How the COVID-19 Outbreak Is Impacting Property Division
New Jersey is an equitable distribution state, which means that property in a divorce is not automatically split 50-50. However, the two spouses need to reach an agreement on how to divide the assets. The COVID-19 pandemic, which has led to over 187,000 cases in New Jersey as of August, is complicating that in several ways.
Falling Incomes Could Impact Division
Sometimes, property division depends on each party’s employment and earnings potential at the time that the court decree is issued. However, the COVID-19 crisis has resulted in job losses and businesses closing. Many others have seen their incomes slashed with no way of knowing when or if they will ever recover. Income is part of the picture when it comes to asset division.
This may change the terms under which property is divided between the two spouses. Spouses with a lower earnings potential can usually get more of the marital estate. Additionally, those who have lost income stand a better chance of receiving a higher share of the estate.
Stock and Real Estate Valuations Are Volatile
Soon-to-be exes should understand that there is some uncertainty surrounding the valuation of property to be divided in a divorce. The COVID-19 crisis originally caused the stock market to collapse, taking down the value of assets in many marital estates. While the stock market has recovered, the effect has lingered.
In a divorce, property is generally valued at its current market value. However, there have been increased disputes among parties about valuation given the uncertainties of the pandemic. Moreover, parties may be unsure of exactly how to value property. Some spouses may not want to sell out of their shares of certain investments that have fallen during coronavirus outbreak. Both may want to hold on to property. Otherwise, they fear that they will be selling their once high-flying assets cheaply.
The volatility of the stock markets may also complicate asset division. Parties may be trying to negotiate a settlement based on a certain asset valuation. Even after a small period of time, the asset valuation could change completely. Certainly, there may be bigger changes between the time that the agreement was negotiated until the time that it is signed. These unstable valuations make it difficult to negotiate an equitable marital separation agreement.
Real estate may also present a particular challenge right now. While property values remain stable, there is a looming threat over housing prices due to a possible foreclosure crisis. Furthermore, there could be difficulty valuing the price of the real estate asset because one or both spouses may not even be able to afford monthly utility and mortgage costs. Finally, the value of the home may change dramatically in the period before the spouses could get a court hearing given the volatility of the economy.
Court Hearings Are Hard to Come By
If the two spouses are unable to negotiate a settlement, the status of courthouses in New Jersey will make it even more challenging to divide the property. They may eventually be able to get a remote hearing, but it will be difficult to both hold a full trial remotely and get a court date while courts address other pending cases. As a New Jersey family law attorney will tell you, courts have a big backlog and a contested divorce hearing is not their highest priority right now.
The best thing right now for most spouses to try to settle their divorce. If they cannot reach an agreement, they should avail themselves of virtual divorce options such as mediation. They may be taking a chance if they rely on a court to decide the matter, both in terms of property valuation and getting a court date.
To learn more about how COVID-19 could impact property division in your divorce case, contact a New Jersey family law attorney at Morgenstern & Rochester. Call our Cherry Hill office at (856) 489-6200 so we can schedule your initial consultation. We can set up remote meetings for social distancing.