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The Terminal Date for Equitable Distribution
Why is the terminal date for equitable distribution so important?
In many divorce cases a critical important issue is when is the "cut off" date for equitable distribution. This basically means at what point in time are the marital assets counted to determine equitable distribution. In many marriages the parties stay separated for a very long time before one spouse eventually files for a divorce. In other divorces the case may take years to finalize. In many cases the value of the marital assets may increase or decrease substantially from the date of separation or date when the complaint is filed until the divorce is finalized. The value of mutual funds or stocks may increase or decrease substantially once the parties separate or when the divorce complaint is filed. Moreover, the value of real estate also may fluctuate substantially. Finally, credit card debts are also accumulated during the separation period or the time period when the divorce is being litigated. Given these considerations the terminal date or "cut off" to determine equitable distribution is critically important.
What is the bright line rule to determine the "cut off" date for equitable distribution purposes?
The bright line rule is that date when the divorce complaint is filed is the "cut off" date to determine what marital assets will be eligible for equitable distribution. The seminal case on this area is Painter v. Painter, 65 N.J. 196 (1974). In this New Jersey Supreme Court case the court adopted a bright line rule. The Painter court held that property will be eligible for equitable distribution only up until the date of the complaint is filed. Therefore, any property obtained after the "cut off" is exempt from equitable distribution.
Are there any exceptions to the bright line rule established by the Painter decision?
Yes. Perhaps the most annoying aspect of family law to many people is that it is so confusing. There are very few areas of family law where there are hard fast answers. In my view the answers to many family law issues are constantly in the "grey area." There are exceptions to every rule and to every case. Many clients are utterly baffled as to how inconsistent the field of family law can be. It is important to note that the Painter decision does indicate that there can be some deviations from the bright line rule that the "cut off" date is when the complaint is filed. An important section of the Painter holding provides as follows:
We are under no illusion that what we have said above will provide certain and ready answers to all questions which may arise as to whether particular property is eligible for distribution. We have sought only to implement the legislative intent, as we discern it, by settling forth what we believe should be the general governing rules. Individually problems must be solved, as they arise, within the context of particular cases. Id. at 218.
What are some other important cases that have addressed the issue of the terminal date to determine equitable distribution?
If the divorce is being filed under one of the seven fault grounds (including extreme cruelty, adultery, abandonment, substance or alcohol addiction, institutionalization, deviant sexual conduct and incarceration), the 18 month separation period, required for a no-fault divorce, is waived. However, each ground for divorce has its own stipulations.
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