One of the things that we were reminded of from the McGreevey divorce is that if a party claims that an asset is exempt from equitable distribution, they have the burden of proving the exemption.  In McGreevey, the wife shared in what the husband alleged were the proceeds of the sale of his premarital condo because he failed to prove the exemption at trial.

I just recently completed a trial, representing the wife, where we had several claims of exemption because personal property, cash and stock were either gifted premaritally or during the marriage.  In addition, there were certain inheritances during the marriage.

The law in NJ is pretty clear all property acquired during the marriage by way of gift, devise or intestate succession is exempt from equitable distribution other than interspousal gifts which are subject to equitable distribution.  Similarly, if an asset is premarital, then by definition, it is not “acquired during the marriage” and thus exempt.

The problem arises when exempt funds are commingled with non-exempt funds.  To prove exemption, this requires the daunting task of tracing all of the funds into (and perhaps out of) the account during the relevant period of time.  Even if you can trace the funds, there are judges who believe that once an account is commingled, it should be evenly divided.

One would think that personal property should be easier.  Usually, but not in my most recent trial, there is little dispute as to whether an asset is premarital or not.  Usually, but not in my most recent trial, there is little dispute that a birthday present or other gift to one party during the marriage was a gift to that person, as opposed to a gift to the whole family.

During my trial, the position taken at some point, perhaps after a comment made by the judge, was that since the collection was displayed in the marital home, it became a marital asset.  Of course, if the exemption of an engagement ring which is not a marital asset and often kept in the marital home is clear – then why would any other gifted piece of personal property by different.  In fact, I asked the husband on cross examination whether his daughter had collectibles – he answered yes.  I asked then whether they were displayed in the marital home and again he answered yes.  I then asked him if he was making a claim to these assets as marital and he said no.

While clearly the game was exposed by that point, the fact remains that if you want to make sure that at item is exempt, keep it separate and try to keep records.  The burden is on you.

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