Determining who gets the assets in a divorce is fraught with potential peril. The division of family property in a divorce is often challenging, especially if the couple has significant financial assets such as closely held businesses, homes, restricted equity, rental properties, broker-dealer accounts, retirement and pension accounts, deferred compensation, professional licenses or practices, and so on.
It’s difficult, even in the best of circumstances, to divide assets. But if the relationship between soon-to-be ex-spouses is adversarial, the decision about who gets the assets can be extremely complicated.
Division of Assets in Divorce
The family assets shouldn’t be divided based on their current financial value:
- It’s important to consider which assets offer better short-term financial security and long-term financial security.
- It’s also important to consider the assets’ cost basis, tax consequences (if sold), and liquidity.
In addition, the divorcing couple must consider separate property and marital property. Since this is a complex topic, it’s best to consult an experienced divorce attorney before making any final decisions.
Separate Property in a Divorce
Separate property between spouses may include 1) property that was owned by you or your spouse before the marriage, 2) an inheritance that you or your spouse received before or after the marriage, 3) a gift that you or your spouse received from another person, such as when your mother gives you an expensive piece of jewelry, or 4) a settlement you received for pain and suffering in a personal injury claim.
Separate property may lose important separate property status once you commingle the asset with marital property. For instance:
- If you decide to retitle a separately owned condominium property by adding your spouse as co-owner.
- If you deposit money from an inheritance that your parents left you into a joint bank account with your spouse.
Any other property you acquired during the term of the marriage is often considered marital property—whether your spouse owns the property and regardless of how he or she titled it.
Most people considering divorce believe that they are not entitled to a portion of a certain asset because it’s titled in their spouse’s name. Fortunately, this isn’t true.
All property acquired by both spouses during their marriage is most often viewed as marital property, regardless of the property ownership or title.
Marital Property in a Divorce
Marital property may consist of the assets and income acquired by both spouses throughout the marriage, including:
- 401(k) plans
- Any other retirement plan
- Deferred compensation
- Restricted stocks/equity
- Stock options
- Country club membership
- Life insurance policies (especially whole life policies with cash value)
- Broker accounts, such as stocks, bonds, mutual funds, options, commodities, etc.
- Bank accounts, such as checking, CDs, savings, vacation club, or money fund assets
- Federal and state tax refunds
- Closely held business
- Real estate
- Limited partnerships
- Regulation D partnerships
- Professional license and practice
- Cars, trucks, boats, airplanes, etc.
A spouse may argue that separately owned assets that increase in value during the marriage should be viewed in part as marital property.
Contact an experienced divorce attorney to discuss concerns about the division of assets in New Jersey. NJ is an “equitable distribution” state. This means that the court will “equitably” divide marital assets. In other words, the division between you and a spouse must be “fair”—but not necessarily equal.
New Jersey Is an Equitable Distribution State
The court will consider some of the following factors in the division of your marital assets:
- The length of your marriage.
- The property and/or income marriage partners contributed.
- The living standard established in the marriage.
- The age, physical, or emotional health of each spouse.
- The current income or earning potential of each spouse.
- The financial condition of both spouses after the divorce is final.
- The contribution of a spouse to the earning power, education, or training of the other spouse.
- The custodial parent’s needs required to maintain a current lifestyle for children of the marriage.
- The debts of both spouses.
Most NJ Divorces Settle Out of Court
The court may also consider other relevant factors. It’s extremely difficult to know the outcome. For many reasons, both parties should attempt to stay out of court when possible. Approximately 95 percent of divorce cases settle out of court.
As you can see, there are many potential pitfalls in the equitable distribution of assets. Hiring a knowledgeable divorce attorney can help you get a fair share of assets that you worked hard to acquire. Contact Nitti and Nitti Attorneys at Law to discuss your divorce and family law questions at 973-226-4141 or by filling out our convenient online contact form.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.