#equitabledistribution

Courts consider a wide array of factors in awarding alimony and equitably distributing the assets of parties in divorce cases. Often, a question arises about whether an asset should be used to determine alimony or whether it should be subject to equitable distribution—or both. Awarding a portion of an asset from the same source in alimony and in equitable distribution is referred to as “double dipping”.  Interestingly, New Jersey law prevents double dipping only when the issue concerns pension or retirement benefits.

The rule preventing “double dipping” originated in the 1982 case of D’Oro v. D’Oro. In this case, the court ruled that a pension cannot be counted as “income” for the purposes of determining alimony if it has already been considered under equitable distribution. The court upheld this rule in the landmark case of Brown v. Brown in 1990. Here, the ex-wife of a retired naval officer claimed to be entitled to an equitable distribution of her ex-husband’s retirement pension. The Mississippi Supreme court rejected the plaintiff’s claim on the grounds that the distribution of such an asset constituted “double dipping”. The court agreed with the logic of D’Oro v. D’Oro, stating that it would be inequitable for the pension to be counted both as a share of equitable distribution and as a cash flow determination for alimony.  

The case of Steneken v. Steneken in 2004 raised the issue of whether “double dipping” applied to the distribution of business-related assets. The defendant had appealed a court decision that gave his ex-wife both a share of his business and a monthly alimony based on his salary from the same business. However, the court argued that the present value of a business, based on its past earning, can be considered entirely separate from the earnings it would provide a shareholder in the future. In other words, a business can be both an asset for equitable distribution and a source of income used to determine alimony. The precedent allowing double dipping to occur in non-pension or retirement benefit cases continues to be upheld by New Jersey courts today.

Comments: Numerous courts around the country have since expanded the “double dipping” rule to protect business-related assets from being distributed twice. However, New Jersey courts continue to uphold that the “double dipping” rule applies only to pensions and retirement benefits. Whether or not this statute is unfair to business owners is widely disputed.

Call us at 609-924-2900 if you have a possible case or visit our web site at www.strichlaw.com.

New Jersey law operates under standards of “equitable distribution” in determining how marital property is to be distributed in case of a divorce. The court takes a number of factors into account in determining what is a fair, equitable and just division of the assets and liabilities of the parties.  This differs from “community property” states, in which property is split 50/50 between the spouses.

Marital property includes everything that is acquired and legally owned during the course of a marriage, and consists of both assets and liabilities. It does not matter whose name or money was used in the acquisition of such property, though some exceptions do apply. Examples of marital assets and liabilities, as well as non-marital exceptions, are found below:

Marital Assets include:

Stocks, bonds, cash and savings accounts

Individual retirement accounts, pension plans, 401K's and other retirement funds

Cash value of life insurance policies

Real estate

Cars and other vehicles

Furniture and other house fixtures

Business(es) owned by one/both spouses

Marital Liabilities include:

The mortgage balance on your home

Debts owed to banks, savings and loan association, or any lending institutions

Car loans, school loans (if not premarital), home improvement loans, any money borrowed during the marriage and that has not yet been paid back in full 

Loans owed to relatives/friends

Unpaid bills at the time of the hearing (department stores, credit cards, doctors, etc.)

Non-marital exceptions include:

Anything acquired (or incurred) by either party prior to the marriage

Any gift or inheritance acquired during the marriage that is not from the other spouse

Income generated by non-marital assets during the marriage (excluding income used as a marital asset or in a joint account)

Any assets or liability specifically excluded from being determined as marital by a valid written agreement of the parties (such as an ante-nuptial/pre-nuptial agreement or a post-nuptial agreement)

Gifts between the spouses prior to the marriage, including engagement rings

Call us at 609-924-2900 if you have a possible case or visit our web site at www.strichlaw.com.

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