Investment Accounts

If a couple divorces in New Jersey, decisions will need to be made about how to characterize each item of property, and determine what each asset is worth. Whether or not an investment account may be divided depends on whether the court considers it to be marital property or separate property. At Goldstein Law Group, our experienced Middlesex and Monmouth County high net worth divorce lawyers seek to protect the financial wellbeing of our clients during the division of investment accounts.

Investment accounts that are held in one spouse’s individual name and are acquired before the marriage are separate property not subject to division, so long as the account is not comingled with marital funds. Joint investment accounts, however, are subject to equitable distribution during divorce. Equitable distribution does not necessarily mean an equal - 50/50- split of the investment account. Instead, courts seek to divide property fairly (equitably) , by looking at such factors as the length of the marriage, each spouse’s contribution to the marriage, each spouse’s economic circumstances, whether one of the spouses made it possible for the other to obtain education or training, potential tax consequences, and the couple’s shared lifestyle during the marriage.

Generally, a judge can choose to give greater weight to certain factors over others. Very often, we see that the greatest emphasis placed on how long the marriage lasted and what kind of lifestyle the spouses led during the marriage, including what their typical investment practices had been. New Jersey courts do not look at “fault” for purposes of distributing accounts, unless one spouse has improperly dissipated marital assets, or behaved egregiously towards the other. In such a case, the court may assign the other spouse a greater share of any remaining assets, including investment accounts, in order to compensate for the dissipating spouse’s misuse.

If the investment account is a gift to one spouse during the marriage, it is considered separate property. As long as it remains separate and is not comingled with marital property, such an account will remain the property of the spouse in whose individual name it exists, even if it changes form due to economic circumstances, or accrues interest during the marriage. The lines get grayed however if, for example, the gifted account is kept separate but the earnings on that account are reported on the parties joint income tax return and marital funds are then used to pay the income taxes on those earnings! The waters just got cloudy!

For example, a mutual fund account that is separate property which grows exponentially during the course of a marriage because the fund manager is a skillful investor, remains separate property in spite of its growth. However, separate investment accounts can be transmuted into marital property through the original owner’s actions. For example, the recipient of a gifted investment account who then puts his or her spouse’s name on the account has turned the property into a comingled asset. In that case, the investment account will be subject to equitable distribution by the court.

In some cases, the distribution of investment accounts is covered by a prenuptial or postnuptial agreement. Our attorneys can review these types of agreements to determine whether they are enforceable. If the agreement is not enforceable, we can work with you to develop strategies to challenge the agreement’s validity, and seek a division of the investment accounts.

At Goldstein Law Group, we work in concert with experienced accountants and appraisers in an effort to make sure that your property is fairly valued, categorized and divided. We have offices in Metuchen and Brielle, from which we serve individuals in Monmouth and Middlesex Counties, and the surrounding areas. Our family law attorneys will work diligently to understand the details of your situation and advocate for your interests. We represent clients in Freehold, Rumson and Manalapan, among other communities. Contact us at 732-967-6777 or via our online form to schedule a Free 10 Minute Case Evaluation* with a Middlesex or Monmouth County attorney.