“What happens to our assets and debt when we get divorced?” This is a very common question I get asked by clients starting the New Jersey Divorce Process. Rightly so, couples are worried about the debt they have accrued on credit cards, a home equity line of credit, student loans and car loans. At My Law Firm we will review the documentation you provide and along with other financial factors, explain your options in your proceedings.
Does Marital Fault or Misconduct matter?
For the most part, judges dividing marital property in New Jersey don’t care who is at fault in the divorce, however, there are a few rare exceptions. In the case one spouse has “dissipated” (wasted) marital assets by misusing property (gambling is an example), a court may assign the other spouse a larger part of the remaining assets to help compensate for the loss of marital funds. A judge might also make an exception if one spouse’s behavior was “egregious” or extremely shocking. An example of this is if one spouse tried to kill the other.
Are there factors more important than others?
It is up to the judge to decide how important any particular factor is. Judges usually consider the length of the marriage and the marital lifestyle as the most important factor in a Northern New Jersey divorce. For example, people ending longer marriages have usually contributed more significantly to a joint standard of living and given up more individual opportunities.
Couples going through a Hudson or Bergen County divorce can negotiate their own property divisions, either on their own, or with the help of their lawyer. New Jersey courts also provide several programs for divorcing couples to help them resolve property disputes. If an agreement isn’t able to be made, a judge or arbitrator will make the decision.
Equitable distribution is made in three basic steps:
Identifying Marital Property
Marital property includes assets and debts which are accumulated during the marriage. This does not include property either spouse acquired before the marriage, received as an individual inheritance or a gift from a third party during the marriage. A spouse will have to prove any claims that property the couple owns at the time of divorce is separate. This can be difficult, since separate and marital property are often “commingled,” or combined. An example of this is, one spouse might deposit funds from a previously separate account into a joint account, and then continue to add marital funds to the joint account during the marriage.
A spouse who owns property can “transmute” (change) separate property into marital property, or vice versa, by changing the title to the property during marriage. For example, if one spouse changes the title on a separately owned home to both spouses as “tenants by the entirety,” the home becomes marital property subject to equitable distribution.
Distributing marital property from separate property can be complicated. If you and your spouse disagree about whether specific property is separate or marital, it is best to contact one of the professionals at My Law Firm.
Determining the Value of Marital Property
Normally, property is valued at its current “fair market value,” which is what you could sell the asset for if you sold it today. In some cases, couples need help from professionals, such as real estate or business appraisers, to determine asset values for property, in the case of a home or a business. A retirement pension can also be very difficult to evaluate and may require the input of a forensic accountant or an actuary.
Distribute Marital Property
There are several different options to consider in the distribution of marital assets and debts. A couple can agree to sell a marital home and divide the proceeds even before the divorce is final. If only one party agrees on this line of action, that spouse will have to ask the court for permission to put the home on the market.
A couple can also give (or be ordered by the court) one spouse the right to live in the home for some temporary period of time. This is most common when the couple has minor children. The order or agreement might specify that the house will be sold at some specified future date, for example, when the youngest child leaves for college. Another possibility is that the home be transferred to one spouse, while the other retains an interest-bearing loan.
If a couple has enough joint assets to enable one spouse to “buy out” the other spouse’s share, the spouse keeping the house may be able to refinance it with a new mortgage.