A spouse selling an asset before a divorce isn’t necessarily contrary to New Jersey law. It depends on whose property it is, under what circumstances the sale occurs, and whether the sale and what happens with the proceeds are transparent. Serious problems arise if one spouse secretly sells marital property and keeps the proceeds.

If you are considering divorcing or you and your spouse have discussed it without making a decision, call our office. Don’t wait until one or both of you decide to end the marriage.

Talk to us if you are heading towards splitting up because selling assets is just one of many possible pre-divorce problem areas that can arise. You need to be aware of them and take steps to prevent them or at least reduce the damage they might do.

Whose Property Is It?

An essential part of New Jersey divorce law is equitable division and distribution. When the two of you go your own ways, you each should have a fair share of the marital assets and debts. What that “fair share” will be is subject to discussion, negotiation, and, hopefully, an agreement. If not, it can be decided by a judge after a trial.  With judicial vacancies becoming a statewide problem, it is equally or more likely that the hearing you have is held before an arbitrator (private judge) than a “real” judge.

Property is exempt (can’t be divided) or marital (can be divided). Though legally these are distinct categories, in the real world, it’s not always clear-cut. Marital property includes all assets acquired by either spouse from the date of the marriage until earlier of a divorce filing or a signed settlement agreement is signed. It may be:

• Savings accounts
• Real estate
• Artwork
• IRA and 401(k) accounts
• Personal property
• Business or professional practice ownership

There are exceptions, including an inheritance received by a spouse during the marriage and kept as separate property. Everything else is, technically, exempt property. But if that property is co-mingled with or treated like marital property, it may be divided like marital property.

Why Would a Spouse Sell Property Before a Divorce?

There are legitimate reasons to sell property before a divorce. Divorce costs money and your living costs and taxes will go up. Depending on the issues, the legal fees may be high and involve hiring a professional like an accountant or appraiser.

There’s no problem if the two of you agree to sell marital property (a car or a vacation home), you both cooperate, the process is transparent, and the proceeds are correctly handled. You’re just converting marital property in one form (an SUV) to another (cash in a bank account).

Problems arise when the sale of marital property, or property whose classification is unclear, is done without the other spouse being informed transparently and/or the proceeds are mishandled (used or spent to hide them from the legal process).

This is theft by your spouse and, depending on the circumstances, could lead to criminal charges and civil sanctions. Let’s say the property wasn’t sold but divided through the divorce process, and each party would receive $10,000 as part of equitably dividing marital property. Through a dishonest sale, a party receiving $20,000 and hiding the proceeds may end up with nothing – except a bill for their own lawyer’s fees and costs and another from their spouse’s lawyer.

The sale may have been accomplished through fraud (on unknowing spouse and the buyer if they didn’t know it was marital property), and your signature may have been forged.

What Can Be Done to Prevent a Dishonest Sale of Property?

Call our office early in your divorce discussions with your spouse. We can discuss the law, how it may be applied to your property, and the steps you can take to protect yourself. If you fear your spouse will be unethical and start selling property, or already has, you could file for divorce before the situation gets worse, along with an emergency application to stop the sale and freeze the funds. With the filing, any asset sale could be contested and subject to court approval.

What Can Be Done If My Spouse Sold Marital Property Without My Permission?

Other than filing for divorce, we can inventory personal and marital property. If we determine that marital property is missing, we can engage a forensic accountant to see what happened and where the proceeds went. We can fill out the picture through written questions (interrogatories) and oral questioning under oath (a deposition).

If the two of you can’t agree to equitable asset division, we can litigate the issue. Given the evidence we find, we’ll argue to the judge or arbitrator that all marital assets (including the value of what your spouse improperly sold and tried to hide) should be divided, your spouse stole assets from you, and that should be reflected in the asset distribution. If we’re successful, you should receive your fair amount of assets and your spouse may also be ordered to pay our counsel fees and recovery costs.

Get the Help You Need From a Divorce Attorney You Can Trust

If your spouse is stealing from you or hiding assets, hire a family law specialist attorney to represent you. The attorneys at the Kingston Law Group are available when you need us. We are compassionate counsel and tough advocates. Call 609-683-7400 or contact us online to schedule a near-term reduced fee initial consult at our Central Jersey offices in Kingston. We will listen to your facts, advise you on the law, and recommend the best path to social and economic justice. Call us today. You will be glad you did.