Understanding Marital Property Division Laws in NJ

The divorce process, especially the division of property, can often feel like a tangled mess. Untangling the knots of property, assets, and debts acquired during the marriage—without getting overwhelmed or stressed out by the process—can take a lot of patience (as well as keen legal insight). 

Armed with the right information and support from an experienced divorce attorney, however, it can be a bit easier to unravel the complexities of marital property laws in New Jersey.

Marital and exempt property basics

It’s important to understand what counts as marital property when embarking on the divorce process. Marital property includes all assets that were acquired during the marriage, such as real estate, vehicles, artwork, bank accounts, and pensions. 

Even Individual Retirement Accounts may be considered marital property if contributions were made during the marriage.

Marital property is distinct from exempt property. Exempt property refers to assets that were either: 

• Acquired before the marriage
• Protected as part of a marital agreement
• Acquired as part of an inheritance, gift, or legal settlement

During divorce, New Jersey relies on the concept of equal distribution to guide the division of assets. This means assets and debts acquired during the marriage are divided fairly, but not necessarily equally, in a divorce.

Equitable distribution generally only applies to marital assets, not exempt assets. However, there is a great deal of nuance involved in asset division, and outcomes depend on the specific facts of a situation. Your consultation with a divorce attorney is a great time to discuss your unique circumstances, your goals for asset division, and what your options might be. 

New Jersey marital property laws at a glance

As the Garden State operates under this law of equal distribution, the court considers a variety of factors when determining how to divide property amongst divorcing parties which include:

• Length of the marriage
• Financial and non-financial contributions of parties
• Age and health of each spouse
• Current situation of each spouse at time of separation
• Standard of living during the marriage
• Long-term earning capacity of each spouse

Keep in mind that these are factors that the court will evaluate if parties are litigating their divorce. If divorcing couples take the route of mediation to resolve matters, they can decide what division of assets would work best for them. This approach helps families create a more personalized settlement, and one that often involves less stress. 

Common questions about marital property laws and divorce in New Jersey

Questions in divorce are common, especially when it involves something as nuanced as dividing marital property. Below are some of the most frequent questions we hear at Dughi, Hewit & Domalewski. 

Who gets to keep the family home?

The marital home, as well as other mutually owned properties, is to be divided fairly, but there are numerous ways this might play out. One spouse might keep the house if their name is on the deed and there have been significant financial contributions toward the purchase and upkeep. Sometimes one party will “buy out” the other spouse’s share of the equity.

Ownership of the marital home may also play a role in how other assets are divided. For example, if one party feels strongly about staying in the home, they may negotiate to retain ownership while agreeing to divest themselves of retirement assets. 

What about retirement assets? 

Besides the family home, retirement accounts often make up a large portion of a divorcing couple’s net worth. As such, retirement assets are something that are carefully considered when property is divided. 

Generally speaking, retirement accounts accumulated during the marriage are considered marital property. They are subject to division but not necessarily split 50/50. 

The first step is to determine what portion of the account qualifies as marital property. The type of retirement account as well as potential tax penalties are also taken into consideration. Working with an experienced divorce attorney can help you assess the pros and cons of different strategies for dividing retirement accounts. 

What happens if one spouse keeps the household or raises the children while the other spouse works?

New Jersey acknowledges non-monetary contributions in the form of childrearing and homemaking and take these factors into consideration when determining the equitable  distribution of assets and debts. 

What happens with contested items including keepsakes, jewelry, etc.? 

All assets, including those of sentimental value, are subject to equal distribution, so it is best to negotiate and reach a fair compromise with such items. Depending on the items in question, it may be necessary to bring in a valuator to assess the market value of items so the fairest decision might be reached. 

While the court will weigh emotional attachment, replacement value, and overall fairness, finding a solution outside of court determination is ideal for all parties where possible. 

What happens if we own a business together or one spouse owns a business? 

Business ownership can make division of assets and debts more complex as, if establishment of the business occurred during the marriage, it may be subject to the equitable distribution law. 

Because businesses represent a complex financial asset, it’s common to undertake an appraisal to better determine how the business contributes to the overall financial picture. 

Many factors go into the calculation of this type of asset division and, as such, it is highly recommended to consult a legal professional to best protect assets, understand tax implications of dividing business assets, and explore the best potential outcomes for all parties.

What if we cannot agree on how to divide our property, assets, and debts? 

Of course, the most ideal outcome is for parties to come to an agreement that is favorable for all parties through their own negotiation or mediation. If parties are unable to reach an agreement, however, litigation may be the most appropriate path to take. In such situations, the division of assets is determined by a judge. 

Litigation can be a time-consuming and stressful process, but working with an experienced family law attorney can help you understand the process and how to best prepare.

Is there any way to prepare for dividing marital property? 

Even if your case moves to litigation, you do have autonomy in the process. Start by gathering financial documents like bank statements, investment records, mortgage records, pay stubs, and property tax records, as well as documentation related to home renovations and any debts or liens. 

Whether you negotiate your asset division in mediation or need the court to settle your equitable distribution, this information will be necessary to ensure all your assets and debts have been considered.

Consult with a divorce attorney

An experienced family law attorney can help navigate the complexities of dividing the marital estate. Whether you move forward with private mediation or if your case is destined for litigation, our skilled family law team can analyze your specific situation, advise you on the best course of action, and represent you in negotiations or court matters.

Schedule a consultation with us today.