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When navigating the complexities of divorce in New Jersey, handling gifted or inherited assets can become a contentious issue. Unlike marital property subject to equitable distribution, gifted or inherited assets are typically considered separate property. However, the distinction can blur if these assets are commingled with marital funds or used for joint purposes. It is crucial to safeguard these assets through proper documentation and legal guidance to ensure they are accurately classified and protected during the divorce process.
Understanding Equitable Distribution and How Gifted/Inherited Assets Come Into Play
In New Jersey, property division during a divorce is governed by the principles of equitable distribution, which means that marital assets are divided fairly, though not necessarily equally. The distinction between marital and separate property is crucial in determining which assets are subject to division.
Definition of Marital and Separate Property
Marital property includes assets acquired by either spouse during the marriage, regardless of whose name is on the title. Separate property, on the other hand, encompasses assets owned by one spouse before the marriage, as well as certain assets acquired individually during the marriage, such as gifts and inheritances.
Gifted and Inherited Assets
In New Jersey, one spouse’s assets received as gifts or inheritances during the marriage are generally considered separate property and not subject to equitable distribution. However, there are critical exceptions to be aware of:
- Commingling of Assets: If the gifted or inherited assets are commingled with marital assets, they may lose their separate property status. For example, if inherited money is deposited into a joint bank account and used for marital expenses, it may be deemed marital property.
- Transmutation: This occurs when separate property is transformed into marital property. For instance, if an inherited home is retitled in both spouses’ names, it may be considered marital property subject to division. In the context of equitable distribution, the term “separate property” refers to property owned by one spouse individually.
- Use of Assets: How the gifted or inherited asset is used during the marriage can impact classification. If the asset is used to benefit both spouses or improve marital property, it might be treated as a marital asset.
- Prenuptial or Postnuptial Agreements: These agreements can specifically outline how gifted and inherited assets will be treated during a divorce, potentially overriding standard equitable distribution rules.
Proving Separate Property
The burden of proof lies with the spouse claiming an asset as separate property. Detailed records and documentation are crucial in establishing the individual nature of gifted or inherited assets. These records can include financial statements, gift letters, and any relevant legal agreements.
Legal Assistance
Navigating the complexities of asset division in a New Jersey divorce can be challenging. Consulting with an experienced divorce attorney is essential to protect your rights and to ensure that gifted or inherited assets are appropriately classified and preserved.
Takeaway
While gifted and inherited assets are typically considered separate property in New Jersey, their treatment during a divorce can be influenced by various factors, including commingling, transmutation, and marital agreements. Proper documentation and legal guidance are vital to safeguard these assets and achieve a fair distribution. Bozanian Mcgregor LLC can help determine how or whether your gifted/inherited assets can be considered separately during your divorce. We have experienced, compassionate attorneys who will advocate on your behalf.