Yours, Mine, Or Ours? Dividing Assets and Debts in Divorce

If you’re like many spouses facing divorce, you might believe that marital assets and debts are divided according to which spouse owns a particular asset or incurred certain debts.

For example, suppose you have one or more bank or investment accounts in your name.  Or your spouse charged up large outstanding balances on credit cards in his name.

In this example, you might assume you would keep the accounts in your name and your spouse would have to pay “his” credit cards.

But not according to New Jersey divorce laws.  Rather, marriage is considered its own entity separate and apart from each spouse.

In other words, generally, as long as assets and debts were acquired after the marriage date, they belong to what you might consider the “marital enterprise.”

Therefore, conceptually speaking, divorce (or marital dissolution as it’s often referred to by the court), is not really much different from a partnership business dissolution.

For instance, both business partners might negotiate the terms for dissolution or refer to an existing partnership agreement on the disposition of assets and liabilities.

Similarly, most New Jersey divorces are settled by mutual agreement in what’s called a  “Marital Settlement Agreement.”

Generally, in addition to custody and parenting time for children, the Marital Settlement Agreement typically spells out specific provisions on matters like financial support and division of the marital assets and debts.

That’s why before the Marital Settlement Agreement is drafted, divorcing spouses will generally exchange formal itemizations and financial statements for all marital assets and debts owned in either or both names.

Typically, the lawyers for both spouses negotiate and draft the Marital Settlement Agreement.  The lawyers also typically file the legal documents with the court required to obtain your Judgment of Divorce.

It’s important to recognize that once you get married, the law treats “the marriage” as a separate and distinct entity.  And much like a business, the assets and debts belong to the marriage entity and generally get distributed to each spouse when dissolving the marriage.

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