Assets acquired during or contributed to the marriage are subject to division, known in New Jersey as "equitable distribution." Similarly, debts incurred during the course of the marriage are subject to allocation. When are assets not subject to distribution? When will debt be the responsibility of only one party? Many considerations factor into the answers to these questions. Has one party made a major contribution to an asset from premarital or inherited assets? How much time has passed in the meantime? Has one party incurred debt in the form of dissipation – gambling, drinking, drugging?
Evaluation of Assets
The determination of assets "in the pot" is only the beginning point.
- Pensions: If one party has a pension, has it been accumulated entirely over the course of the marriage? If not, what portion is "in the pot?" In any event, what is the value of the pension and the portion subject to distribution? What assumptions are made for an asset that will not be paying out for years? Will you require an expert evaluation?
- Retirement accounts: Retirement accounts such as 401(k)s and 403(b)s are now quite common, probably even more so than the traditional pension. These accounts raise similar questions: Did contribution begin before or after the marriage? What portion of the account is "in the pot?" How are loans against or withdrawals from the account(s) treated?
- Businesses: Does one party run a business? Did he or she begin the business before or during the marriage? What portion is subject to distribution? How is that portion to be valued? What if the business is the spouse's primary source of income or only an investment? What if the business is held with others subject to a partnership or operating agreement? Again, will you require an expert evaluation?
- Options and restricted stock units: Those employed in the financial sector often receive compensation in the form of nonpublicly traded stock options or restricted stock units in their company. Evaluation and distribution of such assets can be quite complicated and requires your lawyer to have experience with such assets and with experts who know how to evaluate such assets.
Your lawyer should know whether and when to seek expert assistance from accountants, real estate appraisers, business evaluators, economic experts and others in valuing all types of property. I have and regularly make use of such resources, especially in high net worth cases.
Allocation of Debts
The existence of debt is only a starting point. What debts are to be allocated and in what proportion?
- Premarital debt: if a party brings debt into the marriage, is that party solely responsible for the debt? What if the other party has undertaken an obligation to assist in paying down the debt over the course of the marriage?
- Home mortgage: Was the home purchased during the marriage? Does one party now wish to keep the home? Can he or she do so and take the other "off the liability"? Did one party buy a home prior to the marriage? If so, is the other spouse in any way responsible for the liability? Was the property refinanced during the marriage? If so, were both parties on the mortgage note?
- Other liabilities: What about credit card debt? Or an automobile loan? What was purchased with the credit card? Did such purchases benefit one party more than the other? Was the noncardholder even aware of the purchases and ensuing debt? What about car loans? Should they remain with the party who is to keep the car? What is the value of the car after netting out the loan?
- Dissipation: Are there instances when debt can be entirely allocated to one party? If the debt has been incurred entirely for the benefit of one party, without the knowledge or consent of the other, such an allocation may be appropriate. Such situations typically involve dissipation of assets or cash through activities such as gambling, which may take many forms, or alcohol or drug abuse.
Equitable Distribution Versus Alimony
One method of negotiating equitable distribution and alimony is to provide more of one and less of the other. This is the sort of resolution the courts are rarely able to achieve, but can be much more amenable to the parties. Both parties may wish to effect an "unequal" division of assets, or liabilities, in exchange for alimony. The reason for doing so is clear — the parties can more completely extricate themselves from future disputes over modifications of alimony.
Or course, the downside to such arrangements is that the party who would otherwise receive alimony may then feel more inclined to take the sort of action, such as remarriage, that would end any obligation to pay alimony. Only close attention to the goals of the parties and clear explanation of the pros and cons of such an arrangement make such tradeoffs a satisfactory resolution to these two difficult issues.
You need qualified, experienced and intelligent advice to resolve issues of equitable distribution. It is unlikely you will be able to find your way through these difficult issues without the assistance of an attorney. I have successfully tried and settled numerous cases involving distribution of assets and allocation of liabilities. I can ensure you will be fully and fairly represented.
Contact Me Today
Call me at 908-336-0268 or send me an e-mail to schedule a meeting with an experienced asset division lawyer in Somerville, New Jersey. I look forward to hearing from you. Your initial consultation is an important step in securing and protecting your legal rights.