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NJ Family Legal Blog

Pertinent Information As It Relates To New Jersey Family Laws

MARRIAGE AT RISK IN TODAY’S ENVIRONMENT OF INCOME INEQUALITY?

Posted in Divorce, Practice Issues

In recent years, we have been repeatedly cautioned by government leaders and renowned economists that the wealth gap and income inequality in America is only getting worse.  As part of the widening gap, some experts describe a slow disappearance of the middle class, with individuals/families who formerly fulfilled that category now moving either up or down on the wealth scale.

Ultimately, experts conclude that the “rich getting richer” is not the sole source of such inequality, but also, among other factors, that many of the blue collar jobs once relied upon by middle class families to put food on the table have disappeared.  At the same time, many households now have two fully employed parents, and, an overall demand for more affordable products by that same middle class category leads to outsourcing jobs overseas – essentially, one cause perpetuating another.

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These issues, among others, are discussed in “Marriage Markets,” (with a link to the NY Times review) a new book by two family law professors, June Carbone and Naomi Cahn that examines why the number of marriages are on the decline, while non-married families and single parents are on the rise.  The book argues that income inequality has led to a decline in marriages, as middle class and lower income American families can no longer invest as they once did in growing a household and in futures of their children.  By correlation, it should come as no surprise that families with greater wealth more often have more stable marriages than those families with lesser wealth, can better invest in themselves and their children, and, should the marriage go south, can better finance a potential marriage dissolution.

While parties seem more willing to move on from a marriage, especially now that every State has some form of “no fault” divorce option, and while the economy has seen improvement since 2008, people still come to me on occasion contemplating whether it is more cost effective for them to remain married – even if they have to live separate and apart.  This sort of decision is troubling in that it handcuffs a couple’s ability to divorce and move on.  From a legal perspective, there is also a strong argument to be made, based on case law in New Jersey, that assets and income continue to accrue and are subject to distribution even after the separation date – especially since New Jersey really has no true legal form of separation.

Similarly, a lack of financial resources may also hinder parties from properly addressing all issues in a divorce, especially as to children.  The cost of attorneys, experts, and the like can be overwhelming for some and, as a result, litigants will, for example, forego the use of an expert when the need for a forensic custodial or accounting analysis may be imperative to fully and completely address a given issue.

THE TAKEAWAY

While this blog post is less about specific law and practical tips, the primary arguments and underlying thesis of “Marriage Markets” are both interesting and relevant for the future prospects of marriage and divorce in our country.  The wealth gap continues to widen despite governmental measures taken to fend off its occurrence and has touched upon our world of family law in a way that has and will continue to impact how we practice and advocate for our clients.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group. Robert practices in the firm’s Roseland, New Jersey office and can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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THINK TWICE BEFORE INVOLVING YOUR CHILDREN IN YOUR DIVORCE

Posted in Custody, Practice Issues, Visitation/Parenting Time

Many of you have heard the term “parental alienation.”  The term is a lightening rod and the accusation made all too often for conduct, while terrible, that is not parental alienation.  In fact, I have heard a few judges say that they get allegations of parental alienation in a large majority of their cases – creating a “boy that cried wolf” effect whereby judges don’t take seriously real alienation.

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That said, in many cases, what is being labled as “alienation” is the improper involvement of the children in one way or another.  Some times, the improper conduct is direct, and sometimes it is more insidious and indirect.  Here are some examples of improperly involving the children in the case.

  • Badmouthing the other parent to the children
  • Badmouthing the other parent in the children’s presence
  • Badmouthing the other parent in the community in a way where it could either get back to the children or stigmatize the other parent making their attendance at public events that the children are involved in uncomfortable.
  • Attempting to buy the children’s affections.
  • Telling the children that you give mommy all the money so you can’t buy them anything.
  • Telling the children that daddy doesn’t give you enough money so you can’t buy them anything.
  • Telling your children to go ask the other parent to buy them what they want because you can’t afford it.
  • Making the children messengers
  • Portraying your self as a victim, all of the time and in front of the children such that you are asking explicitly or making the children feel that they have to protect you, if not protect you from the other parent.
  •  Exhibiting so much anger for the other parent, in the presence of the children, such that the children feel that they have no choice but to be hurt or angry at the other parent too – not because they feel that way, but to not disappoint you (and/or because they feel that you will be angry at them if they don’t act the same way that you do to your spouse.)
  • Sharing adult information with the children.
  • Telling the children (or doing it in their presence) about your spouse’s indiscretions
  • Bad mouthing your spouse’s new significant other to and/or in front of the children
  • Empowering the children to make decisions that they have no business making and then saying you are abiding by the decisions that they children should not have been put in the position to make in the first place.
  • Telling your children that you would love to see them but the other parent isn’t letting you (when you are really down the shore with your new girlfriend)
  • Acting like the children’s friend instead of a parent
  • Appearing hurt if the children show affection to the other parent
  • Going overboard in telling the children that you will miss them and be sad without them before they go with the other parent on parenting time

I am sure that I can go on and on and I welcome readers and other family law attorneys to add to the list in the comments.

Some of the time, the parent is doing these things because they want to hurt the other parent.  Much of the time, they don’t realize or understand the potential damaging impact that such behavior, especially if repeated, can have.  You are a parent for a lifetime but childhood is fleeting and it is over before you know it.  Time wasted or worse yet time lost having to deal with the impact of this conduct can never be recovered.  Moreover, do not understimate the harm to the child and to the parent-child relationship.  In fact, I have heard that it is not uncommon for a child who has been affected by this in childhood, to turn on the guilty parent in adulthood when they gain perspective and see for themselves what that parent did to them.

As such, think twice before involving your children in your divorce.

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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Photo credit: Copyright: <a href=’http://www.123rf.com/profile_lightwise’>lightwise / 123RF Stock Photo</a>

THE PRESUMPTION OF CUSTODY IN A DOMESTIC VIOLENCE CASE IS NOT DETERMINATIVE IN A CUSTODY CASE

Posted in Custody, Domestic Violence, Visitation/Parenting Time

In the domestic violence statute, there is a presumption that the abused should get custody.  In the custody statute, the prior history of domestic violence is simply one of the many factors that a court must consider.  There really has not been a reported case that addresses the confluence of these two statutes until July 28, 2014, when the Appellate Division decided R.K. v. F.K.

In that case, the mother obtained a Final Restraining Order (FRO) against the father in 2008 and was awarded custody subject to the father’s parenting time.  In 2010, a plenary hearing was held in the domestic violence action on the father’s application to change custody, which was ultimately denied.

In 2011, the father filed a complaint for divorce and hired a custody expert who opined: (1) “that Mother had “very significant psychological problems,” which jeopardized her “emotional stability as a parent,” were “likely to interfere with appropriate parental communication with” Father, were “likely to interfere with her parenting,” and could have “a very negative effect on her children.”"; 2) “that “[t]he current situation does not appear to be in the best interests of the children as a long-term plan.”";  3) that it was “inadvisable for Mother to continue home-schooling the children and 4) also recommended that Father and Mother split residential parenting responsibilities evenly.

After a seven-day trial, the court denied relief because it found no substantial change of circumstance, and because it relied on the presumption of custody in N.J.S.A. 2C:25-29(b)(11) of the Prevention of Domestic Violence Act of 1991 (DV Act), N.J.S.A. 2C:25-17 to -33.

The Appellate Division vacated the decision, finding that the trial court “misapprehended the roles of both the change of circumstances requirement and the presumption.”

The Appellate Division noted that while the trial court applied a changed circumstances analyis, “…at a trial to determine custody, “the ultimate judgment is squarely dependent on what is in the child’s best interests.” Baures v. Lewis, 167 N.J. 91, 115 (2001).”  The Appellate Division noted that the two step process relative to change of circumstances (i.e. the threshhold showing of a changed circumstances to be entitled to discovery and a plenary hearing) does apply to custody cases.  That said, one a movant makes that preliminary showing, “…  the second-step hearing or trial is decided using “the same standard that applies at the time of [an] original judgment of divorce.”"

The Appellate Division noted that based upon the expert’s report which established a change of circumstances, an evidentiary hearing was warranted; i.e. the trial court correctly went to step two of the process making the finding of a lack of showing of a change circumstance a contradictory finding.  Put succinctly, the Appellate Division held:

Thus, the court was required to determine custody at that trial based solely on the best interests of the children. However, in its decision the court mistakenly relied on the lack of a “substantial change in circumstances.” The change of circumstances standard serves to determine whether a trial should be held, not to determine the result of that trial. (Emphasis added)

The Appellate Division went on to hold that, “The trial court also erred by relying in this matrimonial proceeding on the presumption used in domestic violence cases.”  The court noted that it is proper and within the statute to award temporary custody at an FRO hearing.  The court noted the rationale for this:

This presumption plays an important role in the initial DV proceedings, which must be conducted expeditiously, and in which custody is only one of many issues. See N.J.S.A. 2C:25-29(b). Further, this presumption reflects the DV Act’s finding “that there exists ‘a positive correlation between spousal abuse and child abuse; and that children, even when they are not themselves physically assaulted, suffer deep and lasting emotional effects from exposure to domestic violence.’”

In this case, the DV court awarded Mother temporary custody of the and the trial court assumed that the presumption still governed.  It did not because a different statutory scheme applies to custody determinations in divorce trials which are governed by N.J.S.A. 9:2-4, which addresses domestic violence as one of several factors requiring consideration.  The court further noted:

Allowing our family courts to weigh the seriousness of the history of domestic violence against the other N.J.S.A. 9:2-4 factors, rather than binding them with a mechanical presumption, better enables them to consider the best interests of the child in determining the vital issue of child custody in divorce, using their “special expertise in the field of domestic relations.” Cesare, supra, 154 N.J. at 412. In so doing, the court must consider “the safety of the child and the safety of either parent from physical abuse by the other parent.” N.J.S.A. 9:2-4.

The take away here is that if the court thought that there was no change of circumstances, then it shouldn’t have had a trial (though this too may have been reversed based upon the expert’s report – but I think it would be harder to show an abuse of discretion than an error in the law – which is what this reversal was based upon.)  Once it did, it had to apply the custody statute.  Since more than two years went by, the parties were allowed to  supplement the record to bring the court up to date.  That said, the father lost more than two years here that he can never get back – further showing the inefficiency of the system.

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

LITIGANT BARRED FROM APPEARING IN DIVORCE MATTER THROUGH DESIGNATED POWER OF ATTORNEY

Posted in Divorce, Practice Issues

A power of attorney can be a necessary, if not critical mechanism by which to accomplish certain activities in one’s life, where the person instilled with such power acts as an agent on behalf of the appointing individual.  For instance, elderly or disabled individuals often designate someone, often a relative, with a power of attorney to handle financial affairs, real estate matters, and even court proceedings.  Indeed, the appointee can do whatever he or she is allowed to do pursuant to the written POA, which can be tailored to a specific situation.  The written POA is signed by the appointing person, otherwise known as the “principal”, and the appointee, known as the “attorney-in-fact”, to “perform specified acts on behalf of the principal as the principal’s agent.”

Can a person be appointed, however, as an “attorney-in-fact” to act as the principal’s agent in a divorce proceeding?  Until recently, this question had gone unanswered in New Jersey case law.  From my own experience, I was recently involved in a matter where the family part judge barred a pro se litigant from having her father act on her behalf with a power of attorney.  As the litigant was competent, never claimed or was adjudicated as incompetent, and provided no basis why she should could not act or testify on her own behalf, the trial court found inappropriate the father’s claimed authority.

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In Marsico v. Marsico, the latest published decision from the Honorable Lawrence R. Jones, J.S.C., Ocean County’s prolific family court judge, the Court barred a litigant from appearing and testifying in a divorce matter through a designated power of attorney.  The parties involved in the divorce matter were each in their eighties, having been married for more than thirty years.  In December, 2012, husband executed a Power of Attorney (POA) appointing his daughter from a prior relationship as his “true and lawful attorney-in-fact” over his affairs, giving her a broad range of power to handle financial matters on his behalf, as well as “institute, prosecute and defend any actions or proceedings brought in any court.”

In responding to wife’s complaint for divorce, husband filed – but did not sign – an answer and counterclaim, which was signed, instead, by his daughter as his unilaterally appointed attorney-in-fact.  Wife logically objected, arguing that husband had not even yet been adjudicated as unable to act on his own behalf or otherwise incompetent.  She also argued that a potential conflict of interest existed since husband’s daughter had a potential interest in an ultimate disposition of the marital estate.

Prohibiting the daughter from acting on husband’s behalf, Judge Jones concluded:

As regarding an appearing party’s duty to render written certifications or oral testimony in a contested divorce proceeding, however, [New Jersey's Revised Durable Power of Attorney Act] does not expressly authorize one to delegate such duty to a third person. To the contrary, the court finds that a competent party cannot designate a surrogate, either through a purported POA or otherwise, to testify in his or her place without consent of the other party or court order.

The court took particular issue with such efforts in the context of a family law matter, where “the entire factfinding procedure is heavily dependent upon the testimony of the parties themselves, and involves a focus on otherwise private issues, dealings and communications between spouses within the family structure.”  Indeed, the judge addressed the potential pitfalls involved, with a litigant “sidestepping” his obligation to testify, disclose certain information, undergo cross examination, and the like, as well as the agent’s lack of personal knowledge, all under the court’s watchful eye and analysis of credibility.

Such fact finding and disclosures, through certified statements from a litigant, come as early as the initial pleadings for divorce, the Case Information Statement, discovery responses, certifications in support of motions, depositions, testimony in court, and more.  Indeed, while not drawing conclusions as to the particular principal/husband in this matter, Judge Jones concluded, “Such power may potentially lead to serious misuse by parties who seek to employ such a strategy for inappropriate and improper purposes that are obstructive to the fact finding process.”

Cogently referencing the New Jersey Rules of Evidence, the court noted the requirement of personal knowledge with respect to the facts of a matter, where such facts could not be propounded by an agent without risk of same being incomplete or unreliable, or even a form of inadmissible hearsay.  The court even referenced the potential unauthorized practice of law through the appointment of an attorney-in-fact.

Notably, the court expressly excepted those situations where the litigant has already been judicially declared incompetent and thus, is unable to act on his or her own behalf, and the court has appointed a legal guardian, rather than the principal unilaterally appointing an agent of his or her own choosing.  The court also addressed those situations where there is no incompetency declaration and the person can largely function independently, but certain mental health challenges merit the appointment of a guardian ad litem to assist the party during a litigation.

THE TAKEAWAY

Marisco teaches us that the potential concerns raised by instilling an individual with a power of attorney preclude its use in a divorce or other family court matter.  There are several other ways to ensure your own protection as a litigant, whether it be through a guardian ad litem, declaration of incompetency/guardianship appointment and more.  As a litigant in a family court matter, it is otherwise incumbent upon you to be a part of the process, appear, testify and the like, no matter how reasonable the circumstances in which the POA was executed.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group. Robert practices in the firm’s Roseland, New Jersey office and can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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CHANGING YOUR NAME POST DIVORCE

Posted in Divorce, Modification, Other

In my opinion, most people (typically women) decide whether or not to change their name to a maiden name at the actual time of the divorce proceeding, if not sooner.  The decision is a largely personal one and in my years of practice I’ve heard the gamut of reasons why to or not to change from the married name.  N.J.S.A. 2A:34-21 is the statute that governs legal name changes in our state.

Rarely do we see the courts chime in on this issue, because generally its quite mundane.  However, a recent published trial court opinion stemming out of Passaic county gives guidance on when is the appropriate time to make a request for a name change and how timing may be everything when it comes to this issue.

In the matter of Leggio v. Leggio, Mrs. Leggio filed an application with the family court seeking to change her name.  She provided the court with a copy of her dual judgment of divorce from bed and board entered in 2004.  Ten years later, she sought to change her name.

A critical point in this matter that cannot be overlooked is the distinction between a divorce from bed and board and a divorce.  New Jersey does not recognize legal separation for married people.  However, a divorce from bed and board has been considered by many to be the closest available option to a legal separation.  However, those who enter into a divorce from bed and board are not legally divorced and their marital bond is not dissolved. As an example, they can still remain on their spouse’s health and/or car insurance.  In order to become ‘divorced’, in the true sense of the word, from a divorce from bed and board, one party must file an application with the court seeking to convert their judgment into a final judgment of divorce.

The Leggio’s never did that.  So, when Mrs. Leggio came to the court seeking to change her name, the court looked to the statute which explicitly states, “The court, upon or after granting a divorce from the bonds of matrimony to either spouse…may allow either spouse…to resume any name used by the spouse…before the marriage…,or to assume any surname.”  This very language gives our courts authority to grant a name change incident to or after a “divorce from the bonds of matrimony”.  Because a divorce from bed and board does not dissolve the bonds of matrimony, the court held that a name change could not be granted unless and until a final judgment of divorce is entered.  The mere passage of time is insufficient.

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Sandra C. FavaSandra C. Fava is a partner in the firm’s Family Law Practice, resident in the Morristown and Roseland, NJ offices. You can reach Sandra at 973.994.7564 or sfava@foxrothschild.com.

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ABA BLAWG 100 – PLEASE NOMINATE THE NEW JERSEY FAMILY LEGAL BLOG

Posted in Practice Issues

We have been writing the New Jersey Family Legal Blog since 2008.  The writing has been a labor of love for us and has been very well received.  Aside from the satisfaction of seeing that thousands of people read the blog each month, we have heard from judicial law clerks and other lawyers about how much they enjoy the blog and use it as a resource – sometimes their first resource when doing reseach.  Sometimes we even see our posts used against us by adversaries.

Each year, the ABA Journal publishes the ABA Blawg 100, recognizing the 100 best legal blogs.  We would ask that you please consider nominating the New Jersey Family Legal Blog for inclusion this years.  We would really appreciate and really appreciate your interest in our blog.  You can submit your nominations here.

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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THE DAY “DADDY” BECAME “DAD” – CHILDHOOD GOES BY QUICKLY

Posted in Custody, Visitation/Parenting Time

I experienced a bittersweet moment this weekend.  My family was away for the holiday weekend (the weekend before my daughter’s 11th birthday), and she had a friend with her.  All of a sudden, gone was “daddy” only to be replaced by the much more mature sounding “dad” when she spoke to me.  I was not angry.  In fact, words cannot express the love and pride I have for both of my children.  That said, it was a stark reminder about how fast children grow up.  In a instant, she graduated from that sweet little girl to a mature (most of the time) pre-teen.  It is not that I did not see this coming, mind you, just that when it got here, it was jarring.

Father Holding Child Hand Stock Photo

So why, do you ask, is this family anecdote on a Family Law Blog?  In fact, I am happily married.  However, this reminded me that in one particular case, where there is particularly egregious parental alienation going on, we started using the term “childhood is fleeting”, to urge the court to act swiftly (it didn’t and that is another story – perhaps for a future post on this blog).   Put more simply, while there will always be a parent-child relationship, at least in name or by biology, childhood is finite.  It ends at 18 – if not sooner.  And once it is gone, it is gone.

When a parent interferes with the other parent’s relationship with the child(ren), special occasions interfered with or worse yet, the other parent is precluded from attending, disparaging the other parent to the child, buying a child’s affections, making a child take sides, the harm done is untold.  So too, when a parent voluntarily absents her/himself from a child’s life, think of all that child and that parent loses?  While sometimes there can be make up parenting time, often the parent can never be made whole.  If proms, graduations, religious events, birthdays, fathers or mothers days are missed – you can’t get those days back.

Courts often don’t do enough to stop parental interference (putting aside for the moment that it can take months to actually get before a judge), which only serves to encourage the violator to continue their abhorrent conduct.  Often, they are steeled by the fact that they got away with it, or worse yet, the threats of sanctions are empty threats, empowering the misconduct to get worse.

As I have just seen for myself, childhood goes by in a blink of an eye. Because you can never get the time back, court’s must be more dilligent in ensuring that parenting interference is swiftly remedied.  After all, isn’t this in the best interests of the child?

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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A CHANGE IS GONNA COME – NEW JERSEY LEGISLATURE OVERWHELMINGLY PASSES ALIMONY REFORM BILL

Posted in Alimony, Modification

After almost three years of legislative discussions, negotiations, arguments, and the like, alimony reform is coming to New Jersey in what is turning out to be light speed.  Late last week, the New Jersey State Assembly unanimously passed a compromised form of long-debated legislation that would represent what many consider to be a substantial overhaul of New Jersey alimony law as we know it.  Today, the Senate Judiciary Committee approved the bill, after which it was granted ”emergency” status, and followed by a full Senate vote.  The bill now rests on Governor Christie’s desk for his review.  There are many changes in the present form of the bill from that earlier debated in the legislature, by the State Bar, various family law committees, and the like, as this issue has quickly come to a head.  I provide below the major highlights of the law in its present form.

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Regarding alimony awards, the law would only apply to awards involved in divorces that are in process, but not yet finalized, and future divorces that have yet to commence.  While some alimony reformists were seeking a retroactive application of the law to provide alimony relief to those payor spouses whose divorces were already finalized (other than through circumstances such as retirement, cohabitation and involuntary job loss/income decline-type modification), the legal and practical implications of such a provision would have raised major questions that are beyond the content of this blog entry.  For practitioners, this law will not only provide future guidance, but, critically, will provide for great use in ongoing divorce matters, especially where a question exists regarding whether alimony should be “permanent”, or what should happen to alimony once the payor reaches the age of retirement.

To that end,  the alimony reform movement seemed to gain momentum following last year’s Appellate Division decision in Gnall v. Gnall, 432 N.J. Super. 129 (App. Div. 2013), which is now pending before the Supreme Court of New Jersey.  One of the major issues in that case was the Appellate Court’s apparent holding that a 15-year marriage is one of long-term duration meriting a permanent alimony award.  Under the new legislation, however, that would not be the case.  As discussed below, the word “permanent,” in reference to alimony, will be removed from the statute, and a marriage of 15 years would no longer merit a “permanent” award.

Now for the highlights, some of which already exist as previously decided New Jersey case law, but of which are now being statutorily codified:

1. Standard of living – Neither party would have a greater entitlement to the standard of living (or a reasonably comparable standard of living) established during the marriage.

2.  Pendente Lite support payments - The nature, amount and length of pendente lite support, if any, paid during a divorce proceeding is now a statutory factor to consider when rendering an alimony award.  This bolsters the argument for those payors who pay interim support during a proceeding for months, if not years during a divorce proceeding.

3.  Weight of alimony factors – In analyzing the alimony factors, the court is required to “consider and assess evidence with respect to all relevant” factors and specify, with written findings of fact and conclusions of law, if it determined that certain factors are more or less relevant than others.  No factor shall carry more weight than any other factor unless the court finds otherwise.

4.  Duration of alimony - For any marriage of less than 20 years in duration, the total duration of alimony shall not, “except in exceptional circumstances,” exceed the length of the marriage.  The length and amount of alimony shall be determined pursuant to the statutory factors, as well as “the practical impact of the parties’ need for separate residences and the attendant increase in living expenses on the ability of both parties to maintain a standard of living reasonably comparable to the standard of living established in the marriage . . .”  A non-inclusive list of ”exceptional circumstances” are set forth in the proposed law.

6.  Reimbursement alimony - May not be modified for any reason.

7.  Permanent alimony - The word “permanent” is changed to “open durational” alimony.

8.  Retirement - The proposed law provides extensive language addressing a retirement scenario and, as a threshold matter, alimony may be modified or terminated upon the prospective or actual retirement of the obligor.  While another post will merit a more in-depth discussion on this topic, the major changes include:

  • “Full retirement age” is defined as the age at “which a person is eligible to receive full retirement benefits under the Social Security Act” – presently 67 years of age.
  • There will be a rebuttable presumption that alimony terminates once the obligor spouse reaches full retirement age (which can be set to a different date based on a showing of “good cause”).  The law then provides several factors for a court to consider in determining whether the rebuttable presumption can be overcome.
  • If the rebuttable presumption is overcome based on the enunciated factors, the court is required to apply the standard alimony factors to determine whether a modification or termination of alimony is appropriate.  Critically, “if the obligor intends to retire but has not yet retired, the court shall establish the conditions under which the modification or termination of alimony will be effective.”
  • If the obligor seeks to retire before full retirement age, the obligor must prove by a preponderance of the evidence that the prospective or actual retirement is reasonable and made in good faith.  A series of factors are then set forth to determine what constitutes “reasonable and made in good faith.”
  • When a retirement application is filed in cases where there is an existing final alimony order or enforceable written agreement established prior to the effective date of the new law, the obligor’s reaching of full retirement age shall be deemed a good faith retirement.

9.  Modification of alimony – The law separates self-employed obligors from non-self-employed obligors.

  • As for non-self-employed obligors: a) a variety of factors are enunciated for a court’s consideration, most of which are already considered as part of the process when an application to modify alimony is made pursuant to Lepis v. Lepis, 81 N.J. 281 (1980); and b) importantly, the law provides that no application shall be filed until a party has been unemployed (involuntarily), or has not been able to return to or attain employment at prior income levels – or both – for a period of 90 days.

10.  Cohabitation – Alimony may be suspended or terminated.  The term is defined as involving a “mutually supportive, intimate personal relationship in which a couple has undertaken duties and privileges that are commonly associated with marriage or civil union but does not necessarily maintain a single common household.”  A variety of factors are enunciated, similar to those detailed in existing case law.  There cannot be an absence of cohabitation “solely on the grounds that the couple does not live together on a full-time basis.”

These are mainly the highlights of the pending law, and much discussion will follow once the law is enacted, interpreted, relied upon, and utilized in negotiations, arguments and the like.  The changes to alimony duration, retirement and modification are undeniably significant to family law practice.  Stay tuned to this blog for more updates and analysis on the new law as they unfold.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group. Robert practices in the firm’s Roseland, New Jersey office and can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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STERN REVISITED – USING THE SHAREHOLDER AGREEMENT TO DETERMINE VALUE

Posted in Equitable Distribution, Practice Issues

Inevitably, when there is a business to value as part of a divorce, the valuation experts will ask for buy/sell and/or shareholders agreements.  I often wonder why because quite often, you really don’t see much discussion about these agreements in the valuation reports.  Moroever, since Brown v. Brown changed the landscape, did away with discounts and essentially ushered in more of a value to the holder construct, it seems like consideration of an agreement was dead.  Rather, a myopic view of methodologies focused on income seemed to be the norm – disregarding all else.

In fact, I had a case not long after Brown where my client was a second year partner at on of the highest paying law firms in the world.  He had no clients, but was very smart, worked very hard and made a lot of money.  My adversary and I agreed that we would use a joint expert to give us a number of what my client would get under his shareholder agreement if he left (because that really was all that he would get if he left and any calculation based upon cashflow would really be a pure fiction in that case).  That said, when we got the report, we got two calculations.  One dealt with the agreement and the other was a capitalization of earnings. The reason for the second calculation – the expert believed, wrongly in my opinion and thankfully our mediator’s opinion, was that Brown required it.

Buy And Sell Switch Stock Photo Photo courtesy of freedigitalphotos.net

That said, there is New Jersey Supreme Court case law  (Stern v. Stern and Bowen v. Bowen to be precise) that suggests the use of a “trustworthy” buy-sell agreement to establish value, noting that in some instances it may appropriately establish a presumptive value of a party’s interest.  Often the issue is what is a  a “trustworthy” buy-sell agreement?  What makes an agreement trustworthy?  It is updated frequently and routinely used when people enter and exit a business.

That issue was the subject of a recent unreported (non-precedential) decision by the Appellate Division in a case called Levitt v. Jakobs. In that case, the Appellate Division affirmed a trial judge that valued plaintiff’s two percent interest in his group medical practice at $446,000, consisting of the value of his stock, his retirement compensation and his longevity bonus, and awarded defendant twenty-eight percent of that sum. The Plaintiff contended that the trial judge erred in using the stockholder and employment agreements to value his interest in the practice instead of using the discounted cash flow approach employed by his expert.

The Appellate Division disagreed and held:

We find no error in the judge’s considered decision that the practice’s regularly updated corporate agreements were a better measure of value than plaintiff’s expert’s projection of cash flows through 2020, discounted by a rate chosen on the basis of U.S. Treasury bonds, augmented by selected risk premiums and reduced by an assumed long-term growth rate.

The Court further held:

Here, the judge found that the practice’s governing agreements “set forth a clear basis to determine the value of plaintiff’s . . . interest” in the practice, noting that there had been thirty-two purchases or sales of stock under the formula in the stockholder’s agreement in the prior ten years.

Here, rather that looking at a calculation that was theoretical in basis, the court looked at what actually happened in 32 prior transactions within the same business.  Put another way, for better or for worse, the plaintiff was not likely going to get more or less than what he was entitled to in the formula used on the last 32 occasions.  Seems to be a fair result.

Interestingly, it is usually the business owner who urges the use of the agreement which often will provide a lower value than some type of income approach to valuation.  Here, the business owner was arguing for the opposite result which suggests that the income approach used by his expert suggested a lower value.

The take away from this case is that the shareholder/buy-sell agreements should not be ignored.  Find out how often they have been updated and whether they have been used if it is appropriate in the case.  Then determine whether it is appropriate to argue in your case.  If you do so, remind the court that Stern is still good law.

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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NJ COURT FINALLY RECOGNIZES THE ECONOMIC REALITIES OF PARENTAL COLLEGE CONTRIBUTIONS

Posted in Child Support, College

It all started with the 1982 Supreme Court case of Newburgh v. Arrigo.

That is the case that lawmakers, judges and attorneys alike point to when they are asked the age-old questions “why do divorced parents have an obligation to contribute to college, but intact parents do not?”  Eric Solotoff blogged about this conundrum on March 13, 2014 when Rachel Canning’s story hit the news (remember – that teen who sought and failed to compel her married parents to contribute to her college education?).

In addition to the factors it sets forth that a court must consider in allocating college contribution, a main takeaway from Newburgh is as follows:

In general, financially capable parents should contribute to the higher education of children who are qualified students. In appropriate circumstances, parental responsibility includes the duty to assure children of a college and even of a postgraduate education such as law school.

The thoughts conveyed by Newburgh – that college is a necessity – have been echoed throughout the nation.  In a 2013 HuffPost/YouGov poll, 53 percent of respondents agreed that a college education was necessary in order to get ahead in life, compared to just 28 percent who said it was not.

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Since Newburgh, it has become axiomatic in New Jersey that parents must split in some fashion – i.e. not always 50/50, but full contribution allocated between the parents – their children’s college education upon divorce.  It became obligatory, the right of the child, just like child support for each child whose parents separated.

Newburgh became even more oppressive for some when in 2000, Finger v. Zenn overturned the so-called “Rutgers Rule” set forth in 1968 in Nebel v. Nebel, which limited a parent’s mandatory contribution to the amount which would have been required to send the student to a state university such as Rutgers.  Suddenly, parents were faced with astronomical college tuition obligations to costly private or ivy league universities.  These stresses were only heightened as college tuition continued to rise through the early 2000s.

But in recent years, particularly during the recession, and with the skyrocketing costs of private universities, this rule of financial contribution has become a rule of potential financial ruin.  I have heard and observed clients in distress at the prospect of paying for college.  When there is not enough money to go around for even daily expenses, how could a court mandate that college takes priority?

Well, a new superior court case, published on June 13, 2014 – Black v. Black – tackles these very interesting and real issues head on.  The case presented three legal issues regarding a divorced parent’s obligation to contribute to the cost of a child’s college education, when he has previously agreed to do so in a marital settlement agreement:

1.         What happens when there is a damaged relationship between a college-age student and a parent?  Should the parent still be obligated to provide ongoing financial assistance?

2.         Whether a parent should be obligated to pay for the cost of an expensive private college over a more modestly priced state school; and

3.         Whether the court can consider a student’s younger siblings of relatively close age who are likely to attend college in the near future as part of the college contribution analysis.

In this blog, I am only touching upon the last two inquiries.  The first one – the relationship between the contributing parent and the college student – will be a topic for a later blog.

One of the financial hurdles immediately recognized by the court head on in this case was that there was not a whole lot of money to go around.  The custodial mother was imputed an annual income of $20,000 while the non-custodial father was imputed an annual income of $60,000.  The father agreed to pay the mother $300 per week in alimony, along with child support under the New Jersey Child Support Guidelines for three children, who at the time of the divorce were 16, 13 and 10.  Additionally, the parties jointly stipulated that they would share in the cost of their children’s future college costs.

In the years that followed, there was a breakdown in the relationship between the oldest child and the father, however, the relationship with the two younger children remained intact.

In 2012, the oldest child graduated from high school and was accepted into Rutgers University at an annual cost of $12,000, most of which would be covered by grants, scholarships and loans.  The parties disagreed as to the amount of contribution from each parent, with the mother apparently requesting that the father contribute the vast majority of the uncovered costs.  It appeared that the father’s main objection centered around the child’s unwillingness to repair their relationship.

As a result of the disagreement, the father refused to contribute, leaving the mother to raise $4,000 for the child to attend his freshman year.

The child exceled during his first year of study.  At the conclusion of his freshman year, the child set forth his desire to transfer to the University of Miami – an out of state, private institution – so that he could pursue a major in Marine Biology.  The price tag for this transfer: $55,000 per year, less $33,000 in estimated financial aid, leaving an uncovered balance of $22,000 per year.

In assessing the father’s college contribution, the court very closely considered “the availability of colleges and universities which are significantly less expensive, and thus more reasonably affordable for some parents, than a student’s school of ‘top choice.’”

In examining the issue, the court specifically stated that “[t]he case of Finger v. Zenn…does not hold to the contrary.”

The court said that Finger only stands for the proposition that the family court is not prohibited from ordering a non-custodial parent to financially contribute to a child’s college costs in an amount exceeding the cost of attendance at a state college.  It specifically rejected the interpretation some courts have espoused that when a student seeks to attend a private university, the comparative cost of tuition at Rutgers or another less expensive state college is, as a matter of law, immaterial to the analysis.

Poignantly, the court recognized:

In intact families, where mothers and fathers address such issues outside of divorce court, the comparative expenses and affordability of tuition at different colleges is usually a significant factor for consideration by financially responsible parents and students alike. The issue of cost is no less important in families of divorce, particularly in cases where neither parent can afford a blank checkbook approach to education.

Recognizing the above, the Court came to the conclusion that regardless of what school a student personally wishes to attend, no parent should be expected to contribute more than he or she can reasonably afford.

The Court then went on to examine another financial reality posed by the parties’ situation: when there are other, younger children in the family, who are good students and who are relatively close in age to an older, college-age sibling, this can be a relevant factor in determining how much money the parents should apply towards the oldest child’s college education?

There are real economic implications to a parent’s decision to help fund a first child’s education, especially when there is no money specifically set aside for the expenditure.  The parents may potentially be sacrificing the educational opportunities of the younger children in favor of the older child.

As a result, the Court ultimately found that the parties have a reasonable ability to contribute $7,500 per year – $3,375 from the mother and $4,125 from the father (45%/55% split) – which was to be allocated between three college savings plans to be established and earmarked for all three children’s potential college costs.  This would result in a total contribution of $60,000 ($7,500 * 8 years), or $20,000 per child for his or her college education.

This opinion is novel for parents and the legal community alike.  Oftentimes, judges may be quick to strictly adhere perceived interpretations of case law based upon the prevailing legal practice, all the while ignoring the harsh economic realities posed by their decision.

Recall the Rutgers professor who agreed to contribute to the cost of graduate school and then got saddled with a $120,000 for his daughter to attend Cornell Law School?

The judge in this case, however, was not afraid to go out on a limb and deviate from awarding an amount that would have been financially devastating for both parents, and potentially for their younger children.

This case is especially instructive in drafting divorce agreements, so that litigants and their children can avoid long, protracted battles that ultimately do nothing more than deplete funds that would otherwise be contributed toward college. For example specifying the following in your divorce agreement could cut off much potential conflict at the pass:

1.         Percentages of Contribution.  Especially if your child is close to college-age, specify what percent each parent will contribute.  This will avoid the nickel and diming in the future.

2.         Expenses Covered.  Will the parents be responsible for room and board?  What about books? SAT and college preparatory classes?  Years abroad?  Set forth in your agreement exactly which expenses will be covered.

3.         Type of School.  Should the cost of tuition be capped at a state university or would you like to see your child go on to a prestigious, yet pricey, private school?  Reasonably decide what you can afford and cap the contribution if you believe paying for private college will impose financial stress.  Again, this does not mean that your child cannot attend the private school; he or she may just have to bear some of the cost.

4.         Establish 529 Accounts Early On.  If you have more than one child, a 529 account may be most appropriate if limited funds need to be allocated equally.  You may even want to stipulate to a joint 529 account in your divorce agreement, with an agreement by each party to contribute a certain amount each year. Remember, money placed in a 529 grows tax free and you can take it out if your client receives a scholarship, penalty free.  It is a win-win all around.

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Baer, Eliana T.Eliana T. Baer is a frequent contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com.