Protecting a house from a future divorce

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Q. Our daughter “Mary” is married to “John” but they’ve been separated for about eight years. “Mary,” as soon as her youngest graduates from college, wants to purchase a home that we now own, in which she now lives. How can we construct the sale to “Mary” while she’s still married to “John” so he doesn’t get a piece of the house if she later sells it or dies?
— Concerned

A. This isn’t a simple issue.

Courts in New Jersey are afforded substantial discretion in deciding the equitable distribution of marital assets and debts in a divorce.

In your hypothetical, the parties, though separated for a period of eight years, remain legally married to one another, said Jeralyn Lawrence, a family law attorney with Lawrence Law in Watchung.

She said that means any assets accumulated, even during this period of separation, are technically considered marital assets and subject to distribution because “mere physical separation alone is an insufficient indication that a marriage is effectively at an end,” citing a case known as Brandenburg v. Brandenburg.

Notwithstanding, Lawrence said, the courts must look to the statutory factors when issuing a determination.

Specifically, she said, N.J.S.A. 2A:34-23(h) bestows upon the courts the authority to divide marital property, with the caveat that any real or personal property “legally or beneficially acquired during the marriage… by way of gift, devise, or intestate succession shall not be subject to equitable distribution.”

“Thus, in this scenario, should Mary’s mother desire to gift the property in question to her daughter, same may be accomplished such that the property will be exempt from equitable distribution should the parties later divorce,” Lawrence said.

Alternatively, should Mary desire to purchase the home from her mother but does not wish to file a formal complaint for divorce, she may consider entering into a formal separation agreement with John, Lawrence said.

She said such agreements have been validated by our courts when accompanied by the actual separation of the parties.

“Under such circumstances, the date upon which the marriage terminated for purposes of equitable distribution will be the date of the separation agreement itself,” she said. “In this scenario, we would recommend that Mary consult with a family law attorney to discuss her options and the viability of entering into a formal separation agreement to avoid the potential for the home at issue to be considered a marital asset incident to divorce.”

Email your questions to moc.p1566185920leHye1566185920noMJN1566185920@ksA1566185920.

This story was originally published on June 13, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.

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