FAQs: Division of Assets

The Technical Answer is no. New Jersey is an equitable distribution state which means it does what is equitable i.e., what is fair. The division of assets is governed by the 16 factors stated in N.J.S.A. 2A:34-23.1. However, in New Jersey many couples end up with a 50/50 split of assets in their divorce because that is what determined to be fair.

New Jersey is not a community property state, but an equitable distribution state. When dividing assets, the courts in New Jersey will attempt to do what is fair which is not always equal.

New Jersey uses ‘equitable distribution,’ meaning that the court will divide property between the parties in a manner that is fair and equitable, and not necessarily equal. Practically speaking, though, most divorces will have close to a 50/50 split of property. The only property that can be divided is marital property. This is anything that has been acquired from the date of marriage up to the present day – even if the property is titled only in on party’s name. Any property acquired before marriage, via inheritance, or through a gift is not subject to equitable distribution.

New Jersey family law includes a statute concerning the division of assets in a marriage. There are 16 factors. Some of them include how long the marriage was, the ages and any health problems of the parties, what kind of standard of living they enjoyed when they were in the marriage, and the current values of property, including assets and debts. Notably, whether one spouse is at fault is not considered as part of the division of the estate.

If you contributed to your retirement account throughout the course of your marriage, then chances are it is considered marital property and would be subject to division – even if it’s only in your name. It gets complicated when you have started your retirement account before marriage but continued to add to it during the marriage. You will need to determine the value of the retirement account before the marriage.

If the account is not in your name, then often times dividing up retirement can be subject to significant taxes and early withdrawal penalties. A retirement plan requires a qualified domestic relations order (or QDRO) to divert funds to another payee. The decree must specifically state the plan and order the spouse receive a certain percentage of the property. QDRO's can be complex, specific, and vary from each sort of retirement plan. Different administrators have different requirements.

Stock options are usually considered deferred compensation – usually because they are not available for payment unless and until the party holding the stocks sells them, or the company offers to buy them back. Any stock options earned during the marriage is marital property. If the stock options have vested, meaning the compensation associated with it can be obtained, then it is easier – courts will determine the value of the stock and order that it be liquidated or award the value of the stock to the other spouse with equivalent assets of the estate. If the stocks have not yet vested, it makes it more difficult to value and there is nothing yet to distribute. Therefore, the stock option holder might be made to hold the stock in what’s called a Callahan trust on behalf of the other spouse.

The good news is that New Jersey family laws require courts to consider the marriage as an economic partnership and considers non-economic contributions from one party to be equally as important as the income or property brought in by the other spouse. The fact that one spouse decided to stay home and sacrifice the advancement of their career in order to raise their children and run the household means that the other spouse had more time and energy to devote to their own career. The courts consider this an even trade, and will treat the ‘stay at home’ partner just the same as the primary breadwinner.

The general rule of thumb is to keep your separate property completely separate and not commingle it with any other kind of property. For example, if you receive an inheritance of $10,000.00, you should deposit that money into a separate, interest-bearing account and not contribute any income that you have earned during the marriage to it. If you start depositing money earned during marriage into that account, then you have ‘commingled’ the asset, meaning your spouse would now be entitled to a share. Similarly, if you purchased a house prior to the marriage, but then you and your spouse take out a loan or contribute money to a renovation or to pay down the mortgage, the asset has become commingled, and your spouse would thus be entitled to some value of that home, even though it was bought prior to your marriage

Yes – and no. If the value of the property has increased simply because of interest, market fluctuations or inflation, and not because of any sort of positive, affirmative action on your part, then the increase in value will most likely be awarded to you. However, if you and your spouse did something to increase the value, that is more difficult. Even if you and your spouse did home renovations to a separate property, your spouse could claim that their labor and time saved you costs and added value to the home, meaning they would be entitled to some share of that improvement.

Furthermore see, New Jersey Family Law Part 1: Frequently Asked Questions About Child Custody Laws in NJ, New Jersey Family Law Part 2: Frequently Asked Questions about Child Custody Laws in NJ and New Jersey Family Law Part 4: Frequently Asked Miscellaneous Questions. Property division can be complex and overwhelming in any New Jersey family law matter. If you have questions about what to expect regarding your property in a divorce, get in touch with the law offices of Peter Van Aulen today for an initial consultation at 201-845-7400.