The publisher of Divorce Magazine discusses the division of assets and debts in a divorce with Family Lawyer Eric Hannum from Manasquan, New Jersey.
Video Transcript: Distribution Of Assets And Debts In A New Jersey Divorce
Dan Couvrette: I’m Dan Couvrette. I’m the publisher of DivorceMag.com and Family Lawyer Magazine, and today I have the pleasure of speaking with New Jersey family lawyer Eric Hannum. This is part of a series of interviews that I’m doing with top family lawyers across America to provide information for people who are contemplating divorce, going through a divorce and, in some cases, are recently divorced.
Eric and I are going to be talking about the distribution of assets and debts today.
This conversation is specific to New Jersey. If you are not in New Jersey, you should check with a family lawyer in your state and area because things change from state to state.
I’ve known Eric for a while and I figure that the best way I can give you a sense of who Eric is, what he does, and what he can be counted on is to share a testimonial from one of his clients that I read on his website. I’ll read that testimonial now.
“I want to commend Eric Hannum and his staff on the excellent legal services you provided in the connection with my recent divorce. They made a difficult situation more tolerable. They walked me through every step from beginning to end. Mr. Hannum’s firm has all the attributes I’d expect in a good law firm, outstanding customer service, knowledge and seasoned experience, professionalism, integrity, strategic thinking, enthusiasm, and responsiveness. I really enjoyed working with Eric and I could not be more satisfied.”
For me, that kind of encapsulates Eric and his firm. You can learn more about Eric and his firm, at www.ericbhannumlaw.com.
Dan Couvrette: Given that we’re talking about distribution of assets, let’s start by defining equitable distribution versus equal distribution, because I think people get confused about that. Can you tell me what the difference is – particularly as it applies to New Jersey?
Eric Hannum: Some states are equal distribution states and New Jersey is an equitable distribution state. What happens is you have assets that are divided here in New Jersey on an equitable platform, meaning that there are facts and circumstances that could balance one way or the other in favor of one party to have a greater share of the assets or debts, whichever you’re looking at depending on the facts and circumstances of the case. Whereas other states are equal, and they divide every asset down the middle no matter what the facts and circumstances are.
Dan Couvrette: What could be some of those factors that would come into play when their assets are being divided or the debt is being divided?
Eric Hannum: There’s an equitable distribution statute in the state of New Jersey, and there are 16 factors that the court or a mediator will contemplate when dividing an asset. For example, you could take the age, health, and emotional status of a person into consideration. That’s one of the factors. Let’s say you have a debt of $50,000 and you have one person in the marriage that’s the primary wage earner, and you have another person in the marriage who is on social security disability. Let’s say they have debts totaling $80,000. The judge or a mediator could turn around and say, “Well, it’s not equitable to saddle someone who’s on social security disability for health reasons with half of that debt.”
You could also have another example where one of the factors is the contribution a party made to the earning capacity of the other party. Let’s look at the same debt where one person stays home. If dad stays home and raises the kids and mom has a great job and she climbs the ladder in the corporation. What happens is dad sacrifices [his career] by staying home, and mom gains [career and economic advancement]. If they have $80,000 in debt, the court or a mediator could look at it and say, “It’s not fair that the person with no income, or maybe they have a part-time job, should be saddled with half of the debt.” An equitable split might be 80/20 or something along those lines.
Dan Couvrette: Another term that people may or may not fully understand is marital property. Can you distinguish what is considered to be marital property and what might not be considered marital property as they’re going through a divorce in New Jersey?
Eric Hannum: Ordinarily, anything that’s purchased between the date of the marriage and the date of the divorce complaint will be a marital asset subject to equitable distribution. [On the other hand, one spouse might have received] a gift or an inheritance, which is [non-marital property] that is not subject to equitable distribution. Let’s say your parents give you a valuable painting, or they give you $50,000 and you don’t comingle that asset with other marital assets [e.g., you deposit the $50,000 into a separate account in your name only], that asset will not be subject to equitable distribution. If the gift was a car or a house or a boat or something along those lines [and the whole family enjoys the use of the gift, and perhaps your spouse contributes to the mortgage or upkeep of the gift, you have likely transformed your non-martial gift into marital property]. That’s the differentiation between marital and non-marital.
Dan Couvrette: Can you define real property and personal property?
Eric Hannum: Real property is raw land or a residence or a vacation home versus personal property, which could be your motorcycle or your boat or something along those lines or anything in the home. Your furniture is personal property.
Dan Couvrette: If we went through and did an overview of the assets that are typically divided in a divorce case, can you give people a sense of what sort of information they should be gathering? What type of records do they need? What would they come to you with to say here’s what we’ve got?
Eric Hannum: Some assets are going to be divided under the equitable distribution statute – such as checking accounts, retirement plans, 401(k)s, things along those lines. Any of the paperwork supporting those assets would be of great assistance to an attorney. You also have deeds, titles, and other things of that nature that are beneficial to have. Anything that’s associated with the asset itself – particularly a supporting document for the asset – is surely something that’s going to be needed.
Dan Couvrette: Given that the family home is in most cases the largest asset that the family has, is there specific information that you need or specific things you should be doing regarding the family home?
Eric Hannum: One thing is if the parties separate, you always want to continue paying the mortgage. You never want to have a house fall into foreclosure and end up with issues that aren’t necessary during a divorce.
Dan Couvrette: We understand that assets are being distributed equitably but how do we put a value on those assets? How do we know what they’re worth? How can a couple divide up those assets? What’s that process like?
Eric Hannum: It depends on the asset, Dan. You could have a home for instance, and the home would be either sold at market value and the proceeds divided, or you could have something like a retirement plan where the pension would have to be calculated. What was the value at the date of the marriage? What was the value at the date that the complaint was filed? [The difference between the two values help to] determine what share of the pension each party is going to receive. There are different types of valuation value. For instance, you could have a gun collection. There are many businesses out there that do valuations – for a price, of course – which allows for an asset like a gun collection or coin collection to be valued and then divided by the parties.
Dan Couvrette: You’ve been at this for a while. You probably have lots of connections out there for people who can value assets and give people a sense of what they’re worth.
Eric Hannum: Absolutely.
Dan Couvrette: We now have an idea of how assets get valued. But how do they get divided equitably? What is the process for that? Is it you just fighting over it, or do you negotiate? How do you come to a conclusion?
Eric Hannum: It depends on what path you travel. If you’re going to a mediator, the mediator will try to determine – again, based on the 16 factors – which factors are going to be applied to it and how that’s going to divide the property on a percentage share. If that can’t be done, then the next route would be to take it to the judge. The judge will explore the factors and he or she will determine which percentage share each party should get.
Dan Couvrette: How important is it to have relationships with other family lawyers when you’re working on a divorce case? I think that many divorcing people think that you and the other lawyers are combatants – but really, you’re working together to come to a solution. Does it help to know the lawyers on the other side and have worked with them in the past?
Eric Hannum: It does, because clients are here today and they may come back six months from now, but your opposing counsel is there for your entire career and to be able to reach across the table and come up with a solution for a family, which is what we are. We’re providing solutions to families. It’s very important to have relationships with other attorneys in most parts of the state of New Jersey.
Dan Couvrette: Experience does help, doesn’t it? You have a pretty good sense of where things are going to end up when you look at all the factors at the beginning of a divorce. That must be reassuring for your clients and help give them a bit or a lot of comforts as they’re going through the process.
Eric Hannum: I try to help them through the process, Dan. I’ve been practicing now since 2005, and after 16 years I’ve experienced a lot of variables and factors in numerous divorces. You start getting an idea as to where things are going to go and you start understanding the judges in your and other areas after you’ve brought cases before them, and you hear their decisions. You can formulate an idea and provide that idea to your client as to what may happen in the divorce.
Dan Couvrette: I mean, you touched on it a little bit in one of your examples, but is there anything more you can say about debt and how it’s dealt with in a divorce case?
Eric Hannum: Debt and assets are all handled the same. Mind you, there could be non-marital debt. You have instances where someone starts an affair, and they start spending money on the other person or one the other family and that debt is not going to be part of the marital debt.
Dan Couvrette: Eric, it’s been a pleasure talking with you today about the distribution of assets and debt. For more information about Eric, I recommend that you go to his website www.ericbhannumlaw.com.
I also recommend that you visit www.divorcemag.com, where you’ll also find this interview by the way, and www.divorcedmoms.com, where you’ll find lots of great information to help you through your divorce. Thank you again, Eric.
Eric Hannum: The pleasure has been all mine. Thanks, Dan.
The Law Office of Eric B. Hanum Esq., LLC handles divorce and family law. Eric Humum’s team represents residents of Ocean, Monmouth, Burlington, Mercer, and Middlesex Counties and communities throughout New Jersey. For more information, please visit his website www.ericbhannumlaw.com