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How to Protect Premarital Assets in a New Jersey Divorce

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When two people are going through a divorce, the equitable distribution of property is going to be one of the main focal parts of any dispute. The question often arises about what property should be part of the marital estate and subject to this distribution versus separate premarital property that should remain with the party who owned it prior to the marriage. Those with substantial assets are often particularly concerned about retaining their premarital assets during the divorce.

Here’s what you need to know about protecting your premarital assets during a divorce in New Jersey.

Retaining NJ Premarital Assets In Divorce

One of the main ways to protect premarital assets is through the execution of a prenuptial agreement that outlines the separate nature of the property and makes it clear that it will not become marital property. Of course, if a divorce already is a possibility, this no longer is an option. In addition, many couples contemplating marriage find it difficult to foresee a time when this type of agreement will be necessary, even though fifty percent of marriages end in divorce. It’s not an easy conversation to have with your partner when you’d rather be planning your wedding or honeymoon, but it’s important to broach the subject of premarital agreements if you have any assets you must keep protected, or if you would prefer to keep your assets separate even during your marriage.

Assessing Divorce Premarital Assets

The law in New Jersey does protect premarital property. Under New Jersey law, N.J.S.A 2A:34-23(h), there is a clear rule that premarital assets are not subject to equitable distribution. However, it often is not this simple when the property in question has been heaped in with the property acquired during the marriage. There are several different types of analysis that may be applied to determine whether the property is subject to distribution.

If an asset was purchased in contemplation of marriage, then it may be pulled into the scope of marital property. The court will look at the behavior of both parties surrounding the acquisition of the property. For example, if one person purchases a house while the couple is dating or engaged, but not married, and the title only is in the name of the purchasing party, the court will review whether the other spouse had input into the purchase and how much time and resources have been invested in maintaining or improving the property. A determination that the property was purchased in contemplation of marriage means that it is now a marital asset.

Another scenario involves when one party to a marriage had an asset prior to the relationship and that asset increased in value during the course of the marriage. The court will take a hard look at the value increase. The analysis will turn on whether the asset was passive or active. A passive asset will increase in value without any contribution from the other spouse. When one person owns $100,000 in stocks before entering into a relationship that eventually leads to a marriage and that stock increases to $150,000 during the marriage, the analysis is whether the other spouse had anything to do with the increase. The stock did not require any contribution of time or money, and its increase in value was due to forces outside of the control of either party, so it likely will be ruled a premarital asset that is not subject to distribution.

If the asset were not stock but instead was a condo that increased from $100,000 to $150,000 and the condo was not purchased in contemplation of marriage, then the court may look at whether the non-purchasing spouse exerted physical or financial effort towards maintaining or improving the property. If the court deems this an active asset, then the $50,000 increase in value likely will be subject to equitable distribution.

Men who have accumulated an expensive car collection or several recreational vehicles are often surprised to learn that these collections may be at least partially divisible during their divorce. If you used marital assets to add to your collection, it’s important to speak to a divorce attorney right away to understand NJ marital property laws.

The Problem with Joint Assets

Another problem that confuses the issue of whether an asset is subject to equitable distribution is when the parties have commingled premarital assets with marital assets. Commingling can happen in several ways. For example, placing funds into a joint account could transform the asset. Selling stock and using the funds to purchase a family home likely will result in the conversion into marital assets.

In order to protect premarital assets, the person possessing the property should never:

  • Commingle the assets with marital property;
  • Permit the other spouse from investing time or effort into improving the asset or otherwise increasing its value;
  • Add the name of the spouse to any title, account, or any other indicator of ownership.

It is important to keep premarital assets as separate as possible. Any inheritance should be maintained as separate assets, with funds in separate accounts and property outside the marital home. Distancing certain property prior to a divorce action may prevent it from being part of the equitable distribution, but this should not be done in such a manner as to make the court suspect that a fraud is being perpetrated.

If you have concerns about premarital assets and are already married, your first step should be hiring an experienced divorce attorney for men in New Jersey who can explain all the relevant laws. You shouldn’t necessarily be fearful that your ex will be awarded all your premarital assets in the divorce; that is a highly unlikely outcome. Even so, it does pay to be cautious if you’re not ready to part with any of your premarital assets. An attorney will be able to give you a better idea of what is at stake in your divorce, since each marriage is different and each couple has unique premarital and marital assets.

The Micklin Law Group, LLC Advocates Zealously for Clients Going Through Divorce

When there is a dissolution of marriage, there is going to be emotional turmoil and arguments over who gets what. If you came into the relationship with significant personal property, it may be possible to protect some of the assets during the distribution of property. Whether you have a prenuptial agreement or not, you are entitled to an equitable divorce.

The Micklin Law Group, LLC will provide an honest evaluation of what items may reasonably remain separate from the marital property. To schedule an appointment with a property division attorney in New Jersey at The Micklin Law Group, LLC, call us at (973) 562-0100 and we will work with you to protect your interests.

 

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