In A New Jersey Divorce, Are There Times When Assets Are Not Split Equally?
In New Jersey divorce law the term equitable distribution is used in almost every divorce case. It describes the way the Family Court Judge shall divide and distribute the assets of the marriage in a fair, just and equitable way. As a divorce attorney I have found that many people believe that courts simply split the marital property in half equally. However, the lawyers at my law office I know that this is not exactly true. In the interest of fairness a New Jersey Divorce Court looks at numerous factors to divide the property in manner that is just to both parties. In furtherance of this goal, sometimes Family Part judges will order an unequal division of property. In the case of Falkowski v. Falkowski, the New Jersey Appellate Division reviewed an appeal by ex-wife Charlene Falkowski, in which she challenged the final judgment of divorce. She contended there was an unequal equitable distribution and the Superior Court of Union County, Family Part awarded a greater portion of the marital estate to her ex-husband Frank Falkowksi.
Frank and Charlene Falkowski married in 1982. When they divorced in 2009, the marital assets subject to equitable distribution were worth approximately $1.5 million. The divorce trial lasted seven days, and at the conclusion the Family Part determined that the property of the marriage should be split equally, with the exception of two jointly-owned homes. They had one home in Clark, New Jersey, that was valued at $430,000, which was divided as fifty-five percent to Frank, and forty-five percent to Charlene. They also had a vacation home in Manahawkin, which had a postulated equity of $342,000. This home would continue to be occupied by Frank, and divided sixty-five percent to Frank, and thirty-five percent to Charlene. The Family Part of Union County justified their decision to divide the two homes unequally because of the personal labor Frank put into renovating the two homes during the marriage. The Family Part judge referred to his work as “sweat equity.”
In regards to the other matters, the Family Part judge ordered that both Frank and Charlene would equally share in their daughter’s college costs. Frank was also ordered to Charlene rehabilitative alimony of $ 3,000 per year for two years as well a permanent alimony award of $ 33,000 every year. On March 17, 2010, the Family Part issued a dual final judgment of divorce which incorporated the afore-mentioned financial requirements. In response, Charlene filed a motion for reconsideration, specifically challenging the unequal division of the two houses. On April 30, 2010, the trial judge denied the motion, and Charlene filed an appeal as a result.
When the divorce was filed, Frank was sixty years old and Charlene was fifty-six. This was Frank’s second marriage, and after his first divorce he bought out his first ex-wife’s portion of their marital home which was located in Stanhope, New Jersey. However, he still owed her money for that buy out when he married Charlene. When they first got married, Frank and Charlene lived in this Stanhope house, and Charlene contributed a portion of her income from work to assist Frank to pay off the debt he owed to his first wife. Moreover, Charlene’s income also helped pay for the renovations the first marital home, and her named was added to the title at some point.
The couple sold the Stanhope home in 1986, and used the money from the sale to buy their new house in Clark, New Jersey. According to Frank’s testimony at trial, he “gutted the house and replaced everything,” over three years, and contended that Charlene did not contribute to any of the renovation work. Charlene on the other hand, testified that numerous people took part in the renovations, including Frank, herself, and some relatives.
Frank and Charlene purchased their second home located in Manahawkin in 2001. This house also required a great deal of renovations and work. Frank traveled to Manahawkin on his days off to work on the renovations. Somedays he would stay there overnight, and continue the renovations in the morning. Besides a few friends who assisted him with putting sheetrock on the ceiling, he did all of the work himself. Charlene testified that these renovations took about five years to finish. She further testified that she “was not involved in the renovations as much as Clark” because she was at home with their young daughter. She did however claim that she was involved in “jacking up the corner of the house and rebuilding the child’s room.”
In September 2008 the couple separated. Charlene stayed in the Clark home, while Frank moved into the house in Manahawkin. An appraisal report done on the Clark house reported that it was in “above average condition,” was properly maintained, and no mortgage debt remained on the house. Both Frank and Charlene wanted to live in the Manahawkin house, which was valued at $ 380,000, and had a mortgage of $ 38,000 remaining. The court explained the reasoning for awarding Frank fifty-five percent of the Clark’s home value. The judge explained that $ 120,000 of the price of the house was paid by Frank, and he should also be entitled to a small extra portion of it because of the “sweat equity” he put into the house. The judge went on to reason that while marriage is a joint endeavor, with both husband and wife working together for each other’s benefit, Frank went “above and beyond the call of duty,” and improved the house’s value. This included replacing the windows, doors, light switches, molding and outlets, gutting the kitchen, putting in new oak floors and new walls, retiling, and putting in new toilets and sinks. All of this work took him three years, and according to the trial judge this sweat equity was worth the extra five percent. In regards to the extra portion of the Manahawkin home, the trial judge explained that Frank worked on it for five years and built it into what it is today. The judge reasoned it would be more fair to recognize his “sweat equity” and award him 65% of the value of the house.
On appeal, the New Jersey Appellate Division stated that the New Jersey Supreme Court has created a three-step process that trial courts must follow when equitably distributing assets of a marriage. First, the Family Part must decide which specific property of each spouse is actually eligible for division. Then, the Family Part must calculate its value, and third, it has to determine how to divide those assets in a way that is most fair to both parties. This process is not simply a mathematical distribution of the marital property, but requires the weighing of various different factors and situations as may be presented in each case. These factors include how long the marriage lasted, the property brought into the marriage, written agreements made before or after the marriage, each person’s income and potential earning power, each person’s contribution to the preservation, depreciation, or appreciation of the value of the property, and any other consideration the court might deem important or relevant.
In Falkowski the Family Part relied on the last broad factor to justify the unequal division of two houses due to Frank’s personal work in making improvements and renovations to the home. Therefore, the New Jersey Appellate Division found that the Family Part of Union County did not abuse its discretion in dividing the value of the two homes unequally.
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