How the Courts Divide Marital Debts and Assets in Divorce
Determining who will receive what property in a divorce, and who will be saddled with marital debt, is rarely an easy process. Courts consider numerous factors, including whether there was any financial wrong doing (one of the leading causes of divorce), whether the parties have become used to living a certain way, and whether one party made sacrifices to allow the other party to pursue his or her dreams.
In New Jersey, as in the majority of states, courts apply the legal principle of “equitable distribution” to property settlements in divorce. It’s important, though, to understand that a court will get involved only if the parties cannot reach a mutual agreement on their own; however, courts may look at privately agreed-upon settlements to ensure there was no duress or coercion.
If the parties cannot agree on the distribution of marital debts and assets, the court will apply the principle of equitable distribution. Equitable, as used here, means “fair,” but not necessarily equal. The court will consider a wide range of factors to come up with a fair arrangement:
- The duration of the marriage
- The physical and emotional health of the parties
- The age of the parties
- The standard of living established during the marriage
- The income or property brought to the marriage by each party
- Any written agreement made by the parties, either before or during marriage, concerning property distribution
- The economic circumstances of each party at the time the division of property becomes effective
- 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
- The contribution by each party to the education, training or earning power of the other
- The contribution of each party to the acquisition, dissipation, preservation, depreciation, or appreciation in the amount or value of the marital property, as well as the contribution of a party as a homemaker
- The tax consequences of the proposed distribution to each party
- The present value of the property
- The needs of a parent with physical custody of a child to own or occupy the marital residence and use or own the household effects
- The debts and liabilities of both parties
- The need to create, now or in the future, a trust fund to secure reasonably foreseeable medical or educational costs for a spouse or child
- The extent to which a party deferred achieving his or her career goals to maintain the home
- Any other factors the court deems relevant
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At the Cintron Firm, LLC, we bring more than 14 years’ experience to men and women in all matters related to family law and divorce. To set up an appointment, contact our office at 201-791-1333 or 917-494-5695, or send us an e-mail.