Equitable distribution in New Jersey does not mean half

People arrive at a New Jersey divorce believing everything gets divided down the middle. That is the rule in community property states. New Jersey is not one. New Jersey divides marital property equitably, which means fairly in the circumstances — often close to evenly, sometimes not, and never automatically.

The court does three things, in order

New Jersey courts have followed the same three-step approach since Rothman v. Rothman (1974): identify which property is subject to distribution, determine what it is worth, and then decide how to allocate it equitably. Most arguments that feel like they are about fairness are really about step one.

What is marital property, and what is not

As a general rule, property either spouse acquired during the marriage is subject to equitable distribution, regardless of whose name is on it. Property owned before the marriage is generally exempt, and so are gifts and inheritances received from someone outside the marriage — a bequest from a parent, for example.

The exemption is easier to state than to keep. Depositing an inheritance into a joint account, using premarital savings for a down payment on a house you both own, or the increase in value of a premarital asset that both spouses worked to build are all situations where exempt property can lose that character in whole or in part. A gift from one spouse to the other, notably, is not exempt — interspousal gifts are marital property.

The sixteen factors

N.J.S.A. 2A:34-23.1 lists the factors a court weighs in deciding what is equitable. They cover the duration of the marriage; the age and health of the parties; the income or property each brought to the marriage; the standard of living established; any written agreement made before or during the marriage about distribution; the economic circumstances of each party at the time distribution becomes effective; the income and earning capacity of each, including educational background, training, employability, time out of the workforce and custodial responsibilities; the contribution by each to the education, training or earning power of the other; each party's contribution to the acquisition, dissipation, preservation or appreciation of the marital property, including the contribution of a homemaker; the tax consequences; the present value of the property; the need of a parent with custody to own or occupy the marital residence; the debts and liabilities of the parties; the need for a trust fund for medical or educational costs; the extent to which a party deferred career goals; and any other factors the court finds relevant.

Read that list and the reason there is no property calculator becomes obvious. Several of those factors are not numbers.

The assets that most often need a lawyer

• A marital home — the divorce judgment does not transfer a deed or refinance a mortgage. Those are separate documents, and getting one spouse off a mortgage usually means a refinance the other must qualify for alone.
• Pensions and retirement accounts — dividing these generally requires a separate court order, and the plan administrator, not the divorce judgment, is who has to accept it.
• A business either of you owns — valuing a closely held business is expert work, and the value is usually contested even between people who agree about everything else.
• Anything acquired partly before and partly during the marriage — the line between exempt and marital runs straight through it.

What this means if you are settling it yourselves

Couples with simple finances — two incomes, a car each, a shared account, no house and no pension in play — routinely divide things themselves and write it into a settlement agreement, and a court approves it. That is the situation this software is built for, and if it is yours, the distribution section of your agreement is mostly a matter of writing down what you already decided.

If any of the four assets above is on your list, the honest advice is to get a New Jersey family lawyer to draft that piece. Not the whole divorce — the piece. An agreement that divides a pension in language a plan administrator will reject is worse than no agreement at all, because you will find out years later.

Clear Parting Docs is not a law firm and this is general legal information, not legal advice about your situation. For advice you can rely on, talk to a New Jersey attorney — any one you choose.