s premarital assets. This is known as active appreciation. If a premarital asset has increased in value during the marriage without either party contributing toward that increase, this is known as passive appreciation and the increased value is generally not available to the non-owner spouse for equitable distribution.
Standard of Living [ expand ]
The standard of living established during the marriage or civil union is an important factor for the Court to consider not only for the purposes of equitable distribution but also for the purposes of determining alimony and child support. In some cases, it may be necessary to retain forensic accountants to determine the marital financial lifestyle. In other cases, the marital lifestyle would be determined based upon the testimony of the parties and the completion of Case Information Statements (Financial Statements), which are required under the Court Rules.
Premarital Agreements [ expand ]
The parties may have entered into an agreement during the marriage or prior to the marriage, which is known as a premarital agreement and reflects an already agreed upon distribution of marital and premarital assets in the event of a divorce. Such an Agreement should be considered by the Court when determining equitable distribution.
Earning Potential [ expand ]
A Court will also consider the economic circumstances and the earning capability of both spouses. This would include the:
- Employment skills;
- Work experience; as well as
- Responsibility for caring for the children.
Contributions [ expand ]
Another factor to be considered by the Court is the contribution by each party to the education, training, or earning power of the other party. There may be situations in which one spouse pays for student loans for the other spouse’s education, perhaps during the marriage or student loans that were accumulated prior to the marriage.
It is also important for the Court to consider what each party contributed to the acquisition, dissipation, preservation, depreciation and appreciation of assets acquired during the marriage. The Court must also look to the contribution made by a party who is a homemaker. If a party dissipates marital assets during the marriage, especially if it is unknown to the other spouse [such as gambling, supporting a girlfriend or a child born out of wedlock with another woman] the other party may be entitled to a larger share of the marital estate/assets.
If a husband or a wife substantially contributed to either the depreciation or appreciation of assets, especially if exempt funds were utilized, this is important for the Court to consider in the distribution of assets. Although it is difficult, if not impossible, to place a value on being a homemaker, staying home to take care of children, the house, do grocery shopping, the laundry, and contribute to every other aspect of the employed spouse’s life, so that he/she can focus on the financial support of the family, is recognized under New Jersey law. Marriage is often referred to as a joint enterprise. The success and vitality of a marriage, in part, is based upon the efforts of both spouses, which includes both economic factors and noneconomic contributions.
Tax Consequences [ expand ]
Another factor that the Court must consider is tax consequences of the proposed distribution of assets to each party. Not all assets that are divided between the husband and wife are subject to tax consequences, but some are.
Before a Court can begin to decide who gets what asset in a divorce, it is important for the Court to know the value of the marital property, which may involve obtaining various types of appraisals such as for the:
- Marital home;
- Any business interest;
- Other real estate interests, and
- Personal property.
Ownership of Family Pet [ expand ]
A Court may also be called upon to determine which party will maintain ownership of the family pet, such as the dog or cat. In some situations, a Court may determine that it is best to have the pet follow the children, meaning when the children are with Dad, the pet goes with Dad and when the children are with Mom, the pet goes with Mom.
Celebrity Goodwill [ expand ]
Another issue that falls under the equitable distribution umbrella is celebrity good will, which was an issue in the case of former Governor James E. McGreevey. Two of our attorneys, Jennie L. Osborne and Stephen P. Haller, represented former Governor McGreevey in his matrimonial trial in 2008. Celebrity good will is not property in the traditional sense. Celebrity good will has been described as future earning capacity that has been enhanced during the marriage because the reputation of one party leads to probable future patronage from existing and potential clients, leading to good will, which has value. There was expert testimony offered in the McGreevey case to the effect that fame or notoriety alone does not bring about celebrity good will, unless it gives rise to enhanced earning opportunities over and above what the individual could earn and the probability of future earnings that developed during the marriage, not afterward.
Need for Marital Residence [ expand ]
Another factor under the Statute is the need of a party who has physical custody of a child to own the marital residence or use and own the household property, which is a very fact-sensitive issue. This issue may be of particular importance in a case that involves a disabled child.
Debts and Liabilities [ expand ]
The debts and liabilities of the parties is yet another consideration. There may be situations in which one party or the other accumulated significant debt during the marriage but the other party did not reap any benefit from the debt. The issue becomes whether the debt is marital or non-marital.
Before a Court can determine the distribution of assets, it must first:
- Identify the property acquired during the marriage;
- Determine the value of the property; and then
- Decide how to best to distribute the property between the parties, based on the circumstances of each particular case.
- The Court must also decide whether it is equitable to divide each asset between the parties on a 50/50 percent basis or by some other ratio.
Assets come in different forms, values, and with various tax consequences. The Court must apply all of the statutory factors to each asset to determine how the asset is to be distributed. There may be different allocations between the parties for different assets, based on the Court’s concept of fairness.