In New York State and New Jersey, divorce property division is called Equitable Distribution. This includes splitting up the spouses’ joint marital assets and debts. Since both NY and NJ are equitable distribution states, in both states the purely marital property is divided equally (split 50/50), but other issues like pre-marital property that grew in value during marriage or pre-marital property used to buy a family home are examined for fairness in the division.
There are generally 3 steps to NY and NJ courts evaluating how to divide marital property.
1. Identifying marital property. First, what property is to be included inequitable distribution. Assets included may include real estate property, retirement plans (the portion that changed after the date of marriage and up to the date of filing for divorce), bank accounts, savings, stock options, investment accounts, vehicles, and other kinds of tangible property.
Generally, Marital Property is the property acquired by one or both spouses from the date of marriage registration to the date of the filing of the divorce. Marital Property also includes the liabilities or debts of the couple.
2. Value of marital property. Some marital property is easily valuated, such as looking at bank statements or investment account statements and their value as of the date of filing of divorce. Others, like real estate or professional practice owned by one spouse, or a different owned by the couple will need a professional appraisal by a licensed appraiser with a specialty in the field. Business benefits such as stock options, deferred compensation or value of expected bonuses also require special attention. Debts are also important to identify and value. Pre-marital property must be subtracted from the equitable distribution split.
3. Division of the assets. Both NY and NJ courts have discretion in determining the fairness or equity in dividing up the marital assets. The courts take into consideration the following factors when doing equitable distribution:
- Duration (length) of the marriage.
- Age and health of both spouses.
- Each spouse’s contribution to the financial part of the marriage.
- Education and income of each spouse.
- Custody arrangement. For example, this is important when the court determines which spouse gets to stay in the marital home and how long.
- Spousal maintenance.
- Each spouse’s earning potential and future conditions.
- Debts. How to assign and split up the debts sometimes requires creative lawyering.
- Liquidity of the property being divided. Some assets are easily sold and divided, while others require a plan of action over a period of time. Will one spouse buy the other spouse out, or will they sell? How to divide up retirement plans without incurring a penalty.
- One spouse’s addiction and criminal activities that directly affect the financial situation of the couple.
- Any other factor or information the courts may find relevant to use their discretion to make the division fair and equitable.
What are some things that courts will not take into consideration when making equitable distribution decisions?
1.Cheating and adultery.
2. Domestic violence (to a degree). In some extreme abuse cases, the courts will consider how terrible the abuser’s behavior was.
3. If the property purchased during the marriage was held in the title of one spouse’s name only.
4. If your spouse is a good person and “deserves” the equitable distribution award.
5. Criminal activities of your spouse with some restrictions.