Dividing Investment Properties and Unearned Income in New Jersey
Assets that are acquired during the course of a marriage are usually considered marital property, which means that they will likely be distributed equitably between both spouses in the event of a divorce. However, some assets can be more difficult to divide than others. If you are experiencing issues determining how to distribute your property while taking into account the value of your investment properties and unearned income, ask a New Jersey property division lawyer for legal advice.
How Investment Properties are Distributed
If investments were acquired during a New Jersey marriage, they will usually be divided at the time of the divorce. If there was no premarital component, the entire amount of the investment’s worth will usually be divided. If there was money that was contributed to the investment before the marriage, in addition to during the union, the person claiming the premarital component will have to provide documented proof of the portion of the money not subject to division.
Additionally, if there was a premarital component, the increase in value from that amount will also be exempt from distribution. However, it is essential to note that whatever was acquired, invested, and grown during the marriage will usually be divided.
If a rental property was obtained during the marriage, either the property is sold and the proceeds are split, or one party buys out the other person’s interest in that property. If the person who buys out the other’s interest maintains that property and keeps it, any rental income that stems from that is considered unearned income. This means that the money made from retaining a rental property will likely be included in that spouse’s overall income and may be factored into calculations for child support or alimony.
Earned vs. Unearned Income
Earned income is payment that someone earns from their employment. Unearned income includes other forms of passive revenue, such as dividends from trust accounts, stocks, or rental income. If a person does not actively engage with their investments and instead leave it subject to market forces, it would be considered unearned income because money is being made off the money that has been contributed, and the recipient is not necessarily doing anything active towards that growth.
Reporting Unearned Income
Unearned income must be reported on a person’s tax returns, and it is often important to get advice from an accountant to complete this process accurately. Matrimonial attorneys in New Jersey know, understand, and appreciate tax ramifications in a divorce, which is why they often work in conjunction with forensic accountants.
What is the Significance of Dividends?
Dividends are the rewards that a company gives to its shareholders generated from the company’s stocks. They can be issued in various forms such as a cash payment, more stocks, and other forms. Dividends are usually a part of the profit that the company shares with its shareholders, and there are several different types.
Cash dividends are the most popular form, which is achieved by a dividend payout. There are also stock dividends, so if any company issues additional shares to its employees or shareholders, they will take this form. One can also get dividends from a company in which they have a direct ownership interest, or from their employer based on company performance. A NJ divorce lawyer can explain how dividends may be divided between two spouses as forms of unearned income in a divorce.
Ask a New Jersey Attorney to Help You Distribute Your Investment Properties and Unearned Income
Some assets and forms of income are so complicated that they not only need the assistance of a skilled divorce lawyer to distribute, but also require an accountant’s help. Our team of attorneys have extensive experience working with financial professionals to take on complex divorce cases, and we can use our knowledge to help you divide your investment properties and unearned income. Call today to set up an initial consultation and learn more.