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

During tax season this past Spring, we posted blog entry entitled "Who Gets The Tax Exemption".  This past month in a Chief Counsel Advice (CCA), the IRS has clarified the provisions in the IRS Code relating to exemptions which were discussed in our blog.  CCA 200925041 cautions that a Final Judgment of Divorce awarding one party a dependency exemption may not be upheld by the IRS if the Judgment awarding the dependency exemption contains contingencies.  

In our prior blog, we discussed the recently amended IRS code, Section 152(e) relating to tax exemptions.  Section 152(e) directs, for exemption purposes, that the custodial parent is the one with whom the child resides the greater number of nights during the year regardless of the terms of a divorce decree.  However, Section 152(e) does not preclude the non-custodial parent from claiming the exemption so long a the custodial parent executes IRS Form 8332 releasing the exemption.  Sandra Fava, the scrivener of the blog, noted that it is important to make sure that there is a procedure in place to have the custodial parent file IRS Form 8332 so that the non-custodial parent will be able to claim the exemption.  CCA 200925041 clarifies the procedure in effectuating the exemption through execution of Form 8332 and further recommends additional procedures in order for the non-custodial parent to exercise his or her right to claim the exemption..

CCA 200925041 clarifies that (1) for pre-July 3, 2008 divorce decrees or separation agreements allowing a non-custodial parent to claim an exemption for a child, a non-custodial parent may attach pages of a divorce decree or separation instrument executed on or before July 2, 2008 if the pages constitute a statement substantially similar to the requirements of Form 8332 in effect at the time of the entry of the decree or separation agreement; and (2) for post-July 3, 2008 divorce decrees or separation agreements, a custodial parent's release of a claim to an exemption for a child must be separate from the decree or separation agreement.  The release of the exemption my be pursuant to a signed Form 8332 or a document that conforms to the substance of Form 8332 but the document's only purpose must be to release a claim to the exemption. 

Also very important is that CCA 200925041 specifically noted that for pre-July 3, 2008 divorce decrees or separation agreements, while in order to obtain the exemption the non-custodial parent may attach pages of a divorce decree or separation instrument executed on or before July 2, 2008, the provisions to the divorce decree or separation agreement must not contain any conditions on claiming the exemption.  For example, parties often agree that one party may claim an exemption so long as his or her child support obligation is current.  If this type of provision is contained in the divorce decree or the separation agreement, regardless of whether the condition is satisfied, a non-custodial parent will be unable to claim the exemption simply by attaching copies of the decree or separation agreement as has been the practice in the past.

Accordingly, it is important to do the following:  (1) If you have a pre-July 3, 2008 divorce decree or settlement agreement that contains conditional requirements and you are the non-custodial parent, discuss with an attorney how to best protect your exemption right and any necessary modifications to your Judgment or your settlement agreement to effectuate your right;  and  (2) if you are currently separated or about to be separated and are heading to divorce, make sure that you address these issues with an attorney so that you can insure that there are no problems in the future with respect to the IRS and exemptions. 

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Custody disputes are often the most emotional part of any divorce litigation.  Determining what the physical and legal custodial arrangement will be is a fact-specific analysis that puts at the forefront the best interests of the child.  While both parents start out with a presumpton of equal rights in a custody proceeding, fostering a child's relationship with both parents is of utmost importance, as is encouraging both parents' involvement in raising the child. 

N.J.S.A. 9:2-4(c) provides for several factors that a trial court must consider in determining whether to award joint custody, sole custody or an alternative that works in the child's best interests.  These factors include, but are not limited to, the parents' ability to agree, communicate and cooperate in matters relating to the child; the parents' willingness to accept custody; and the needs of the child.  The Appellate Division recently addressed these factors in the context of a physical and legal custodial dispute in Elliott v. Prisock-Elliott, decided June 2, 2009. 

For a joint physical and legal custodial arrangement, the New Jersey Supreme Court has held that the children must recognize both parents as sources of "security and love," with a desire to continue both relationships; both parents must be fit and willing to accept custody; and the parents must demonstrate a "potential" for cooperation analyzed outside of the divorce context.  A parent involved in such a dispute should understand, though, that he or she need not have been as involved as the other parent in the child rearing process for joint custody to be appropriate. 

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For about a decade, Limited Duration Alimony (LDA) has been an available form of alimony in New Jersey.  The questions often asked regarding LDA is, when should it be awarded and, relatedly, for how much and how long? 

These questions were recently addressed in the unpublished Appellate Division opinion of Elliott v. Prisock-Elliot, decided on June 2, 2009.  Generally, where one spouse is economically dependent upon the other at the end of a marriage, an alimony award helps the dependent spouse achieve a lifestyle "reasonably comparable" to that enjoyed during the marriage.  Several factors are included in a Court's alimony determination under N.J.S.A. 2A:34-23, including, but not limited to the dependent's spouse's needs and ability to fulfill them, and the other spouse's ability to contribute.

LDA, though, is specifically intended to address a dependent spouse's economic need for support where the marriage reflected a true partnership, but the marriage itself was too short in duration for a permanent alimony award, and the dependent spouse needs neither education nor job training to return to the workforce that would potentially merit a rehabilitative alimony award.  LDA essentially aids the dependent spouse who has the education/job skills to have a career, but devoted efforts instead to the marriage and allowed the other spouse to increase their own earning capacity at the same time. 

The Appellate Division found that the trial judge in Elliott failed to adequately consider the alimony factors and the purpose of LDA in granting its award of 10 years of LDA at $30,000 per year on a marriage of less than 10 years at the time the complaint for divorce was filed and approximately 12 years when the dual judgment of divorce was entered.  Specifically, the Appellate Division noted the trial court's error as to the length of the marriage; its complete lack of findings as to each spouse's marital contributions other than that each had worked on their own to care for the children; and its insufficient assessment of the dependent spouse's need for alimony and the other spouse's ability to pay.  The trial court's decision on alimony was reversed as a result.

While LDA should not be awarded as a substitute for permanent alimony when a permanent award is appropriate, a proper LDA determination requires a careful look at each fact-specific case and how those facts mesh with the statutory alimony factors in New Jersey, as well as a consideration of LDA's overall purpose in aiding a dependent spouse in need.  Also, while the amount of an LDA may be modified, N.J.S.A. 2A:34-23(c) prohibits modification of the length of the LDA term except in the case of the broadly termed "unusual circumstances."

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Previously, we blogged upon the Hudson County case of Crespo v. Crespo where the trial judge held that New Jersey's Domestic Violence statute was unconstitutional.  On June 18, 2009, in a reported decision, the Appellate Division reversed the decision of the trial court and found that the status was constitutional.

The trial court decision in Crespo was intriguing in that in 1992, the Appellate Division previously found the statute to be constitutional.  The Appellate Division in Crespo was similarly surprised that it's binding precedent was "side stepped." 

Notwithstanding, the Appellate Division re-affirmed that the lowest standard of proof, preponderance of evidence, was appropriate and constitutional in these matters, noting again the Legislative intent of protecting victims from domestic abuse which has been echoed by the New Jersey Supreme Court.  In short, the public policy in this regard, was and is clear. 

Stay tuned to see whether this matter is appealed to the New Jersey Supreme Court.

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Despite what people often think are iron-clad agreements, foolproof from any misinterpretation, despite best efforts, that may not always be the case.  One area that has been given significant recognition for interpretation by our courts is the area of what constitutes emancipation of a child.

This issue was recently addressed in the unpublished Appellate Court opinion, Zingone v. Zingone, decided June 1, 2009, A-0078-08T1.   Generally, a parent has no obligation to support an emancipated child.  So what constitutes emancipation?

The Supreme Court of New Jersey has held that emancipation can be found when a child marries, joins the military, reaching of an appropriate age, and when a court orders him/her so based upon the child's best interests.  Just because a child turns 18 years old only establishes prima facie, not conclusive proof.  Whether a child is emancipated at 18 years old depends on the facts of the case.

So what does the court look at? The most important inquiry is whether the child has moved beyond his or her parents' sphere of influence and responsibility and has obtained independent status.  To make this determination, one must look at the child's needs, interests and independent resources as well as the family's expectations and the parents' financial ability.

However, if an agreement remains vague as to a triggering emancipation event, as the plaintiff argued in Zingone above, courts will often refer to public policy, which in modern times, encourages a college education, especially where a child shows scholastic aptitude and the parents are able to afford it.

In New Jersey, our highest Court has recognized that generally, financially capable parents should contribute to the higher education of children who are qualified.  Even in cases where a child may take a brief break from college, during which time he or she is working full-time, our courts have held that that child is not emancipated because he or she has not yet moved beyond their parents' sphere of influence.

These cases are often extremely fact specific and require examination of several factors before an individual can determine whether or not their child may be emancipated under the laws of this state such that relief from financial obligations would be successful.

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When can one's well intentioned conduct cross the line into a form of domestic violence under New Jersey's Prevention of Domestic Violence Act?  That was the question addressed by the Appellate Division in P. O’D v. J. O’D, where it affirmed the trial court’s entry of a final restraining order against the defendant mother under the PDVA based on the trial court's finding that the wife harassed her ex-husband.  Two children were born of the marriage, and the parties’ Property Settlement Agreement (PSA) provided that the parties would equally share residential custody (2 or 3 weekdays and alternating weekends). 

The husband testified during a final hearing on a prior temporary restraining order that, starting in September 2007 for a 3-month period, the wife started calling him late at night and using profanity during their conversations. According to his testimony, there were a series of phone calls where the wife would keep calling until he would answer the phone. He further alleged, and the wife did not deny, that she started abusing alcohol at this time. On one night within the 3-month period, the wife threatened the husband’s well-being during her phone calls. A couple of days later, the husband was notified by the wife’s boyfriend that the children were in danger and that the husband should take them from her mother’s custody, which he did successfully. 

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A difficult question often faced by litigants is whether a trial judge is deciding his or her case with a fair and unbiased eye.  Should a litigant feel that they are not getting a fair shake, the party can file a motion for recusal of the trial judge.  R. 1:12-2 of the New Jersey Rules of Court, however, requires that the motion be made to the actual trial judge whose recusal is sought. 

This issue was recently addressed by the Appellate Division in the published opinion of Vic Chandok v. Rekha Chandok.  Rekha appealed from the judgment of divorce on various issues, but the Appellate Division only addressed her challenge of the trial court's Order denying her motion to recuse the trial judge.  The original motion was based on Rekha's assertion that she could not receive a fair and unbiased hearing because of a prior relationship between the trial judge and her attorney where they were partners in a law firm that went under, subsequently followed by contentious litigation between the judge and attorney.  Ultimately, the trial judge ruled that Vic's business and investment interests were exempt from distribution; Rekha was not entitled to alimony; no child support was granted over and above Vic's maximum obligation pursuant to the Child Support Guidelines; the parties were granted joint legal custody; and Rekha was to pay in excess of $40,000 to a discovery master. 

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One issue often looming over the preparation of a Property Settlement Agreement is whether or not the parties agree to waive statutory rights to seek a modification of support.  Otherwise known as an "anti-Lepis" clause, such language seeks to essentially overcome the courts' "equitable power . . . to modify alimony and support orders at any time," under N.J.S.A. 2A:34-23 and the New Jersey Supreme Court's seminal decision in Lepis v. Lepis, 83 N.J. 139, 145 (1980).  Drafting such an enforceable anti-Lepis clause is not as easy as it sounds, as found by the Appellate Division in Stefanacci v. Stefanacci.  

The facts of the case are relatively straightforward, as it was the language of the Property Settlement Agreement at issue that formed the basis of the dispute.  After a 20-year marriage, the parties filed for divorce.  The parties ultimately resolved the matter, memorialized in an oral settlement stated on the record.  Included in the oral stipulation was Joseph's agreement to pay Marcia limited duration alimony for 13.5 years or until Marcia's cohabitation with another person unrelated by blood or marriage for 120 days; Marcia's remarriage; Joseph's death; or Marcia's death.  Provision was also made for the commencement of payments and Marcia's ability to seek child support should alimony cease and the children are unemancipated.

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The disposition of the marital home is oftentimes the most pressing financial issue in a divorce case. The current real estate market brings tax issues to the forefront which must be given consideration. When negotiating a settlement, (or preparing for trial) it is important to understand the tax consequences of the disposition of property. Too often, parties simply think they are just going to divide assets at the value that they have today on a statement rather than understanding the tax affected value. One area that has to be carefully considered is the marital home.

As a general rule, when you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes. However, in the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence.

In a matrimonial action, and in particular, in a long marriage where the parties have owned a house for many years, this rule can have a profound affect on a party who has not been living in the house while the action has been pending. Add to this a real estate market that us sluggish and in which houses are taking years to sell, a settlement that says the parties shall “sell the house and divide the proceeds equally”, can really result in an unequal amount to the parties after taxes if one parties pays a substantial capital gains tax and the other, who has been living in the house pending sale, does not. SO, if you are going to let one parent stay in the house for the next six years until junior finishes high school and the real estate market hopefully bounces back, make sure you have considered the possible tax consequences.

Capital gains of course, are not limited to houses. The same concern exists for investments and any other assets that have increased in value. So if Jane is going to get the AT&T stock that was a wedding gift 25 years ago and worth $100,000 today and John is going to get the money market account with $100,000, it’s really not an equal distribution of assets, because Jane is getting an asset that is going to be taxed. 

The above examples are meant to stress the importance of understanding the effect that taxes can have on a distribution of assets and the importance of getting sound advise from your attorney and accountant or other tax professional prior to signing any agreement.  

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