Equitable Distribution

“Equitable distribution” signifies the division of all property that was acquired by both or either party during the marriage. Unlike Alimony, which is awarded in recognition of the post-marital duty of support, Equitable Distribution is an award of the property acquired during the course of the marriage. Whereas Alimony helps to maintain the income of both parties at a certain level over time by using one party’s income to support the other, Equitable Distribution refers to a fair distribution of assets and liabilities “lawfully and beneficially acquired” while the parties were together.

What types of property are subject to Equitable Distribution?

Almost everything! Examples include:

  • Real property, including recreational, investment or the marital residence.
  • Personal property, including household furnishings and personal items.
  • Personal injury awards and workers’ compensation claims (but only that portion of the settlement or award intended to compensate for lost earnings and medical expenses of the injured spouse; on the other hand, the portion designed to compensate for pain, suffering, mental and physical disabilities, and the perquod claim of the uninjured spouse for loss of consortium).
  • Personal financial interests, including insurance annuities and cash value, personal accounts receivable, bank accounts and other institutional deposits, securities, trusts, tax shelters, tax exemptions, gambling and lottery winnings, employment related assets (earnings, earning capacity, professional degrees and licenses, employee retirement plans, social security plans, IRAs, and business interests).
  • Debts and obligations, including mortgages, credit cars and private loans.
  • Executive stock options.

What types of properties might not be subject to Equitable Distribution, or are protected in some way?

Examples include:

  • Assets acquired “before” or “after” the marriage (at least most of the time and when they do not increase in value).
  • Shares of stock acquired before the marriage, and, at the end of the marriage, the same shares of stock are still in existence in the same form.
  • Assets not intended to be marital property.
  • Property acquired after the marriage.
  • Gratuitous transfers from third-parties in the form of gifts, inheritances and intestate acquisitions, provided they remain separate.
  • Transfers between spouses made in connection with a separation. (Interspousal gifts are generally subject to equitable distribution.)
  • In general, passive income derived from pre-marital property. (Note: Such income may still be considered in Alimony calculations. Also, an increase in value may be subject to equitable distribution to the extent that such increase is attributable to a change to substantial active participation by the owning party, direct financial contribution increasing the equity, direct non-financial contributions for which both parties are jointly responsible, or when the enhanced value is due to joint efforts and skills of the spouses working together.)
  • Pre-marital property that has not been “converted” to joint property.

Things to Consider

The parties and the court should consider the following factors in figuring out how to equitably distribute the assets and liabilities:

  • The duration of the marriage.
  • The age and physical and emotional health of the parties.
  • The income or property brought to the marriage by each party.
  • The standard of living established during the marriage.
  • Any written agreement made by the parties before or during the marriage concerning an arrangement of 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 need of a parent who has physical custody of a child to own or occupy the marital residence and to use or own the household effects.
  • The debts and liabilities of the parties.
  • The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse or children.
  • The extent to which a party deferred achieving their career goals.