EQUITABLE DISTRIBUTION OF PROPERTY

 

The Equitable Distribution Law, which is applicable to divorce actions only, must be taken into consideration in negotiating and litigating matrimonial matters.

There are fourteen (14) statutory factors which the law requires a Court to consider before making its “Distributive Award” of the “Equitable Distribution” of marital property. They are:

1. The income and property of each party at the time of marriage, and at the time of the commencement of the action;

2. The duration of the marriage and the age and health of both parties;

3. The need of a custodial parent to occupy or own the marital residence and to use or own its household effects;

4. The loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution;

5. The loss of health insurance benefits upon dissolution of the marriage;

6. Any award of maintenance;

7. Any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party;

8. The liquid or non-liquid character of all marital property;

9. The probable future financial circumstances of each party;

10. The impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession, and the economic desirability of retaining such asset or interest intact and free from any claim or interference by the other party;

11. The tax consequences to each party;

12. The wasteful dissipation of assets by either spouse;

13. Any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;

14. Any other factor which the court shall expressly find to be just and proper.
    [Egregious conduct which “shocks the conscience of the court” may alter the distribution percentage

    ]1

 

Separate Property is Defined As:

1. Property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse;

2. Compensation for personal injuries;

3. Property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to contributions or efforts to the other spouse;

4. Property described as separate property by written agreement of the parties.

Marital Property is Defined As:

All property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of matrimonial action, regardless of the form in which title is held, except as otherwise provided in agreement.

It is vital for each client to thoroughly explore and examine each item of property and each statutory factor to maximize their “equitable” position and the resultant distributive award, whether arrived at through litigation or settlement.

Date Upon Which Valuation Effective

As soon as practicable after a matrimonial action as been commenced, the Court shall set the date or dates the parties shall use for the valuation of each asset. The valuation date or dates may be anytime from the date of commencement of the action to the date of trial.

The net effect of this new law is that the dissolution of a marriage will be treated much like the dissolution of a business partnership. Both parties will receive part of the business (marital) assets. The amount, percentage or proportion each will receive will vary based upon the factors set above. In order to fully carry out the mandate of the law, full disclosure of all financial information is more important than ever before. A greater amount of time must be spent with each client in fully developing each aspect relevant to Equitable Distribution.

NOTE: The parties may enter into a valid contract either before or after the marriage to distribute their property and such contract is binding provided its terms are fair and reasonable at the time the contract is made and are not “unconscionable” at the time of entry of a final judgment of divorce.