What Is Equitable Distribution in Divorce?

equitable distribution new jersey

You often hear people say that marriage is no more than a contract between two people. In some ways, this is absolutely true. However, marriage is also the life that two people create together. It’s their children and their families. It’s their emotional bond. It’s their home and the belongings they accumulate over the years as a couple. 

And with the swipe of a pen, that entire life can crumble and they must figure out how to pick up the pieces. 

Much attention gets paid – as it should – to the division of custody time, but what about property and belongings? In order to move on, these things – and the liabilities attached to them – must be divided between the parties in the fair and just manner known as equitable distribution. If done properly, both people can finalize their divorce in a respectful and thoughtful manner without losing everything they owned.

What is Equitable Distribution?

Equitable distribution can be defined as the fair and just division of marital assets or property. But what does that actually mean? Many people mistake the word “equitable” for “equal,” but that isn’t accurate. Equitable actual means “fair.” This means that the property acquired in divorce will be fairly distributed between both parties based on a range of criteria.  There are several factors to consider during this process:

  • If you and your spouse agree on the division of property, then the equitable distribution of property by a judge under New Jersey statute and case law isn’t necessary
  • Just because one spouse “owns” (holds title to) a piece of property, it doesn’t mean the property isn’t part of the marital property to be divided
  • A prenuptial agreement, where there is one, is a key component to determining how property is divided in a divorce
  • Age and health of both parties play a part in determining the division of property

How Will My Marital Property be Distributed?

There are several ways that property is distributed during a divorce. For instance, a couple who has a prenuptial agreement will be able to keep most, if not all, of their pre-marital assets, as well as assets earned from those pre-marital assets. 

Take Jane and Tom for example. Jane and Tomare engaged to be married. Jane owns an art gallery that sells the work of up-and-coming artists in the New York metro area. The gallery is growing and is estimated to be worth over $10 million within five years. Jane and Tom go to an attorney for a prenuptial agreement and Jane makes sure to include her art gallery and all of its current and future assets and income in the agreement. 

15 years later, Jane and Tom are in the middle of a divorce. Because of the prenuptial agreement, Jane’s attorney can argue that Jane’s income and ownership equity in the art gallery isn’t part of the marital property. It’s likely that the art gallery proceeds and income won’t be part of the equitable distribution of the divorce. 

Another common issue is whether the property is divided if one spouse purchased a home or car in their name only. The reality is, even if only one party is listed on the title, both parties maintain it and it will likely be part of the marital assets. Here is a great example of how this works.

Tessa and Jason Jones are married. The Jones’ are ready to buy a home but due to credit issues, it’s easier for Jason to buy the home in his name only and keep his name on the title and the mortgage. 10 years later, Tessa and John are getting a divorce. John’s attorney argues that John owns the house because both the title and mortgage are in his name. 

However, Tessa’s attorney argues that the house is part of the assets subject to the equitable distribution of property. Without Tessa contributing to the household income, paying the bills, and caring for the children, John would not have been able to maintain the mortgage and all of the other responsibilities of raising a family together. The courts will agree with Tessa, as the house and mortgage were accumulated during the marriage – regardless of whose name either the asset or the liability is in.  Both the asset and the liability will be distributed.

Splitting Assets in a Divorce in New Jersey

These are just two examples of some of the issues that occur during the process of the equitable distribution of property in a divorce. To learn more about how you and your spouse may divide your property during a divorce, contact the attorneys at Keith Family Law. One of our knowledgeable attorneys will be happy to answer your questions. 

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