New Jersey’s Equitable Distribution Statute guides courts to consider several factors in deciding how to distribute property upon the dissolution of a marriage. For instance, courts consider, among other factors, the duration of the marriage; the income or property brought to the marriage by each party; the economic circumstances of each party at the time the property division becomes effective; and the contribution of each party to the acquisition/dissipation/preservation/depreciation or appreciation in the value of the marital property, as well as contributions of one party as a homemaker. Many people believe that all assets are to be split "down the middle" or equally, when, in reality, the analysis is more complex and an unequal distribution may be permitted under a given set of facts and circumstances.
Pursuant to these factors and numerous New Jersey cases on equitable distribution, a variety of assets exist that are generally exempt from equitable distribution including, but not limited to, an inheritance or pre-marital assets. Generally speaking, however, separate assets can effectively transform into marital property subject to distribution when such property is commingled or mixed with marital assets. For instance, if a spouse receives an inheritance and then deposits it into a joint bank account with marital monies, then the inheritance has arguably commingled with the other joint account monies and is now subject to distribution. That said, just because it is commingled does not automatically mean that it should be equally divided upon a divorce.
The Appellate Division’s recent decision in Speck-Bartynski v. Bartynski touched upon this issue. There, the Wife appealed from that portion of a Final Judgment of Divorce equitably distributing investment accounts containing $1.5 million in commingled funds obtained from the Husband’s inheritance with 1/3 going to the Wife and 2/3 to the Husband. The inheritance was $2.5 million and approximately $2.186 million was commingled with marital funds, including, but not limited to, investment accounts to which both parties had access.
While most of the other assets involving the use and/or investment of the commingled funds were equally divided, the trial court implemented the disproportionate split as to the investment accounts because the Husband had attempted to limit the Wife’s access to the accounts by requiring two signatures. In affirming the trial court’s decision, the Appellate Division noted that the trial court properly considered the equitable distribution statutory factors, especially as to the Husband’s sole contribution – through the inheritance – to acquiring the investment accounts at issue; the Husband’s desire to preserve the inheritance for his children and grandchildren; and the restrictions he placed on the Wife’s use of the money.
A spouse with separate property, such as the inheritance in this case, must therefore be cautious as to where the money is going to be deposited, how it is going to be used, and who is going to have access. Otherwise, commingling of such funds can ultimately render it marital property subject to equitable distribution.