One of the most contentious and often difficult parts of the divorce process is the division of the spouses’ marital assets or property—both real property (real estate) and personal property (money, stocks, bonds, homes, cars, art, household furnishings, etc.). The spouses may be able to agree on how such assets will be divided—but often they cannot, and the court must determine how the assets will be divided—and sometimes the court will order certain assets be sold to facilitate the division of the assets.

If the spouses live in a community property state (as opposed to an equitable distribution state), and if an asset was acquired by one spouse before the marriage, it will generally remain that spouse’s separate property and not subject to division upon divorce. But income earned from the separate property asset and any appreciation (increase) in the value of the separate property asset during the marriage may be community property rather than separate property, and subject to division. Community property states generally include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

In other states—so-called equitable distribution or common law property states—the court attempts to divide the spouses’ assets equitably (fairly)—which does not necessarily mean equally. In deciding what is an equitable distribution of the spouses’ marital property, the court may consider factors such as the relative education, employability, earning capacities, and separate property assets (acquired before marriage) of the spouses, and whether one spouse’s infidelity or abusive behavior, for example, was a greater factor in the breakup of the marriage.

In practice, the difference between the division of assets in community property states and in equitable distribution states is sometimes not as great as it may seem, as the court in a community property state may have the discretion to divide the spouses’ community property on a 60-40, 70-30, or other unequal basis.

When evaluating the division assets, it is also important to consider any tax implications for the division of the assets—such as the responsibility to pay property taxes due on a home or other real property.

In New Jersey, the division of marital assets during a divorce is governed by the principles of equitable distribution, as New Jersey is not a community property state. This means that the court will divide the couple's assets in a manner that is fair, but not necessarily equal. Factors considered by the court include each spouse's education, employability, earning capacity, and separate property (assets acquired before the marriage). The court also takes into account the contribution of each spouse to the marital property and the economic circumstances of each party at the time the division of property becomes effective. Marital misconduct, such as infidelity or abuse, may also influence the court's decision. It is important to note that equitable distribution applies only to marital property, which is property acquired during the marriage. Separate property, owned by one spouse before the marriage or received as a gift or inheritance, is generally not subject to division. However, any increase in value of separate property during the marriage may be considered marital property. Additionally, tax implications are an important consideration in the division of assets, as certain transfers can have significant tax consequences.