Do New Jersey Family Courts Have to Follow the Law of Equitable Distribution in New Jersey Divorce Cases? Not Always.
The process of dividing assets in a New Jersey divorce is called “equitable distribution.”
The authority for equitable distribution is contained in a New Jersey statute (N.J.S.A. 2A:34-23h) which states: “… [Where a judgment of divorce…is entered the court may make such award or awards to the parties…to effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired by them or either of them during the marriage….” (emphasis added).
Does that mean that if one spouse acquires an asset before the marriage, the other spouse has no rights?
In a previous article, I discussed a case entitled Weiss v. Weiss, in which a New Jersey appeals court had ruled that a date prior to the wedding may be considered as the date of the commencement of the marriage for the purposes of deciding whether property is a marital asset subject to equitable distribution.
In a recent case entitled Thieme v. Aucoin-Thieme, the New Jersey Supreme Court dealt with an issue that was different but just as important:
Even if one spouse has no rights to “equitable distribution” of an asset in a divorce under N.J.S.A. 2A:34-23h, in extraordinary circumstances does a New Jersey family law court have the power to grant that spouse a share of that asset under “equitable principles?”
The answer is yes.
New Jersey family courts are courts of equity. In other words, the facts in some cases justify relief from the strict application of the law.
The New Jersey Supreme Court recognized Thieme v. Aucoin-Thieme to be one of those cases.
The parties were married in 2010 after living together for 8 years and having a daughter in 2003. After 14 months of marriage, the husband filed for divorce. At the husband’s insistence, the wife had given up her career and educational opportunities when their daughter was born, so that she could raise their daughter and run the household. In an email sent shortly before the wedding, the husband recognized the wife’s “sacrifice” and noted that he would support her “fully” for it, “regardless of [their future] circumstances.”
Prior to the parties’ cohabitation and continuing through the date of their divorce, the husband had worked at a biotechnology consulting company. While he had no ownership interest in the business, he was promised by the owners that, should they ever sell the company, he would be handsomely compensated for his incredible commitment. No dollar amount or stocks award was ever explicitly defined.
The parties’ Marital Settlement Agreement, which concluded their divorce, made no mention of a potential bonus to the husband. However, the husband had assured the wife via email that she would get a piece of any future bonus resulting from the sale of the company, should that ever occur.
Just three months after the divorce was final, the company was sold and the husband was paid $2.25 million. After a New Jersey Family Part trial judge ruled that the wife was only entitled to a percentage of the portion of the $2.25 million which the husband earned during the marriage, and the New Jersey appeals court affirmed the trial judge’s decision, the New Jersey Supreme Court agreed to hear the case.
The wife asserted that allowing the husband to keep the vast majority of the $2.25 million (which was earned during the parties’ cohabitation), would constitute “unjust enrichment” of the husband. Therefore, she asserted that the court should impose a “constructive trust” on the money—a remedy which had been authorized in previous New Jersey family court cases.
The New Jersey Supreme Court agreed. It held that awarding the wife only what she would have been entitled to under the New Jersey equitable distribution statute would result in unjust enrichment to the husband and that the percentage of the money earned during the parties’ cohabitation should be held in constructive trust by the husband for the wife. The case was sent back to the New Jersey family court trial judge to determine the wife’s equitable share.
As can be seen, dealing with “equitable distribution” in New Jersey divorce cases is often complicated and requires good legal representation.
Salvaggio Law Group devotes its entire practice to New Jersey Family Law matters, including those related to divorce and equitable distribution. If you want to talk, please call us at 973-459-4927 or fill out the Contact Form on our firm’s website.