Marriage may be many things, but one thing it is for most couples is an economic partnership: joint accounts, joint loans, joint title on homes, and so on. Generally, the longer that a marriage lasts, the more the spouses function as a single economic unit in their choices and planning. Not surprisingly, then, when divorce looms, the financial aspects of the marriage come to the forefront, and this is certainly the case when it comes to the problem of equitable distribution. If your spouse and you have decided to divorce, and you need help understanding and working out an equitable division of your assets, Bergen County divorce lawyer Howard B. Leopold can assist you.Equitable Distribution Principles in New Jersey
For New Jersey and 40 other states, the rule for dividing marital assets is equitable distribution, which means that all marital assets are divided “equitably”—that is, “fairly.” Equitable does not always mean equal.
The first issue to be resolved in any asset division process is which property is subject to division. The answer is marital property. Marital property is virtually any property acquired by the couple during the marriage from income derived during the marriage. This includes not only things like houses and cars but also pensions, retirement funds, benefits, life insurance, and even debts. In contrast, separate property is property owned by one of the spouses prior to the marriage or property acquired during the marriage through inheritance or gift. Separate property might also include portions of a personal injury settlement. It is not subject to division.
As straightforward as that may sound, there are some wrinkles. For example, income from separate property may be separate. If an investment greatly increases in value or provides a lucrative return, all of that gain or income is separate. However, separate property may change its character either partially or completely. If a husband takes over the management of a house owned by the wife prior to the marriage, and the couple invests marital funds for its improvement or maintenance, the house may become marital property, or its increase in value or the rental income may be deemed marital property. Or, if a husband uses his separate funds to purchase a car for his wife, that car may become a marital asset.
In addition, even though the property remains separate, the separate property may be taken into account in the equitable distribution. If the husband’s separate property is worth millions, the court has discretion to award a greater share of the marital assets to the wife.
Once the marital assets are identified, equitable distribution is based on an assessment of what the court deems to be fair, taking into account many factors, including the length of the marriage, the financial status of the parties, the income and earning potential of each spouse, and the likely future needs of each spouse. Other factors include:
The nature of the property itself and whether it should be liquidated, or if one spouse is better equipped to retain it;
How the couple lived during the marriage;
The roles of the spouses during the marriage (e.g., raising the children, providing income, housekeeping);
Any effort made by one spouse to enhance the earning power of the other during the marriage;
The respective ages and physical and mental health of the parties;
The needs of any children, in light of custody agreements;
The tax consequences of any particular asset division; and
How each spouse managed assets during the marriage.
In working out the financial arrangements with your spouse in your divorce, whether it is amicable or not, it is important to obtain the advice and assistance of an experienced Bergen County divorce attorney to make sure that you understand what the law provides and how different distribution arrangements may affect your financial well-being in the short- and long-term. For a free consultation, call family law attorney Howard B. Leopold at (201) 345-5907 or use our online form to schedule an appointment. He can guide residents of communities throughout Bergen, Essex, Passaic, and Hudson Counties, including Hackensack, Englewood, Bergenfield, Cliffside Park, Dumont, Edgewater, Elmwood Park, Fair Lawn, Fairview, Fort Lee, Franklin Lakes, Garfield, Glen Rock, Hasbrouck Heights, Hillsdale, Little Ferry, Lodi, Lyndhurst, Mahwah, New Milford, North Arlington, Oakland, Palisades Park, Paramus, Ramsey, Ridgefield, Ridgefield Park, Ridgewood, River Edge, Rutherford, Saddle Brook, Teaneck, Tenafly, Wallington, Westwood, Wyckoff, Jersey City, Paterson, and Newark.