While the divorce rate in the U.S. has slowed over the past decade, a significant number of married couples still ultimately separate. According to the American Psychological Association, around 40% to 50% of marriages end in divorce.

Financial disagreements during a marriage are among the top reasons for conflict between couples, so it is not surprising that the process of dividing shared assets during a divorce is often complex and emotionally charged. It is important for divorcing spouses to know that, if they cannot agree on how to separate property and finances outsides of court, a judge will determine it for them.

What does New Jersey law consider marital property?

New Jersey law considers almost all assets that either partner acquires during marriage and before filing for divorce to be marital property. Potential exceptions include third-party gifts or inheritances left to only one spouse and not intermingled with shared property. During divorce proceedings, the judge must determine what assets are subject to marital division, what the value of each asset is and how to distribute assets fairly. In addition to real estate, financial holdings and personal property, divisible assets may include pensions, severance pay and even debt.

How do the courts decide on a fair division of marital property?

Rather than simply splitting assets evenly, New Jersey divorce courts follow a system of “equitable distribution” based on sixteen factors. These factors act as guidelines that help judges to divide property in a way that minimizes economic hardship for either partner and ensures ongoing support for any children. Examples include:

  • How long the marriage lasted
  • What standard of living spouses shared during the marriage
  • The earning capacity of each party, including education, work experience and child care responsibilities
  • How much each party contributed to or detracted from shared property during the marriage
  • Whether either spouse deferred his or her own career goals to enhance the other’s earning capacity

It is important to keep in mind that equitable distribution laws only apply when a divorce goes to court. Many couples choose to avoid a potentially undesirable division of property through negotiation or mediation.