Dividing your assets in divorce is more than figuring out who keeps the house. After all, marriage involves more than sharing a living space: there are cars and keepsakes and bank accounts and 401(k)s that need to be divided.
It can be challenging to sort through everything that has value—both financial and sentimental—as you’re simultaneously processing all the other feelings that go along with divorce. As you prioritize what’s important to you as you move forward, take the time to evaluate what you want—and then what you need. The right steps today can help you preserve what’s yours.
1. Learn What Property is Subject to Equitable Distribution
In New Jersey, the courts divide assets according to a principle known as equitable distribution. Under equitable distribution, each spouse receives a fair—but not necessarily equal—share of their marital assets (and of their debts).
Assets and debts are only subject to equitable distribution if they’re classified as “marital property.” Knowing which category all your “stuff” falls into helps protect them—and this can be particularly important in a high-asset divorce.
Things that may be subject to equitable distribution include:
- Real estate
- Bank accounts
- Stocks, bonds, and investments
- Hotel points and air miles
- Household items
- Pets (yes, pets are considered property in New Jersey)
- Life insurance
Debts may also be subject to equitable distribution. Debts can include:
- Credit card balances
- Car loans
- 401(k) loans
- And other outstanding financial obligations
Generally speaking, marital property consists of assets and debts acquired during the marriage. Those obtained before marriage are usually considered separate property—but there are significant exceptions.
The rules governing marital and nonmarital assets can be hard to navigate. We encourage you to consult with an experienced attorney about what might be subject to equitable distribution.
2. Prove That Your Premarital Assets Are Your Own
Only some marital assets are subject to equitable distribution, but your spouse may be able to argue that something is shared property rather than separate property if you acquired it when contemplating marriage.
Take, for example, purchasing a home while dating your future spouse. Your spouse might claim you were contemplating marriage when you bought the house—and therefore, the home is marital property. However, if you can demonstrate you (and not your spouse) improved or maintained it before marriage, you may be able to argue that your home is not, in fact, marital property or that a good portion of its value is exempt from distribution.
Your spouse may also try to claim rights for a premarital asset if it increases in value during your marriage. Your spouse is only entitled to a share of the asset if it increases in value due to some form of active contribution—passive growth in value means the asset will be considered yours alone.
There’s a greater likelihood that your spouse could claim your premarital assets if the marriage lasted many years, as this increases the possibility that your spouse contributed to the asset somehow.
3. Protect Your Business
If you started your own business during your marriage, it could be considered a marital asset, even if your spouse never contributed to the company. To protect your business, there are several courses of action you can take to help protect it from a claim for distribution:
- Not making your spouse an officer or employee
- Keeping separate books and records for the company and your personal expenses
- Having separate bank accounts for business and personal expenses and keeping the funds separate
This is often a difficult decision, but a knowledgeable attorney can guide you through your options and help you find a solution that serves your needs.
4. Claim For Misuse of Marital Funds
The cause of a divorce doesn’t usually impact the division of marital property. Still, in some cases, you may be able to demonstrate that your spouse’s actions led to the dissipation of marital assets due to the misuse of monies or property.
For example, you may be able to show that your spouse spent shared funds engaging in adultery or lost excessive amounts of money gambling. If the court finds your spouse’s behavior egregious, you may receive the larger share as compensation.
5. Assess Property Value Yourself
Professional valuations are immensely helpful in the divorce process.
While determining the value of things like real estate is relatively straightforward, it’s less straightforward with assets such as retirement plans, sports memorabilia, collectibles, vehicles, or art that can require specialized knowledge and experience. In these cases, you should receive a valuation from a forensic accountant, actuary, or other valuation experts to ensure any division is based on an accurate appraisal.
6. Reach an Agreement Through Mediation
If you can arrive at a Marital Settlement Agreement through mediation or any other alternative dispute resolution (ADR) method, you’ll have much more leeway in determining how your assets are distributed.
Although it can sometimes be difficult to collaborate with your spouse during a divorce, a skilled mediator serves as an experienced third party and can help you craft an agreement that considers both parties’ needs and desires.
7. Work with an Experienced Equitable Distribution Attorney
The experienced attorneys at Jacobs Berger, LLC offer creative solutions to help you protect what’s yours during a divorce. Our team prioritizes open, clear communication—we’ll start by answering your questions, then guide you through your options and help you create a plan for preserving your assets.
If you need help navigating the asset distribution process during divorce, contact us to schedule a strategic planning session. We’re here to help our clients plan for a better future.