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Marital Versus Separate Property in Equitable Distribution

 

 

 

In New Jersey, when spouses get divorced, their marital assets and liabilities are divided during a process called equitable distribution.   They are divided in a way that is equitable, or fair, but not necessarily equal.  As a general rule, property that is considered marital is subject to equitable distribution.  Property that is considered separate is not subject to equitable distribution.   

Therefore, a key step in the equitable distribution process is figuring out what is marital property versus what is separate property.  Courts have generally defined marital property as the property that is acquired between the date of marriage and the date that the divorce complaint is filed.   Therefore, property acquired before marriage or property acquired after the divorce complaint is filed is generally considered separate property.

 

There are, of course, some exceptions to this general rule:

  1. Gifts and Inheritance During Marriage Are Generally Separate Property

Gifts received from a third party (such as a parent, sibling, or friend) during the course of the marriage will be considered separate property, provided the gift was given to just one spouse (the gift giver did not intend for both spouses to receive the gift) and the gift has not been commingled with marital assets.

Similarly, an inheritance received during the course of the marriage will be considered separate property if the inheritance was left to one particular spouse (not both) and the inheritance has not been commingled with marital assets.  

  1. Separate Property Can Become Marital Property

When assets that are considered separate property become commingled with marital assets, they can lose their separate status and become marital property as it relates to equitable distribution.  For example, if your mom gives you a birthday gift of $1,000 and instead of using it for yourself, you deposit it into a joint checking account that is used to pay marital bills.  A court could easily conclude that you intended that money to become marital property. Similarly, if you inherit an heirloom from your grandma that you sell for $50,000 that you use as a down payment for your family vacation home, than most likely that house will be considered a marital asset.    Therefore, if you have pre-marital assets or assets that were acquired via gift or inheritance during marriage, while generally considered separate property, they can be converted into marital assets for equitable distribution purposes depending on the specific circumstances.



This information is for general purposes only.  For advice and guidance regarding your specific situation, you should contact a family law attorney.

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