Division of Assets and Debts
In Family Law, the term "equitable distribution" refers to the division of marital property by a court in a divorce proceeding. However, since the word "equitable" does not mean "equal" and there are no requirements that property awards to each party be precisely equal, providing a fair allocation of the property between spouses require guidelines rather an arbitrary or willy-nilly approach of allocating property. New Jersey's Equitable Distribution Statute, N.J.S.A. 2A:34-23, provides both the statutory authority and guidelines necessary for courts to adjudicate the distribution of property. The statute allows family courts to make determinations about how real and personal property will be divided following a divorce. Before dividing property, the courts, lawyers, and parties to the divorce must first identify and list what is to be divided. Generally, this list will only include property that was legally or beneficially acquired during the marriage. Other types of personal or real property, usually called "separate property", may be deemed as not divisible if it was owned by one party before the marriage or acquired during the marriage by one spouse through gift or inheritance. Such separate property is protected under N.J.S.A. 2A:34-23(h).
Once divisible property has been identified, the court applies, but is not limited to, the following factors in N.J.S.A. 2A:34-23.1:
a. The duration of the marriage;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage by each party;
d. The standard of living established during the marriage;
e. Any written agreement made by the parties before or during the marriage concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse or children; and
o. Any other factors the court may deem relevant."
In addition to evaluating the above factors, courts also make fact sensitive analyses of all the issues relating to valuation of assets, the eligibility or ineligibility of each party, and equitable distribution. These evaluations are what often justify litigation.