One of the most difficult and challenging issues in a divorce is the division of property. Throughout a marriage, the spouses will acquire property together. This includes everything from the mundane to the extravagant. When a couple divorces, this property must be divided between them. While this process may seem simple, the law has certain requirements and special procedures related to how the property can and must be divided following a divorce. In New Jersey, there are certain guidelines that must be followed when dividing property.
Marital Property Versus Non-Marital Property
The first step in dividing property is determining what property is eligible for distribution in the divorce proceedings. Property that is considered "marital property" is any and all property attained by either spouse during the marriage. The other type of property is known as "separate property," which is a property that belongs solely to one spouse and will not be considered in the property division proceedings. For the most part, it is easy to tell which category each fits in; however, there are some special circumstances that can lead to some confusion.
Marital property can be far-reaching. "Property obtained during the marriage" can pertain to nearly everything that the spouses have at the time of the divorce. This includes physical assets such as a car, a house, or even gifts, as well as intangible things such as debts and bank accounts. Marital property can even extend to property that has the title solely in one spouse's name.
Separate property can be difficult to discern sometimes. Typically, four types of property may qualify as separate property, including:
- Assets you obtained before the marriage: Any assets you already have going into your marriage, including high-value property, such as a home, or car, will generally qualify as separate property. However, when the spouses are married, and these assets mingle during the marriage, they may lose their separate status. Or, if you use a separate asset to improve upon something you own jointly, such as a home, you can lose this separate status. If you jointly improve assets you owned before marriage, increasing them in value, such as adding an addition to a house, then the value may be considered when it comes time to divide property in court. A portion of that asset may then be subject to equitable distribution by the court.
- Assets you obtain after filing for divorce: After one party files for divorce in New Jersey, assets you acquire may become separate property, such as salary earned or new investments. However, this doesn't include assets purchased with marital assets. You can't file for divorce and then use marital assets to buy a house and call the home separate property.
- Gifts or inheritance obtained during the marriage: If one spouse inherits property or assets or is gifted assets during the marriage, it is generally separate property. However, this doesn't apply to gifts from one spouse to the other.
- Assets in a pre-nuptial or post-nuptial agreement: Even though the law considers most assets acquired during a marriage as marital property automatically, you can override this rule by agreement through a pre or post-nuptial agreement. The two of you can jointly agree on specific property or types of assets that will not become marital property during your marriage.
Identifying Separate Versus Marital Property
If you've been married for a significant amount of time, identifying separate property can be challenging, but there are some steps you can take.
- Consult your pre or post-nuptial agreement: If you have any agreements about the property division, consult these first.
- Make a list of potential separate property: You can discuss any assets you brought to the marriage, those listed in your prenup, and any inheritance or gifts.
- Consult your account statements: Looking through your account statements can give you an idea of how much in value your assets increased during marriage and help you identify potential separate property.
- Consult legal documents: Bills of sale, appraisals, and insurance documents may also help you identify when you purchased or acquired assets and if that happened before your marriage. If you've been married for a long time, particularly in the pre-digital age, these documents may not necessarily be easily accessible. In those cases, you can try to identify separate property through photos, letters, videos, and the like, particularly if they show assets in dispute before you married.
Under New Jersey law, property must be split between the spouses according to the doctrine of equitable division, sometimes referred to as equitable distribution. Under this principle, the court will divide the property in a way that is "fair" to both sides. However, interpretations of "fair" are dependent on what is established in the court of law, and under the ruling of the courts, fair does not have to be equal. Property division does not need to be settled by the rule of the court. Instead, spouses can work to form a settlement together that divides the property without the court getting involved. Then, they need only have that settlement finalized in court. If the spouses cannot reach a compromise, then the court will intervene and utilize the process of equitable division to settle the matter.
Factors Used to Determine Equitable Division
When dividing property, the court will use a number of different factors pertaining to the marriage to determine what is "fair" to each spouse when property is being divided. These factors include:
- Duration of the marriage: The length of the marriage plays a role in how the court perceives each spouse's time spent with one another, and potentially the depth of the marriage, as well as how much time they have spent acquiring property.
- Standard of living achieved during the marriage: The court will factor in how the spouses lived during the marriage and attempt to preserve that standard when dividing property.
- The value of property at present: The property's current value will play a role in itemizing the property in order to assign it.
- Spouse's contributions to the marriage: "Fairness" may be based on how much each spouse had contributed to the marriage and what properties had been acquired by which spouses.
- Each spouse's finances post-divorce: The spouse's financial status will be considered when dividing property, especially if one spouse has been dependent on the other.
- The sacrifice of any career or educational goals: If one spouse has sacrificed considerable career or educational opportunities and no longer has the time or capabilities to pursue them, the court may grant them more assets. This also plays a role in permanent alimony payments.
- Each spouse's current and potential earning capacity: Along with financial status, if a spouse has the capability to earn more, this will be considered as well.
- Whether or not a spouse contributed to the education or furthering the career potential of the other: If a spouse has provided contributions to their partner's educational or career goals, this will be factored into the court's decisions. This also plays a role in reimbursement alimony.
- Debts and liabilities of each spouse: Along with any property, debts and liabilities will be split among the spouses as well. This can be challenging as some debts may be split regardless of who initially acquired them.
Any "faults" in a fault divorce situation are not typically considered in the way the court divides property unless the spouse at fault has committed serious and dire acts or crimes against the other. Alimony does not play a role in any property division proceedings, and neither does child support. These items will be considered separately and have their own specific processes.
Dividing the Home in a Divorce
One of the most hotly contested financial assets during a divorce is often a shared home. If you and your spouse can't agree on your home, the court will often decide the matter, dividing it "equitably" as part of the equitable division of your assets.
- Sell the property: You and your spouse can decide to sell the property and divide the proceeds according to your agreement or the divorce decree.
- One spouse buys out the other: One spouse can agree to buy the other out, paying them for their equity in the home. You may also need to divide the buyout costs and refinance the home if you and your spouse don't own it outright.
- Maintain the home: You and your spouse can agree to jointly maintain your residence, allowing one spouse to live there or alternating who lives there with a child. This can be expensive but may work for cooperative divorced couples with families who want to keep their children in one home.
If you have a joint mortgage on your home, it's important to remember that the divorce decree or property settlement may affect who owns the home or in what proportion, but it will not affect your mortgage. The bank will still consider both of you responsible for the payments. If your property settlement holds your spouse responsible for the mortgage payments, but they fall behind on payments to the bank, the bank will still hold you responsible. This can affect your credit and any other assets you own individually, even after your divorce is final.
Hire an Experienced New Jersey Family Law Attorney
Property division can be a frustrating and emotional time for parties who are undergoing divorce proceedings. When divorce proceedings begin, it is of utmost importance to obtain the counsel of an attorney. Having an attorney on your side throughout the divorce and property division process can help protect your interests. In a property division case, your attorney can work together with your spouse's attorney in order to generate a fair settlement. Conversely, if one cannot be reached, an attorney who will stand up for you and advocate for your interests in court can make all the difference.