Divorces can be emotionally and financially complex. Aside from child custody, the greatest source of contention in a divorce is the division of marital assets. While spouses can resolve this matter on their own without involving the court, it’s essential to understand what might happen if disagreements arise. When it comes to asset division, both New York and New Jersey follow the “equitable distribution” principle. But what does “equitable” mean, and what exactly is marital property?
What is Equitable Distribution?
When spouses are unable to agree on how to split marital assets, including debts, upon divorce, a court will need to make a decision for them based on what is most “equitable.” Equitable means just in light of the circumstances, not equal. There are several factors that influence the court’s decision. While there are some differences regarding precisely how courts in New York vs. New Jersey make this determination, a court will typically consider these things:
- The length of the marriage
- The income and property both spouses had when they got married
- The age and health of both spouses
- Both spouses’ likely future financial situations
- The need of the spouse who has custody of the children to remain in the marital residence
- Whether either spouse contributed to the other spouse’s earning power
- The tax consequences to both spouses
What is Considered Marital Property?
Divorce judges only have jurisdiction to distribute marital property during a divorce. However, they can authorize certain measures to determine whether property is considered marital. In general, property that either spouse acquires before marriage is “separate,” and property acquired during the marriage is “marital”. Property will not be considered separate just because it is titled in one spouse’s name. That said, with very few exceptions, if an item was purchased after the date of marriage, it will likely be considered marital. Retirement accounts, bank accounts, houses, vehicles, personal property, and cash are a few examples of items that can be considered marital if they (or a portion of their value) were obtained during the marriage.
Separate property, on the other hand, is any property that the individual spouses owned before they were married. There are also certain assets that the law will recognize as separate. For example, in New York, any personal injury compensation, third-party gifts, and inheritances a spouse receives during marriage is presumptively viewed as that spouse’s separate property.
Spouses who sign prenuptial or postnuptial agreements can designate certain items as separate property, and define what will be considered to be marital property. This means that assets that would normally be classified as marital and subject to an equitable distribution can effectively be taken off the ‘marital” table by agreement.
Special Asset Division Considerations for High-Net-Worth Husbands
If you are a high-net-worth husband, having a court make a decision about how to divide the assets you’ve worked so hard to build can be scary. There is a lot at stake, and courts are often unlikely to fully appreciate or understand the complexity of your situation. For instance, you may own property in another state or country, have rare art or other collections that require appraisals, or have started a family business that is difficult to value.
In addition, there can be significant tax implications depending on how your assets are ultimately divided. That’s where we come into play.
The Role of a Divorce Lawyer in Asset Division
At Dow Divorce Law, we understand the many challenges men face during high-net-worth divorces. Our founding attorney is a Certified Financial Litigator, and we know that asset division isn’t just any step in the process; it’s your future. When you work with our firm, we seek to:
- Handle negotiations: We will make and receive settlement offers, explain what the legal consequences of various terms are, and help you decide whether to settle or go to trial.
- Limit asset exposure: We work to limit the court’s consideration to marital items and advocate for separate assets to remain protected.
- Work with financial experts: If you have unusual or complex assets, or items that are difficult to value, we will consult with experts who can advise us and the court.
- Minimize tax and legal risks: Certain divisions of property could increase your tax liability or create legal challenges. We anticipate these issues ahead of time and advice you when to work with an accountant or other professional to mitigate them.
- Take your case to trial: If an out-of-court settlement isn’t feasible, we will move toward a trial. At trial, we will apply our litigation skills and legal experience to argue for a judgment that best protects your interests.
How Are Assets Divided In a Divorce: FAQs
How is debt divided in a divorce?
Debts are typically divided according to the same equitable distribution principles that apply to the division of property. The debt in question must typically be marital to be subject to equitable distribution. Though in some cases, the lines between marital and separate debt can be blurred (for instance, if there is evidence that one spouse agreed to be responsible for the other spouse’s separate debt).
Judges can decide that certain debts, even though they were incurred after the date of marriage, should rightfully belong to just one spouse. For instance, a spouse who runs up a high credit card debt to support an extramarital affair should not expect the court to make the other spouse responsible for it.
Are separate bank accounts marital property?
Whether a separate bank account is considered marital property depends more on how the account was acquired, where the money came from, and how it was maintained than on anything else. The court must determine why the spouses opened these accounts and what purpose they served during the marriage. This requires examining deposits and withdrawals and how those funds were used.
Accounts into which both spouses made deposits, and which were used to pay for joint marital expenses, will likely be viewed as marital. These can be contrasted with a bank account that either spouse opened and deposited money into before the marriage, and all but ignored during the marriage. .
Is an inheritance marital property?
An inheritance that either spouse receives during the marriage will usually remain their separate property. However, this can also depend on how the inheritance was handled during the marriage. For instance, if one spouse inherits money and deposits it into a joint bank account to pay marital expenses, it will be much more difficult to argue that the inheritance remains separate property.
How long does the asset division process usually take?
This largely depends on how contentious the divorce is, the nature of the marital assets and debts, and whether the spouses can reach a settlement. More complex and contested divorces require more expert witnesses, more discovery, more mediation, and generally more time.
Protect Your Assets with an Experienced Family Lawyer at Dow Divorce Law
Asset division requires time, patience, and careful planning, especially in high-net-worth divorces. No matter how agreeable or disagreeable your spouse is, or how complex your assets are, we can help. Are you ready to get started with your asset division or some other aspect of your divorce? Call Dow Divorce Law or complete our online contact form to schedule your paid strategy session today.
