Dividing passive and active assets in New Jersey divorce

On Behalf of | May 11, 2022 | Divorce, Divorce, Property Division |

In New Jersey, all marital assets are subject to equitable distribution upon divorce. This includes income from your active job or businesses or money made passively, like stocks, digital assets, etc. Here’s what to expect during your separation if you have such assets.

Active appreciation

Actively appreciating assets are those that increase in value due to the efforts or contributions of either spouse or, at least in part, for the time you’ve been married. For example, suppose you started a company that became a success because of your leadership skills, ideas, and business acumen. In that case, the court will consider the increase in value as active appreciation.

Passive appreciation

On the other hand, passively appreciating assets increases in value due to outside market forces: not necessarily your efforts. For example, if you bought a piece of land 15 years ago for $50,000, and over the years, the state government improves infrastructure, security, etc., leading to an increase in population, there will be a high demand for that parcel of land now. Its value can rise to $250,000 or more. The court will consider that passive appreciation.

Dividing actively and passively appreciating assets in New Jersey

If you acquired an actively appreciating asset while married, it would be subject to a fair distribution depending on your contributions to its growth. Remember, even if you were the one that put in the work while your partner stayed at home to take care of the kids and other affairs, their contributions as a homemaker are as significant as yours. The same applies to passively appreciating assets acquired during the marriage.

Property division is different for separate assets. If your separate property increases in value passively, they won’t be subject to division. However, for actively appreciated assets, your spouse could have a claim.

The line between active and passive assets in a marriage is not as clear as you might think. There are a lot of factors that the court can consider during property division. It’s important to carefully assess your situation to see what you could be entitled to.

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