Equitable Distribution in NJ & NY

To discuss equitable distribution in NJ and equitable distribution in NY, we have to look at terms like marital property and separate property, premarital assets, marital estate, and commingling and transmutation.

Equitable Distribution in NJ & NY - Alexander Mediation GroupOne of the defining features of marriage is sharing, including sharing one financial picture.  Although couples sometimes mingle assets well before marriage (and other couples manage to keep their assets mostly separated during marriage), the majority of couples who consider divorce have commingled their assets.

The term “commingling” simply means mixing together your money, property, and other assets with the money, property, and other assets of your spouse.  When you both put your premarital, separate savings into a single account, titled to only one of you, you have commingled your assets.  

Transmuting assets, on the other hand, takes place when parties convert the title of an asset (such as a bank account) to include the other spouse, effectively titling the property to both parties jointly.  

With commingled and transmuted assets, both you and your spouse now have a claim to some portion of that asset because there is an “implied donative intent.”  This means that there is a presumption that you deliberately shared this asset with your spouse and knowingly converted separate property into marital property.  

Because transmuting an asset requires the deliberate changing of title, there is a more significant implied donative intent than with commingled assets.  That is, there is a presumption that one spouse deliberately gifted the re-titled asset to the marital estate, intending to share it with their spouse.  The burden is higher to disprove donative intent in instances of transmutation than commingling.

Equitable distribution in NJ and NY requires evaluating how each portion of the marital estate should be fairly distributed, and to whom—it’s about ensuring you and your partner receive your share of what you built together.  And while each share might be fair, they may not be equal.  In mediation, rather than relying on the courts to decide what is appropriate for you, you and your spouse agree together on what is reasonable and proper.

Equitable Distribution In NJ And Equitable Distribution In NY Aren’t About Splitting Assets Equally—They’re About Splitting Assets Fairly

Equitable Distribution in NJ & NY - Alexander Mediation GroupEquitable distribution in NJ and NY doesn’t mean splitting assets 50/50—it means assets and debt are divided in a way that is fair under your specific circumstances, after the evaluation of multiple factors.  In mediation, we look at the needs of both parties and come up with fair terms to which both you and your spouse can agree.  If both parties contributed assets (like money and real property) to the marriage equally, equitable distribution in NJ and NY may also mean equal distribution of those assets.

However, partners don’t generally contribute assets equally—in many cases, one partner contributes to the marriage monetarily while the other partner contributes in another way (usually by parenting full time and/or supporting their partner’s career).

We consider how each party contributed, but we also look at the length of the marriage.  If you’ve been married only one year, you will more than likely each exit the marriage with ostensibly what you each entered with.

Equitable distribution in NJ and NY in a long term marriage of thirty years, on the other hand, would often result in a fairly even distribution of assets, frequently close to 50/50.  The longer you’re married, the more intertwined your finances and other assets are considered to be.  The longer the partnership, the more evenly assets and debt are divided.

The courts recognize that the non-monetary contributions of one spouse often conditioned the financial advancement of the family as a whole.  This is taken into account when distributing assets. Equitable distribution in NJ and NY considers both the direct and indirect investments of the parties in the marital estate; both are given the considerable weight they merit.

The Assets Included In Equitable Distribution in NJ and NY

The following are just a few of the assets that are divided through equitable distribution in NY or NJ:

  • Equitable Distribution in NJ & NY - Alexander Mediation GroupPensions
  • Retirement assets accrued during the marriage
  • Non-Retirement investment accounts (stocks, bonds)
  • Real property (i.e. real estate)
  • Timeshares
  • Bank accounts
  • Vehicles
  • Personal items (called personalty)
  • Furnishings
  • Art
  • Photographs
  • Collections
  • Mileage points
  • Businesses
  • Medical and Legal Practices
  • Higher Educational Degree(s) obtained during marriage (increased earning ability)
  • Pets
  • Funeral plots


Passive Vs. Active Assets

Whether an asset is considered passive or active has bearing on how it will be distributed.  An example of a passive asset that would be considered excluded from equitable distribution is a retirement account owned by the wife prior to entering the marriage, which she never actively manages during the marriage.  She holds the asset and it grows by dint of market forces.  Both the asset and all the accrued interest would typically be considered the sole property of the wife and outside the scope of equitable distribution.  

Conversely, an active asset, that would be subject, in whole or in part, to equitable distribution, is a business owned and operated by the husband during the course of the marriage.  In this instance, the husband works in the business an average of two days each week and reinvests some of the annual proceeds to improve the business.  

Equitable Distribution in NJ & NY - Alexander Mediation GroupOnce an asset is evaluated as active and subject to equitable distribution, the equitable distribution analysis is required to determine what portion of the actual asset (or its equivalent value) each spouse will receive.  

When determining how much of an active asset a partner is entitled to, we look at each spouse’s direct and indirect contributions to that asset.  If, based on the nature and divisibility of the asset in question, and the financial best interests of the parties as identified by them, only one partner will receive the asset in toto, that partner typically cedes other assets or otherwise equalizes the distribution of the marital estate. .

Equitable distribution aims to distribute a fair share of the marital estate to each party based on the totality of circumstances.  Deciding what is fair depends on a variety of factors.  

New Jersey’s Statute on Equitable Distribution outlines the factors evaluated, and follows:

2A:34-23.1  Equitable distribution criteria.

4.In making an equitable distribution of property, the court shall consider, but not be limited to, the following factors:

a.The duration of the marriage or civil union;

b.The age and physical and emotional health of the parties;

c.The income or property brought to the marriage or civil union by each party;

d.The standard of living established during the marriage or civil union;

e.Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;

f.The economic circumstances of each party at the time the division of property becomes effective;

g.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 or civil union;

Equitable Distribution in NJ & NY - Alexander Mediation Grouph.The contribution by each party to the education, training or earning power of the other;

i.The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;

j.The tax consequences of the proposed distribution to each party;

k.The present value of the property;

l.The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;

m.The debts and liabilities of the parties;

n.The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;

o.The extent to which a party deferred achieving their career goals; and

p.Any other factors which the court may deem relevant.

In every case, except cases where the court does not make an award concerning the equitable distribution of property pursuant to subsection h. of N.J.S.2A:34-23, the court shall make specific findings of fact on the evidence relevant to all issues pertaining to asset eligibility or ineligibility, asset valuation, and equitable distribution, including specifically, but not limited to, the factors set forth in this section.

It shall be a rebuttable presumption that each party made a substantial financial or non-financial contribution to the acquisition of income and property while the party was married.

L.1988, c.153, s.4; amended 1997, c.407; 2006, c.103, s.80; 2009, c.43, s.2.

Assets Not Subject To Equitable Distribution In NJ or NY

Some assets fall outside of the marital estate. A few examples of those assets:

  • Gifts from third parties to individuals (not interspousal gifts)
  • Inheritance
  • Premarital assets

However, if an asset from this class has been commingled or transmuted, it could still be subject to equitable distribution in NJ or NY.  For instance, if you invest your inheritance into your marital home and proceed to live there with your spouse for several decades, you have reclassified your separate asset into marital property.  

Your Assets Don’t Necessarily Get Split Down The Middle In Equitable Distribution In NY Or NJ

Equitable Distribution in NJ & NY - Alexander Mediation GroupEquitable distribution in NJ or NY does not necessitate every asset being liquidated, disposed of or divided.  As in the cautionary Biblical tale of King Solomon, sometimes the value of an asset is destroyed if it is cut in two.  Assets such as real property (consider the home in which the children reside) can be maintained by one spouse in exchange for an offset of other assets.  A spouse’s business, most valuable if it remains operational, and run by one spouse, can remain in tact if the business owner “buys out” the other spouse’s equitable share, often through the distribution of other assets.  

Equitable Distribution In NJ & NY Is About Making Sure You Get What You Need (And Your Spouse Does Too)

The longer the marriage, the closer to a 50/50 split we tend to see, especially after long term marriage, (usually defined as 20 years or longer).  In mediation, we arrive at terms that work for you and your spouse.  Your contributions to the marriage, financial or otherwise, will be recognized and valued.

To learn more about equitable distribution in NJ and NY, read our articles on the subject here, here, and here.  Feel free to call us if we can be of assistance.