Assemblywoman ALISON LITTELL MCHOSE
District 24 (Sussex, Hunterdon and Morris)
Precludes most distributions of increased value of pre-marital residence at time of divorce.
CURRENT VERSION OF TEXT
An Act concerning the valuation and distribution of certain assets in divorce proceedings and supplementing chapter 34 of Title 2A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Any asset, real or personal, brought into the marriage by either spouse thereto shall, in the absence of evidence by the non-owning spouse of a marital gift, remain the sole and exclusive property of the owning spouse. A non-owning spouse claiming entitlement to a share in the increased value of a pre-marital asset shall be obliged to prove that such spouse’s efforts resulted in an ascertainable and quantifiable increase in the market value of such asset. In the case of a residence owned by one of them prior to the marriage, same, including any increase in market value, shall be wholly exempt from distribution unless the non-owning spouse establishes (a) that such spouse’s efforts resulted in an actual and quantifiable increase in the market value thereof and (b) that such efforts were made in anticipation, by the parties, that such non-owning spouse would share in the increased value resulting from such contribution. Contributions to the expenses associated with the routine maintenance of such a residence, including but not limited to the payment of taxes, mortgage interest, utilities, and repairs, shall not be considered contributions to the value of said asset.
2. This act shall take effect immediately.
At the time of a divorce, the Family Part labors under an obligation to equitably distribute the property acquired by the parties during the term of the marriage. While an asset brought into the marriage by one of the parties is generally exempt from equitable distribution, any increase in its value is potentially subject to distribution. At present, there exists neither statutory law nor case law defining the appropriate limits of a request by a non-owning spouse to secure a share of the increased value of a pre-marital asset belonging to the other. Instead, the courts have drawn distinctions between “active” and “passive” assets, but, especially in the case of a pre-marital residence, there exists little guidance respecting whether same is an “active” or “passive” asset, what constitutes a “contribution” to the increased value, and how to evaluate same.
This bill resolves that difficulty by precluding most distributions of the increased value of a pre-marital residence in the absence of some evidence of an understanding between the parties that a non-owning spouse’s contributions would entitle such spouse to share of said residence. It further specifies that mere contributions to the maintenance of a pre-marital home by a non-owning spouse shall not be considered as contributions to the value thereof being, instead, the normal incidents of residing in such home. It leaves intact the right of a non-owning spouse to secure reimbursement for contributions made to the reduction in mortgage principal from marital assets and, in the event of an agreement, for contributions to capital improvements made to a residence, provided that same resulted in an ascertainable and quantifiable increase in the market value of the home.