Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

What Does Equitable Distribution Mean in a New Jersey Divorce?

Equitable distribution is the phrase the court uses when it divides property rights and obligations between spouses during divorce. Its purpose is to allocate property during the course of the marriage to both parties, whether or not that property is titled in one or both of the parties’ names.

What factors are considered?

Pursuant to a New Jersey Statute N.J.S.A. 2A: 34-23.1, courts consider the following factors in making an equitable distribution of property:  

1.  The duration of the marriage;

2.     The age and physical and emotional health of the parties;

3.     The income or property brought to the marriage by each party;

4.     The standard of living established during the marriage;

5.     Any written agreement made by the parties before or during the marriage concerning an arrangement of property distribution;

6.     The economic circumstances of each party at the time the division of property becomes effective;

7.     The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage;

8.     The contribution by each party to the education, training or earning power of the other;

9.     The contribution of each party to the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property;

10.  The tax consequences of the proposed distribution to each party;

11.  The present value of the property;

12.  The need of a parent who has physical custody of a child to own or occupy the marital residence;

13.  The debts and liabilities of the parties;

14.  The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse or children;

15.  The extent to which a party deferred achieving their career goals; and

16.  Any other factors which the court may deem relevant.

What are common assets and liabilities subject to equitable distribution? 

Marital home—many couples divorcing require cash on hand to fulfill their debt requirements. The first asset that is typically sold of is the marital home. It is common that a marital home is appraised rapidly and listed for sale, especially where parties have low liquidity and large amounts of debt. Once a house is sold and all home equity loans are paid in full, the remainder of the money from the sale of the house is normally divided evenly to put toward a new residence or support obligations;

Second homes or timeshares—any real property purchased during the marriage is subject to equitable distribution. If a party comes into a marriage already owning a vacation home or a timeshare, it is unlikely that the opposing party can claim title to the asset unless he or she proves that he or she enhanced the value of the property.

Investment accounts—any joint investment account is subject to equitable distribution. If an account is gifted to one party and that party places his or her spouse’s name on it, the account becomes a comingled asset and subjects it to distribution upon divorce;

Retirement accounts—based on the case Kruger v. Kruger, 73 N.J. 464, A.2d 659 (1977), pensions are clearly subject to equitable distribution in New Jersey. As long as the accrued benefits are related to the joint efforts of the parties, a pension fund is up for distribution. Similarly, any IRA accounts are subject to equitable distribution in New Jersey. It is not necessarily the case that individual IRA accounts will be split evenly, but in most cases they are;

Alleged dissipation of assets—if one party uses marital property for a purpose unrelated to the marriage, especially while the marriage is headed downhill, that person will be affected during the distribution of assets. Making withdrawals against home loans and investment accounts should only be done for the benefit of the family as a whole;

Life insurance, bank accounts, credit card debt, income tax liabilities, cars, and any other tangible personal property and furnishings are all subject to equitable distribution as well.

Can my ex-spouse seek equitable distribution of property I owned prior to the marriage?

Property owned by each spouse prior to marriage remains that spouse’s property. In an event of divorce however, some of that property may qualify as an asset eligible for equitable distribution.  Furthermore, enhancement in value of a spouse’s premarital asset occurring during the marriage is subject to distribution, but only to the extent that the increase in value is attributable to the efforts of the other spouse. 

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