Typically, divorcing spouses are unable to come to an agreement and will have to go to court where a judge will consider the state laws to properly and equally split up property and debt.
So, How Are Property and Debt During Divorce Divided?
New Jersey is an “equitable property” state, meaning that all marital property established during the marriage is to be divided equally between the parties. Unless the court rules that equal distribution would be unjust, that is usually what occurs when dealing with property and debt during divorce.
The process of dividing property consists of granting each spouse a percentage of the total value of the property, and they will each receive items whose worth will total up to their percentage.
Anything possessed by either spouse during the term of marriage is considered to be marital property unless it can be proven that it was separate property. When it comes to retirement, the court will be able to identify the rights of each spouse and their retirement plan, or under an insurance policy.
Marital Vs. Non-Marital Property
People often wonder what is considered to be marital vs. non-marital property, so here is a breakdown.
Marital property: This includes everything earned during the marriage, and everything acquired from those earnings. So any debts sustained during the marriage, such as college planning costs or credit card debt, if both spouses are responsible for the credit card debt or share a child together.
Non-marital property: This includes property that was purchased by one spouse prior to marriage, property that was gifted to one spouse by a third party, property that was inherited by a spouse prior to the marriage, or property that was acquired or bought by a spouse during the marriage that was a clear result of the efforts of the spouse prior to marriage.
Community & Commingling
Commingling refers to when two spouses mix their separate property with their marital property. If the husband was left an inheritance, this estate plan would be considered a separate property and the wife would not receive any of it during the divorce. But, if the husband deposited that inheritance into a joint account with the wife, and that money was then used to pay bills, that inheritance would be considered a marital property and would possibly be divided between the spouses.
In New Jersey, there is no community property. The division of property during a divorce would abide by the rules of equitable distribution, which as stated above, is the equal distribution of marital assets during a divorce. These assets include houses, real estate title, retirement funds, property, debt, and any financial accounts obtained during the marriage.
Things like pets, burial plots, and cars should also be taken into consideration.
Burial plots are an easy asset to forget when dividing assets during a divorce, but should not be overlooked. Until one of the parties releases his or her rights by a divorce decree, the two spouses will share ownership of the rights.
While many individuals consider pets as a family member, they are actually considered personal property during a divorce. There are other variables to consider in court though, such as who cares for the pet the most. Luckily, a lot of the time, spouses can come up with an agreement on their own about who takes ownership of the pet or pets.
Since NJ is an equitable distribution state, judges will divide the property equitably, which is not always equal. So, if one spouse wanted to keep the car purchased during the marriage, they would be able to explain to the judge why they think that would be fair. If one of the spouses needs the car more than the other, like traveling to work or picking up kids from school, the final decision would be up to what the judge believes is equitable.
Contact a New Jersey Divorce Mediator Today
If you are going through a divorce, and need professional help determining property and debt assets, contact a New Jersey divorce mediator today. At Divorce Law & Mediation, we will work hard to assist in providing a fair and equal distribution of assets during a difficult time.