Dividing Property and Debt During a Divorce

Alimony and Legal Issues When Getting a Divorce While Living With Someone Else

If you are getting divorced from your spouse in New Jersey, you likely know that your property and assets will be divided. The assets acquired by either you or your spouse during your marriage are classified as marital property no matter how they might be titled. At the Ziegler Law Group, LLC, a divorce lawyer in New Jersey can help you understand the laws that apply and determine the most favorable way to divide your property and debts.

Equitable Distribution in New Jersey


New Jersey is an equitable distribution state for the division of assets and debts in divorce. This means that your assets and debts will be fairly divided, which might not be 50/50. Courts consider the following factors when deciding how to divide assets and debts between divorcing spouses:

  • Marriage duration
  • The ages and health of both spouses
  • Any separate property a spouse owned before the marriage
  • The marital standard of living
  • Existence of a prenuptial or post-nuptial agreement that addresses property division
  • The financial circumstances of each spouse
  • The income and earning capacity of each spouse
  • Whether one spouse delayed their career because of the marriage
  • How much time and money would be required for a spouse to obtain training or education
  • Contributions each spouse made to the marriage, including those as a stay-at-home parent
  • The current value of all assets
  • Whether the parent with residential custody of a child will need to remain in the marital home
  • The debts of each spouse
  • Any potential need for an educational or medical trust for a spouse or child
  • Other factors


The factors won't be weighted equally. Instead, a judge can assign more weight to some factors at their discretion.

Misconduct and Property Division


In most cases, courts don't consider marital misconduct by either spouse when they divide the property. However, if a spouse has wasted marital assets, the court might give the other spouse a larger portion of the remaining assets. For example, if a spouse spent marital funds on an affair partner or lost money through gambling, the other spouse might receive a larger share of the assets. There might also be an exception when one spouse engaged in egregious conduct, such as attempting to murder the other spouse.

How Property Division Works


Divorcing couples can negotiate with each other to try to reach a settlement agreement. A spouse can also hire an NJ divorce attorney at the Ziegler Law Group,LLC to negotiate for them. If a couple can't reach an agreement, the court will make the final decision on how to divide the property and debts following a divorce trial.

Classifying Assets as Marital or Separate


The first step to dividing the marital estate involves classifying the assets as marital or separate. Separate assets and debts are those that either spouse acquired before the marriage. They also include inheritances that one spouse received during the marriage as long as the funds weren't commingled with marital funds.

The following types of property might be marital assets and divided in a divorce:

  • Real estate
  • Bank accounts
  • Investment accounts
  • Pensions
  • Retirement accounts
  • Stock options
  • Social Security benefits
  • Debts
  • Household furnishings
  • Motor vehicles
  • Lottery winnings
  • Life insurance policies


Separate property isn't divided in a divorce, but the owner might need to prove that it is separate. In some cases, separate property can be changed into marital property when it is commingled with marital property. For example, depositing an inheritance check into a joint bank account could change it to marital property. Similarly, changing the deed to a property to the names of both spouses can also change it to marital property even when one spouse owned it before the marriage.

Any increase in the value of a separate asset during the marriage that only results because of financial circumstances will remain separate. On the other hand, if the other spouse made contributions to a separate asset that helped it increase in value during the marriage, the increased value would likely be considered to be a marital asset.

Valuing the Marital Assets


Once the marital assets have been identified, they will need to be valued. Certain assets, such as bank accounts, are simple to value. Others might require a formal appraisal. The value of an asset is its fair market value.

Dividing the Marital Assets and Debts


Some assets are simple to divide, but others are more difficult. The marital home can be difficult to divide. A couple might choose to sell the home and divide the proceeds, or one spouse might choose to remain in the home with the promise of refinancing it in their name. If the spouse who remains in the home doesn't refinance it by a deadline established by the court or agreed to in the settlement agreement, the other spouse might have to file a motion to enforce the agreement and force a sale. When the spouses own the home outright, one spouse might agree to take a larger share of the remaining marital assets in exchange for having their share in the house bought out.

Another type of asset that can be difficult to divide is a spouse's retirement plan. This has to be done correctly to avoid tax consequences. The spouse who owns the retirement account can't simply withdraw money to give to the other spouse because doing so could result in early withdrawal penalties and potentially being moved into a higher income tax bracket. Instead, the spouse might need a qualified domestic relations order (QRDO) to properly divide a retirement account per IRS rules.

Equitable Distribution of Marital Debts


Debts acquired by either spouse during the marriage are considered to be marital property and subject to division in a New Jersey divorce. Debts that either spouse acquired before the marriage will remain that spouse's separate debt.

In some cases, the court might decide that a debt a spouse incurred during a marriage should be considered to be that spouse's separate debt. For example, if one spouse took out multiple credit cards secretly and ran up the balances to try to ruin the other spouse's credit, the court might decide the spouse who did that will remain responsible for repaying them.

Debts are fairly divided just like marital assets are. The court will consider what is fair when deciding how to divide a couple's debts. If one spouse has a much higher income and ability to pay, the court might assign the sole responsibility for a debt to the higher-earning spouse.

It's important to understand that orders from a family law judge and settlement agreements are not binding on your creditors since the creditors don't participate in the divorce. This means that even if the court orders your spouse to pay a debt, the creditor can come after you for repayment if your spouse fails to pay. If that happens, you can return to court to seek enforcement of the order, but your credit score could be negatively impacted.

Learn More From a Divorce Attorney in Essex County NJ


Dividing marital property in a divorce can be complex. If you and your spouse can't agree on how to classify your assets or how to divide them, it's a good idea for you to get help from a divorce lawyer at the Ziegler Law Group, LLC. Call us at (973) 878-4373 to schedule a consultation.

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