Equitable Distribution in New Jersey: Understanding the Basics

When a marriage ends, one of the most significant, and often contentious, issues is the division of assets and liabilities. In New Jersey, this process is governed by the principle of equitable distribution. Unlike community property states where assets are divided 50/50, New Jersey law aims to distribute marital property fairly, though not necessarily equally. With that being said, in many cases, Judges do find that a “fair” distribution is in fact an equal distribution.  Understanding how equitable distribution works in New Jersey can help divorcing couples navigate this complex process more smoothly.

What is Equitable Distribution?

Equitable distribution is the legal principle used to divide marital assets and debts during a divorce. In New Jersey, this does not mean a straight-down-the-middle split. Instead, the division is based on what is deemed fair given the circumstances of the marriage and divorce.

Marital vs. Separate Property

Before delving into the distribution process, it’s crucial to distinguish between marital and separate property:

Marital Property: Includes assets and debts acquired during the marriage, regardless of whose name is on the title. This can encompass real estate, retirement accounts, investments, vehicles, and personal property, to name a few. The term of the marriage is generally viewed as the date of marriage through the date of the filing of a divorce complaint.

Separate Property: Includes assets and debts acquired before the marriage or after the filing of the complaint, as well as inheritances and gifts received by one spouse individually which have not been commingled with marital assets.

Factors Considered in Equitable Distribution

New Jersey courts consider a variety of factors to ensure a fair division of property. These include, but are not limited to:

Duration of the Marriage: Longer marriages may result in a different distribution of assets than short term marriages.

Age and Health: The physical and emotional health of each spouse can impact the division, particularly if one party has significant medical needs.

Income and Earning Capacity: Current and future earning potential of each spouse is assessed to determine how assets should be divided.

Standard of Living: The lifestyle enjoyed during the marriage is taken into account to maintain a similar standard post-divorce.

Economic Circumstances: Each spouse’s financial situation, including debts and liabilities, is considered.

Contributions to the Marriage: This includes both financial contributions and non-financial contributions, such as homemaking and raising children.

Future Needs of the Children: If the couple has children, their needs and who will have primary custody are critical factors.

The Process of Equitable Distribution

1. Identification and Valuation of Assets

The first step is identifying all assets and liabilities. This requires full disclosure from both parties. Then a determination must be made as to which assets and liabilities are “marital” as opposed to “non-marital.” Valuation of these assets is also necessary, sometimes involving experts for items like real estate or businesses.

2. Negotiation

Often, couples will attempt to reach an agreement through negotiation or mediation. This can be less adversarial and more cost-effective than going to court. A mediator can help facilitate discussions and suggest fair solutions.

3. Court Intervention

If negotiation fails, the court will step in. Each party presents their case, and the judge makes the final decision based on the factors set forth in the statute. This process can be lengthy and expensive, making negotiation a preferable option when possible.

Equitable distribution in New Jersey strives to achieve fairness, not necessarily equality, in the division of marital assets and debts. Understanding the factors that influence this process can help divorcing couples prepare and advocate for a fair settlement. While the prospect of dividing assets can be daunting, with careful planning and professional guidance, it is possible to reach an outcome that supports both parties’ futures.

About the Author

Brian Budic is Co-Chair of the firm’s Divorce and Family Law Practice Group He has extensive experience representing clients in all aspects of family law in New Jersey, including complex issues of divorce, equitable distribution, child custody, parenting time, child support, alimony, domestic violence, and prenuptial agreements. Brian knows the stress and emotional toll that his family law clients experience before, during, and after the divorce process. As a result, he treats every client with the empathy, responsiveness, and respect that they deserve.