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New Jersey Property Division
Property Distribution Laws in New Jersey

In New Jersey the courts generally accept a fair and reasonable property division the parties agree to. If the parties cannot agree, the property is divided by the Superior Court within the Judgment of Divorce.

An equitable distribution state, New Jersey follows the dual classification system of marital and separate property, and an increase in the value of separate property remains with its owner.

When the parties are unable to reach a settlement, the Superior Court divides the marital estate in an equitable manner. Equitable does not mean equal, or even half, but rather what the Superior Court considers fair.

Under New Jersey case law, a property division order is final and cannot be changed unless there are exceptional and compelling circumstances that would require a change for the sake of fairness and justice.

Factors in Equitable Distribution

In seeking an equitable distribution, the court is guided by New Jersey Statutes - Title 2 A - Chapters: 34-23. It considers, but is not to be limited to, the following factors:

  • the duration of the marriage;
  • the age and physical and emotional health of the parties;
  • the income or property brought to the marriage by each party;
  • the standard of living established during the marriage;
  • any written agreement made by the parties before or during the marriage concerning an arrangement of property distribution;
  • the economic circumstances of each party at the time the division of property becomes effective;
  • 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;
  • the contribution by each party to the education, training or earning power of the other;
  • 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;
  • the tax consequences of the proposed distribution to each party;
  • the present value of the property;
  • 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;
  • the debts and liabilities of the parties;
  • 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;
  • the extent to which a party deferred achieving their career goals; and
  • any other factors which the court may deem relevant.

The New Jersey courts strive for an equitable distribution of marital property. New Jersey marital property is divided under the considerations of New Jersey Statute Section 2A:34-23.1, but the trial court judge receives great discretion when dividing property.

Marital Property vs. Separate Property

Generally, separate property is not included in a New Jersey divorce. The only property that comes into the court's distribution is legally classified as property of the marriage subject to New Jersey Statute Section 2A:34-23.1.

Marital property means assets acquired by either spouse during a marriage as well as separate property brought into a marriage and converted into marital property. Under New Jersey case law, the court assumes that assets acquired during the marriage are marital property unless proven otherwise. Immune property consists of property that each spouse had before the marriage or acquired individually without including it into the marital property. This may also include property deemed separate under an agreement between the spouses. In the end, the trial judge decides what property is marital, and what property is separate.

Valuing and Dividing Property

First, the court classifies assets and liabilities, property and debt, as marital or separate. Then it assigns a monetary value to the marital property and debt. Finally, it distributes the marital assets between the two parties in an equitable manner.

After the court decides which property is available for distribution, the next step is property valuation. The final step is the allocation of marital property.

Under New Jersey Statute Section 2A:34-23.1, the court considers a number of factors in dividing assets and debt, including:

  • the parties' age & health;
  • the contribution of each party to the marital property;
  • the parties' economic circumstances; and
  • tax consequences.

The Marital Home

In New Jersey, as in many jurisdictions, the equity in the marital home is often one of the biggest assets the spouses divide. The equity is the market value of the house, less any debts or liens against it. Equity is established by determining what the current market value of the home is at the time of separation. Once the spouses agree to a current market value, any debts associated with the property (mortgage, taxes, home equity loans, etc.) are deducted from the market value to arrive at the equity to be divided. Normally, making this calculation requires a paid real estate appraisal or a real estate agent can prepare a market analysis for free.

From there, couples choose one of three options to divide the equity:

  • The spouses sell the home and divide the proceeds.
  • One of the parties may refinance the home and "buy out" the other party.
  • One spouse (usually the custodial parent) remains in the home with the exclusive use and possession for a certain period of time (for example, until the youngest child graduates from high school), then either buys out the other spouse or sells the home and divides the proceeds.

Pensions and Retirement Accounts

In New Jersey vested pensions are marital property. A pension vests when all the requirements to receive the pension have been met. Unvested pensions are also marital property. Until the pension has vested, the person under whom the pension is maintained has only an expectancy of interest in the pension.

Several different methods of valuation are used in determining how much a marital asset is worth, depending upon the asset to be valued and the level of agreement between the parties. Courts generally accept the value when the spouses mutually agree on a value of a particular asset. Experts may be retained by the parties or by the courts to determine the value of marital assets if the parties cannot agree. Such experts may include accountants, real estate or business appraisers, or pension valuators. The use of experts adds to the cost of the divorce.

In New Jersey the court may include the retirement benefits and plans earned by both spouses as marital assets available for division. Retirement benefits vary greatly but can generally be divided into two groups:

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