New Jersey Divorce and Family Lawyer & Attorney : Fox Rothschild Law Firm : Domestic Violence, Prenuptial Agreements, Child Custody

There is a not too uncommon phenomenon that is frequently seen in divorce cases.  Specifically, as soon as the notion of a divorce action become a reality, many supporting spouse's incomes suddenly, and usually without valid explanation, drop substantially.  It may come as no surprise that someone may want to manipulate their income when an alimony or child support obligation is about to be set.  This affliction is sometimes known as "R.A.I.D.S." or Rapidly Acquired Income Deficiency Syndrome (sometimes also known as "SIDS"  Sudden Income Deficiency Syndrome.) 

That is not to say that there are not valid, legitimate and explainable deviations in someones income.  Some people are in commission sales and one year is legitimately better than another.  Perhaps someones income is tied to real estate.  That person may have a legitimate reason why 2007 and 2008 are down years.  Mortgage bankers are probably having trouble now as are realtors.  I recently had a case where if you looked at my client's tax returns and W-2s, one would think that support should have been based upon a seven figure income as opposed to a mid-six figure income.  In this case, there were some discrete one time payments from exercises of stock options and change of control of companies that he worked for.  These are not the situations I am talking about.  In fact, when there is non-recurring income, it may be legitimate to back it out for purposes of computing support or else the support would not be fair to the payor.  When income legitimately fluctuates from year to year, the Child Support Guidelines and decisional law suggest taking an average (3 or 5 years is common). 

The cases that I am talking about are those where there is no explanation for the sudden drop in income.  Very often, this occurs when the supporting spouse is self employed.  There are many ways income is hidden.  Sometimes, it is just not collected - as possibly evidenced by a large rise in accounts receivable.  Sometimes, there may be several capital expenditures or large equipment purchases, which reduce the profits and thus the income.  Other times, perquisites or personal expenses paid by the business increase dramatically.  Check the business credit cards - they are often illuminating in this regard.  Cash is also a possibility as are other manipulations with payments received.

In these cases, discovery is critical to smoke out the true income and real reason for the alleged reduction in income.  The use of a forensic accountant is often essential to get to the correct income number.  

RAIDS is certainly an illness that can be diagnosed and with the proper team of lawyers and experts, cured so that the supported spouse is treated fairly. 

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One of my pet peeves is litigants and lawyers that use custody and parenting time issues as a bargaining chip to get better a better financial settlement.  I have several matters ongoing now where that is occurring.

In a recent case, both in negotiations between the parties directly, and in negotiations with opposing counsel, we were told that the proposed resolution of a hotly contested parenting time issue for far less than had been demanded was fine but only as part of a global settlement including the finances.  Put another way, they were only going to resolve visitation if my client made financial concessions.  The bad faith of the tactic was evident.

In fact,  in New Jersey, there is really little interplay between the parenting time and the finances other than some child support adjustments made for the number of overnight visits.  This does not even really come into play in high income cases that exceed the Child Support Guidelines.  That said, since parenting time and custody issues are based upon the best interests of the children, most would agree that you should not negotiate these issues based upon money.  However, it comes up all to frequently, often to the detriment of the children and at a great financial and emotional cost to the parties. 

The system in New Jersey is set up to try to smoke out and resolve these bogus parenting and custody issues early in the case.  At the outset of a case, the parties are required to attend a Parent Education program given by each county.  After that, the parties are required to go to mandatory custody and parenting time mediation, usually with Court staff, unless there is a domestic violence restraining order in effect.  Only then, do you get into custody and parenting evaluations with experts, etc.  Also, this is all completed at the outset of the process, long before discovery is over, and often before it is even started in earnest.

A familiar scenario of the bad faith custody dispute that I have seen a fair amount as of late is as follows:  one parent is the traditional stay at home parent - the other is the Type A executive type that leaves the home at 6 a.m. and doesn't return home until 7 p.m.  Sometimes, that person travels substantially for business as well.  The stay at home parent has been responsible for all medical and dental visits, haircuts, play dates, teacher conferences, etc. The divorce starts and the  parent that works out of the home demands either custody or a 50-50 parenting arrangement. 

In these cases, absent mental health issues or other extraneous circumstances, the demand is one that is typically made either because there are control issues or as a bargaining chip.  That is not to say that there are not times where this parent should not get custody, because there are and I have gotten custody for these types of parents. 

That said, when these issues are made for bargaining, if the matter does not settle in mediation, the next step is custody evaluations by a forensic psychologist. If the parties cannot agree on a joint expert or the Court does not appoint one expert, there can be two experts.  The children are now made part of the process and have to meet with the expert several times.  Their teachers may be contacted.  Their doctors and therapists may be contacted.  The parties' therapists may be contacted.  Other collateral sources may be contacted (neighbors, coaches, family members, etc.)  The price to pay on the family, aside from the legal and expert fees, is high - especially when the issue is for bargaining only.

Don't get me wrong.  I understand that there are good faith custody and parenting disputes that require this process.  While the toll is still the same, that may be unavoidable.  However, if the issue is not a "real" one, I would hope that people would not use it improperly as a bargaining chip.  The collateral damage may be great.

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Previously I blogged about the fact that cases have a life of their own and will only settle when both parties are ready.  As I was trying to settle a case today that is scheduled to start trial in Morris County next week, I was reminded of a related issue.

In this case, we have had a hard time getting the other side to negotiate.  They have taken a position that we don't think is reasonable nor supported by the facts or the law.  That said, we have made proposals to try to resolve the case.  In fact, at each time we have been required to negotiate (at the Early Settlement Panel, mandatory economic mediation (several sessions) and at an Intensive Settlement Conference), we have made proposals.  In some ways, it was against my normal practice to not bid against myself, but the client wanted to at least try to stir some movement. 

At each point, rather than provide a counter proposal, the other side has tried to wow us with, to put it nicely, "fuzzy math" in order to justify why they are right and we are wrong.  They have never, however, moved off of their proposal on support in any significant way. 

I finally had to tell the opposing counsel to just give me a number without the explanation or argument because I wasn't going to buy their theory, ever, and the theory didn't make a difference if the number was acceptable.

In fact, this is not unusual when trying to settle matters.  That is, sometimes the theories and explanations will bog things down.  The bottom line is that if  the parties agree on the number or a certain resolution of a non-financial issue, in many instances, it matters not at all how or why you got to that number.  In fact, the explanation may just start the argument again. 

Sometimes, it is more important to just give a number than explain how you got there.  If the number is fair and within the realm of reason, and the parties can live with it, it is sometimes better to be settled then win the debate which may only prove more costly.

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            It’s that time of year. High School seniors all over the country are making that agonizing decision, “which college should I go to?”  While the kids are choosing schools, parents are thinking, “how will I pay for it?” Financing college is a challenge in the best of circumstances, but for families in which parents are divorced or separated, the issues become particularly difficult. 

            New Jersey courts will, in appropriate circumstances, compel both parents to contribute towards the college or vocational educational expenses of their child. This is in recognition of the fact that in today’s day and age, a college or vocational education is becoming a necessity. In the absence of an existing agreement, New Jersey Courts will conduct an analysis considering several factors. The New Jersey Supreme Court, in the case of Newburgh v. Arrigo, 88 N.J. 529 (1982) set forth the basis upon which parents can be ordered to contribute towards college expenses.

            When a child has suitable scholastic aptitude for the pursuit of a college education and continues to exhibit that aptitude throughout his college career, the court will examine:

                      (a)        Whether the parent if still living with the child would have voluntarily contributed to the cost of the requested higher education;

                      (b)        The effect of the background, values, and goals of the parent and the reasonableness of the expectation of the child for higher education;

                      (c)        The amount of the contribution sought by the child for the cost of the higher education;

                      (d)        The ability of the parent to pay the cost;

                      (e)        The relationship of the requested contribution to the choice of the school and course of study sought by the child;

                      (f)        The financial resources of both parents;

                      (g)        The commitment to and aptitude of the child for the requested education;

                      (h)        The financial resources of the child, including assets owned individually or held in custodianship or trust;

                      (i)         The ability of the child to earn income during the school year or on vacation;

                      (j)         The availability of financial aid in the form of college grants and loans;

                      (k)       The child’s relationship to the paying parent, including mutual affection and shared goals, as well as the child’s responsiveness to parental advice and guidance; and

                      (l)         The relationship of the education requested to any prior training and the overall long-range goals of the child.

                   After reviewing these factors, if a court finds that contribution for college is appropriate, it may impose some or all of the following conditions:

                      (a)        all savings accounts earmarked for the child’s education shall have been exhausted

                      (b)        scholarships, loans, grants, and any other financial assistance shall have been applied for in reasonable fashion. The parties and the applying student shall cooperate in this regard;

                      (c)        reasonable contribution shall be made by the child towards the education costs from summer employment;

                      (d)        each of the parties shall have an equal say in the choice of higher educational schooling;

                      (e)        there shall continue to exist the customary parent-child relationship as currently exists;

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In an unreported decision of the Appellate Division on April 17, 2008 in the case of Swicinski v. Maul, the Court held that passage of time alone was a sufficient change of circumstance to warrant a modification of the father's parenting time.

In this case, the parties were never married. In 2003, when the child was six weeks old, the Court entered an Order granting the parties joint legal custody, designating the mother as primary residential custodian and granting the father parenting time every Sunday between 10:00 a.m. and 6:00 p.m., and between 6:00 p.m. every Monday through 6:00 p.m. the next day. Because that schedule was cumbersome and involved four round-trips in each three-day period, the parties voluntarily modified that schedule so that father's parenting time would begin on Sunday morning and conclude on Monday at 6:00 p.m.

In 2007, the father sought additional parenting time and it was opposed by the mother.  The trial court granted the additional time and the Appellate Division affirmed. 

The trial court noted and the Appellate Division agreed that  parenting time for an infant should be structured differently than parenting time with a 4-year old and that that alone was a change of circumstancee.  The father also had other changes in his life - a new wife, a new home and greater stability.

The trial court also noted that custody and parenting time issues are always subject to review.  That said, in practce, typically, a change of circumstances is necesseary to obtain a modification. 

What should be taken from this case is that the needs of a child differ depending on their ages.  Parenting time that may be appropriate for an infant or toddler, is not necessarily appropriate for an older child.  As such, just because parenting time is settled does not mean that it can never change with time.  This case confirms a common sense argument many have been making for some time.

For a link to the case, click here.

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I urge you to check out our partner, David Draganosky's (from our Montgomery County, PA office)post on the PA Family Law Blog entitled "Client's Can Help - 14 Tips for a Client Going Through Divorce."  It is an excellent piece on how client's can assist in their case as well as maintaining a good attorney-client relationship.

You can go right to the blog by clicking here or directly to the post by clicking here.

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      In high-income cases, determining the appropriate level of child support is a difficult - and critical task for the courts.  Part science, part art, most judges rely on both detailed financial disclosures adn a qualitative assessment of what is truly in the child's best interests. In the vast majority of low- and middle-income cases, judges follow the advice of the New Jersey Child Support Guidelines, which define child support based on the family’s net income. In 2006, the Guidelines were revised include more high-income situations. Many feel this formulaic approach was more hindrance than help because discretionary spending patterns can vary widely. 

       The New Jersey Supreme Court’s revised the Child Support Guidelines effective September 1, 2007 – specify only a minimum support level (with no guidance on an upper limit) for families with net incomes exceeding $187,000. Previously, the Guidelines defined both the support level for families with net incomes exceeding $229,840. When the new Guidelines are in effect, a large number of cases will no longer be subject to guidelines on the maximum level of support, which should result in awards that are more in keeping with the parties’ lifestyles.            

        Approximately 10 years ago, the New Jersey Child Support Guidelines were overhauled to include more families. Prior to those changes, only cases in which the combined net income (i.e., the net after-tax income of both parents) was under $52,000 per year fell within the Guidelines. The changes significantly raised the upper limit of the Guidelines to include families whose combined net income was as much as $150,800 per year ($2,900 per week). The Guidelines were not changed again until 2006, when the upper limit was raised to cover families up to $229,840 ($4,420 per week). The goal was to make the Guidelines more inclusive.

            However, the changes had unintended consequences. While there were some modest increases in child support awards at lower-income levels, support actually decreased at the upper levels – which prompted an immediate outcry from the Family Law Section of the New Jersey Bar Association. Others argued that strict Guideline calculations did not make sense in higher-income situations where discretionary spending patterns would not necessarily be captured in the economic data on which the Guidelines were based. 

          The Supreme Court took note and accepted the recommendation of its Family Practice Committee to set the top of the guidelines at $187,000 per year ($3,600 per week) in combined net income. The Court expects that the new limits will cover 90 percent of the state's child-support cases.

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On March 27, 2008, the Appellate Division released the decision in Gotlib v. Gotlib.  This is a reported decision which means that it is precedential and must be followed by courts in the future. 

In this case, the plaintiff/ex-wife filed a motion seeking enforcement as to unreimbursed medical expenses and the payment of college expenses. She also sought to invalidate defendant/ex-husband's transfer to a third part for his share of the marital residence.

As to the issue of medical expenses, the parties were required per their Judgment of Divorce to equally share in these costs.  The plaintiff sought more than $23,000 in medical expense arrears, going back to 1996.  These expenses included those that were already awarded to her in 1997 when she was required to file an enforcement motion.  Though she was successful in the motion, the defendant never paid.  The defendant argued that plaintiff waived her right to enforce the Judgment's clear provisions requiring each party to pay one-half of the children's un-reimbursed medical expenses because she did not consult with him before the children visited certain physicians, and did not bill him on a monthly basis, as required by the Judgment.

The Appellate Division disagreed holding that a parent's obligation to pay un-reimbursed medical expenses should be deemed by a court reviewing a motion to enforce litigant's rights as an essential benefit to the parties' children. In this light, the right to receive these payments belong to the children, and is therefore is not subject to waiver by a custodial parent. That said, the non-custodial parent retains the right to question the reasonableness of any individual medical expense.

The Appellate Division made some interesting comments as to how parents should ideally act after a divorce:

"A parent from whom financial contribution is sought nevertheless retains the right to challenge the reasonableness of the medical expenses. Cooperation, discussion and consultation should be the guiding principles in any decision involving the welfare of the parties' children. In deciding what type of medical treatment is required, the need for the parties to behave and act like parents is paramount. This may require them to subordinate their adversarial interests as litigants in favor of their children's welfare."

They also set forth factors that should be considered when assessing medical expenses, as follows:

"Some of the relevant questions to be addressed when considering the reasonableness of a reimbursement request are: (1) was the treatment medically necessary; (2) was the medical treatment in response to an unforeseen emergency requiring immediate action; (3) did the treatment involve elective or cosmetic medical services, and if so, was it in the best interest of the child involved to undergo such treatment; and (4) in cases of elective or cosmetic medical treatment, was the decision economically sound, given the parties' financial resources. This list is by no means an exhaustive recitation of the issues to be considered in every case. These cases are, by necessity, factually sensitive. A proper resolution requires careful attention to the salient facts."

As to the college issue, the Appellate Division reversed the finding that the parties should equally share the costs remanded the matter to the trial court  to make factual findings, after conducting a plenary hearing, guided by the factors outlined in Gac v. Gac and Newburgh v. Arrigo. The reason for this was that the Judgment was silent as to how the parties would divide higher education expenses, however, in arriving at his decision, "the motion judge did not address the Newburgh and statutory factors reflected in N.J.S.A. 2A:34-23(a) ,,, The court simply appears to have divided the expenses equally."  In addition, the Court was concerned because the plaintiff also did not seek contribution from defendant until long after the expenses had been incurred, "thereby excluding him from the decision making process of whether his son should attend Curry College or whether his daughter should attend Ba'er Miriam Yeshiva, both private schools. (citations omitted).  Participation by both parents is an essential factor under Gac, expressly required by the JOD, and should have "weigh[ed] heavily against the grant of a future application. (citations omitted)."   

In Gac, a father was not required to pay for college because of similar reasons as in the case above.  This seemingly creates a contradiction in how medical expenses and college expenses are treated.  Seemingly, reimbursement for medical expenses cannot be waived for lack of prosecution of the arrears.  On the other hand, contribution for college costs can seemingly be waived if a parent waits until after college is completed to seek reimbursement.  The distinction, at least in this case, is that apparently, at least as to the medical expenses, the defendant was given the explanation of the medical expenses and the proofs near the time they were incurred and/or the defendant had knowledge of them - even if exact compliance with the Judgment was not made by the plaintiff. 

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