Asset Tracing

Here the couple married at a young age, they did not have any significant assets, and they shared all of their assets during their marriage. Moreover, the court held that the decision to purchase the marital home and title it jointly was a joint decision, as was the decision to sell the stock and apply the proceeds to their down payment to reduce their joint mortgage indebtedness. Moreover, before any marital problems ensued, neither spouse took any affirmative stem that would tent to prove an intent that the stock was not an inter-spousal gift. Therefore, under these circumstances the court held that the home was subject to equitable distribution even though it was purchased in part with the proceeds from the sale of the stock.

In summary, the Pascale court held that it is permitted to recognize that the purchase of a home may be more traced to one souse than the other. However, the court held that it is not compelled to equitably distribute the proceeds of the marital home in accordance with the original financial contributions of the spouses.

6. What is the standard of law that a court uses to analyze whether a spouse’s conveyance of separate property into joint title creates a gift?

In many marriages the spouse with more assets will convey or give separate premarital property to the other spouse. A key issue then arises whether the separate property should remain an exempt asset, or whether it is transmuted into marital property. New Jersey adheres to the view that a spouse’s conveyance of separate property into joint title presumptively creates a gift to the marital estate. Therefore, the separate property is transmuted into marital property. Nonetheless, the spouse who contributed the property can rebut this presumption if he or she proves that he or she did not intend to make a gift.

7. Before I was married, I had $50,000 deposited in my own individual savings account. However, once I got married, I deposited these funds into a joint savings account with my wife. I am now getting divorced. Is the $50,000 that was deposited into my original savings account now subject to equitable distribution?

Maybe. This scenario would once again trigger a transmutation analysis. Transmutation disputes often arise when separate funds have been deposited into a joint account or when marital funds have been placed in an account that originally contained only separate funds.

As discussed above, the general rule is that a transfer of separate property into joint names evidences a gift to the marital estate. Therefore, the transferred property becomes marital property. Most of the New Jersey case law has held that combining marital and separate funds in an account transmutes the separate funds to marital property only when it is impossible to trace the separate funds. If the funds in the account can be traced of “uncommingled” then most courts will try to allocate between the marital and the separate property.