Navigating Equitable Distribution: A Comparative Glance at New York and New Jersey
One of the most significant areas of concern for parties going through a divorce is the equitable distribution of marital assets. There are key distinctions between the laws of New York and New Jersey that can have a significant impact on the division of assets. Our attorneys at Berner Law & Mediation Group, with their extensive knowledge of state laws in New York and New Jersey, are well-equipped to guide families in determining the terms of their separation.
The concept of equitable distribution refers to the legal process by which marital assets and debts are divided between spouses upon divorce. Both states have notably adopted the philosophy that the division should occur “equitably,” which does not always mean “equal.” Both states aim to divide assets and debts fairly, but there are differences in how that is achieved.
One difference is the approach related to marital and separate real property. Both states characterize marital and separate property the same way: marital property (assets acquired during the marriage regardless of how they are titled) is subject to division between the parties, and separate property (gifts, inheritances, pre-marital assets) remains with the titled spouse.
However, in the case where a spouse utilizes separate property to purchase a marital asset (i.e., downpayment for a home), the states differ in how to distribute that separate property. In New York, the spouse would be entitled to a dollar-for-dollar separate property credit for the separate funds utilized for the down payment. This concept could also be applied to separate funds used to invest in renovations, separate funds to pay down the mortgage, etc. In New Jersey, there is no such concept. Instead, New Jersey adopts the principle that separate property transforms into marital property over time. Thus, the down payment that was undeniably used from separate property funds loses its separate property characterization as time passes from when the separate property was used to purchase the home to when the divorce is happening.
Another difference is each state’s approach to support payments and distributing equity in a business. Specifically, courts often face the issue of “double dipping” when the income from a business is both part of the marital asset value and serves as the business owner’s income for calculating spousal support. New York has implemented a rule prohibiting double dipping, meaning that income derived from the business cannot be counted for two different purposes (equitable distribution and support). New Jersey, in contrast, will allow greater flexibility and may find double dipping justifiable based on the overall financial picture of the parties.
Divorce is already challenging and emotional, and understanding the legal framework surrounding the equitable distribution of assets is essential. Whether you are in New York or New Jersey, the team at Berner Law & Mediation Group not only offers attorneys who understand the differences in each state but also empathize with the emotional journey you are on. They can help you navigate the varying complexities of asset distribution.
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The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
