
Divorcing couples must divide their property, such as real estate and bank accounts, and overlook debt division. However, marital debt should be an essential topic of conversation while negotiating the terms of a divorce. You must decide who will be responsible for specific debts to prevent confusion and financial issues in the future.
How Is Marital Debt Handled in New Jersey?
New Jersey is an equitable distribution state. Typically, the courts divide marital property equitably and fairly. The same is true for marital debts.
Equitable distribution does not necessarily mean a judge will order each spouse to pay an equal share of financial liabilities. It depends on the nature of the debt and what is most fair based on the circumstances.
For example, a judge can assign a mortgage to only one spouse if they have a job and the other doesn’t or make a significantly higher income.
Marital debt is any debt either person incurs while married but before the date of filing for divorce. It doesn’t matter if the debt is only in one person’s name. Debt is considered marital debt if incurring it benefits both spouses.
Nonmarital debt is debt one spouse incurs before getting married. Typically, the person bringing specific debt into the marriage is solely responsible for it after divorce.
Nonmarital debt can also include debt one spouse incurs while married that only benefits them. For example, gambling or spending money on an affair can qualify as nonmarital debt.
Factors Involved in Dividing Debt
The courts consider much the same factors for dividing debt that they use in property division, such as:
- Standard of living each person established during the marriage
- Both spouse’s age, emotional health, and physical health
- Each person’s overall economic situation
- Property or income either spouse brought into the marriage
- Expense and time required for one party to obtain the training or education necessary to achieve the marital standard of living
- Duration of the marriage
- The extent of either spouse’s delay in pursuing their career goals while married
- Either person’s contributions to the other’s preserving, wasting, acquiring, or improving the marital property, including contributions as a homemaker
- The current value of all property
- Tax consequences of division
- Each spouse’s income and earning capacity based on experience, education, training, custodial responsibilities for children, and duration of absence from the job market
- Both party’s liabilities and debts
- Present or future medical or education trust needed for either person or a child
- Contributions one spouse made to the other’s earning power and education
- One spouse’s need to maintain the marital residence or use household effects because they have physical custody of a child
Are Marital Debts Protected from Creditors?
You can’t prevent creditors from coming after you for unpaid bills despite having a final divorce decree signed by a judge. Creditors can pursue payment from either spouse regardless of the terms of a divorce.
For example, the judge might have assigned particular credit card debt to your ex. However, that doesn’t mean you’re off the hook for payment. If both names are on the account and your ex misses a payment, the creditor can go after you.
You can protect yourself by liquidating your assets to repay your marital debts. Resolving the problem before the divorce is final is your best course of action. However, paying off everything you and your spouse owe might be impossible. You can refinance the remaining debts in one person’s name: the person responsible for it.
Another beneficial option is to include an indemnification clause in your settlement agreement. It doesn’t prevent a creditor from pursuing payment from you. However, it requires your ex to compensate you for the payments you make on the debt and any costs you incur from a collections action.
Contact a Dedicated and Skilled Divorce Attorney Today
Incorporating all marital debt, such as mortgages, auto loans, and tax liabilities, into your property division agreement is crucial. You must take the necessary steps to protect yourself during negotiations so you don’t leave the marriage with debt you should not have to pay.
The Law Office of Andrew A. Bestafka, Esq. has extensive experience representing New Jersey clients in divorce proceedings. We can identify potential issues and minimize financial risk while dividing debt between you and your ex. You can count on our legal team to fight for your interests and future.
If you’re going through a divorce, call our Monmouth County divorce lawyer at (732) 898-2378 for a confidential consultation to learn more about how we can help. We’re available 24/7 to speak with you, so you can reach us when you need us most.

For many divorcing couples, their 401(k)s and other retirement accounts are usually some of their most valuable assets. Retirement accounts (or at least a portion of the value of those accounts) are considered part of a couple’s marital estate subject to distribution between the spouses in divorce. But due to the complex tax laws governing 401(k)s and other tax-advantaged retirement accounts, dividing these accounts in divorce often becomes one of the most difficult and contentious parts of any divorce proceeding.
How the Value in a 401(k) Is Split in a Divorce
Generally, all funds that spouses contribute to their 401(k) or other retirement accounts during their marriage are considered marital property and are subject to equitable distribution. For example, if you make $250,000 in contributions to your 401(k) during the period of your marriage, that $250,000 will likely be considered marital property. In addition, any growth in the value of the account during the marriage may also be considered marital property that can be equitably divided.
Unlike other states that use an equal distribution approach to dividing marital property, New Jersey uses an equitable distribution approach. This means that courts are not required to divide marital assets 50/50. Instead, courts will seek to divide the couple’s assets in a way that seems equitable, or fair. In deciding on a fair division, courts consider factors such as the respective financial situations of the spouses, each spouse’s earning capacity, the standard of living during the marriage, and the length of the marriage.
The Effect of Prenuptial/Divorce Settlement Agreements
Of course, spouses may decide to treat their 401(k)s and other retirement accounts differently from the standard equitable distribution rules. For example, spouses may execute a prenuptial agreement prior to marriage, or a marital settlement agreement immediately prior to or after filing for divorce. In this agreement, spouses may expressly waive any rights they may have under the law to the funds contained in their spouse’s retirement accounts. Or spouses may agree on how to divide their retirement funds, rather than letting the court decide what an equitable distribution would be.
Will You Have to Pay Your Ex Funds from Your 401(k)?
If your 401(k) or other retirement accounts are subjected to equitable distribution in divorce, does that automatically mean you will have to pay funds to your ex from your accounts? Not necessarily. If your and your ex’s retirement accounts have roughly similar values, you both may agree to simply keep your own accounts, or the court may rule that allowing you both to keep your own accounts achieves an equitable distribution of the marital estate.
But where one spouse earned significantly more or contributed more to their retirement accounts during the marriage, the court may decide that the other spouse is entitled to a portion of the value of that account. When that happens, funds will have to be paid from the account(s) of the higher-earning spouse. Of course, many types of tax-advantageous retirement accounts, such as 401(k)s, are subject to rules that prohibit the withdrawal of account funds prior to retirement or prior to the account holder reaching a certain age. Early withdrawals may make the account holder liable for penalties or significant taxes.
A spouse that receives a portion of their ex’s retirement accounts may take the funds in one of several ways:
- If the recipient spouse has their own 401(k), IRA, or another similar account, they may choose to directly roll over the funds they receive into their account. Doing so can ensure that neither you nor your spouse is held liable for any penalties or taxes for early withdrawal.
- The recipient spouse may choose to defer receiving any funds from the account until their ex retires.
- The recipient spouse can immediately cash out their portion of their ex’s account by taking a lump sum distribution. While penalties for early withdrawal may be avoided, the recipient spouse will still have to pay income taxes on that distribution.
If a portion of your 401(k) or other retirement accounts are distributed to your spouse in divorce, you will need a court order known as a qualified domestic relations order, or QDRO to avoid the penalties and taxes that come with early withdrawals. The QDRO authorizes the administrator of your retirement plan to pay money to your spouse according to the terms of the order, without any penalty to you for withdrawal.
Contact Us for Help in Resolving Issues with Your Retirement Accounts During Divorce
If you are seeking a divorce and have questions about how your and your spouse’s 401(k)s and other retirement accounts will be divided in your divorce, call the Monmouth County divorce lawyers of the Law Office of Andrew A. Bestafka, Esq. today at (732) 898-2378 or fill out the contact form on our website for a confidential consultation. An experienced divorce lawyer from our firm can help you understand your rights and options when dividing your retirement accounts during divorce.

Are you currently going through or thinking about filing for divorce in New Jersey? Are you wondering how marital property is divided by the court? New Jersey is an “equitable division” state, which means that the court will try to divide the marital property in a fair or equitable way, depending on the circumstances of the couple. This is an important aspect of a divorce and can be quite complex. The Law Office of Andrew A. Bestafka, Esq. has been dealing with property division issues in divorces for more than a decade. For help, call (732) 898-2378. You’ll talk with a knowledgeable divorce attorney who can make the difference between a good property settlement and a bad one.
Why You Need an Attorney to Help with Property Division in a Divorce
It is crucial to have an attorney who knows New Jersey divorce law and understands the nuances of how marital property is divided by the court. Whether negotiating a favorable agreement out of court or arguing before the court in a contested hearing, an experienced attorney knows what needs to be done to get the best outcome for you and how to do it.
An experienced attorney also knows the factors the court will be looking at to make its decision and which arguments will best cover each of them. Another important element in dividing marital property is establishing an accurate value for the property. Knowing how to present favorable evidence to the court regarding value is complicated. If you don’t have a skillful attorney to represent you, you’ll be at a huge disadvantage and are unlikely to get the property division you want in court.
Why Choose Law Office of Andrew A. Bestafka, Esq.?
Law Office of Andrew A. Bestafka, Esq. has practiced exclusively in the area of family law since 2008. Mr. Bestafka grew up in Monmouth County, New Jersey, so he knows the area and the people well. Law Office of Andrew A. Bestafka, Esq. has been named one of the ten best Family Law Attorneys in New Jersey by the American Institute of Family Law Lawyers. This award is prestigious and takes into account not only client satisfaction but also the respect of his peers in the legal profession. He also has served on the Family Law Committee for both the New Jersey State Bar Association and the Monmouth Bar Association. Law Office of Andrew A. Bestafka, Esq. and his associates take great pride in helping families through one of life’s most difficult challenges.
Law Office of Andrew A. Bestafka, Esq. fights to get the best outcome possible for each and every client. Law Office of Andrew A. Bestafka, Esq. is caring, compassionate, and attentive to the needs and wishes of their clients. Mr. Bestafka and his associates are experienced in family law and will help you get the best outcome possible under the law. Your financial future after your divorce will be significantly impacted by how the court divides marital property, so it is important to choose outstanding legal representation, such as Law Office of Andrew A. Bestafka, Esq..
Factors in New Jersey Marital Property Division
New Jersey law directs the court to divide property “equitably.” This means your marital property may not be divided 50-50. The court’s decision depends on several factors. Two of the most important factors are the income and earning capacity of each party and who has primary custody of the children, if children are part of the divorce. The court also looks at how and when assets were acquired and the contribution of each spouse. This contribution can be financial, but it can also be household chores such as cleaning and cooking. New Jersey Courts also consider whether one spouse helped the other to get through school and earn a degree and if they may have delayed their own education in doing so. There are many other factors the court can consider that your attorney can discuss with you. The exact factors depend on your circumstances.
New Jersey honors pre-nuptial agreements, if one was executed prior to the filing of the divorce. A pre-nuptial agreement is a contract or agreement between the spouses that divides property ahead of time should the parties divorce at some point. If you have questions about pre-nuptial agreements, it is a good issue to bring up during your initial consultation with your attorney from Law Office of Andrew A. Bestafka, Esq..
Marital property may include obvious things like cars and real estate, depending on when and how they were purchased. But it also includes such things as retirement accounts, investments, pets, and even frequent flyer miles and cryptocurrency. Your situation is unique, which is why there is flexibility built into the “equitable division” decision the judge makes.
If You Are Going Through a Divorce, Call Us
Division of marital property in a divorce is complicated, and it is very important to your financial future. Law Office of Andrew A. Bestafka, Esq. is an experienced, respected firm that will aggressively pursue the best financial outcome that New Jersey law allows in your case. Call (732) 898-2378 today to schedule an initial consultation and discuss your circumstances with us.
A recent Wall Street Journal article reported that Michael Mandelbaum, whose family owns a stake in the Minnesota Vikings franchise, claimed he was never officially married to his wife when she brought a divorce petition against him.
This allegation came after Mandelbaum and Debra – the woman who claimed the two were indeed married legally – lived together for 20 years as man and wife. The report stated they had a Jewish wedding ceremony, and even bought property and filed taxes together as husband and wife. However, Mandelbaum claimed that their divorce is not valid, since he and Debra did not obtain a marriage license before their ceremony, as New Jersey law dictates they must. Mandelbaum said that his and Debra’s wedding on December 5, 1995 occurred 16 days before their marriage license was approved. Debra asserted that his attempt to deny they were ever married is merely a way to keep her from money she would receive in divorce proceedings.
Divorce is usually complicated, especially if the separating couple disagrees on issues such as asset division, child custody, and alimony. Regardless of your issue, the divorce attorneys at the Law Office of Andrew A. Bestafka, Esq., in Monmouth County can offer experienced and committed legal representation throughout your divorce. Call our offices at (732) 898-2378 today to begin discussing your situation.
The 2nd U.S. Circuit Court of Appeals reversed a Manhattan district court judge’s 2011 decision that dismissed a lawsuit filed against a Wall Street multi-billionaire by his ex-wife.
The long running legal battle began in a 1990 divorce proceeding when Patricia Cohen accused then husband Steven A. Cohen of hiding his assets while formalizing a property division agreement. She claims he lied about losing his entire $9 million investment in co-op apartments.
The appeals court decision relied heavily on the evidence Patricia submitted regarding her discovery of a court file in 2008 revealing a $5.5 million dispute settlement paid to Cohen. Patricia’s 2009 fraud-based claims also involved allegations of Cohen’s 1985 $20 million insider trading profit from a tip given by fellow Wharton School graduates of the University of Pennsylvania.
Defense lawyers argued that Patricia was merely harassing Cohen and trying to gain media attention at the expense of her ex-husband.
Formalizing property division in divorce court proceedings can be tedious and complicated. To get the support and guidance you need, speak with the legal team at the Law Office of Andrew A. Bestafka, Esq., by calling (732) 898-2378 today.