NJ Family Legal Blog : New Jersey Divorce and Family Lawyer & Attorney : Fox Rothschild Law Firm : Alimony, Child Support, Child Custody, Prenuptial Agreements, Essex, Morris, Mercer, Atlantic

The Simkin v. Blank case in New York has been a frequent topic on this blog.  It was game over for Mr. Simkin today when the NY Court of Appeals ruled that this Madoff victim could not revise his divorce deal.

 We first wrote when the case was filed.  In this case, in June 2006, the parties agreed to evenly split the $5.4 million in an account they had with Madoff Securities. As a result, the husband gave the wife $2.7 million in cash, and retained the account. As a result of the alleged Madoff Ponzi scheme that has essentially rendered the account worthless, the husband filed suit seeking the $2.7 million that he paid the wife. The husband alleges that because the account turned out to be valueless, the spirit of the agreement was broken.

We next wrote when the trial court first ruled, dismissing the matter.   I even participated in a podcast about this ruling. Acting New York State Supreme Court acting Justice Saralee Evans decided that the husband is stuck with his decision to keep the account instead of withdrawing his money before the December 2008 collapse of Bernard L. Madoff Investment Securities LLC. The Justice noted that while the husband claimed the Madoff account held no assets, he did not allege it had no value. Key to the decision was that in 2006 and "the several years after that plaintiff maintained this investment," the account "could have been redeemed for cash, presumably significantly in excess of its 2004 value." In addition, the Justice held that "An investor's ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake."

The next installment was about the Appellate Division's decision which reversed the trial court decision and reinstated the Complaint.  The Appellate Court found that dismissal was improper and the husband had the right to try to pursue both the issues of mutual mistake (i.e. there never really was an account) and that the wife was unjustly enriched. In coming to its decision, the majority of the court held:

The dissent states: “[a]t the time of the agreement, Steven had an account in his name with [Madoff].” Untrue. Steven never had an account in his name with Madoff; on Madoff's own admission there were no accounts within which trades were made on behalf of investors.

The dissent then states, “Steven liquidated part of the account to fund his payments to Laura.” Untrue. In Madoff's Ponzi scheme what appeared to Steven and Laura to be a partial liquidation of an account was simply a payment to Steven that came from funds deposited by a more recent “investor” in what the “investor” believed was his own account.

The dissent further observes, “[Steven] did not liquidate the rest of the Madoff account ... and he continued to invest in it.” Untrue. There was no account which could be liquidated, as became apparent when Madoff received $7 billion worth of “liquidation” calls from investors in 2008. Nor was Steven “investing” in an account; his further contributions went directly to pay other “investors” in the scheme.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Alimony is supposed to be decided based upon the statutory factors, right?  There really isn't a formula to determine alimony, right?  Even if there is this formula that is used to get a ball park figure for a range of alimony, judge's can't use it, right?  So what happens when they do? 

We have blogged on the so called "rule of thumb" several times before.  In fact, we reported on one case last year that specifically said that a formula approach to determine alimony was impermissible.  On the other hand, we also blogged on another case last year where an expert in a legal malpractice case against a divorce lawyer based her opinion that the alimony was too low based upon this formula and the court found this a permissible opinion because the use of a formula was "widely accepted by the members of the matrimonial bar.

The use of the "formula" or "rule of thumb" was disfavored again this month in the case of Eick v. Eick, an unreported (non-precedential) decision from the Appellate Division.  Just as it did last year, the Appellate Division stopped short of saying that the trial judge actually used a formula.  However, the court held:

Plaintiff argues that the remand judge may have used an impermissible formula to determine the amount of alimony, rather than applying the factors required by N.J.S.A. 2A:34-23(b) to the facts shown by the evidence. He contends that the judge subtracted defendant's annual income of $52,909 from his five-year average income of $94,6322 and then awarded defendant thirty-three percent of the resulting figure. This calculation appears to match the amount of alimony awarded by the judge in this case.

We decline to speculate whether the remand judge used such a formula. Nevertheless, as a general proposition, we agree with plaintiff that use of a percentage formula based only on the parties' incomes is not authorized by law. Such a formula does not weigh and balance particular factors as listed in the statute and as might affect each individual case.

Just as in the case last year, the court was not precluded from coming to the number that the formula determined, but "... but require additional support in the record for its determination."  So with all of these cases, is the take away that you cannot use a formula, but if a court does, it should make factual findings supporting the amount ordered? 

 _________

Eric 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 practices in Fox Rothschild's Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

While it doesn't happen in every case, from time to time there is a request made by a client or opposing counsel to tape the meeting between the opposing expert.  This happens more frequently in contested custody cases, but it could happen as to any expert, I suppose.  The general rule seemingly had been that these sessions can be taped (with notice - not surreptitiously).  Why do people want to do this?  Some people are not trusting.  Others want to make sure that they are not misquoted in an experts report.  Some even do this if an expert is known to ask leading types of questions suggesting a response that may then be used against the party being interviewed.

A question recently arose as to whether the experts can be compelled to tape all interviews, not only of the one party, but of the children too.  In a reported (precedential) trial court opinion in the case of Koch v. Koch which was decided last year but approved for publication last week, the judge refused to allow all interviews to be taped.  Specifically, the court concluded that concludes that a party has the right to record his or her own interviews with a psychologist or psychiatrist, but does not have the right to compel the other party’s expert to record interviews of the other party or the parties’ children.

As to the general rule noted above, the judge here was not so sure and the opinion included a threshold discussion as to whether expert interviews in a custody case could be taped since the case that lawyers generally relied on involved the taping of a session with a psychologist in a civil litigation.  Notwithstanding the conclusion, the judge noted:

Accordingly, a custody evaluation is an expert report where the court expects, and is
assisted by, the independent professional judgment of a licensed mental health expert.  Requiring recordings could undermine the very purpose of the evaluation. If the children know that they are being recorded, and know that their parents are in a custody dispute, the children might be less candid for fear that their parents will hear what they say to the evaluator. Such recordings effectively bring the parents into the children’s interviews and could distort the information needed to prepare an accurate and balanced evaluation.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

You work hard in high school, graduate top of your class in college, go on to graduate medical school, spend the longs hours and dedication needed to finish your residency, and finally after thousands of hours of studying, hundreds of tests and years of hard work - you are a doctor.  You start your own practice. You made it professionally. Personally, things are a bit different. You are facing a divorce. What does that mean for the medical practice you’ve worked so hard to establish?

Doctors may face unique issues during a divorce. Long term marriages may have seen years of what is considered relatively ‘average’ income (medical school and residency), followed by a dramatic or steady increase in salary (or a combination of both). It is no secret that self-employed doctors are usually not a typical W-2 employee. So what does this mean in the context of a divorce? What happens to the medical practice when the couple divorces?

Equitable distribution in New Jersey does not automatically mean half or 50% of a marital asset. Equitable distribution is not a simple mechanical division of assets accumulated and/or created during a marriage. The word 'equitable' itself implies the weighing of many considerations and circumstances that are presented in and unique to each case.  A judge would not be fulfilling his/her judicial obligation if he/she routinely or mechanically divided assets from a marriage equally.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Going through a divorce can be overwhelming – equitable distribution, visitation, alimony, child support, division of retirement accounts, where to live, re-entering the workforce.  All of these are important, long-lasting decisions.  But there is one thing that many people fail to consider during a divorce………..divorcing your credit reports.

Today, your credit report can have a significant impact on all aspects of your life - obtaining a credit card, getting qualified for a mortgage, car loans, a job, the interest rates you pay, car insurance, life insurance.  Not having good credit can cost you thousands of dollars.  That is why it is important to address your credit report, and the lines of credit that your spouse can access as early in the divorce process as possible.

The key to divorcing credit reports is understanding the difference in the way a court views debt versus the way credit companies view debt.  A court views debts as either marital debt or non-marital debt, and will divide it according to a variety of NJ statutory factors, which can be found here.  Credit companies view debt as either being joint or individual.  With joint debt, both spouses signed for the credit and both spouses are responsible for the debt. With individual debt, only one spouse signed for the debt, hence only one spouse is responsible for it. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Parties often like - well no one really likes to pay alimony - to use alimony as a vehicle to settle issues in a case because usually, alimony is deductible to the payor and includible in the income of the recipient.  Because of differences in tax brackets, proper structuring of alimony can create additional cash flow for the recipient and additional tax relief for the payor. 

There are times, however, when alimony is paid in a lump sum. Sometimes an alimony obligation is bought out - prepaid if you will (though for the payor, one wonders whether this is a good deal because the recipient can go out and get married the very next day whereas alimony terminates upon remarriage typically (as well as death).  Other times, people make a business decision to front load some of the alimony so that the monthly payments in the future are reduced.

However, lump sum alimony cannot be deducted nor is it includible in income.  Because of this, consideration should be given to what the lump sum should be by perhaps tax effecting the number so that the recipient does not get the full amount, up front, without having to pay taxes on it.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Same sex marriage remains a hot news item these days with the passage into law of the right to marry, most recently in Washington and in other states.  Within the past week or so, the New Jersey lawmakers passed a bill permitting same sex marriage, only for it to be swiftly vetoed, as promised, by Governor Christie who is proposing putting the issue to the voters.  The counter argument to that which is most often cited is that an issue of civil rights should not be put the voters.

On a parallel path is the pending law suit by Garden State Equality challenging the civil union statute as being discriminatory. The four court complaint Counts asserted, as follows:  Count I -  a denial of equal protection under Article I, Paragraph 1 of the New Jersey Constitution; Count 2 -  a denial of the fundamental right to marry under Article I, Paragraph 1 of the New Jersey Constitution; Count 3 - a denial of equal protection under the Fourteenth Amendment to the United States Constitution, in violation of 42 U.S.C. § 1983; and Count 4 - a denial of substantive due process under the Fourteenth Amendment of the United States Constitution in violation of 42 U.S.C. §
1983. 

After motion practice, Counts 2, 3 and 4 were dismissed by Judge Feinberg.  However, a motion for reconsideration of the dismissal of Count 3 was filed.  That motion was decided yesterday.

In a very well reasoned opinion, Judge Feinberg reconsidered her order and reinstated Count 3.  As a result, same-sex couples will be allowed proceed with the case asserting that New Jersey is denying them equal protection of law under the federal constitution by limiting them to civil unions rather than marriage.  In the ultimate trial, same sex couples will have the opportunity to demonstrate that the Civil Union statute has failed to afford same-sex couples the same rights and responsibilities as heterosexual married couples.  Stay tuned for the next round in this fascinating litigation.
_________

Eric 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 practices in Fox Rothschild's Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Melissa Brown, an attorney in Charleston, South Carolina, is a fellow of the American Academy of Matrimonial Lawyers and one of the preeminent family lawyers in South Carolina.  I had the occasion, last week, to read her excellent article on her blog entitled "How to Find the Right Divorce Attorney for You."  Melissa has graciously allowed us to re-post her post.  Her article is as follows: 

When your marriage is falling apart and a divorce is imminent, it is critical to find a skilled, experienced, competent family law attorney to represent your interests. With a little bit of legwork and some patience, you can find a highly experienced divorce attorney who is the “right fit” for you. The following three simple steps outline a basic approach to put your case in the hands of the right attorney.

Step 1: Ask Your Friends for Attorney Referrals
Begin by asking your divorced friends, family members, and trusted coworkers for their thoughts about the attorneys who represented them – and the attorney who represented their ex-spouse.

Do not simply ask “Did you like your attorney?” Dig a little deeper. Be specific. Ask questions such as:

• After your experience what is the most important quality to have in a divorce attorney?

• What did you like the most/least about your attorney?

• Did you feel the attorney listened to you?

• Did you feel your attorney advocated for you?

• What was your opinion about the opposing attorney? (Surprisingly, it is not uncommon for one to have high regard for the opposing side’s attorney. Asking detailed questions about the opposing counsel’s performance can be enlightening.)

• Did your legal fees reflect the value and quality of the legal services that you received?

Pay attention to others’ responses. Take note of which attorneys’ work was valued and appreciated by their clients and which attorneys were a disappointment. Make a list of the attorneys whose work was appreciated and respected because these are the attorneys with whom you need to meet, interview and consider retaining.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Fox Rothschild's New Jersey Family Law Legal Blog welcomes Kelly Sutliff, MA, LPC, NCC, a licensed professional counselor with Kelly Sutliff, LPC, located in Madison, New Jersey, as a guest blogger.

Having known Kelly for over ten (10) years and speaking at length with her about the trauma that many children suffer through as a result of divorce, I thought it would be helpful for readers to hear about the mental and emotional impact of this process from a mental health professional. Below is an excerpt from a piece written by Kelly to better help parents going through a divorce understand the impact on their child.

"It's my fault". "My parents don't love me anymore". "I lost my family". "I'll never see my mom/dad again". These heartbreaking comments are commonly mentioned by children affected by divorce. Although these comments may be unrealistic, the sense of loss a child may feel as a result of his or her parents' divorce can be overwhelming and devastating. It is important for parents to help their children to cope with the divorce as well as to seek outside professional help, if needed.

Divorce can be an emotionally traumatic experience that can have an impact on a child's feelings of safety, security, and stability. Frequently, the stress children feel as a result of their parents' divorce relates to the family structure changing. Children fear change and the amount of changes that follow a divorce can be overwhelming and frightening. Many children also feel a loss of attachment to one or both of their parents after a divorce. Changes in scheduling and how often they see a certain parent can cause a certain amount of distress. The fear of being abandoned is also a fear that many children of divorced families face. Often, they feel that because one parent has moved out of the "family home", they are likely to lose the other parent at some point as well. They may blame themselves, feel unloved, and worry that they are the cause of their parents' relationship ending. Another factor that can lead to children's feelings of stress is hostility and fighting between parents. Arguments and tension between parents may make children feel angry, guilty, and alone. Some children feel "put in the middle" of their parents' arguments and believe that they are being asked to choose sides. The internal struggle that these children face when feeling this way can have profound negative effects on their behavior.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

April 17, 2012 is the 2011 tax filing deadline and it's quickly approaching. The Government does not care that you are going through potentially the most difficult time period in your life. Like the Godfather, the IRS wants its money. It does not want to hear excuses. It does not want to hear that you always filed jointly and now your soon-to-be ex-spouse will not sign the joint return, or provide their W-2, or disclose the income of the closely held business because they fear it will be used against them in the divorce process.

Filing your taxes can be difficult, especially if you owe money. Trying to file when going through a divorce can be especially difficult. That is why it is important to work with your attorney and a tax professional. There are many decisions to make when filing taxes during a divorce. First, you have to determine your filing status: married filing jointly, married filing separately, or head of household. If you decide to file jointly, make sure to be extra diligent. If your spouse prepares the returns, have your own tax professional review them to ensure that they are accurate. The IRS does not care that your spouse prepared or filed the taxes. If you sign the return, you can be held liable for misreporting.

If you decide to file married filing separately or head of household (if you qualify), the following determinations have to be made (and in some instances negotiated):

1. Who gets the mortgage interest deduction(s) and other itemized deductions?

2. Who gets to claim the child(ren)?

3. Can I deduct the temporary support?

4. Can I deduct my legal expenses for the temporary support?

5. Who gets to claim the Child Tax credit and the Household and Dependent Care credit?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Divorce filings seem to be at an all-time high and, to no surprise, the trial courts are feeling the pressure.  Documents filed with the court can get lost in the shuffle.  Although motions should be addressed within 24 days from the initial filing date, it can take months until the court actually makes a decision.  By then, the issues grow stale or even worse, they grow more complicated. Emotions blaze as time passes.  Many would argue that having your "day in court" is becoming somewhat of an illusion.   With this in mind, attorneys must be more creative and diligent in addressing issues in a case before they arise.  Leaving it to the court can make it worse, especially if the judge does not follow proper procedures in providing their decision and the judgment/order of the court.  If the court does it wrong, you may get your day in court - TWICE!

• Email This
• Print
• Comments
• Trackbacks
• Share Link

While decisions from the Appellate Division addressing a former professional athlete's motion to reduce his support obligations do not come around all that often, we have, in fact, previously blogged on the issue.  Now from the Appellate Division comes the unpublished (not precedential) matter of Villone v. Villone, where the Appellate Division strictly relied on "triggering" language in the parties' Marital Settlement Agreement in reversing and remanding a trial court's decision that a former Major League Baseball pitcher was not entitled to a modification of support. 

The matter involved that of former pitcher Ron Villone, who has played for more franchises than almost anyone else in the history of the game (an interesting record that was recently broken) - 12 to be exact as of Spring Training 2011, when he was released by the Washington Nationals and signed with the Somerset Patriots (an independent, minor league baseball club).  He became well known for his travels, earning the nickname "Suitcase" Villone from teammates.  Also interesting is that his current wife is on the reality show "Baseball Wives", which, in the context of asking for a support reduction could provide potential evidence for his former spouse to use against him in opposing such request at the trial level.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Having just experienced several months of "interesting", to say the least, negotiations on several matters, it got me thinking about creating a list of things to do if you really don't want to settle your case.  Hey, every body is entitled to their day in court if they want it. So what if there is nothing that can be gained from it.  So what if you can't win.  So what if forcing the matter to trial will create other legal issues.  So what if trial will cost tens of thousand of dollars.  Here is the list:

10.  Ignore your expert's advice.  What do they really know about the value of your business or how a judge will likely assess your total income/cash flow?  What does an accountant know about taxes, or more importantly, how the IRS may address the creative accounting practices that you or your business have employed?  What does the custody expert really know? 

9.  Ignore your lawyer's advice.  What do they know anyway?  If your lawyer is telling you that you should jump at the deal on the table because it looks like a huge win, disregard it.  If they tell you that you have real exposure on certain issues or may be forced to pay your spouses legal fees, roll the dice. If your attorney tells you that they are willing to try your case, but that you should consider settlement because the cost of the settlement will be less than the cost of the trial plus the absolute minimum you have to pay, don't believe it.  And what does your lawyer know about the law or the judge anyway?

8.  Ignore the facts of your case.  Trust your ability to spin the facts in a way that doesn't make sense.  Plus, how can they prove if you're lying.

7.   Ignore what the neutrals are saying.  What do the Early Settlement Panelists know?  What does the mediator know?  When the judge has a settlement conference and gives directions, what does she/he know?  Assume that the people that have no "horse in the race" are aligned with your spouse or their attorney, have been bought off, or are just plain ignorant.  Really, it has nothing to do with the facts of your case or the reasonableness of your position.

6.  Ignore the law.  It doesn't apply to you anyway.

5.  Continue to misrepresent things, even when the other side has documents to disprove virtually everything you are saying.  Assume that you will be deemed more credible than the documents.

4.   Believe that the imbalance of power that existed during the marriage will allow you to bully your spouse into an unfair settlement.  Assume that your spouse's attorney wont try protect her/him.  All lawyers roll over on their clients, right?

3.   Take the position that you would rather pay your lawyer than your spouse. Ignore that fact that this tactic usually ends with your doing both, and maybe your spouse's lawyer too.

2.  Pretend as if your spouse never spent a second with the kids in the past and has no right to do so in the future.  Make false allegations of neglect or abuse.  Ignore the social science research that says that it is typically in the children's best interests to spend as much time as possible with each parent.  What do the experts know about your kids anyway?  And while you are at it, bad mouth your spouse to or in front of the kids. Better yet, alienate them.  Then fight attempts to fix the relationship.

1.   Take totally unreasonable positions implementing any or all of above and on top of that, negotiate backwards.  Ignore the maxim "Pigs get fat, hogs get slaughtered."  Put deals on the table and then reduce what you are offering.  Negotiate in bad faith.  Negotiate backwards.  Don't worry that this conduct may set your case back.

The above is clearly facetious and tongue in cheek. I do not recommend this behavior.  It is usually self destructive and short sighted.  But, believe it or not, these things happen all of the time.  While I am not saying that no case should ever be tried, because sometimes trials are necessary, if you want to ensure a costly trial that may not go well for you, try the things on this list.  And if it is your day in court that you want, be careful you wish for.

_________

Eric 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 practices in Fox Rothschild's Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link

Beware the tax calculations in the child support guidelines' automatic calculator.  You  be getting  less support that you should be.  At a time when the NJ Child Support guidelines are notoriously low, it is important to make sure that an obligor's  net income is appropriately calculated in order to asses whether the correct amount of child support is being paid.  Child support is calculated based on the net income of the parents.  Net income for support purposes is calculated by taking gross income, deducting taxes, mandatory retirement contributions ( such as a state pension deductions), union dues, and other allowable deductions listed in the Guidelines.  The more the net income, the more the support award.   The issue of taxes must be carefully looked at, particularly in this age of automatic calculators.

The child support guidelines that are on various computer programs including the state's judiciary web site, and ones used by attorneys regularly, have automatic tax calculators.  In other words, if you know that your spouse makes $150,000 per year, you can plug that in and the computer will spit out a "net" number after hypothetical taxes are paid out. Similarly, if you look at the guidelines in the appendix to the current court rules, there is a table that similarly calculates an amount to deduct for taxes.

The problem, however, is that these calculations consist of an estimated tax amount based upon the tax bracket of the payor, rather the actual tax rate.  There's a difference, and in some cases, it can be significant.  A tax bracket is the percentage of income that is taxed ate the top rate.  We live in a country that has a progressive tax, an so higher income levels are taxes at higher rates.  However, when you hear someone say that that are in the 35% tax bracket, that does not mean they necessarily pay 35% in taxes for all of their income.  In fact, most individuals, when you review a tax return with all of their deductions, actually pay a far lower amount of taxes as a percentage of their income.  So in other words, even if you think someone is in a 25% tax bracket, there is a good possibility that the actual percentage of their income that noes to taxes is something closer to 11% depending on how they file (married, single,head of household), the deductions that they can take, and the dependents that they claim.  

The result of all this is that when you simply look to the calculators in these programs, you may be shorting yourself when it comes to support. This is not to say, however, that the calculators do not play an important role in calculating support.  There are times when you know that the obligor may not have significant deductions and in fact the amount may be spot on.  In other times, you may not have the information and a judge needs to make a "best guess."  However, when the information can be available, it is always preferable to a review tax returns.  

_________________________________________________

Jennifer Weisberg Millner is a contributor to the New Jersey Family Legal Blog and a member of Fox Rothschild's Family Law Practice Group. Jennifer practices throughout New Jersey in all areas of family law and family law litigation and is resident in the firm’s Princeton office. You can reach Jennifer at (609) 895-6712, or jmillner@foxrothschild.com.

• Email This
• Print
• Comments
• Trackbacks
• Share Link