Is NJ a Community Property State? No, and Here's Why
New Jersey is not a community property state. This means that assets acquired during a marriage are not automatically considered equally owned by both spouses. Instead, New Jersey is an equitable distribution state. Understanding this distinction is crucial for anyone considering marriage, going through a divorce, or managing their finances as a married couple in the Garden State.
Let's break down the key differences and answer some frequently asked questions.
What is Community Property?
In community property states, any asset acquired during the marriage, regardless of whose name it's in, is considered jointly owned by both spouses. Upon divorce, these assets are typically divided equally. This is a significant difference from equitable distribution.
What is Equitable Distribution?
New Jersey, like many other states, follows the principle of equitable distribution. This means that marital assets are divided fairly, but not necessarily equally, during a divorce. The court considers various factors when determining a fair distribution, including:
- The length of the marriage: Longer marriages often lead to a more even split.
- Each spouse's contributions: This includes financial contributions, but also contributions as a homemaker or caregiver.
- The value of each spouse's separate property: Separate property is anything owned before the marriage or received as a gift or inheritance during the marriage.
- The economic circumstances of each spouse: The court considers each spouse's earning potential and financial needs.
- Fault in the marriage: While not always a deciding factor, adultery or abuse might influence the distribution.
How are Assets Divided in New Jersey Divorces?
The judge will strive to create an equitable, or fair, division of assets, taking into account all the factors listed above. This might result in a 50/50 split, but it doesn't have to. The goal is fairness, not necessarily equality.
What are Considered Marital Assets in NJ?
Marital assets generally encompass anything acquired during the marriage, including:
- Real estate: Homes, land, etc.
- Bank accounts: Joint and individual accounts can be considered marital assets, depending on their source of funds.
- Retirement accounts: These are frequently subject to division in a divorce.
- Stocks and investments: Similar to retirement accounts, these can be divided equitably.
- Vehicles: Cars, boats, etc.
- Business interests: The value of a business owned during the marriage may be divided.
- Personal property: Furniture, jewelry, and other belongings.
What Happens to Separate Property in NJ?
Separate property, as mentioned earlier, generally remains the sole property of the individual who owned it before the marriage or received it as a gift or inheritance during the marriage. However, the increase in value of separate property during the marriage might be considered a marital asset subject to equitable distribution. For example, if one spouse owned a home before the marriage, and its value increased significantly during the marriage, the increase in value might be subject to division.
What if We Have a Prenuptial Agreement?
A prenuptial agreement (prenup) can significantly alter how assets are divided in a New Jersey divorce. A well-drafted prenup can clearly define separate property and how assets will be distributed in the event of a divorce. It's crucial to have legal counsel when creating a prenuptial agreement.
In Conclusion
Understanding the difference between community property and equitable distribution is vital for navigating marital finances and divorce in New Jersey. While New Jersey does not follow the community property system, its equitable distribution laws aim for a fair division of assets, considering various factors to achieve a just outcome. Seeking legal advice from a qualified family law attorney in New Jersey is recommended for anyone facing these issues.
