One of the more complex issues we see when addressing alimony and equitable distribution relates to inherited assets and the money (distributions, investment experience, interest, etc.) that emanates from them. Under New Jersey law, inherited assets remain the exempt, separate property of the spouse who inherited same. It cannot be distributed in whole or in
We often deal with cases in which one or both spouses own a business. In many of those cases, a spouse received their interest in a business prior to the marriage, either from a family member, or otherwise. With regard to premarital assets and/or any other assets that a party claims is exempt, that party…
Mark Ashton, a partner in our Exton (Chester County, PA) office and former editor of our Pennsylvania Family Law Blog, wrote a very in depth and interesting post entitled "Qualified Personal Residence Trusts: Are These Homes Subject to Claims in Equitable Distribution", on that blog.
Mark discusses how an estate planning tool …
Whether an asset is exempt is a common issue that arises in divorce case. The general rule is that an asset acquired prior to the marriage which is not commingled is exempt from equitable distribution. In addition, an asset that is received via inheritance and/or third party gift is also exempt as long as it is not commingled. Commingling is essentially putting an asset into joint names or depositing it into a joint account. Changing something from someones own name into joint names is deemed as making a gift to the marriage.
Also, the law is clear that the person who seeks to have an asset deemed exempt has the burden of proving that the asset is exempt.
Because an engagement ring is a premarital gift, albeit a conditional gift, from one spouse to to the other, it is exempt from equitable distribution. If the ring is replaced and/or enhanced during the marriage, while the original stone, if it exists, remains exempt, the new ring is not exempt. In fact, any gifts between spouses during the marriage are not exempt and are subject to equitable distribution on divorce. As such, some times we are required to have jewelry, furs, and other expensive presents appraised to determine their value for equitable distribution purposes. Sometimes this task is made a little easier because parties have appraisals for insurance purposes which is why we often ask for the homeowners insurance policy riders.
The premarital portion of retirement assets, i.e. IRAs, 401ks, pensions, are typically exempt. For defined contributions plans (ie. the accounts with cash balances), the trouble may be finding or obtaining the documents to establish the premarital values. That said, even though the premarital values are often commingled with contributions made during the marriage, the premarital portions are typically exempt. Contrast that with a regular premarital bank account where deposits are made during the marriage using marital income. Many would argue that this account has lost it’s exempt status. Is that fair? What is the real difference? Perhaps the difference is that though money will usually go in and out of a bank account, there usually is not the same type of two way activity as to retirement accounts.
People sometimes assume that “equitable distribution” automatically means a 50/50 division of assets. However, a court cannot simply view a list of assets and make the automatic determination that the list should be divided 50/50 between the parties. The guiding case in New Jersey to help determine who gets what or how much in equitable distribution is Painter v. Painter, 65 NJ 196 (1974). Another frequent question is what happens to assets that one party brought in to a marriage? Also, what happens to assets gifted to one party during the marriage by family members or third parties other than their spouse?
Recently, the Appellate Division issued an unpublished decision which addressed equitable distribution of a marital home and vacation home to parties who had been married twenty years. In the matter of Miller v. Miller, A-2506-07T1, Decided April 28, 2009, defendant-husband appealed from a Judgment of Divorce where the trial judge granted the plaintiff-wife an interest in both the marital home and vacation home that defendant alleged was not subject to equitable distribution as it was alleged to be an immune asset owned by him prior to the marriage.