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

If there is cohabitation by an ex-spouse who receives alimony, the ex-spouse is at risk not only to a potential decrease in alimony but also at risk for a total termination of alimony.  On March 7, 2013, the New Jersey Appellate Division released the published decision of Reese v. Weis upholding a trial court’s termination of permanent alimony as a result of cohabitation.

As we have blogged in the past, cohabitation is considered a change of circumstances that warrants review of alimony.  New Jersey Courts have described “cohabitation” as involving an “intimate” “close and enduring” relationship “requiring more than a common residence”  whereby the “couple has undertaken duties and privileges that are commonly associated with marriage”.

Once cohabitation is established, the dependent ex-spouse has the burden of proving that he or she continues to be dependent upon the alimony being paid regardless of the cohabitation.   When a dependent ex-spouse economically benefits from the cohabitation, his or her support may be reduced or terminated.  A reduction is appropriate where the dependent ex-spouse can prove that he or she still has some need to the support taking into consideration the economic benefit received from the cohabitation. 

What triggers a reduction versus termination?  In the 46 page Reese decision, the Court concluded that the lower Court’s termination of the dependent ex-spouse’s alimony as a result of cohabitation was appropriate for the following reasons.

First and most importantly, the dependent ex-spouse did not prove a continued need for support.  The dependent ex-spouse asserted that her partner did not subsidize any of her expenses and that her expenses and those of the parties’ children were paid solely by her.  In the alternative, she argued that if the Court found that the partner was providing a financial benefit to her, such benefit did not equate to a total elimination of support.  Unfortunately for the dependent ex-spouse, during the trial, she could not articulate or provide evidence as to her actual need for continued support and how the cohabitation did not impact or only minimally impact  her financial needs. 

Second, the partner provided a direct economic benefit to the dependent ex-spouse by directly paying a significant amount towards the dependent ex-spouse and the parties’ children’s expenses (such as housing, food, clothing, transportation, etc.).

Third, the partner provided indirect economic benefits to the dependent ex-spouse including gifts and luxury vacations which enhanced the dependent ex-spouse’s lifestyle.  It was virtually impossible for the trial court to discern the household financial contributions by the dependent ex-spouse and by the partner because of their intertwined finances.

Fourth, the total years that the dependent ex-spouse and the partner resided together exceeded the term of her marriage to her ex-husband who was paying alimony and child support in excess of $235,000 per year.  In short, the partner not only provided direct and indirect economic benefits to the dependent ex-spouse but elevated her lifestyle for a period longer than the parties enjoyed their marital lifestyle.

The majority of the Reese opinion centered on the cohabitation issues.  However, the Court also noted that despite the fact that the application to terminate support was filed after there had been ten years of open cohabitation, the ex-husband was not precluded from filing the application after all those years.

The Reese decision shows that when a dependent ex-spouse chooses to reside with a partner, modification of alimony payments are not solely based upon the partner’s dollar for dollar contributions to the relationship but the enhancements to the standard of living of the dependent ex-spouse by the partner and the length of the cohabitation versus the length of the marriage to the party paying alimony also weigh into the Court’s analysis.

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Wikipedia defines grey divorce as a "term referring to the demographic trend of an increasing divorce rate for older ("grey-haired") couples in long-lasting marriages."  Now while "grey divorces" of a short or mid length marriage provide challenges for a divorce attorney, many believe that divorces of long term marriages are easy.  Just whack up the assets 50-50, agree to permanent alimony and call it a day, right?  That is not an uncommon result, but does it really make sense to do so and not consider real life anticipated events such as retirement and the receipt of Social Security, to name just two. 

Typically, when marriages are longer than 20 years, the concept of permanent alimony seems like a no brainer.  When the parties are in their sixties (or maybe even late fifties) does this make sense?  What if the parties always discussed and agreed that at age 65, the husband was going to retire and planned and lived their life accordingly?  Now, at age 61, either party seeks a divorce (I was going to say the wife - but it really doesn't matter).  Should this be a permanent alimony case? The default answer is yes but should there be more critical analysis to this? 

In this case, we can assume that all of the assets will be divided 50-50, except perhaps a business asset.  Even then, while business assets are usually disproportionately divided, for longer marriages, the non-titled spouse gets more than they would have in a shorter marriage (the fairness of this may be the subject of another post.)  In addition, it is likely that the amount of alimony afforded will not allow the payor to save substantially before the divorce and a normal retirement age in a few years hence.

If the agreement does not account for retirement, aren't the parties just buying themselves more litigation in a few years?  Should consideration be given to allowing for retirement and the termination of alimony any time after retirement age without the need to litigate?  If that is the case and someone still works full time after the agreed upon retirement age, should alimony continue? 

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Yesterday, I blogged on the proposed alimony reform legislation in New Jersey.  At the end of that post, I posited the following questions.  Is this really a radical change, or in many respects, does it simply codify what is often done in practice anyway? Will it really take away advocacy when circumstances so require?

Aside from removing the term "permanent alimony" and perhaps sickening reaction in causes in some people, does the proposed legislation really do more than codify the case law or what was done in practice, in many respects.  Remember, is "permanent alimony" really permanent now anyway?  Can't people seek to retire already and isn't retirement a change of circumstances?  Don't people already negotiate, when appropriate, limited duration alimony when people are divorcing close to retirement age, as opposed to buying a second litigation to occur a few years later? 

The following are some other random thoughts, in no particular order and of no particular importance. 

1)  Is "indefinite alimony" a nicer term for "permanent alimony"

2)  While certainly possible and appropriate in many circumstances under existing law for marriages of less than 20 years, permanent alimony was infrequently given in marriages less than 20 years after the limited duration alimony statute was enacted. In fact, I heard someone on a panel at the State Bar Convention last year state that 20 years was sort of a magic number ensuring permanent alimony.

3)   The concept of imputing income to someone that is unemployed or underemployed essentially  already exists in the case law and child support guidelines, and thus, really is not new.

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There has been an alimony reform movement that has been gaining traction throughout the country.  Some of the major concerns appear to be this issue of permanent alimony and the lack of uniformity in alimony awards, both in amount and duration, from case to case.  In the recent past, alimony laws have been reformed in Florida, Massachusetts and Maryland.  Is New Jersey next?

On March 7, 2013, A3909 was introduced in the New Jersey Assembly, which, if passed, would radically change alimony as we know it in New Jersey. 

The following are a highlight of the changes:

• All references to permanent alimony are deleted from the statute, though, as noted below, for marriages of more than 20 years, an indefinite award of alimony can be be granted

• The concept of imputing income to someone that is unemployed or underemployed, which already exists in the case law and child support guidelines, would be codified

 

• The amount of limited duration alimony should not exceed the recipient's need or 30 to 35 percent in the difference between the parties gross incomes at the time of the initial award, though a court would have the discretion to deviate.  Some reasons for deviation would be advanced age, chronic illness, unusual health circumstances, whether the payer is providing or ordered to provide health insurance to the recipient, sources and amounts of unearned income not allocated in equitable distribution, the recipient's inability to become self-supporting based upon the abuse of the payer, and others, including a catch all "any other factors that a court deems relevant and material."

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Yesterday's New York Daily News published an article indicating that 28% of wives out-earn their husbands according to an analysis of Census Bureau data by USA Today.  The article goes on to state that, despite these advances, women still lag men in the highest levels of their chosen fields

Given the reality of many women earning more than their husbands, the logical corollary is that many more women will have to pay alimony to their husbands.  Makes sense right?  As we know, the New Jersey alimony statute is gender neutral as is the case law that interprets the statute.

But how does the woman, who for the first time hears that she may have to pay alimony react to that news and how does a man's request for alimony play in the court of public opinion?  Usually, not well.  Despite the desire for gender equality and the law being gender neutral, many people still believe in the notion that only women get custody and only women get alimony.  In fact, some of my most difficult cases have been cases where the husband has made a claim for alimony.  These cases were not close calls either.  These were cases where if the parties were reversed, it was a no-brainer, slam dunk, unquestionable alimony case.   This even happens in cases where the husband was a stay at home parent. 

A frequent refrain heard in these cases, usually by the wife who doesn't want to pay or her family and friends is "what kind of man seeks alimony."  Do you ever hear similar insults when a woman is seeking alimony?  I haven't.

This news story highlights that as women continue to out earn their husband's and traditional gender roles become old news, that more and more women will be called upon to pay alimony, barbs aside.

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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 .

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We have done dozens of posts on this blog about alimony over the last 5 years.  Recent experiences have convinced me that it is time to get basics. Despite all of the cases that say that you can't use a formula (the rule of thumb we have discussed previously on this blog), more and more, people are espousing a blind adherence to the rule of thumb.  In one recent case with income of a few hundred thousand, an adversary told me that it was the maximum amount of alimony that I can get, despite the fact that it came no where close to meeting my client's already pared down budget.  In another case, where the income was a few million, one side was arguing that the rule of thumb was a minimum, as if there should be no consideration of any other factors.

Despite the calls for alimony reform and formulas, as we have said many times, courts deciding cases cannot use rules of thumb.  Even when they do, they can't tell you that they did.  Rather, they have to review the alimony factors set forth in the statute - remember them?  Here, they are again, from N.J.S.A. 2A:34-23(b):

(1) The actual need and ability of the parties to pay;

(2) The duration of the marriage or civil union;

(3) The age, physical and emotional health of the parties;

(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;

(5) The earning capacities, educational levels, vocational skills, and employability of the parties;

(6) The length of absence from the job market of the party seeking maintenance;

(7) The parental responsibilities for the children;

(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;

(9) The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;

(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;

(11) The income available to either party through investment of any assets held by that party;

(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and

(13) Any other factors which the court may deem relevant.

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 Very often, we deal with cases where our client or his/her has compensation from employment that is more than just salary plus bonus. Rather, with all of the financial services companies, pharmaceutical companies and other corporations in this area, we see all sorts of different compensation structures, including stock options, restricted stock, RSUs, REUs, etc.  Moreover, when the employee is in management or higher up in the company, the types of deferred compensation and/or equity plans can get even more complex.  Further, by its very nature, deferred compensation is not realized as income immediately, but usually over several years, typically 3 to 5 years.  Often it vests in two ways.  On way is serial vesting - 100 options are granted which vest over 5 years - 20 per year.  Sometime there is cliff vesting which means that the options all vest in year 5.  When an employee has been with a company for several years, then often start to have deferred compensation vesting each year and possibly available for income.

The question often arises as to whether these deferred compensation vehicles are income, assets or both,  While the answer is not simple, it is not as complex as many make it out to be..

Typically, deferred compensation that was granted prior to the date of the Complaint for Divorce is treated as an asset and is subject to equitable distribution.  If the deferred compensation is vested, meaning it can be immediately cashed in, then quite often it is equally divided (though again, New Jersey is an equitable distribution state not an equal division stated so it is not an automatic that these assets will be equally divided - sometimes it just seems that way.)

If the deferred compensation is not vested and requires continued, post-divorce Complaint service in order for vesting to occur, that is where things get more difficult.  I have seen some simplistically argued that anything granted before the Complaint gets equally divided no matter when it vests.  More recently, I have seen a greater use of some type of calculation (coverture fraction) used to recognize the post-complaint service of that spouse.  Many believe this to be the fairer way of equitably dividing deferred compensation.

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Most people are aware that a supporting spouse may be entitled to modify an alimony obligation upon a showing of “changed circumstances.” However, many people do not know that the “leg-work” that they have to do to set themselves up to succeed on such a Motion begins long before the parties ever go to Court, especially if a supporting spouse is asking for relief on the basis of a purported job loss or reduction in income.

Below is a non-exhaustive list of items that a Judge will look for when a supporting spouse is requesting to reduce his or her alimony obligations:

• Has the applicant proven that his/her circumstances have changed such that he/she would be entitled to a child support or alimony reduction - Common scenarios constituting changed circumstances include:
       o A reduction in a party's income;
       o Illness;
       o Retirement;
       o The receipt of an influx of liquid assets;
       o Cohabitation of the supported spouse.

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As a continuation to my alimony-themed posts, the particular issue that is the subject of this blog post may come as a surprise to some supporting spouses; namely, the fact that the term and amount of a limited duration alimony obligation can be lengthened in some rare circumstances.

New Jersey Courts do have authority to modify the amount and term limited duration alimony. In the case of modifications of limited duration alimony, the alimony statute, N.J.S.A. 2A:34-23(c), provides as follows:

An award of alimony for a limited duration may be modified based either upon changed circumstances, or upon the nonoccurrence of circumstances that the court found would occur at the time of the award. The court may modify the amount of such an award, but shall not modify the length of the term except in unusual circumstances.

Rothfeld v. Rothfeld (App. Div. 2008), while unpublished, is just one example of this portion of the statute in action. In Rothfeld, the parties divorced after an approximately seven (7) year marriage. They had two (2) children: Jonathan, who was born on September 19, 1996; and Martin, who was born on September 15, 1998. Both parties were members of the New Jersey Bar and the husband had an active private practice. The wife had not returned to active practice, however, as a result of her parenting obligations with respect to the children, particularly Jonathan, which had prevented her from doing so.

In reaching their divorce settlement, the parties agreed upon “limited duration alimony” in the amount of $500 per week for four years, effective April 1, 2003. According to the wife, at the time the PSA was negotiated, “it was assumed that [she] would be able to obtain per diem work in the law field.”

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Reading the recently unpublished (not precedential) Appellate Division matter of Connaughton v. Connaughton  brought me back to my days of toiling as an account executive at an advertising agency in Manhattan. Our team often worked long hours and frequently traveled for client meetings, commercial shoots, and the like. 

Advertising also was and remains notorious for forcing account and creative executives to switch from agency to agency in order to make more money over time.  For instance, a person who just joined an agency may be making tens of thousands of dollars more than a similarly situated person who started with and remained at the same agency throughout their career for no other reason than that the newly hired person came from a different agency.

The income situation in Connaughton was interesting in that Brian's historical income increased as he frequently switched jobs and moved up the proverbial ladder.  Similarly interesting was Elizabeth's income growth, which stalled once she left the workforce and gave birth to the parties' child.  Specifically, the parties married in 1995, and a year later, Brian obtained a job with J. Walter Thompson while Elizabeth commenced a period of freelance work that lasted throughout the remainder of the marriage. 

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As a continuation to last week’s post regarding what happens when trial courts fail to grant hearings to supporting spouses when they may be warranted, i.e. upon a showing of changed circumstances, this blog post will focus on those times where a hearing is deemed unnecessary based on the facts of a given case. This sometimes occurs in situations where an obligor is self-employed, has the ability to control his or her income, and is attempting to capitalize on the down economy in order to wriggle out of support obligations, sometimes only a few short years after the initial support award.

This type of issue was addressed at length in a prior blog post by Eric Solotoff, Esq. in the context of a discussion of Donnelly v. Donnelly where a self-employed attorney was denied a reduction to his alimony obligation two years following the entry of the Final Judgment of Divorce based on a purported downturn in his law practice. In these types of instances, trial courts have followed the mantra that where the supporting spouse owns his own businesses, the income of the self-employed obligor must be viewed “more expansively.”

For example, in the 2010 case of Pisciotti v. Pisciotti, the defendant-husband appealed from an Order denying his motion to reduce his alimony obligations and to pay child support. At the time of their divorce in 1999, the parties entered into a Property Settlement Agreement (“PSA”) obligating the husband to pay $3,000 per month in alimony, as well as child support in the amount of $4,207.34 per month. Ten (10) years following the parties’ divorce, the husband filed a motion to reduce his support obligations, arguing that his income had substantially declined since the time of the divorce and that his assets, which included several heavily mortgaged properties, had decreased significantly in value. The husband also asserted that the fitness center business, in which he was a co-investor and employee, had suffered during the economic downturn, thereby diminishing his compensation therefrom. The husband supplied various materials in support of his motion, including an updated Case Information Statement, his certification, and personal tax returns. The former wife opposed the motion, arguing that the husband’s motion was not adequately supported, and therefore he had not established a prima facie change of circumstances.

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In this economy, you would be surprised to see how many judges are jaded by applications brought by supporting spouses to reduce their support obligations based upon a reduction in income. After all, some judges entertain these applications on their daily docket and oftentimes see supporting spouses who are simply attempting to capitalize on the down economy and lack any actual merit to their cases. This blog post will explore one of the reactions by judges to this type of application; namely, denying the request of the supporting spouse outright without even holding a hearing, taking testimony, and making credibility findings.

Support obligations are always modifiable by the family court upon application of the supporting spouse.  Typically, this type of application requires the supporting spouse to make a threshold prima facie showing that “changed circumstances have substantially impaired the ability to support himself or herself.” Lepis v. Lepis, 83 N.J. 139, 157 (1980). When such a showing is made, the Court must next determine if a plenary hearing is warranted. This is sometimes referred to as the two-step Lepis analysis.

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Mark Ashton, a partner in our Exton (Chester County), Pennsylvania office and former editor of our Pennsylvania Family Law Blog wrote an interesting post entitled "Elements of Expense: How Employers Help to Make Your Life Expensive & Your Lawyer Bewildered".

In his post, Mark ruminates on the difficulty in deciphering the modern pay stub.  Mark notes that over the years we have evolved from a time and place where compensation consisted of salary and a bonus to one where a paystub reads like the Dresden Codex (an anthology of Mayan astronomical tables).  In fact, the piece emanated from him having just devoted more than half an hour to reading and interpreting two paystubs that included salary, commission, vacation time, etc. as well as more than $100,000 of payments under the titles: ECC Disc Incentive; Long Term Cash Vest; RS Unit Vesting; and RSS Vesting.

Of course, once a you get past the alphabet soup of categories of income and withholdings, next you have to figure out what to do with them. For instance, you have to make a decision as to whether this is really income, an asset or both. This often comes into play with regard to bonuses and the exercise of deferred compensation. Is it recurring or non-recurring?  Is it an anomalous, one time payment?  Does this reflect an undisclosed change in how and/or the amount of someones compensation. What year should it be attached to, e.g. a bonus paid in 2012 for 2011 (do you just look at income received in the calendar year or do you add the salary received in a calendar year to the bonus for that year paid in the first quarter of the next year?) 

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With the economic downturn and slow down in the economy since 2008, there has been a lot more post-judgment litigation to reduce alimony and child support. Much of this litigation has been legitimate; other has been brought by opportunists, throwing around buzzwords and crying about the economy when there is really no substantial change of circumstance.  Moreover, there is no uniformity as to what a "substantial change of circumstance" really is and judges have been all over the map, from judge to judge and county to county.

One would think that after a 17 month job search that culminated in the alimony obligor accepting a job where he had a two hour commute to Pennsylvania and which resulted in a 22% reduction in his income from the time of the divorce would be a no-brainer substantial change of circumstances.  If you thought that, you would be wrong.  In fact, the trial judge in the case of Austin v. Austin did not find this to be a change of circumstances. The Appellate Division, in an unreported (non-precedential) decision released on December 6, 2012 reversed finding this to be "Lepis quality change of circumstance."

Even then, there may not be an automatic reduction in alimony.  The Appellate Division stated:

We do not suggest that the Family Part must reduce plaintiff's alimony obligation. The trial court should conduct an evidentiary hearing in the event further review of the record
reveals a genuine issue of material fact. We leave open to the Family Part's discretion to what extent, if any, the totality of the circumstances impels a permanent change in the alimony component of the PSA. However, that court must now treat plaintiff's current employment situation and lessened income (and defendant's present health concerns) as significant vectors affecting the ultimate determination of a fair and reasonable
alimony award.

Because there is no uniformity as to what a "Lepis quality change of circumstances" is, and because these cases are determined on a case by case basis, I suspect we will continue to see these decisions all over the map.

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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.

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Robert A. Epstein, an associate in our Family Law Group resident in the Roseland, New Jersey office, authored the article, Imputing Income to a Non-Working Spouse During the Pendente Lite Period: A Violation of the Status Quo or a Practical Step Toward the Reasonably Comparable Lifestyle?, for the November 2012 edition of The New Jersey Family Lawyer. The article highlights the fact that the outcome of pendente lite support determinations in divorce proceedings can have a long-lasting impact on the court’s view of the case, the tenor of an ongoing matter, and the prospects of settlement.

Additionally, Lauren E. Koster, an associate in our Family Law Group resident in the Princeton, New Jersey office, co-authored the article,Navigating a Partnership K-1: The Untold Line Items and What They Really Mean, also for the November 2012 edition of The New Jersey Family Lawyer. Koster, and her co-author, Leonard M. Friedman, CPA/ABV CBA, Partner at Rosenberg Rich Baker Berman & Company in Somerset, New Jersey, argue that while a K-1 provides valuable insight about a particular business and how much a person may, in fact, be truly earning, it should also be noted that navigating your way through a K-1 can be a daunting task for those family law practitioners who are not familiar with the document.

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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.

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As we know, limited duration alimony ("LDA") is alimony for a definite period of time.  Unlike rehabilitative alimony where there is a goal in mind to be reached by the end of the rehabilitation period and which can possibly be extended of the goal has not been reached, per the statute, the term of LDA is not supposed to be able to be modified except for "unusual circumstances." Of course, even limited duration alimony is subject to modification based upon "changed circumstances." Of note, however, is that retirement has been recognized as a possible change of circumstances sufficient to seek a modification. 

The issue of whether early retirement could be used by an alimony payor in order to terminate his LDA obligation was recently addressed in the case of Hendrickson v. Hendrickson, an unreported (non-precedential) opinion released on November 5, 2012.  In that case, the parties agreed to an 8 year term of LDA at the time of the divorce in 2006, in the amount of $265 per week, that actually was reduced to $145 per week to take into account that the wife's child support obligation because the husband had custody of the children.  

The husband had been working at Fort Monmouth for more than 30 years when it closed in 2011.  The husband asserted that though he had been offered a position in Aberdeen, Maryland, the net effect of the transfer would have resulted in a reduction of income and increased expenses.  Moreover, he was able to retire for health reasons and collect his retirement benefits.  As a result of a claimed inability to pay, the husband filed a motion to terminate his LDA obligation.  

The trial court denied the request finding that the early retirement was not a change of circumstances.  An unsuccessful motion for reconsideration was denied, as well.  The Appellate Division affirmed the decision, but for different reasons.

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Inflation impacts everyone, right?  As a result, one would think that alimony would routinely be subject to cost of living adjustments (COLA). In fact, we know that Rule 5:6B of the New Jersey Rules of Court states that "(a)ll orders and judgments that include child support entered, modified, or enforced on or after [the effective date of this rule] September 1, 1998 shall provide that the child support amount will be adjusted every two years to reflect the cost of living."  So if child support is subject to biennial COLA increases, alimony is similarly increased, right?  Wrong!

I have been practicing  for more than 20 years and have rarely, if ever, seen COLA clauses related to alimony in marital settlement agreements.  That said, I have also rarely seen decisions that discuss this issue until this week when the Appellate Division released the unreported (non-precedential) opinion in Eberhard v. Eberhard on November 2, 2012. 

In this case, the trial court increased alimony with little rationale provided for the increase other than plaintiff's increased cost of living. In reversing, the Appellate Division noted:

In this matter, we first note the motion judge erred as a matter of law because an increase in the cost of living unaccompanied by a demonstrated need will not satisfy a movant's burden to show the necessary substantial change in economic circumstances to warrant modification of alimony.  (Emphasis added)

So there you have it.  But doesn't the same change of circumstances standard apply to modifications of child support?  Why do we presume, by Rule, that the cost of living for children increases, yet the cost of living for the dependent spouse does not?  Of course, doesn't the payor of both child support and alimony have to face rising costs of living too?  Can we intellectually justify this?  That all said, perhaps the better practice would be to simply negotiate for COLA increases for alimony in divorce agreements.  Of course, the other side will push back and can now cite to this case as the reason why.

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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.

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When settling a case, the parties and their lawyers can be far more creative in settlement then a judge can be if the case is tried.  While family judges have wide discretion in their decision making, creativity is crafting the most beneficial result for both parties is rarely something they can do.  In fact, in many ways, they are constrained from the type of creativity that we see every day in divorce agreements. 

What if you are a high earner, but your income fluctuates greatly from year to year?  While a judge will likely have no choice but to determine your average income over 3 to 5 years and base support upon that as well as the rest of the statutory factors, you may want to agree on some kind of formula so that there is fairness year over year, i.e. you pay more in a better year and less in a down year. For example, if your average income is $2,500,000 but your income fluctuates between $1 million and $4 million per year.  You would really hate paying alimony in those years you only make $1 million.  If a judge decided this case using averages, you might be forced to pay your entire net income, or more, to you ex spouse in the down year.  Similarly, a judge could never say that support "automatically" is reduced or even reviewed if your income is less than $X in the future. 

This concept was reiterated again by the Appellate Division on October 29, 2012 in an unreported  (non-precedential) decision in the case of Means v. Snipes.  In this case, after a trial, the judge decided that in the event that defendant's annual income fell below $2 million, he would receive a reduction in alimony. This is the one thing that both parties agreed was in error - a rare agreement in a very contentious case.

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Though fault was allegedly was something that the court could consider when it related to the determination of alimony, since the Supreme Court decided the Mani case in 2005 fault was largely eliminated from the equation.  The reason is that that Court said that marital fault was largely irrelevant since alimony was neither a punishment to the payor nor a reward to the recipient.  That said the Court acknowledged two "narrow" exceptions to this general principle: "cases in which the fault has affected
the parties' economic life and cases in which the fault so violates societal norms that continuing the economic bonds between the parties would confound notions of simple justice."  The court further noted:

With respect to the first exception, the Court held "to the extent that marital misconduct affects the economic status quo of the parties, it may be taken into consideration in the
calculation of alimony." Id. at 91 (emphasis added). However, when egregious "conduct occurs, it may be considered by the court, not in calculating an alimony award, but in the initial determination of whether alimony should be allowed at all."

The notion of "egregious fault" was born but much like the Loch Ness monster, many of us had heard of it, but few had seen it. That is, until the Appellate Division's published (precedential) opinion released on October 19, 2012 in the case of Clark v. Clark.  In this case, the husband proved that the wife secreted $345,690 from their closely held business during their marriage. He argued that this should have prevented any alimony altogether.  The trial judge disagreed but did order the wife to repay half the amount taken, in satisfaction of plaintiff's equitable distribution interest.  He appealed and the Appellate Division reversed the alimony provision of the final judgment of divorce, concluding the facts supported a
finding defendant engaged in conduct rising to the level of egregious fault.

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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? 

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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.
 

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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.

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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.

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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!

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This being a family law blog, we talk about alimony a lot.  One reason is that, because there are no guidelines, only factors to consider, alimony is one of the more difficult issues to resolve.  How many years should it be for?  When is it permanent?  What does permanent really mean?  Is there a rule that you get one year of alimony for each year of the marriage or you get alimony for half of the length of the marriage?  Is there a rule of thumb (formula)?  In fact, we have recently blogged twice on that issue alone.  In one post, wenoted that the Appellate Division noted unequivocally that a court could not use a formula. In another, we noted that the "rule of thumb" can be used by an expert in a legal malpractice case regarding a divorce to determine if the attorney may have committed malpractice. 

An unreported (non-precedential) Appellate Division decision released on January 12, 2012 in the case of Newman v. Newman touched on a few of the above issues.  While not boring you with all of the details, the following are the relevant facts.  The marriage was just under 13 years in length and the husband was 51 and the wife 40 at the time of the divorce. There were two children of the marriage.  The Court imputed $122,300 to the husband and $45,000 to the wife for support purposes.  The husband's actual income was approximately $88,000 but he was provided free housing as an in-kind benefit which accounted for the difference between his cash income and the amount used for support.  The court awarded $27,000 per year in alimony.

Fun facts of this case: (1) the court awarded 10 years of alimony in a marriage of just under 13 years - a result that the Appellate Division deemed "reasonable"; (2) though budgets and factors were analyzed, when you do the math, the alimony was just under 35% of the difference - curiously close to what the so called "rule of thumb" would result in; (3) the court actually quantified an in-kind benefit - this is hardly done often enough though the Child Support Guidelines would seem to require it; (4) the trial judge deemed this 12 1/2 marriage to be "fairly long term"; (5) the husband's counsel fees alone were more than $100,000 yet he appealed a $5,000 award to the wife's attorneys.

Clearly, alimony cases are fact sensitive and, if tried, the result could vary from judge to judge.

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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.

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It is not unusual to use a three or five year average of someones income when calculating alimony and/or child support if their income fluctuates.  Why does income fluctuate?  Sometimes people earn commissions based upon sales which vary from year to year.  Sometimes the economy or other reasons dictate how much of a bonus they get.  Some times deferred compensation, when it vests and/or is cashed in, yields more in some years than in others.  There are many reasons why income can fluctuate.  As such, both the case law and child support guidelines advise that we should use an average when calculating support.

That said, is this always fair?  What do you do in cases where it is clear that the prior income wont be repeated?  That was the issue in the case of Harwelik v. Harwelik, an unreported Appellate Division opinion decided on December 19, 2011.  In this case, the husband's average income was about $300,000.  However, this included both short term bonuses that he was able to defer and long term bonuses that had a 3 year vesting period.  In July 2006, when the husband's employer, Verizon, sold most of its international assets, his title was downgraded from director to manager. As a result of the change, he was no longer eligible to receive long-term bonuses, although the bonuses previously
granted would still vest and be fully payable. In addition, as a manager, plaintiff could no longer defer the short-term bonuses he received after 2006.  When excluding this deferred compensation from the average income, it was substantially less.  That said, the trial court used the $300,000 average.

In a confusing opinion, the Appellate Division affirmed the use of an average but reversed the use of the $300,000 number because it included the deferred compensation that the husband no longer had, through no fault of his own.

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In August 2011, I posted an article on this blog entitled "Appellate Court Rejects 'Rule of Thumb' Formula to Calculate Alimony - Sort Of."  In that article, I noted that there was a dirty little secret used by judges and lawyers in New Jersey to come up with a "ball park" as to what alimony should be. This "rule of thumb" does not take into account all of the statutory factors. Rather, the formula simply subtracts the lower income (real or imputed) from the and multiplies the difference by a percentage. I have been told that that percentage is 30% or one-third in the northern part of the state and 25% in the southern part.

More importantly, I noted that judges really cannot use this formula and must make findings considering the law and all of the statutory factors.  This post was as a result of a case where the judge seemingly used the formula to determine alimony.  The Appellate Division remanded the matter to the trial court to determine alimony using the alimony factors.

So much to my surprise, a new case came out yesterday emanating from a legal malpractice case filed by a litigant against her divorce attorney.  Lo and behold, the Appellate Division notes that using this "rule of thumb is an appropriate way to calculate alimony. 

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A little more than a year ago, we blogged on the reported Appellate Division Case, Tannen v. Tannen, which addressed the issue of trusts in the context of family law cases.  Relatedly, we blogged on the impact of income from a discretionary trust and whether it reduced a party's need.

In Tannen, the trial court, relying on the newest version of the Restatement of Trusts, required the trustee of a discretionary trust to make distributions to the beneficiary of the trust. Though the trust assets earned significant income, there was no requirement in the trust document for the distribution of the income to the beneficiary. 

The Appellate Division reversed, holding that by applying existing law, which has incorporated various provisions of the Restatement (Second) of Trusts, Wendy’s beneficial interest in the Wendy Tannen Trust was not an “asset held by” her for purposes of N.J.S.A. 2A:34-23(b)(11) of the alimony statute. As  such, the panel determined that no income from the Wendy Tannen Trust should have been imputed to Wendy in determining Mark’s alimony obligation. Addressing the trial court's reliance on the newest Restatement, the Appellate Division noted:

[a]s a court of intermediate appellate jurisdiction, we do not presume to adopt the Restatement . . . as the law of this state and apply its provisions to the facts of this case. Given the significance of its principles in the context of [the New Jersey statute dealing with the power of a court to impute income to a party in a divorce action), such determination would be more appropriately made by our Supreme Court.

As a result, as practitioners, we all awaited the Supreme Court's decision on this expecting that they would tell us one way or the other whether trial court's rationale would become the law of this state.  Doing so might have weakened the sanctity of trusts, but might have been consistent with the jurisprudence of this State that is typically deferential to and supportive of the support recipient for public policy reasons. 

The Supreme Court decided - drum roll please - :The judgment of the Appellate Division is affirmed,
substantially for the reasons expressed in Judge Messano’s opinion of the Appellate Division reported at 416 N.J. Super.248 (2010)."  This one sentence opinion is an anticlimactic end to what could have been a very interesting discussion of an important legal issue.  Because Judge Messano deferred to the Supreme Court on a policy issue, as a student of the law, it would have been interesting to hear our high court explain their rationale given the limitations that the Appellate Division expressed in their opinion.

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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 is resident 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.



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Right before the Thanksgiving holiday the NJ Appellate Court came out with an unpublished decision yet again reminding trial courts when permanent alimony should be permanent and not something else.  While there is no bright line, black and white rule written about the magic number of years that would entitle a spouse to permanent alimony, there are certainly some general facts that assist attorneys and judges alike in determining when a case is appropriate for permanent alimony.  This decision reminds us of those.

In the matter of Happold v. Happold, A-2792-10T1, decided November 21, 2011, the Appellate Court reversed and remanded (to a new judge in the trial court) a decision, which awarded the Wife 10 years of limited duration alimony instead of permanent alimony.  The relevant facts are as follows:

1. The parties were married for 21 years at the time the Complaint for Divorce was filed.

2. The parties were ages 42 and 43 at the time of the Complaint.

3. Three children were born of the marriage, one was emancipated before the trial.

4. The Wife became pregnant with the parties' first child at the age of 16, when she was in the 10th grade.  Husband was in 11th grade at the time.  Wife dropped out of high school only completing a 9th grade level of education.  Husband continued in school and graduated.

5. One year after their first child's birth, Wife moved into Husband's parents' home with Husband.  Wife never worked outside the home during this time.  Husband completed high school and began working.

6. The parties' two other children were born in 1993 and 1995.  While Husband worked outside the home and his career continually advanced, Wife remained at home as the sole caretaker for the children and the home.

7. During the marriage, Husband controlled the parties' finances except for a jointly held savings account intended to give Wife immediate access to money if Husband died.

8. At the time of the trial and during the last year of the marriage, Husband's income was $238,500 and $215,000 respectively.

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Does it matter if a party's income increases between the cut off date (usually the date of Complaint) and the time of the divorce?  What about the argument that this income does not reflect the marital lifestyle so it should be ignored?  These questions were answered by Ocean County Family Part Judge Lawrence Jones, who, in his brief time on the bench, has become a prolific writer contributing a number of reported decisions.

Judge Jones addressed these issues in the reported case of Dudas v. Dudas released on November 1, 2011.  While trial court opinions do not have to be followed by other trial courts or the Appellate Division, Judge Jones' analysis of the issue was interesting.

In this case, the wife was primarily a stay at home parent.  During the marriage, the husband's income grew to the mid-$40,000 range, with a one year high of $59,000 by the end of the marriage.  After the Complaint, the husband's "... W-2 income ... sharply jumped to a personal high of $64,000 in 2009, and then ballooned again to $76,000 in 2010. In 2011, defendant is on pace to earn $68,000." 

Not surprisingly, the wife sought alimony based upon this higher income.  The husband argued, "... that his post-complaint earnings are irrelevant because, (a) alimony should be based upon the parties’ marital standard of living, and (b) that standard of living was never based on the heightened level of earnings he presently enjoys."    Judge Jones disagreed with the husband.

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In determining a payor spouse's gross income in analyzing an appropriate level of alimony or child support, one question that arises on occasion is whether to include so-called "mandatory" contributions to the total number.  For instance, if the payor spouse is required by his employer to contribute $30,000 per year towards his 401(k), should such money be included in that spouse's income in determining support?  As to child support, the answer is a definitive "no." 

As to alimony, since such contributions are excluded from the child support equation and child support carries great weight as a matter of public policy - the New Jersey Child Support Guidelines posit that children should not be forced to live in poverty due to family disruption - it is only sensible and reasonable for such contributions to be similarly be excluded from the alimony calculation.  Simply put, since the Guidelines consider any and all sources of income to aid children, the fact that mandatory contributions are excluded demonstrates that it would be even more unfair and unreasonable to include such contributions in calculating alimony.

The Guidelines provide a definition for "gross income" and, in so doing, expressly exclude mandatory contributions.  Gross income is defined as "all earned and unearned income that is recurring or will increase the income available to the recipient over an extended period of time.  When determining whether an income source should be included in the child support guidelines calculation, the court should consider if it would have been available to pay expenses related to the child if the family would have remained intact or would have formed and how long that source would have been available to pay those expenses."

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Many marital settlement agreements provide that a payee spouse shall receive what is legally classified as "limited duration alimony" from the other spouse.  While not "permanent", alimony of a limited duration is designed for a situation where the payee spouse contributed to a generally short-term marriage where the marriage itself displayed indicia of a marital partnership, and the payee spouse has skills and education enabling him or her to return to the workforce.  LDA is oftentimes distinguished from other forms of alimony known as "reimbursement alimony" and "rehabilitative alimony," which are more tailored to facilitating the payee spouse's ability to earn or to make that spouse whole for sacrifices made during the marriage. 

The question then becomes, for the purpose of this blog entry, can LDA be extended, especially where the term was agreed to in a settlement agreement.  N.J.S.A. 2A:34-23(c) allows for modification of the amount of LDA, but it also prohibits modification of the term of payment except in the case of the broadly termed "unusual circumstances." The Appellate Division recently took up this issue in the unpublished (not precedential) decision of Rothfeld v. Rothfeld.  There, the parties entered into a settlement agreement providing the Wife with four years of LDA, at $500 per week.  Also contained in the settlement agreement was the Wife's representation that she would be able to continue the standard of living that she enjoyed during the marriage because, in addition to her alimony payments and assets received via equitable distribution, she was able to earn income.

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We have previously blogged on the "rule of thumb", a dirty little secret used by judges and lawyers in New Jersey to come up with a "ball park" as to what alimony should be.  This "rule of thumb" does not take into account all of the statutory factors.  Rather, the formula simply subtracts the lower income (real or imputed) from the and multiplies the difference by a percentage.  I have been told that that percentage is 30% or one-third in the northern part of the state and 25% in the southern part.  Of course, judges really cannot use this formula and must make findings considering the law and all of the statutory factors which are:

(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;
(5) The earning capacities, educational levels, vocational skills, and employability
of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to
enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or nonfinancial contributions to the marriage or
civil union by each party including contributions to the care and education of
the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable
distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by
that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and
(13) Any other factors which the court may deem relevant.

While these factors are supposed to be consider and the "rule of thumb" is not, we hear judge's recommending settlements using this rule of thumb all of the time.

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Following on the heels of Melissa Ruvolo's blog entry discussing the need for detailed proofs to fulfill one's threshold burden required to modify support, the Appellate Division's unpublished (not precedential) decision in Bonaventura v. Bonaventura tells the tale of a supporting spouse who unsuccessfully (and surprisingly) tried to reduce his alimony obligation after losing his job in the financial industry.  With the Dow having dropped 500 points yesterday as widespread economic jitters continue three years after the bottom fell out of the economy, and unemployment rates soaring at around 19%, job losses, especially in the financial industry are to sure to continue. 

With that, our jobs as matrimonial practitioners will continue to require creativity to convince courts that a given case is different from the "run of the mill" Lepis applications and, at the very least, necessitates a period of discovery and subsequent plenary hearing.  Bonaventura reveals, however, that not only is each case fact-specific, but also each trial judge can rule differently on a similar factual scenario.

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The cover of yesterday's New York Post read "Ahhhnold:  I Wont Pay A Dime."  That was curious so I next went to the story written by Andy Soltis and the headline was "Arnold Schwartzeneggar Rejects Maria Shriver's bid for spousal support.  As if the cover and headline were not bad enough, the story obnoxiously starts "First, he cheated on her. Now he's trying to cheat her out of tens of millions of dollars."  I then set out on line to see what other newspapers or news sources were saying about this, and while less outrageous, they were equally misleading.  How do I know they were misleading?  I found the actual pleading on-line,

In California, it seems, that there is a mandatory 3 page form Response to a Divorce Petition which I would surmise is a similar form.  The form has blanks to fill and and boxes to check about issues in dispute.  So I looked at the form to see if Arnold said he wouldn't pay a dime or rejected Maria's bid for support.  I found the "smoking gun".  In the box that said "Spousal Support Payable to" the boxes for both Petitioner and Respondent were left empty.  Scandalous!?!  As to counsel fees, because some stories had him refusing to pay them to, he checked of the box suggesting each pay their own.  Scoundrel!?!

My guess that this is standard pleading practice and no big deal.  In New Jersey, we don't have fill in the blank and check the box forms but our pleading practice is reasonably similar for most cases.  The first pleading of the higher wage earner never usually asks that she/he be ordered to pay alimony and in response to their spouse's first pleading, they always ask that it be dismissed.  Are they saying that they are refusing to pay support?  No.  It is just standard pleading practice and no big deal.

Now getting back to Arnold, who, if you look at the full link to the story (above), appears to be deemed to be the "worm-inator", would he really have to pay spousal support.  I can't speak to California, but in many cases where there are extraordinary net worths that both parties will have once the divorce is over, they may not have a need for alimony.  Moreover, to the extent that she may have separate Kennedy assets or income from trusts or otherwise, that could suggest that there is no need. Moreover, if Arnold is not currently working and has no earned income, that too could be a factor. 

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On July 3, 2011, there was on op-ed in the New York Times by Alexandra Harwin entitled Ending the Alimony Guessing Game.

In the piece, she posits that

The unpredictability of alimony rules imposes several costs. Negotiating a settlement deal is much harder when spouses have no idea what they’ll end up with if they take their chances in court. Litigation drags on and the bills pile up when lawyers and experts have to prove their clients deserve any alimony at all. All the while, the emotional costs mount as people awaiting divorce continue in unhappy marriages; some stay married indefinitely because they don’t know if divorce will leave them with enough money to make it on their own. That’s particularly troubling in cases of domestic violence: some wives endure years of abuse because they can’t be sure husbands who control the family finances will be required to give them the money they need to live if they leave. New York’s law minimizes these costs by establishing a mathematical formula to calculate temporary alimony, which one spouse pays the other while the divorce is pending; it also allows judges to adjust those awards up or down under special circumstances.

She also believes that guidelines would make the judges jobs easier and the divorce process fairer.

At first blush, this makes sense - but does it really?  Since all alimony guidelines are income based (and as she points out, they are only for temporary support), they ignore parties' individual circumstances that are not income related.  In a way, guidelines presume that all peoples expenses are the same, that all people with similar income pay the same amount of taxes, that there are no special circumstances, that some families may be savers while others spend every penny earned (and then some), etc.

In NJ, to the extent possible, the goal of temporary support is to maintain the status quo. Sometimes it seems like or certainly could feel to the support payer to being unfair, especially where the other spouse is not working and the payor is paying for most direct expenses plus some amount for personal expenses on top of that.  The risk with guidelines, however, is that certain bills could never get paid if the personal responsible is not given enough money to pay and the other party is not required to make direct payments. 

On the other hand, does New Jersey have de facto guidelines anyway?  More and more, you hear about the "rule of thumb" - i.e. a mathematical formula where the lower income (or what that person could earn if not employed or working to their capacity) is subtracted from the payor's income and alimony is fixed at one-third of the difference.  You see lawyers use this all of the time.  You see judges do this, even when they know that they cant, in trying to settle cases or even in decisions after a trial.  They don't say that they are doing it but you can do the math and see that they are. The rule of thumb may be helpful to get a starting point for review, but if it is the absolute end point, ignoring all other factors, that could be a problem.

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Very often, we deal with cases where one or both parties' incomes are variable, because they are tied to commissions, etc,. or heavily tied to a bonus which can vary.  In fact, for many people who work on Wall Street, their salary (oftentimes in the $120,000 to $150,000 per year range), makes up a small percentage of their annual income with the rest coming as bonus at the end of the year or in the first quarter of the next year.  Moreover, it is not uncommon for the bonuses to vary widely from year to year based upon company performance, etc.

This often makes cases difficult to settle, especially during the uncertain if not unstable economic times of the last several years. Typically, the law provides that when someones income is variable, that a 3 or 5 year average should be considered for support purposes.  In these times, is that fair.  Take the person working at a hedge fund who was earning seven figures for several years, but for the last few years, if they still had a job, only earned their $120,000 per year salary.  Ask that person if taking an average of 3 or 5 years for support purposes is fair.  Moreover, from a cash flow perspective, even when an average is used, the payor can be really strained to pay support if their actual income is lower than the average used.  As time goes by after the divorce, in theory, this should be balanced by the years when they earn in excess of the average.  In the years closest to a divorce, after all assets were distributed and perhaps the liquid assets were used to pay for the divorce, to pay equitable distribution, to buy a new home, etc., there may be no fund to serve as the buffer in one of these under average years. 

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 Virtually every interspousal agreement contains a modification clause whereby the parties set forth procedures for subsequent enforceable modification. Many are constructed as follows:

No modification or waiver of any of the terms of this Agreement shall be valid unless: (1) in writing and executed by the party to be charged; or (2) ordered by a court of competent jurisdiction upon appropriate notice and upon an appropriate showing of changed circumstances as and if allowed under New Jersey law. The failure of either party to insist upon strict performance of any of the provisions of this Agreement shall not be deemed a waiver of any subsequent breach or default of any provision contained in this Agreement.

Note that there are two ways under this clause in which an agreement may be modified: (1) a subsequent writing; or (2) ordered by a court. As to the second, a court, generally, has the inherent power to modify support provisions of an agreement. Where an agreement restricts this power (such as would be the case in an agreement which contains a “non-modifiable” alimony obligation), the restriction will be upheld as long as it does not violate public policy.

However, for the purposes of this article, it is the first – modification by writing – as to which this article is addressed. Let’s take a look at the elements of the writing methodology:

(a)         A writing; and

(b)         Executed by the party to be charged.

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We have blogged countless times about a payor spouse's efforts to modify his alimony obligation post-divorce by claiming that he has suffered a substantial and continuing change in his financial circumstances.  When a court concludes that a change has occurred meriting modification, and implements a new modified support obligation, at what point should the modification become effective?  When the payor spouse first filed for a modification?  When a plenary hearing is held?  At the conclusion of the entire matter? 

Oftentimes, the payor spouse will claim that he has established a change in circumstances and, if the Court determines a plenary hearing is necessary and an intervening period of discovery, that a reduction be made in the interim pending the outcome of the hearing.  Why is such a request appropriate?  First, if the payor has established his initial burden of proving a change in circumstances, requiring him to continue paying at the current amount until completion of a hearing will likely ensure the ongoing accrual of arrears at the higher number.  A Court's refusal to grant such relief also incentivizes the payee spouse to drag out the matter indefinitely, since only the payor suffers without some form of interim relief. To that end, we recently had a matter where the Court declined our payor client's request for interim relief pending the plenary hearing but later granted such relief because the payee spouse had deliberately dragged on the matter for months beyond that envisioned by the Court. 

This issue was also recently addressed by the Appellate Division in its unpublished (not precedential) decision in Baker v. Baker.  There, the payor spouse argued that the trial court erred by only retroactively reducing his alimony by one month - to August 1, 2010 - as opposed to either March 25, 2008 when payor filed his original motion to reduce alimony, or May 2, 2005 when he was involuntarily terminated from his position of employment precipitating his economic downward spiral.

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If you're a regular reader of this blog, you've seen many a post about changes in circumstances and modifications of support obligations.  In fact, Apple Sulit-Paralejo in our Atlantic City office recently published a post on the Ferstenfeld decision. The thing is with changed circumstances,  in this economic climate and job market, it is a popular topic for courts and new decisions are being delivered on a fairly frequent basis.

Today's post is about proving the change in circumstances and stems from the unpublished Appellate Division decision of Romito v. Romito, A-0486-09, decided March 29, 2011. This appeal came from an Essex county trial court decision made after Mr. Romito filed what was at least his second motion to reduce his alimony and child support obligations stemming from a 2002 divorce and property settlement agreement.

Mr. Romito's application was supported by his Certification attesting to the failure of his remaining businesses and a sworn statement of his ability to earn $52,000/yr working for a friend's business, similar to what he had previously operated.  It was also supported by a current Case Information Statement and copies of income tax returns.  Part of the relief sought was a hearing pursuant to Lepis v. Lepis, to prove the changed circumstances.

Ms. Romito filed a cross motion in response opposing this application and seeking other forms of economic and additional relief.  Her application was supported by a Certification attesting that she and the children were in desperate financial straits due to Mr. Romito's failure to pay his support obligations and his unfair competition with her business.  She attested that Mr. Romito owned the business of his friend that he claimed to only work at and that he was concealing income and living a lifestyle inconsistent with his alleged reduced economic circumstances.  It was also supported by her current Case Information Statement, tax returns and proof of expenses that were not paid.

In response, Mr. Romito denied the allegations made in the cross motion and attested that Ms. Romito's economic problems were of her own doing and stemmed from her inability to profitably run the business.  He proposed that if Ms. Romito would agree to turn the Montclair office over to him, he'd pay her $2,000/month in alimony (still a reduction from the parties' agreement but more than he'd been paying).

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Different forms of social media, Facebook in particular, have become the divorce lawyer's best friend as a source of damning evidence.  In fact, we have blogged about this before.  The New York Post today had a story that must serve as a primer on what not to do what when you are seeking permanent alimony alleging disability. 

In this case out of Staten Island, the wife sought permanent alimony alleging that she could not work, rarely left home and rarely socialized because of injuries from a 1996 car accident.  Notwithstanding that tale of woe, she was belly-dancing for hours a day  and then spending several more hours a day blogging about it. And if blogging was not enough, when she was asked by a Facebook friend why she was not posting pictures from her performances, the wife responded, "Gotta be careful what goes online, pookies. The ex would love to fry me with that."

He did. And so did the Court.  Instead of getting the $850 per month in permanent alimony she sought, she received an award of only $400 a month for two years. She also got only 40% from the proceeds of the sale of the marital home and her husband was granted a substantial award of  legal fees for her "dilatory tactics."

What is the lesson from this?  Those who post evidence of their fraud upon their spouse and the Court have no one to blame but themselves when they are exposed. 

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As a follow up to my blog post of last week, this week the Appellate Division came down with yet another cohabitation decision. The case of Pizzuti v. Proctor was decided on March 31, 2011. In Pizzuti, the wife appealed from a decision wherein the trial court terminated her former husband’s alimony obligation of $100 per week on a finding of changed circumstances based on the wife’s cohabitation with an unrelated male.

At the trial level the husband submitted a myriad of proofs that the wife was cohabitating in support of his obligation to terminate alimony. His efforts were for naught however, because the fact that she was cohabitating went completely uncontested. Indeed, in response to the husband’s allegations, the wife stated as follows: "I will spare the Court the trouble of scheduling a plenary hearing because I admit that I do cohabitate with Mr. Argenzio at his home, located [in] Ramsey, New Jersey and have been since 1999." However, as I stated in my previous blog, proof of cohabitation is only half the battle. The next inquiry is whether, by virtue of the cohabitation, the wife was economically dependant on her new paramour. In New Jersey, the fact of economic dependence is presumed upon a showing of cohabitation, and it is incumbent the cohabitating spouse to prove otherwise.

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It seems as though a wave of cohabitation cases has recently swept across the Appellate Division in New Jersey. And for good reason. While well-settled is the concept that a supported spouse’s cohabitation typically will constitute a change of circumstances sufficient to justify end of a supporting spouse’s alimony obligation, the nuances of the law can be quite involved. This can been seen from the Appellate Division’s February decision in the case of Wonderlin v. Wonderlin, on which Sandra Fava blogged. That holding came down to evidence of the times and frequency that an unrelated male came and went from a former wife’s home, which, the Appellate Division ruled, entitled a former husband to discovery on the issue of whether the wife was cohabitating.

While the comings and goings of an unrelated male can be one indicia of cohabitation, in the case of Okoshi-Wilson v. Wilson, the Appellate Division examined a different source to prove cohabitation: the wife’s earnings as compared to her expenditures. There, the husband moved for a termination of his alimony obligation on the basis of the wife’s cohabitation with an unrelated male.

It seemed, based on the proofs submitted, that the husband had always earned a significantly greater salary than the wife, with the wife only earning about $47,000 in 2008 after her alimony of $22,500 per year was considered, as compared to the husband’s $164,164 the year prior. Despite this fact, the wife was apparently living in a posh, three-bedroom Upper East Side apartment, which she clearly was unable to afford on her salary alone. As it turned out, also a tenant of the same apartment was an unrelated male by the name of Steven Macy. This revelation led to the husband’s application for a termination of his alimony obligations. During the hearing at the trial level, Okoshi admitted that she had been able to maintain her New York City residence, because she was Macy’s tenant, allegedly paying him only $135 per week in rent and household work such as watering the plants, purchasing food, and collecting the mail. She further testified that Macy and his daughter only stay at the apartment about five times per month. Okoshi had documents to support some of her assertions — a lease signed by her and Macy and receipts for rent she paid in cash. She denied any romantic involvement with Macy and said he does not support her in any way.

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When parties resolve their divorce via a settlement agreement, can they agree that neither party will seek to modify the agreed upon terms of alimony and child support?  In New Jersey, a court may generally modify a support obligation at any point in time to achieve equity inherent in this State's alimony law.  For instance, as detailed countless times on this blog, a party must establish that they have experienced a substantial and continuing change in circumstances under the seminal case of Lepis v. Lepis, 83 N.J. 139 (1980), in order to merit some form of support modification. 

An "anti"-Lepis clause, however, attempts to limit the court's ability to modify via a waiver by the parties to seek such modification.  To be enforceable, the clause must fulfill several conditions.  First, the parties must include such language in the settlement agreement "with full knowledge of all present and reasonably foreseeable future circumstances," and second, "must bargain for a fixed payment or establish the criteria for payment to the dependent spouse, irrespective of circumstances that in the usual case would give rise to Lepis modifications of their agreement."

However, consistent with my assertion above that such clauses are enforceable - until they are not enforceable - the overriding legal principle in New Jersey is that "If circumstances have made the parties' standards unreasonable, they can in extreme cases be modified.  In less extreme cases . . . the payments can be accrued with enforcement conditioned upon the payment of reasonable periodic payments."

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It is well-settled law in New Jersey that child support and alimony awards are always modifiable. While there is an abundance of case law in the area of post-judgment modifications of support obligations, particularly in this economic climate, the most often cited case for modification is the seminal New Jersey case of Lepis v. Lepis, 83 N.J. 139 (1980). Indeed, the Lepis Court was the first in holding that when changed circumstances substantially impinge upon the supporting spouse’s ability to pay support at the level ordered, a modification of the support order might be necessary. The burden to prove this change in circumstances falls upon the supporting spouse when such a downward modification is sought.

A reduction in the supporting spouse’s income has long been recognized as a changed circumstance warranting a support modification, so long as it is not temporary in nature. In addition, the recent Appellate Division case of Angelastro v. Angelastro, recently solidified the notion that a support modification may be sought when the supported spouse’s economic circumstances change for the better.

In Angelastro, the parties’ property settlement agreement, executed in September of 2008, awarded the wife alimony as follows:

The [h]usband shall pay to the [w]ife[,] starting at the sale of the marital home[,] the sum of $350[] a week in [a]limony commencing for a period of six (6) years. Upon the completion of aforementioned six (6) years[,] the [h]usband's [a]limony obligation shall reduce to that of $200[] and continue for a period of eight (8) years thereafter representing a total payment period of fourteen (14) years.

In addition, child support in the amount of $200 per week was provided for. The parties’ property settlement agreement specifically predicated the above support awards upon the wife’s imputed income of approximately $25,000.

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Previously, Sandra Fava, a contributor to this blog, did a piece on preparing for the initial divorce consultation with a lawyer.  The process, however, starts even before that.  On our web site, we have an advice piece entitled Preparing for the Divorce Process. 

Since it is linked to this post, I will not repeat everything contained in the piece.  However, the topics contained in that piece are as follows:

1. Speak to an attorney now, not later
2. Selecting the right attorney (including how to get referrals for an attorney)
3. Gathering documentation
4. Preparing for the initial meeting
5. Telling the truth
6. Keeping a diary; and
7. Trusting your attorney for legal advice (as opposed to friends, family members, co-workers, etc.)

Do I stay or do I go? This is not an easy question to answer. However, if you are even
contemplating a divorce, divorce planning (and not in the nefarious way that often goes with this phrase) is essential, especially in difficult economic times.  Divorce can be a long, highly charged, expensive process - emotionally and economically. Being prepared and keeping
perspective, at least as much as humanly possible, can help you save time and legal fees
while protecting your and your children's interests.

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If you have been through the process of divorce and have a spousal support obligation to your ex, you should have been advised that aside from explicitly stating an end date for your spousal support obligation, there are few ways to end the payments.  Death is certainly one of them.  If your ex remarries that is a second.  What happens when your ex is living with someone else?

The issue of cohabitation has been dealt with by the courts in NJ in case law since the 1970's.  The issue in and of itself is not new.  How the courts have dealt with allowing parties to prove the issue has been somewhat fuzzy, until a recent unpublished Appellate Division decision provided what seems like some much needed, long time coming, guidance.  If you haven't already, take a look at Wonderlin v. Wonderlin .

So what's the guidance- well let's start with the basic principles cases like Konzelman v. Konzelman, 158 NJ 185 (1999) and Gayet v. Gayet, 92 NJ 149 (1983) have given us.  In Gayet, the court told us we need to look at whether the cohabitating couple bears the "generic character of a family unit as a relatively permanent household".  In Konzelman, the court told us that the relationship in question needed to show signs of "stability, permanency and mutual interdependence".  The proof required is that "of an intimate relationship in which the couple has undertaken duties and privileges that are commonly associated with marriage" which include but are not limited to "living together, intertwined finances such as joint bank accounts, sharing living expenses and household chores, and recognition of the relationship in the couple's social and family circle".  The problem for litigant's and practitioners alike has been, how do you prove such intimate details at first blush so as to convince a court that you have met your burden of proof and now the alleged cohabitating ex must produce evidence to show there is no economic benefit of the relationship and the spousal support is still needed?

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

I did a blog on this phenomenon in May 2008 and was recently asked for permission that it be reproduced for publication for an CLE program in Indiana.  That cased me to look at it again and update it below.

As noted then, there are times when there are valid, legitimate and explainable deviations in someones income.  Some people are in commission sales and one year is legitimately better than another.  Perhaps someones income is tied to real estate.  Back then, I gave the example that a person may have a legitimate reason why 2007 and 2008 were down years, citing mortgage bankers and realtors as people who were probably hurting then. Those people are probably still hurting as are commercial real estate brokers, builders, contractors and other people tied to the real estate industry.  Since that time, Wall Street has changed substantially.  While the market is now coming back, there has been much turmoil in the last two and a half years and many have gone through job changes.  Some medical professionals are working harder and making less.  Accountants that worked with small businesses may have fewer clients and lower revenues in light of the recent recession.

 At the time of the original blog, I talked of a recent where if you looked at my client's tax returns and W-2s, one would think that support should have been based upon a seven figure income as opposed to a mid-six figure income.  In this case, there were some discrete one time payments from exercises of stock options and change of control of companies that he worked for.  (As it turned out, his subsequent income was more in line with the lower number as opposed to the higher number, justifying our excluding the non-recurring income from consideration).

Situations of legitimately fluctuating income were not what I was talking about.  In fact, when there is non-recurring income, it may be legitimate to back it out for purposes of computing support or else the support would not be fair to the payor.  When income legitimately fluctuates from year to year, the Child Support Guidelines and decisional law suggest taking an average (3 or 5 years is common). 

The cases that I was talking about are those where there is no explanation for the sudden drop in income.  Very often, this occurs when the supporting spouse is self employed.  There are many ways income is hidden.  Sometimes, it is just not collected - as possibly evidenced by a large rise in accounts receivable.  Sometimes, there may be several capital expenditures or large equipment purchases, which reduce the profits and thus the income.  Other times, perquisites or personal expenses paid by the business increase dramatically.  Check the business credit cards - they are often illuminating in this regard.  Cash is also a possibility as are other manipulations with payments received.   We have a case now where we suspect payments to a third party to divert a spouses income.  Sometimes a person's loan account and/or cash at hand increases without explanation suggesting that money is being left in the business for no reason.

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

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

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Very often, we are confronted with situations where on spouse is self employed and the business pays certain personal expenses on behalf of one or both of the parties.  Often times, these expenses are wholly appropriate and would withstand IRS scrutiny.  Other times, there are excess perks or other personal expenses paid through the business that have no business purpose.  The practical effect is that these expenses are deducted as business expenses, and essentially taken as tax free income.  For purposes of the determination of the proper income to use for support purposes, as well as for business valuation calculations, these expenses are added back to income. While obviously inappropriate, some times we even encounter unreported income which also has to be added back for support and valuation purposes.

A bigger question/debate is once added back, should taxes being considered?  Put another way, if the person was not paying taxes on this aspect of his/her income. should the income be reduced by taxes or should it be grossed up.  As an example, a person whose W-2 income is $300,000 per year, has far less spending power then someone who earns $300,000 but only pays taxes on $200,000 because of appropriately deducting an expense that is part personal and part business and/or inappropriately taking excess business deductions for personal expenses paid through the business.  To exemplify this point, I have often asked the forensic accountant at a deposition or trial, "What would a taxpaying W-2 wage earner have to earn to have the same spending power (net after tax income), as this person?" 

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A divorce action generally results in a Final Judgment of Divorce which dissolves the bonds  of matrimony - including the part about "in good times and bad . . . "  This however, is not always the case.  Certainly if two people have children together their relationship with each other, although different, will have to continue if they are to co-parent.  But what about a long term marriage at the end of which a Judge orders permanent alimony?  Through permanent alimony the financial relationship of two individuals live on "in good times and bad."

In a recent appellate division case, Knips v. Knips, the Court reversed the trial Court's determination regarding alimony where, after thirty-four years of marriage and an award of $175 per week in permanent alimony, the plaintiff could not afford to lead a "legitimate middle-class" lifestyle.  As the Court in Knips states, "alimony is intended to allow the dependent spouse to live at the marital standard of living, not just 'bare survival'" [emphasis added].  The idea is that If the parties enjoyed a middle-class lifestyle during the marriage, then the parties should be able to enjoy a similar lifestyle after the marriage.  If one party was mainly responsible for financially supporting that lifestyle, then a Court will likely order that they continue to be financially responsible (in the form of alimony payments).  And, if among other factors, the marriage was long enough then then Court will order that this financial responsibility be permanent (i.e. permanent alimony). 

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Visiting a divorce attorney for an initial consultation can be a difficult and intimidating proposition.  For some, it is the realization that their marriage may be over.  For others, it is simply the discussion of such deeply personal matters with a stranger.

Nerves or trepidation aside, the main purpose of the initial consultation is to learn about the process and understand what your rights and obligations could be.  The law is never black and white but has many shades of gray.  A good consultation will explain the black and white and touch upon the relevant areas of gray. 

The initial consultation is also important because this process lets you interview your potential counsel.  Not only is it important that you find the attorney you plan to hire to be competent and best able to represent your interests, but its important that you also like your potential counsel.  Sounds trivial but keep in mind that your divorce lawyer is someone who is quickly going to learn the good and the bad of you and your most personal relationship, your marriage.  Secrets aren't helpful and a level of trust is required.

So what can you do to make sure you get the most out of this initial consultation and at the same time provide counsel the relevant and important information needed?  Here are some suggestions:

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Perhaps its the stress of family life during the holiday season, but many clients of late have claimed that the supporting spouse has stopped supporting the family as he did during the marriage.  The reasons are varied, but often of the same cloth - i.e., the payor spouse claims that he is now earning less money than before, the payor spouse claims that the payee spouse is overspending (despite there being no change from the marital lifestyle) and believes that the supported spouse should get a job after having never worked during the marriage, or, most egregiously, that they simply believe that the marriage is over and a support obligation is over unless a Court directs otherwise.

These situations often leave the supported spouse afraid and wondering how they are going to meet everyday expenses for herself and the kids, while also litigating a divorce matter against their financially superior spouse.  Often this is part of the supporting spouse's underlying strategy - economic coercion, i.e., essentially trying to force the supported spouse to settle under his terms without going through a protracted litigation.

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I recently heard a person say that their spouse believed his alimony and child support would be based solely on his salary.  I am sure he would like that but that statement is wishful thinking at best.  If he was correct, several hundred thousand dollars each year would be his alone and not considered for support.  Aside from potentially being unfair, it is not the law.

In fact, in New Jersey, the definition of income from support purposes includes all sources of income.  In fact, the Child Support Guidelines includes, but is not limited to 23 possibilities for income, as follows:

a. compensation for services, including wages, fees, tips, and commissions;
b. the operation of a business minus ordinary and necessary operating expenses (see IRS Schedule C);
c. gains derived from dealings in property;
d. interest and dividends (see IRS Schedule B);
e. rents (minus ordinary and necessary expenses - see IRS Schedule E);
f. bonuses and royalties;
g. alimony and separate maintenance payments received from the current or past  relationships;
h. annuities or an interest in a trust;
i. life insurance and endowment contracts;
j. distributions from government and private retirement plans including Social Security, Veteran's Administration, Railroad Retirement Board, deferred compensation, Keoughs and IRA's;
k. personal injury awards or other civil lawsuits;
l. interest in a decedent's estate or a trust;
m. disability grants or payments (including Social Security disability);
n. profit sharing plans;
o. worker's compensation;
p. unemployment compensation benefits;
q. overtime, part-time and severance pay;
r. net gambling winnings;
s. the sale of investments (net capital gain) or earnings from investments;
t. income tax credits or rebates (excluding the federal and state Earned Income Credit and the N.J. homestead rebate);
u. unreported cash payments (if identifiable);
v. the value of in-kind benefits; and
w. imputed income

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While the Appellate Division’s in the case of Tannen v. Tannen (addressed in another blog by Larry Cutler), primarily ruled that income paid to the divorcing wife as the beneficiary of a discretionary trust (the “WTT”) cannot be considered an asset available to fund alimony, that discussion naturally begged the question which was addressed in the second part of the case; namely – what effect does the actual income disbursed from the trust have on a determination of the needs of the parties in setting the alimony and child support obligation of the supporting spouse?

It is well-settled in New Jersey that the “marital standard of living” serves as the touchstone for the initial alimony award in a divorce. The standard of living during the marriage is the way the couple actually lived, whether they resorted to borrowing and parental support, or if they limited themselves to their earned income. The Court examines the couple’s “lifestyle expenses” in order to determine how much support is required by the dependent spouse to maintain that lifestyle support.

In Tannen, the trail judge sought to apply his conclusions regarding the parties’ lifestyle expenses to the calculation of the amount of support required by the dependent spouse to maintain that lifestyle. The judge acknowledged that the lifestyle expenses included those incurred by the parties and their children, however did not give any analysis as to the costs associated with the wife’s actual needs post-divorce in light of the fact that income was paid to her at least monthly by the WTT. He also failed to consider at all the husband’s post-divorce needs. The Appellate Division took issue.

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Surfing the internet on a recent morning, I noticed an advertisement for divorce insurance. This was news to me, as I had never seen nor heard anyone talk about such a thing. Practicing family law for twenty years, you would think that I would have noticed this before, but I haven’t. Indeed ,the website that I was viewing stated that it was the only company to offer such a policy. The premise behind the insurance policy is that an individual can purchase “units” of insurance which correspond to a payout in the event of a subsequent divorce.   This payout can be used towards any divorce expenses including legal fees and distribution of assets, although the web site that I was viewing did not actually contain any restrictions.   The website that I was viewing was selling units of $1250. So in other words, if a potential policy holder believed that his or her particular situation would warrant $125,000, then he or she would purchase 100 units of insurance. The policy is paid on the presentment of a final judgment or decree of divorce, and is payable to the insured in a lump sum. To prevent people from purchasing the insurance when a marriage is already in shambles, there is a waiting period of four years. If the insured gets divorced within the waiting period, all premiums ( less taxes) are returned to the policy holder.

So when my head stopped spinning, and after I thought how such a policy could be subject to fraud ( two spouses obtaining a policy and then divorcing just to collect- then possibly remarrying), I wondered how this fits in with New Jersey matrimonial law as we know it. Can this insurance policy be considered an asset of the marriage which would be distributable to both parties? Would it be considered income for support purposes? This raises all sorts of issues!

In New Jersey, all assets that were acquired during the marriage, regardless of whose name the asset is titled in, is an asset of the marriage which is subject to distribution in a divorce. In the event of a policy that was purchased during the marriage by one spouse and that spouse paid the premiums from income earned during the marriage, is the payout an asset? I believe the answer is likely yes. Indeed, I believe that it would be treated the same as the value of a whole life insurance policy, the premiums of which has been paid during the marriage. On the other hand, I am sure an argument can be made that it is only the sum total of the premiums that were paid which constitute the distributable asset.

Alternatively, consider the situation in which one spouse has an account that was his or hers prior to the marriage, and never places that account in joint names, and never commingles marital funds in the account. Then, I believe that the policy and the payout would belong to the purchasing spouse.

In addition, if a third party, say a parent of a spouse purchases the insurance in the name of the spouse, this may be considered a gift from a third party, which is also not distributable in a divorce. I can just imagine the father who never thought the husband was "good enough" for his daughter running out to purchase a policy.

So what about support? The most significant factor considered for both spousal support as well as child support is obviously income, and income from assets is included in that.  If a policy holder has a payout of $250,000 ( the limit of the policy I was viewing), and the prevailing interest rate is 4%, do we add $10,000 of income for support calculations?

I have no doubt that these will be the type of questions that we will begin to see if indeed these policies are purchased by New Jersey couples who find themselves in a divorce. 

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Following on the heels of an earlier blog entry this week addressing "alimony escalators" in the context of proving a change in circumstances meriting a decreased alimony obligation, a new unreported (not precedential) decision from the Appellate Division in the matter of Eick v. Eick, found that the husband had fulfilled his initial "changed circumstances" burden meriting the matter being sent back to the trial court for a plenary hearing on the issue. 

In Eick, the husband was a self-employed bookbinder who was obligated to pay permanent alimony to his former spouse pursuant to a February 2007 property settlement agreement in the amount of $1,500 per month, as well as $2,000 per month in child support for the parties' two younger children (a number agreed upon that went beyond the child support guidelines calculation).  Critically, the PSA established that such figures were based on an income of $117,000 for the husband and $29,000 for the defendant.  As an important aside, it is important in any settlement agreement to note what incomes were utilized to determine support so that a baseline figure exists should the issue arise in the future.

In March 2009, the payor husband filed a motion to reduce his support obligations based on an alleged change in circumstances - a claim that his business had "declined dramatically" due to online research tools utilized by many clients that rendered the need for his services substantially diminished.  He also claimed that his business had suffered due to the growth of imported bond printed material, as well as the general downturn in the economy. 

Interestingly, the former husband supported his application by submitting the report of an employability expert, who concluded that, while he could learn new skills, changing careers was not a realistic possibility after 27 years in the bookbinding business.  The report further concluded that his best option was to stay in his industry, anticipate a continued decrease in business volume, revenue and earnings, and consult with a career counselor or business consultant to determine available options.

In reversing and remanding the trial court's decision denying the husband's modification motion, the Appellate Division noted that not only had his income decreased, but that the wife's income had "significantly increased" - an undisputed fact set forth in the wife's Case Information Statement that the trial court failed to address.  The Appellate Division also concluded that the trial court failed to make sufficient findings as to whether the husband's decreased earning situation was of a permanent or temporary nature, since a temporary situation is not enough to merit a changed circumstances finding.  Even though the trial court noted that the bookbinding industry had undergone difficult times when the PSA was entered, the judge also noted that the situation was further "complicated" by the downward economy.  As a result, the trial court's denial of the husband's application was reversed and remanded for a plenary hearing.

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Though you don't see them much anymore, some times Marital Settlement Agreement contained escalator clauses which, in effect, provided for automatic increases in alimony or child support.  Some times they were a fixed percentage per year. Other times they were tied to the cost of living/Consumer Price Index. 

In the unreported (non-precedential) case of Burroughs v. Burroughs released on August 9, 2010, the effects of a 5% annual increase on alimony escalator clause was at issue.  In this case, the agreed upon alimony was $200 per week and based upon the husband's income of $60,000 at the time (1994).  The husband had comparable income until the year 2000 when he could no longer find same and went to work at Home Depot earning about half of what he made in the past.  In 2006, the alimony was increased to $337 per week, not due to a change of circumstances, but rather, by implementation of the escalator clause.  As an example why not to use such an escalator clause this reflects a 68.5% increase in support in about 10 years.

The husband's income continued at the less than time of the divorce levels until about 2007, when he established a business with a friend to try to increase his income from what he was earning at Home Depot.  This was not a success.  He ultimately filed a motion to terminate or reduce his alimony.  The motion was denied.

The Appellate Division reversed holding that the husband had made a showing of a change of circumstances by virtue of his Social Security statement showing far lower wages post-2000 than his alimony was based upon.  The effect of the escalator clause was also impacted on the showing of a change of circumstances (though this is curious because it certainly is a foreseeable event.)

The matter was remanded for discovery and a plenary hearing.

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In the last several years, I have noticed a shift in the attitudes of judges and lawyers towards women who have spent a long term marriage working within the home raising a family. In New Jersey, there are thirteen factors which are considered when determining alimony, but our case law provides that two of the more important are lifestyle of the marriage and ability of the receiving spouse to contribute toward her (or his) own needs.  This second factor often involves obtaining an employability expert who opines on the issue after administering various objective testing and assessments to determine earning capacity, rather than having any real life information.

Ten years ago, a case in which the wife (or husband)  had been home for fifteen years raising the children and caring for the family would have been most often awarded permanent alimony and would not likely have been expected to return to work full time as the lifestyle of the marriage was such that she was a stay at home mom.    Lately, however, there appears to have been a significant shift in attitudes, particularly towards women, and in my recent experience, the emphasis has shifted to what the receiving spouse can earn, whether it be immediately, or with training in order to return to the work force with less attention to what the parties did during the long term marriage. 

As a society, and for a number of different reasons, we have moved away from a one income household to households in which both spouses are employed. But we still have many couples who, during their marriage made a decision that they wanted a parent home full time to care for the children. Depending on when the divorce occurs, this may result in a situation where the lifestyle has been that a spouse has spent decades out of the workforce. For women, particularly, the realities are such that it is difficult to return after such a long absence, regardless of what skills she may have. In fact, a recent article in the New York Times, as reported by MSNBC, (noted that women who have children still lag behind men and women without children.

Certainly, many, many women with children work full time including family lawyers ( this writer among them), and family court judges. And to some, that may be the new “normal.” But we have an obligation, as we practice, to make sure than in our advocacy as well as in our decision making, that we focus on the lifestyle of the marriage of the case, and not impose our own values on litigants.

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We previously blogged on the Appellate Division's notable decision in Rogers v. Gordon, which addressed the legal standard applicable to prenuptial agreements signed prior to New Jersey's enactment of the Uniform Premarital Agreement statute.  There, the Appellate Division reversed a trial court Order to the extent that it set aside the entire prenup, since, as to equitable distribution, the husband knew that the wife would likely be wealthier than him at the time of a divorce given her family wealth.  As to the issue of alimony, however, the Appellate Division modified the trial court's Order by holding that the husband could seek alimony at a later date if he could establish "changed circumstances" pursuant to  Lepis v. Lepis, 83 N.J. 139 (1980).

Considering the level of acrimony involved in the divorce proceeding, which could be easily discerned from the first Appellate Division decision, it was no surprise that a second appeal was filed, this time as to the issue of counsel fees.  On this appeal, the wife argued that the trial court erred by allowing the husband to seek and obtain counsel fees as to his claim for alimony, since he was denied such a claim in relation to equitable distribution issues previously raised. 

The Appellate Division affirmed the trial court's finding that the husband had expressly waived in the prenup his right to counsel fees in relation to equitable distribution, but that he had not done so as to alimony since the prenup provision regarding alimony did not contain a similar provision waiving counsel fees on that issue.  Ultimately, the Appellate Division remanded for a proper calculation of fees incurred as to alimony, but what struck me as interesting in reviewing the Opinion was the Appellate Division's conclusion that the husband's attorney had achieved some sort of success as to the alimony issue.  Specifically, while it noted that the attorney had not obtained for the husband an immediate benefit - i.e., he still was not entitled to alimony without establishing changed circumstances - the attorney was deemed successful in that he opened the door for the husband to make such a claim in the future.  This even though the husband could very well fail in making that future claim. 

The primary theme in the case was one of contract interpretation - while one paragraph contained language waiving counsel fees, another did not.  Since the prenup was the product of expert drafting, the Appellate Division found the lack of language waiving counsel fees as to alimony to be significant and, as a result, did not preclude the husband's claim.

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Earlier today, I blogged about a NY Times article published yesterday about proposed New York legislation to adopt no fault divorce. That articles also noted that there was legislation proposed to set up a standard formula that judges would need to use to determine alimony (known in New York as maintenance).  The article noted that judges would still have discretion to modify those awards, but that the genesis of the proposed legislation is to prevent "widely inconsistent awards." 

While New Jersey child support guidelines to use where the parties' combined, net after tax income is $187,200 or less, we haves no such guidelines regarding alimony.  Further, I have heard of no proposal to implement them.  There is however, a dirty little secret called a "rule of thumb" that is often used to get a ballpark of what alimony should/could be.   Simply put, you subtract the lower income (or what that person could earn) from the higher income and take one-third of the difference. 

The rule of thumb is very simplistic and does not take into account any special factors other than income or earning capacity. It does not take into account actual taxes paid, lifestyle, sacrifices made, equitable distribution received or any of the other statutory factors.  Moreover, judges cannot use this to calculate alimony if the issue is tried before a judge. 

Do we want something like this in New Jersey?  While it may certainly make things easy and prevent wide deviations you may get from courtroom to courtroom and/or county to county, one size rarely fits all.  Rather, the statutory factors, if fully presented to the Court, and adequately considered Adan implemented by the judge, should result in a fair and reasonable award.  The rule of thumb is a useful sanity check, but no formula will be able to capture all scenarios.

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I tell virtually every client I work with that the Case Information Statement which must be completed by anyone going through the formal divorce process in NJ is one of the most important documents to be completed - arguably, the most important document.

The recent unpublished decision of Raesky v. Brody, A-6148-08T1, decided May 26, 2010, reinforces my mantra.  When completing a Case Information Statement it is important to be honest (it's a document signed under oath with the risk of penalty for perjury), realistic, and thorough.  The budget, assets and liabilities listed on this document will assist a judge in determining the issues of spousal support and the division of assets.  These statements are the maps which judges follow to lead them to a final determination of these issues.

By over inflating  your budget, you give the other side the ability to poke holes at your credibility.  Sometimes the thinking that the higher my budget the more money I can get may backfire, as it appears to have done for Ms. Brody.  Also, in the case where the budget is artificially low, the payor spouse's credibility will be questioned.  If it is the payee spouse with an inaccurately low budget, they run the risk of receiving inadequate support and thus they're unable to meet their needs let alone maintain even a semblance of the marital standard of living.

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In an unreported (non-precedential) decision in the case of Brown v. Brown  released on May 25, 2010, the Appellate Division determined that veterans disability benefits and social security benefits are income for purposes of determining alimony.  In this appeal of an Order that granted some alimony reduction but not as much as the former husband sought, the facts are not particularly interesting.  That said, what was interesting was that the reduction was not as much sought (and in actuality, the ex-husband sought an elimination of alimony, because the court considered the veteran's disability pension and Social Security over his objection.  In fact, he tried to argue that the spendthrift provisions (provisions that prevent creditors from attacking certain assets/benefits) in the relevant federal laws prevent such consideration but the Court noted that a spouse seeking support was not a creditor within the meaning of the law.

The matter was, however, remanded because the trial court did not analyze the statutory factors when reducing the support.  As noted in my blog last week about the Walsh case, when dealing with a motion to modify alimony, once the Court determines ta ht there is a change of circumstances, they have to look at the needs of both parties.  In fact, if the Court makes an initial finding of a change of circumstances, the court must analyze how much the alimony should be in a modification application the same way it would in an initial alimony application.   

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On May 13, 2010, the Appellate Division issued yet another unreported decision in the matter of Walsh v. Walsh.  This is yet another interesting decision in a matter that has been appealed several times.  In one of the prior opinions, the trial court employed an 11 year average of the husband's income for support purposes given the historic variability of his income.

In the present appeal, at issue was a modification of alimony.  In this instance, while the court found that the husband's 2008 income was $58,000, the court essentially imputed twice as much to the husband.  The Appellate Division, however, did not disturb this finding.  They did, however, reverse the decision for several interesting reasons and remanded the matter for a new hearing.

In the trial judge's decision, he found that with the reduced alimony that he ordered, that each party would have a similar monthly shortfall in their budget.  The husband argued and the Appellate Division agreed that there was no basis for this decision.  In fact, the court made no specific findings as to the husband's needs.  In failing to do so, the Appellate Division held that: "As a result, the court did not sufficiently address the central issue in any alimony modification case, the supporting spouse's ability to pay."

The case also highlights the fact that the same standards apply to an initial determination of alimony and a modification.  In fact, the Court held that:

As a final observation, we note that the trial court recognized in its bench opinion that the $2,000 award  "is probably more than [it] would find if this were an initial hearing." Because the same standards apply to an initial alimony proceeding as to a modification proceeding, the court needs to explain its decision in that respect as well.

In the day and age of financial crisis and reduced incomes for many, this case cogently reminds us of the standards to apply and the notion that once a court decides to review an alimony award, while consideration of the marital lifestyle is clearly important, the review is a fresh review based upon all of the alimony factors.  Strict adherence to the prior award is not the standard.

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If a dependent spouse starts living with an unrelated adult after the divorce, is that enough to terminate the supporting spouse’s alimony obligation? While the answer to that question is not as simple as one would think, it is an issue that often arises, especially in a troubled economy where many supporting spouses are having a more difficult time meeting their payment obligations.

In New Jersey, “cohabitation” is considered a “changed circumstance” allowing the supporting spouse to seek an alimony reduction by first obtaining discovery and then demonstrating that the dependent spouse’s needs have either decreased because the third person is contributing to the dependent spouse’s support or is effectively subsidizing the dependent spouse at the supporting spouse’s expense. What, however, is meant by cohabitation? Courts in this state have concluded that it does not merely mean a so-called dating relationship, but, rather, involves a relationship described as having the “generic character of a family unit as a relatively permanent household” where there exists an “intimate relationship in which the couple has undertaken duties and privileges that are commonly associated with marriage.” What does that mean? Since each situation is different, a court will look at a given set of facts for the marital-type relationship including, but not limited to, a joint residence, joint/connected finances, shared living expenses and performance of household tasks, and the relationship is held out in this way to the community, social groups, and family.

Once the supporting spouse establishes the changed circumstance of cohabitation, the burden of proof then shifts to the dependent spouse to prove that he or she has derived no economic benefit from proven cohabitation. The reason that the burden shift is simple – the dependent spouse has greater access to relevant information than does the supporting spouse to disprove a cohabitation benefit.

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Lately, it seems that wherever you turn, well-known personalities, whether they be athletes or entertainers, are entering sexual rehabilitation The question arises as to whether extra-marital sex can be converted into dollars by the offended spouse, that is, is there some theory by which compensation might be grounded.

The answer in New Jersey, perhaps, can be found in the case of Mani v. Mani, 183 N.J. 70 (2005), written by the well-respected Justice Virginia Long -- a justice of the New Jersey Supreme Court who had a wealth of experience both on the trial bench in handling matrimonial matters as well as on the Appellate Division before being elevated to the State’s highest court. In that case, the issue was simply whether marital fault could be considered a factor in awarding alimony. We start from the theoretical position that the statute on alimony identifies fault as a factor. (Note that that was a left over from the time before the Divorce Reform Act in 1971 when the only grounds for divorce were based on fault. Since then, of course, several no-fault grounds have been added to the point being that most cases are now granted under irreconcilable differences) The practical question is simply to what extent will courts utilize fault as a factor in contested cases?

From 1971 and up until Mani, courts were reluctant to become enmeshed in time consuming tit-for-tat testimony which would essentially have no effect upon the outcome in any event. That attitude was resoundingly continued in Mani that alimony is not fault t based, but instead, an economic right of support arising out of the marital relationship to the extent of the standard of living enjoyed during the marriage. It is only where marital fault affects the economic status quo of the parties can a trial court take such fault into financial consideration.

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For any family law practitioner, a high net worth and asset-rich divorce matter can become complicated.  Depending on which party the attorney represents, careful thought must be given to the division of assets, tax consequences and the calculation of income for support purposes.  This task has become more difficult with the recent volatility of the stock market and the many changes in high earning executive compensation, retirement and bonus packages.  A recent article in BusinessWeek by Alexis Leondis addresses and reminds us of many of these changes.

As many big financial firms gained media attention as a result of their financial practices and federal bailouts hit the streets, these companies were forced to take a closer look at their executive compensation packages.  Historically, many of the higher up executives received what some would call enormous bonuses in addition to their already six figure salaries.  These bonuses were included when calculating support figures as this money was typically used to meet daily expenses of the family, including the maintenance of lifestyles that consisted of private school tuitions, nannies and luxury vacations.

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As the saying goes “Hell has no fury like a woman scorned,” but in a recent unpublished New Jersey Appellate Division decision the opposite was true.  In Weitz v. Weitz, App. Div. Docket No. A-1760-08T1, decided February 25, 2010, the defendant, Arthur Weitz, appealed from orders denying his post-judgment motions to terminate payment of alimony and for reconsideration.

Mr. Weitz and his ex-wife, Susan Weitz, were married in 1966 and divorced in 1994.  As part of the final judgment of divorce, a Property Settlement Agreement was entered into by the parties.  The Agreement required Mr. Weitz to pay alimony from 1994 until 2006, but if he was unemployed for a period exceeding 1 month than he would not have to pay for that month.  However, any months Mr. Weitz did not pay alimony would be tacked onto the termination date of the alimony.  The Agreement also stated that if Ms. Weitz remarried, died, or cohabitated with another man, alimony would immediately terminate. 

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The old adage is that “He who represents himself has a fool for a client.” Family law by nature is an emotional area of the law - custody, alimony, equitable distribution, visitation, child support – these things impact peoples’ lives. As a result, when a party disagrees with the decision by the trial court, they have the right to appeal. When the Appellate Division issues a published decision, that decision becomes binding on all trial courts in the State. Thus, family law is constantly changing and evolving. 

For instance, in a recent unpublished appellate decision, a pro se litigant appealed a post-judgment order relating to alimony and custody. In R.K.B. v. C.W.B., App. Div., decided February 8, 2010, Docket No. A-1613-08T1, a pro se defendant, CWB, appealed from an order that: 1) denied his request for a hearing on custody of the parties' son; 2) found defendant in violation of litigant's rights and ordered him to pay plaintiff the sum of $5,000 due as reimbursement alimony; 3) restrained him from discussing court proceedings with his son; and 4) directed him to pay $1,750 to plaintiff as attorney's fees. The Appellate Division affirmed the trial court decision, finding that the trial judge did not abuse his discretion. In addition, the Appellate Court noted that the defendant failed to present sufficient facts to justify a hearing on child custody.

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What happens when a dependent spouse begins living with another partner? Well, in the recent unpublished decision of Hartelust v. Hartelust the Appellate Division reviewed this question. Docket No. A-2519-08T3, decided January 12, 2010. 

Plaintiff Nora Hartelust appealed from an August 1, 2008 Order that terminated Defendant Alexander Hartelust’s alimony obligation.   After twenty years of marriage the couple was divorced in January 2007. The judgment of divorce incorporated the property settlement agreement (PSA).   At the time, the couple had a fifteen year old child, Alexander was earning $60,000/year and Nora was earning $15,000 per year. The PSA stated that Alexander would pay $175 per week in child support, $220 per week in permanent alimony, and transfer his ownership in the marital home to Nora. The PSA did not address cohabitation.

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Recently, I posted a blog entry on the phenomena of the New Years resolution divorce.  Apparently, I am not alone in thinking about this topic at this time of year as my article was quoted in one written by Tony Bertolino who is a Texas attorney.

Whether this is from the sadness many people experience over the holidays or the desire for a fresh start or a better life, it is sadly real. 

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Last week news broke the Jon and Kate Gossellin, stars of the Lifetime television program “Jon and Kate Plus Eight,” were divorced in Pennsylvania. Judge Arthur Tilson entered an Order making it official.  To read previous blog entries on this celebrity divorce click here.

While many news articles reported that the couple used an arbitrator, few actually differentiated or explained the roll of the arbitrator. Sometimes divorcing couples use an arbitrator to decide issues in a divorce rather than go to the Court. While in New Jersey only a Judge can enter an Order actually divorcing a couple – hence dissolving the marriage, an arbitrator can decide almost any other issue, including alimony, child support, equitable distribution, college expenses, graduate school costs, medical expenses, counsel fees and tax-related issues. (The only caveat is that both parties must agree that the arbitrator has the authority to decide the issue.)

In NJ when it comes to custody and parenting time arbitration, there are specific requirements for this process that our Supreme Court has set forth in the Fawzy v. Fawzy matter. To read prior blog entries on this case and arbitration, click here or here.

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I have blogged several times about the celebrity divorces that have been in the news, from John & Kate, to Christie Brinkley, to Stephanie Seymour, to Jim Nantz, to the McCourts who own the LA Dodgers and others.

Every day for the last few weeks, Tiger Woods has been front page news regarding what he first called "indiscretions" and now calls "infidelity."  We have heard in the news about potential sweeteners to his prenuptial agreement if his wife stays, to rumors that she will leave him and so on .  Obviously, since the information from Tiger and his wife is limited, people are left to speculate and gossip.

 As a New Jersey Divorce Lawyer, the best that I can offer is to give some comments on how New Jersey divorce and family law would apply to the facts (hypothetical, speculation or true facts that have been reported). 

In New Jersey, marital fault is largely irrelevant except in limited circumstances.  Though not particularly necessary anymore since we have no fault (irreconcilable differences) divorce, the fault ground of adultery can still be plead as a divorce cause of action.  That said, receiving a divorce based on adultery does not get you anything more financially.

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It is no secret that our country as well as the global economy is in the midst of a downward turn. Jobs are being lost in nearly every industry and the financial world has been turned upside down.

These economic global problems have touched nearly everyone of us. For those who have a financial obligation to support a former spouse or children, the failure to comply with court Orders pertaining to their financial obligations could have dire consequences.

It is not uncommon for a new client to ask, "Will the judge really understand my situation?" or "Am I going to get a break from my financial obligations or will I be spending money on these proceedings in vain?"

Up until recently, this was a question that received different answers from attorneys and judges across this state. The courts had not handed down much guidance on whether they were viewing the current economic crisis as permanent or something temporary that would pass. Attorneys were armed with an understanding of this global problem as it affected their current clients who were in the midst of the divorce process. The stickier question pertained to those individuals who had been divorced for months or even years and could no longer afford to pay that which they agreed or had been ordered to pay.
 

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Alimony terminates at remarriage, doesn't it?  At least that is what we have learned.  In fact, there is even a statute, N.J.S.A. 2A:34-25, that says permanent or limited duration alimony terminates upon death or remarriage of the recipient.  This is not the case for reimbursement or rehabilitative alimony, per the statute, absent an agreement to the contrary or good cause. 

Fast forward to November 17, 2009, the date of the release of the unreported (non-precedential) Appellate Division opinion in the case of Kelly v. Arato.

In this case, the parties were married in 1985 and divorced in 2004.  Their agreement called for $100 per month of alimony and $3100 per month in child support.  The wife remarried 6 months after the divorce and the husband immediately stopped paying alimony.  Four years later, when the husband's attorney wrote to address college for the children, the wife raised the issue of the non-payment of alimony.  After cross motion, the trial judge denied the husband's motion to terminate alimony as well as the wife's motion for payment of alimony arrears.  Both parties appealed.

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Connecticut seems to be the hotbed of celebrity divorces these days. 

Yesterday's news reported that model Stephanie Seymour will have to make due on $270,000 per month in temporary support while her case is pending.  The news accounts report that her husband nets $1.5 million per month making this appear to be a veritable drop in the bucket.

Today's new reports that sportscaster Jim Nantz has to pay his wife $72,000 per month in permanent alimony plus $1,000 per week in child support.  This is a substantial amount if his income is $3.2 million as noted in one place but not so much if his income is $7 million as reported in other places. 

Aside from a look into the lives of the rich and famous, this shows another thing - that is, divorce can be a very public airing of very private matters.  While perhaps it may be more noteworthy for celebrities, even much of regular people's divorce can become part of the public record.  While it is not possible to completely avoid this, treating each other in a dignified and fair manner and settling issues is a way to help keep things out of the public record. 

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We have blogged many times about cases dealing with motions for reductions of child support and alimony.  Obviously, that has been a hot topic given the economic downturn that our country has experienced over the last year or so.  Another interesting unreported (non-precedential) case was released on November 2, 2009.

That case was Miele v. Miele.  In this case, the parties divorced in 2005.  In their Agreement, the husband's support was based upon anticipated gross income of $165,000 per year.  The reason for this was because he involuntarily changed employment in 2005.   In 2004 he earned more than $331,000.  Because of these circumstances, the parties agreement required them to exchange W-2 and 1099 forms for 2006, 2007 2008.

The husband's post divorce income did not approach even the $165,000 level.  As a result, he made a motion to reduce his alimony in 2007 which was denied.   He filed another motion in 2008 which also was denied.  This time, he appealed. 

The Appellate Division reversed.  The Appellate Court found that the parties agreement recognized that there was an involuntary reduction in income and that the $165,000 number was a projection of future income that did not come to fruition.  Given that the husband had shown two, if not three straight years of income that was substantially below the anticipated gross income, he was entitled to, at the very least, entitled to a hearing. 

This case is instructive because I would anticipate that many current divorces will be faced with a similar situation of someone who lost their job and their new income is speculative.  The parties should attempt to include protections in the agreement that take into account that the income could go back to historical levels, as well as what should happen if it does not. 

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Last Friday, I was sitting in a courtroom, early for my case, when the judge called the two attorneys on the case before mine into his chambers.   As the time passed, what interested me was the reaction of both of the clients that were left behind. Both clients were disturbed that they were left alone in the courtroom while their lawyers and the judge were “in the back.” Oftentimes, judges will ask the attorneys to come back to his or her chambers, or office, for a multitude of reasons.  And I realized, that in an already stressful situation, not knowing what was going on was just another worry for the litigants.  

On many occasions, the reason can be something as simple as the judge wanting to schedule something in the case and needs to look at the court calendar. For that matter, most attorneys will have more than one case in front of the same judge and they may wind up speaking about another case entirely for a brief period ( for example, “ by the way, have you been able to settle the Doe v. Doe case you were here on last week?” “ Not yet, judge, but I think we are close to a resolution.”).  I was in a judge’s chambers several weeks ago, and it was nothing more than a scheduling conference as my adversary and I were trying to schedule a next day of trial. Between the two lawyers, we had five cases in front of the judge.  It took quite a while to find a common day that both lawyers and the court was available!

The court may want to get a sense of what discovery it still outstanding and what a realistic time frame is for getting a case ready for trial.  Other times, the judge wants to speak about an aspect of the case and ask the lawyers for their position on a legal issue, and may explore whether the issues should be the topic of further research. Priority of issues in a case may be a topic of conversation as well. Which issues are ones which will take a longer time at trial and which are not. Are there any issues in a case which may reasonably settle prior to trial? And speaking of settlement, the court may want to know how far apart the parties are to a settlement.

Some judges will become more involved than others when settlement is being discussed.  Most issues have come in front of a judge before, and he or she knows that “range” a decision will be in. If one side is being completely unreasonable, the judge may be able to help the parties move towards a settlement. The judge may have some creative ideas for compromise that it wants to share with the attorneys.  The court may want to give the attorneys his or her initial reaction in order to focus an argument.

My point is, there are many reasons why the judge may call the lawyers to chambers. Whatever the reason, it is not unusual for the lawyers to get into chambers, and the court’s staff has a pressing matter to speak to the court about, and the attorneys have to wait.  In any event, the lawyer, should, upon coming back to the client be forthright about the topic of conversation, however mundane it may have been.  It is just one of the ways an attorney should effectively communicate with the client.

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Today I came across a blog entry by a divorce mediator which was nothing short of an attack on "best lawyers."  It appeared as though the ills of the divorce world were placed at the feet of the best divorce lawyers. Lawyers were castigated for such sins as discovery (obtaining financial documents) and seeking court assistance when you want temporary support or time with the children. He said that any lawyer can get the same result and that hiring a good lawyer sets the client up for a racket that is in the lawyer's best interests, but not the client's.

Unfortunately, this is not the first time that I have seen attacks on lawyers from the mediation community.  There appears to be a turf war.  Either you are mediation friendly, or you are not.    Rather than recognizing that some cases are more amenable to mediation than others, the followers would rather attack the "non believers."  

While I agree that most cases will settle, many cases take a fair amount of discovery and litigation to get there. To believe otherwise is simply naive. 

Further, while mediation is not for everyone, it is a useful tool in many cases, Then again, just as not all attorneys are alike, neither are all mediators.  In fact, I suspect that the author of the blog that I read would agree that not every mediator can get the same result - though he says that any lawyer can. 

In a prior blog from May 2009, I wondered whether the mediator's goal was a fair settlement or just a settlement.  To see another blog post on mediation that I authored, click here.  Are parties, often the woman being protected from the imbalance of power that permeated the marriage?  Are people being told of their rights when they appear at mediation without lawyers?  What efforts are made to ensure full and accurate disclosure?  Are the appropriate appraisals being done at all, and when done, are they being challenged and scrutinized to make sure that they are fair and accurate? 

There is no doubt that mediation and other methods of alternate dispute resolution can be a good thing. That said, I have often seen mediations result in a "settlement", but one where the disadvantaged spouse got a "deal" that was neither fair nor reasonable, if not unconscionable. The problem in these cases is that often, once there is an "agreement", the person that got the great deal refuses to concede anything. Thus, a method meant to avoid litigation can often create litigation.  Many of these deals came from the "best mediators." 

That said, rather than attacking lawyers, mediators should recognize that there is a place for the best attorneys and the best mediators.  I posit that the best and most fair mediated settlements will result from the attorneys and mediators working together rather than attacking each other.  I am sure that we can all agree that a fully informed settlement, where both parties interests are fully protected, is optimum. 

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Driving around town this weekend, I saw many lawn signs, like those you would see for a political candidate, advertising a "Free Divorce Seminar." The old adage, "you get what you paid for" comes to mind. 

While I am aware of the phenomena of these "seminars" over the last several years, putting aside potential conflict of interest issues that could perhaps be created, is this the type of thing that one contemplating a divorce should be attending?  Or rather, should a person schedule an honest to goodness divorce consultation with an attorney to which they have been referred or otherwise have researched? 

There is no privacy or anonymity at the seminar - you may see neighbors, parents of your children's classmates, etc.  There is no confidentiality or privilege at a seminar.  You have these things at an initial consultation. 

You cannot ask confidential questions at a seminar; maybe you cannot ask questions at all (and the smart attorney probably would not take questions for risk of prematurely creating an attorney client relationship.)  You cannot show the attorney any pertinent document for the same reason.  And how can you develop a rapport with a speaker at a seminar?  The seminar can never be tailored to your special circumstances because one size never fits all. At a seminar, you cannot really probe the presenter's experience, depth of staff and other resources of the firm, ability to commit to your case, etc. 

At the end of the day, a one-on-one consultation, even if you have to pay for it, will be far more worthwhile to protect your dignity and get the attention and information you deserve.

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We have blogged several times as to a former spouse's attempt to obtain an alimony or child support reduction based on the existence of substantial and continuing changed circumstances impacting the spouse's ability to pay, as set forth by the New Jersey Supreme Court in Lepis v. Lepis, 83 N.J. 139 (1980).  One of the so-called recognized changed circumstances set forth in Lepis is "illness, disability or infirmity" arising after a support Order was first entered. 

An interesting question might arise as to whether a payor spouse claiming an illness or disability as the basis for changed circumstances is really trying to engage in a bad faith form of early, voluntary retirement in order to avoid paying support.  Generally, a retirement when the spouse hits age 65 may justify a support reduction so long as it was made in good faith.  Where the retirement occurs before age 65, however, a Court will look even more closely at the facts to see to what degree the retiring spouse benefits from his retirement compared to the disadvantage suffered by the dependent spouse.

Further, while a temporary change in circumstances, such as through the loss of employment, is generally not enough to obtain a support reduction, what about the reduction of support for a specific, limited period of time?  For instance, New Jersey courts have granted this type of reduction where the payor spouse has been imprisoned or cohabitated with another for a specific period of time. 

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A common misconception in New Jersey is that both spouses can use the same attorney for their divorce.  My local paper recently had an article about divorces in the current economy.  One attorney was quoted as intimating that this was true; the attorney was speaking of uncontested divorces in which the parties agree on issues and the seek the dissolution of their marriage. While I am certain that the attorney’s comments were taken out of context, as one of the points in the article was a concern about legal fees, this is a question that comes to me often.  A client will ask me if I can represent both spouses, even if they have an agreement.  The answer is a resounding, no.

The ethics rules in our state are very clear that one attorney cannot represent both spouses in a divorce.   Simply, it is a conflict of interest.  The New Jersey Supreme Court has said on many occasions, that “one of the most basic responsibilities incumbent on a lawyer is the duty of loyalty to his or her clients. From that duty issues the prohibition against representing clients with conflicting interests."( In re Opinion No. 653 of the Advisory Comm. on Prof'l Ethics, 132 N.J. 124, 129 (1993)).  Our state has a very strong policy in which there should not be even an “appearance” of a possible conflict of interest.  This is to protect the clients.

Imagine a scenario in which one spouse has been home raising children, and the other has been working throughout a twenty year marriage.  This is a situation in which alimony will be an issue.  Certainly, the non working spouse and the working spouse may have differing positions about the amount and term of alimony. Most people agree that in these circumstances, the parties will want to have their own attorneys.  But what about the situations where both parties are working, and they have a house and a couple of retirement accounts.  Many people believe that in this situation, they do not need two attorneys and both use the same lawyer.  Well, they can’t. 

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As seen in Affluent Magazine.

Divorce for those of substantial wealth relative to those of limited wealth is an oxymoron – aspects of divorce between the two classifications are both similar and yet quite different. In final analysis, it is a question of degree – that is, the number of zeros behind the dollar signs. This summary discussion will deal with certain procedures and aspects of divorce which are similar to both. The distinctions lie in the availability and desirability of various procedural vehicles to the two groups.

Privacy and Confidentiality

Nearest to the hearts of you -- the rich and famous (next to, of course, your money) -- is privacy and confidentiality. None of you in your right mind wants to spread your dirty laundry in public – least of all those of you blessed with substantial wealth. With divorces of such persons being instant grist for media dissemination, generally, it is better for all concerned (especially their children on a whole host of levels) to have disposition of your matter not a matter of public spectacle. All too often, the perceived lesser-advantaged spouse may play the publicity card (or threaten to do so) in order to opt out a financial advantage – or in simple parlance – vie for “hush” money. Perception by the lesser-advantaged spouse that the financially-advantaged spouse will deal with her or him fairly (whatever that may mean) will usually go a long way toward negotiations where calmer minds prevail. Another method of seeking to assure a divorce far from the public eye is for a pre-marital agreement to address issues of confidentiality and mediation and/or arbitration out of the public limelight.

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When determining an alimony award, New Jersey courts look at a variety of factors that are listed under N.J.S.A. 2A:34-23(b).  At the very top of that list is "The actual need and ability of the parties to pay."  Similarly, when determining child support, one factor that courts in this State consider is "All sources of income and assets of each parent."  When determining a payor spouse's income, courts will consider both the supporting spouse's present earnings and potential earning capacity.

The question becomes more complicated when the payor spouse owns his or her own business.  Oftentimes tax returns do not tell the whole story and cannot be relied upon as the sole source for rendering an income determination.  For instance, that spouse may have a bank account under the business name, but uses it nevertheless for personal expenses.  Oftentimes such personal expenses are not accounted for on a tax return as income and it then becomes a matter of determining what the actual income level is.  Another example may involve the spouse being reimbursed through the business for personal travel expenses. 

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Summer is over.  Kids are either back to school by now or will start by Tuesday.  The regular routine for most families will soon be back in full swing.

Another phenomena occurs this time of year.  A surge of people call for divorce consultations.  At first I thought it odd or coincidental.  Over the last several years, it has become commonplace.  There is a similar phenomena after New Year's Day. 

New Year's seems logical - New Year's resolutions.  Seemingly decisions are made to not be unhappy anymore and improve what one perceives to be a problem in their lives.  Back to school, however, does not have the same immediate "of course" as to why things occur this time of year.

I suspect that for most people, theirs kids are the most important thing. Since the kids are off and around during the summer, I suspect that many people do not want to start the process while their children are off, where long planned family vacations are scheduled, etc.  Once the routine is back it place, there are more distractions.

This is not to say that people do not start divorces at other times of the year.  Just that there are noticeable surges at these two times of years.

Though this is not to suggest that anyone should rush out to get a divorce, for those with questions about the process, our firm can answer any of your questions.  With our three offices in New Jersey, we cover the entire state.

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Health care reform has been a hot topic as of late, as many Americans passionately debate the merits of the drastic changes being proposed by our current President and where we as a country will ultimately end up on this issue.  With that in mind and on the heels of last night's presidential speech on the issue, now is a good time to review the role of health insurance after a divorce, since non-employee spouses are often understandably concerned about how they will pay for their medical bills and those of the dependent children. 

In a typical situation, one spouse has "family" insurance coverage obtained through his or her employer, providing coverage for themselves and their dependents.  While that spouse may continue to provide coverage for the children once a divorce occurs, the other spouse may no longer be covered because they are now legally independent from the employed spouse.  The insurance company will therefore simply not allow such an arrangement to take place.  During the divorce process itself, however, the insurance policy may continue to cover the other spouse.

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A basic question that people often ask at the outset of a divorce is, does the Court have the ability, or jurisdiction, to hear their case, especially when one spouse lives in a state other than New Jersey?

New Jersey statutory law seems clear, but the outcomes of a jurisdictional question over whether the Court can hear the cause of action for divorce are often based on highly fact-specific scenarios. N.J.S.A. 2A:34-10 states, in relevant part to this blog entry, that a New Jersey Court may have jurisdiction over a divorce when either party to the marriage has “become, and for at least 1 year next preceding the commencement of the action has continued to be, a bona fide resident” of New Jersey. As noted by the Appellate Division in the recently decided Boghosian v. Boghosian, an intricate and interesting unreported (not precedential) opinion decided on August 17, 2009, New Jersey Courts interpreting the language of this law have concluded that “bona fide resident” is the equivalent of “domiciliary” and that either party must actually be domiciled in this State. 

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In an interesting unreported decision released on August 3, 2009 entitled Mathias v. Mathias, a wife was granted both permanent and rehabilitation alimony after a 15 year marriage. 

In this case, the husband was a state trooper.  The wife had cared for the children, by agreement, though she had worked on and off as a cosmetologist.  She was attending college seeking to be a registered nurse at the time of trial.

The trial judge imputed two income figures to the wife.  One as to what she was earning at the time and what she could earn in the future as a nurse.  The matter was reversed and remanded for further consideration as to both.  For the current income, there was a finding that the wife was underemployed yet the Court used her current income.  For the future, the statistics from the department of labor as to what a registered nurse could earn were used. 

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While an inheritance is generally not subject to equitable distribution in New Jersey, the income or interest received from an inheritance can be used to determine an appropriate level of alimony.  Thus, for instance, the income a spouse receives from an inheritance can decrease that spouse's need for a certain level of alimony, even if that spouse never worked during the marriage. 

Notably, it is the inheritance's potential to generate income that matters, so a spouse who receives an inheritance cannot deliberately shield an inheritance in an attempt to affect to raise or lower the alimony award.  It also does not matter if that spouse chooses to actually receive the income derived from the inheritance, choosing instead to reinvest it. 

This issue was recently addressed again by the Appellate Division in the unreported decision of Overbay v. Overbay, where the Appellate Division affirmed the trial court's finding that the Wife who had received an inheritance was able to generate additional investment income from the inheritance without any risk of loss or depletion of the inheritance principal.  In so doing, the trial court considered expert testimony from both sides, as well as testimony from a court-appointed expert, to determine an accurate imputed rate of return on the inherited investments. 

The rate of return for imputation that the trial court ultimately came to was also based on historical rates of return, the Wife's age, and her health issues.  The Appellate Division essentially affirmed the trial court's willingness to take a prudent ground between the parties' respective approaches to investment - not surprisingly, the Husband, who possessed financial expertise, favored an aggressive approach that could potentially lead to greater returns, while the Wife favored a more conservative approach, especially as she dealt with her own health issues.

This was not the first time that the Appellate Division had reviewed the issue between the parties, as it had previously determined in a 2005 reported (precedential) decision that the Wife's interest earned on the inheritance should be imputed to her as income for purposes of determining alimony.  In so doing, the Appellate Division there concluded that, where a spouse has underearning investments and can generate additional earnings - without risk of loss or depletion of principal - but does not do so, a court can impute to that spouse a more reasonable rate of return to such assets.  The Appellate Division noted there that if a prudent rate of return is applied, then additional income need not be imputed even if a more aggressive investment strategy would provide additional earnings. In other words, someone with a lower tolerance for risk historically would not likely be imputed the highest possible rate of return.

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At the time of divorce proceedings, many of my clients ask if they can “lock” the other party to whatever support amount is rendered. If the person asking is going to be paying support, they are asking because they do not want to have to pay more in the future. If the person asking is going to be receiving the support, they are asking because they intend to rely upon the amount indefinitely. My response in most circumstances is that it can be done but it should only be done with great caution and only done by way of agreement. For example, while a litigant’s intent may be to “lock” the support amount because they are anticipating earning more in the future and do not wish to pay more in the future, once locked and the litigant is faced with unanticipated detrimental financial circumstances, they may be unable to obtain a decrease of their support obligation. In other words, it goes both ways - being bound to a specific number regardless of changed circumstances can be very beneficial in some circumstances and in other circumstances very disastrous.

N.J.S.A. 2A:34-23 recognizes the equitable power of the Courts of the State of New Jersey to modify alimony and support orders at any time. Specifically, N.J.S.A. 2A:34-23 states:

Pending any matrimonial action brought in this State or elsewhere, or after judgment of divorce or maintenance, whether obtained in this State or elsewhere, the Court may make such order as to the alimony or maintenance of the parties . . . as the circumstances of the parties and the nature of the case shall render fit, reasonable and just, and require reasonable security for the due observance of such orders. . . . Orders so made may be revised and altered by the court from time to time as circumstances may require. 

Based upon the mandates of the statute, “alimony and support orders define only the present obligations of the former spouses.” Lepis v. Lepis, 83 N.J. 139, 146 (1980). Alimony and support obligations are always subject to judicial review and modification upon a showing of a change in circumstances. Id.    A type of “‘changed circumstance” that warrants modification of a support order is an increase or decrease in the supporting spouse’s income.” Innes v. Innes, 117 N.J. 496, 504 (1990). However, what happens when the parties agree at the time of the divorce that the support provisions cannot be modified?

The Appellate Division decision discussed whether or not a non-modifiable clause (also called an “anti-Lepis” clause) is enforceable in the decision of Morris v. Morris, 263 N.J. Super. 237 (App.Div. 1993). The Morris Court did find that an anti-Lepis clause could be found unenforceable in some circumstances, although the particular anti-Lepis clause in Morriswas upheld. In Morris, the defendant husband sought a reduction in alimony payments despite an anti-Lepis clause in the alimony agreement stating that the agreement was not modifiable for any reason except for the husband's physical disability. The husband based his request for reduction on a claim that the his annual income was $49,000 while his annual alimony payment was $35,000. The wife argued that husband kept all of the assets pursuant to the parties agreement and in exchanged for non-modifiable alimony, she agreed to a support amount of much less than the amount needed to sustain the marital standard of living. In holding that the husband was not entitled to a reduction in alimony payments, the court addressed a conflict between two chancery court decisions. In Smith v. Smith, 261 N.J. Super. 198, 199-200 (Ch. Div. 1992), the court determined that “an ‘anti- Lepis’ clause, which seeks to preclude the exercise of [the] Court's equitable responsibility to review and, if warranted, to modify support obligations in response to changed circumstances, is contrary to the public policy of this State as reflected in its Legislative Acts and its judicial decisions.” In Finckin v. Finckin, 240 N.J. Super. 204, 206 (Ch. Div. 1990), the court concluded that public policy did not prohibit the use of an anti- Lepis clause.
 

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Many times clients ask me what happens with Social Security Benefits when a couple divorces. This is particularly relevant when one spouse (usually the wife) has spent a significant amount of time out of the workforce to raise children. Although many critics have doubts as to the long term viability of the Social Security System, at this time it serves as an important retirement benefit for many individuals. Moreover, this is often an issue which is taken into consideration when making a determination as to alimony.

The amount of benefit that a individual can collect is limited to one half of the former spouse’s benefit, unless the former spouse predeceases the individual in which case the entire benefit will be paid

An individual can collect only one benefit, so for situations when both spouses have been working, a calculation needs to made to determine which benefit will be greater. The Social Security Administration will calculate those benefits. Moreover, an individual does not have to wait for the former spouse to begin collecting benefits.  As long as the criteria are met, the former spouse can still be working.

An individual who is divorced must meet certain criteria in order to be permitted to collect benefits on his or her former spouse’s work record:

            * The individual must have been married for 10 years or longer.

            * The individual must not currently be married ( however, if there is a remarriage  and the second spouse is deceased, the individual may claim under either former spouse so long as each of the marriages lasted 10 years)

            * The individual must be 62 years or older (if the former spouse is deceased, the                            individual can begin collecting at age 60 and if the former spouse is  deceased, and the individual is disabled,  the individual can begin collecting at  age 50.

Oftentimes, there is a remarriage of the former spouse. In that case, and even if a second spouse is collecting benefits based upon the former spouse’s work history, there will be no reduction of benefits to the individual.

Finally, another important thing to remember is that in the event of a death of a former spouse (or a current spouse for that matter), any children under the age of 18, or 19 if they are a full time student are eligible for benefits as well.

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Trials are often won or lost based upon credibility determinations.  More often than not, cases are replete with he said/she said situations, or real differences of opinion as to almost every issue.  In an interesting unreported Appellate Decision released on July 15, 2009, credibility was critical.  As the author of this post was the successful trial and appellate attorney in this matter, I am fully familiar with the facts. 

Aside from being important at trial, credibility determinations cannot be overturned on appeal.  On top of that, as long as the Appellate Division finds that there was sufficient credible evidence in the record, the trial court opinion will be upheld.

In this case, the issues were more than he said she said. In the six months between when the wife said that she wanted to get divorced and the filing of the divorce complaint, the husband's law practice which had been growing and flourishing each year, suddenly became less profitable, if he was to be believed.  He was not believed.  Both the wife's testimony as well as her forensic accounting expert's testimony were deemed more credible. 

It was not just the wife's word that was so compelling.  Rather, at trial we produced thousands of pages of exhibits that supported the issues we presented.  It was not surprising, on appeal, that defendant argued that there was no evidence in the record - but to do so, he had to fail to comply with the rules and submit the trial evidence.  The wife was forced to remedy this. 

On almost every issue at trial, the husband was deemed not credible. This included findings of discrepancies in his Case Information Statement, violation of Court Orders, lack of credibility regarding the marital standard of living and his income, etc.  The Appellate Division's assessment of the husband was perhaps even more severe:

Finally, in an amended notice of appeal, defendant seeks review of an order entered on September 24, 2007 denying his motion for recusal of the trial judge. Defendant claims that "the trial [judge] made several inappropriate credibility determinations about defendant and his experts to justify rejecting the testimony and objective evidence presented at trial." After reviewing the record, we find no evidence of bias
against defendant. The court made credibility determinations based upon the evidence presented and defendant's demeanor and testimony. We give great deference to the trial court's credibility findings and will not upset them unless they are patently contrary to the credible evidence in the record. State v. Locurto, 157 N.J. 463, 470-71 (1999).

Moreover, if this had been a jury trial, the court could have given the "False in One, False in All" charge, instructing the jury that if it found that defendant had testified untruthfully in one instance, it could find his entire testimony to be untruthful. Since numerous discrepancies in defendant's financial information were brought to light during trial, the "False in One, False in All" principle applies.

The ramifications of not being truthful are rarely so clear.  We are obviously proud of the result obtained for our client in this case.

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When a former spouse receiving alimony begins cohabiting with another person, what happens to the payor spouse's support obligation?  Does it terminate?  Is it reduced?  Many people often confront this question and the answer is not always as simple as one would think.  Simply put, merely cohabiting with another person does not automatically entitle the payor spouse to a termination or reduction of support.

As we have blogged about many times before, alimony may be modified upon a showing of "changed circumstances" pursuant to the New Jersey Supreme Court's decision in Lepis v. Lepis, 83 N.J. 139 (1980).  A supported, or dependent, spouse's cohabitation with another person could constitute such a change, which can actually be rendered effective retroactive to the date of the cohabitation itself, rather than the date of the motion filed with the Court.  According to the Supreme Court, cohabitation should lead to a modification where  "1) the third party contributes to the dependent spouse's support, or 2) the third party resides in the dependent spouse's home without contributing anything toward the household expenses."  As explained by the Supreme Court, a modification or termination may occur only if one cohabitant "supports or subsidizes the other [cohabitant] under circumstances sufficient to entitle the supporting spouse to relief."

It was the second scenario that was recently at issue in the Appellate Division's unreported decision, Duarte v. Duarte, where the new person with whom the dependent wife cohabited made no contribution towards household expenses.  Even though the wife was still dependent on the former husband's alimony payments, the Appellate Division concluded that the wife's dependency may have been self-created since it was clear that, to a degree, she supported the person with whom she cohabited without seeking contribution from him for household expenses.  Ultimately, the matter was remanded to the trial court so that it could determine an amount to impute to the wife as her support for the third party, which would then be utilized to reduce the ex-husband's alimony payments.

Thus, while the standard for when cohabitation could constitute "changed circumstances" is clear, it is also clear that each case will be decided on its own facts to determine whether the standard is fulfilled.

EDITOR'S NOTE:  THOUGH PEOPLE SOMETIMES FORGET, THE LAW IS PRETTY CLEAR. WHEN LOOKING AT THE IMPACT OF COHABITATION, THE INQUIRY IS NOT ONLY WHETHER THE ALIMONY RECIPIENT IS BEING SUPPORTED BY THE COHABITANT BUT WHETHER THEY ARE SUPPORTING THE COHABITANT.  PUT ANOTHER WAY, THE INQUIRY OF ECONOMIC IMPACT FLOWS BOTH WAYS.  TOO OFTEN, THE SECOND POSSIBILITY IS IGNORED.  ERIC S. SOLOTOFF

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i have heard on a number of occasions lawyers and judges saying that they cannot, at trial, award retroactive support for the pendency of case if no interim (called pendente lite in New Jersey) support motion was made seeking support.

In the unreported case of Bright v. Bright decided July 9, 2009, the Appellate Division firmly holds to the contrary, affirming the decision of the trial court.  While the case is very fact specific, the logic of the decision was clearly enumerated as follows:

The purpose of pendente lite support is to preserve the status quo, maintaining the parties in the positions they were in prior to the litigation. Mallamo v. Mallamo, 280 N.J. Super. 8, 11-12 (App. Div. 1995); Rose v. Csapo, 359 N.J. Super. 53, 58
(Ch. Div. 2002). "Maintenance of the status quo involves payment of the marital bills and expenses necessary to maintain the dependent spouse at the standard of living enjoyed during the course of the marriage." Rose, supra, 359 N.J. Super. at  60.

Moreover, logically, if someone is not receiving proper support during the pendency of the matter, eatery because they didn't seek it, by agreement or by court order, why should it matter how the deficiency occurred? 

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In an interesting unreported decision released yesterday in the case of Christopher v. Christopher, the Appellate Division reversed a trial court opinion granting the wife permanent alimony. 

The parties were married 2006 and the Complaint for Divorce was filed in December 2004.  Interestingly, the trial court found and the Appellate Division affirmed the tacking of the period of premarital cohabitation to the length of the marriage.  Thus, the 8 year marriage became a 9 year marriage. 

Even still, the Appellate Division found that the relationship was simply too short to award permanent alimony.  Rather, citing the reported Cox decision, the Appellate Division again noted:

limited duration alimony is not intended to facilitate the earning capacity of a dependent spouse or to make a sacrificing spouse whole, but rather to address those circumstances where an economic need for alimony is established, but the marriage was of short-term duration such that permanent alimony is not appropriate. Those circumstances stand in sharp contrast to marriages of long duration where economic need is also demonstrated. In the former instance, limited duration alimony provides an equitable and proper remedy. In the latter circumstances, permanent alimony is appropriate and an award of limited duration alimony is clearly circumscribed, both by equitable considerations and by statute.

The Appellate Division in Christopher deemed this to be a marriage of short duration.  Moreover, despite finding that the husband (a medical doctor) will probably earn more in the future and the wife (a personal trainer) will probably not earn enough to maintain the marital lifestyle in the foreseeable future, those facts alone don't justify permanent alimony in a marriage of short duration.

While not precedential, this case is instructive because it is not unlike many cases that we see and that come before the Courts.

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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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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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Many times a Property Settlement Agreement or Judgment of Divorce will address the payment of alimony.  An alimony calculation, among other factors, is calculated upon the length of the marriage, the income of the parties, the assets each will receive by way of the divorce, the age and health of the parties, and the age of children, if any, etc.  The standard in New Jersey for a divorcing spouse is the ability to maintain the 'marital standard of living' or as close thereto as may be economically possible.

So, does permanent alimony really mean forever? The answer depends on the language in an Agreement or Judgment of Divorce.  There is case law in New Jersey stating that cohabitation may be a cause to terminate alimony.  However, cohabitation alone is insufficient unless the Agreement states otherwise.  There also needs to be some financial benefit or economic intermingling.

Recently, the Appellate Division issued an unpublished decision in the matter of Adessa v. Adessa, A-2854-07T2, decided May 29, 2009, wherein husband filed a motion seeking to terminate his alimony obligation based upon his former wife's cohabitation or alternatively, requesting a hearing and discovery to determine if there was an economic benefit being received by former wife as a result of her relationship.

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Previously I blogged on the issue of mediation and my skepticism of the process under certain circumstances.  This week there was a spirited discussion regarding the issue of mediation on the New Jersey State Bar Association Family Law Section listserve.  As a result, I thought it would be wise to highlight some of the issues again.

To frame the issue, the bigger debate surrounded the practice where a couple goes directly to a divorce mediator or some other trained mediator, without attorneys.  Some of the things that raised concern were as follows:

1. Some mediators are concerned not whether the mediation is fair, but rather, simply that the parties reached a settlement
2. Number 1 would be less troubling, except that many mediators are not telling the party receiving an unfair deal that it is unfair
3. Rather, apparently, for many mediator's, the phrase, "I think you should discuss this issue with a lawyer" is code for the resolution of this issue or this case is unfair.  However, people go to mediators to avoid lawyers and/or there is an undercurrent among mediators that divorce lawyers really are not looking out for the parties' interests.  Moreover, some parties think that if a mediator is not putting a stop to the mediation when something is unfair, that it must be fair.

There was also a concern that the imbalance of power in the marriage that naturally is creeping into the mediation is being ignored.  A perfect example is in a case where alimony, perhaps permanent alimony is a no brainer, yet the wife is willing to waive it in mediation.  Is anyone asking why?  Did the husband vow to never pay alimony?  Was there a threat to "go after custody" if a spouse sought alimony?  Did one spouse say "I spoke to a lawyer who said you weren't entitled to alimony" as a means to deter the other spouse from seeking it?  Was the other spouse given access to money to consult their own attorney?  I once represented a woman in a post-judgment matter whose husband would not give her money for the attorneys she wanted to see, only for mediation and then an attorney he hand selected for her to draft the Agreement.  It was not shocking that the "mediated agreement" included a waiver of alimony and the child going to school where the husband lives, when the child was of school age, despite the fact that the wife was the primary caregiver. 

I have also seen many a  complex matter where one party is pushing for mediation and there hasn't even been the most basic exchange of information at that time, much less formal discovery. I have even seen cases where the party with the documents will not provide them in advance of mediation and will only bring them to mediation and take them with him at the end. The better practice, and the better mediators require, parties to have attorneys involved from the start of the mediation so that both parties are fully informed about the law and the process and so that any imbalance of power can be rectified with an attorney protecting the weaker party.

There is no doubt that mediation and other methods of alternate dispute resolution can be a good thing.  That said, I have often seen mediations result in a "settlement", but one where the disadvantaged spouse got a "deal" that was neither fair nor reasonable, if not unconscionable. The problem in these cases is that often, once there is an "agreement", the person that got the great deal refuses to concede anything. Thus, a method meant to avoid litigation can often create litigation.

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In an interesting unreported Appellate Division decision released on May 20, 2009, in the case of Williams v. Williams the appellate court affirmed a finding by the trial court that the former husband had not shown a change of circumstances and therefore was not entitled to eliminate his alimony obligation.  The case is also a primer of what not to do when seeking a reduction.

In this case, the husband was a long time employee at JP Morgan Chase making $185,000 per year.  His alimony obligation was $1,000 per month.  When he lost his job in August 2006, he immediately stopped paying alimony despite receiving one year of severance pay.

The husband asserted that he had tried but failed to find comparable work.  The opinion was not clear but given the final outcome, one can surmise that overwhelming proof of an unsuccessful job search was not supplied to the Court.  The husband further alleged that he had attempted unsuccessfully to establish a consultant business focusing on information technology. He claimed, however, that the only employment he could obtain was a position in a florist shop. It was not disputed that the florist shop was operated by his girlfriend.  Though the issue was ultimately decided for other reasons, these facts could also lead to a conclusion the he had not made an initial showing of a change of circumstances.

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While there are several factors that a court will consider when making a determination of whether to award alimony and the amount, one of the arguably most important is the income earned and the lifestyle of the parties enjoyed during the marriage.

In the recent unpublished Appellate Division matter of Plocharczyk v. Plocharczyk, decided May 13, 2009, A-3749-07T1, the Court addressed the issue of alleged hidden income for a party who owned what is considered a cash business, a restaurant.

The parties were married for 19 years and at the time of the divorce had one 10 year old child.  The parties proceeded to a trial to determine the issues of child support and alimony.  The major dispute was the husband's income.  Each party retained their own forensic accountant to serve as an expert to calculate both parties' incomes.  During the course of the marriage, the husband was the primary financial provider by operating two restaurant businesses. 

In the midst of litigation, the husband made the unilateral decision to sell one of the two restaurants and then proceeded to argue that his income was reduced, thus attempting to reduce his alimony and child support obligation.  Husband claimed that he had to sell one of the restaurants because he owed $70,000 in back taxes.  The trial judge found that although the back taxes were owed, there were other available means to pay the taxes, therefore there was no need to sell the restaurant.  The trial court relied on the wife's expert's opinion that the sale of the restaurant had not been an arms length transaction.

The trial judge declined to reduce the husband's annual income because of the sale of the restaurant.  Based upon the calculations, the judge found there to be a $600 per week shortfall in the wife's budget.  In reaching that number, the trial court found that not only was the wife short of funds to meet the marital lifestyle but also lacked an ability to save money, as the couple had been able to do during the marriage.

The husband followed the trial court's opinion with an appeal.  The Appellate Court affirmed the trial court's finding.  In doing so they stated that New Jersey courts recognize that "it is the self-employed obligor who is in a better position to present an unrealistic picture of his or her actual income than a W-2 wage earner."  Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006). 

EDITOR'S NOTE:  Cases where one party owns a business generally present more challenges than cases where someone is a W-2 wage earner.  Naturally, the valuation of the business or businesses is a complex process requiring an expert and in depth discovery.  As income is often the most critical element in determining value, it becomes that much more important to determine the accurate income.  As noted in the above case and the Larbig case cited, someone who is self employed can manipulate their income such that what is reported on their tax return is not actually all that they are receiving.  The first place to look is to see what perquisites the business owner has which are being paid by the business.  These often include vehicles, cell phones, travel and entertainment.  From an IRS perspective, many of these may be appropriate and allowable business expenses - from a divorce accounting perspective, you may have to add back these personal expenses paid by the business to determine true income.  Moreover, while perhaps one car is legitimately deducted, the business owner's spouse's car is also "owned" and paid for by the business, as is their cell phone.  Careful scrutiny has to be given to the corporate American Express or other credit cards to see whether the charges are really business expenses or personal expenses.  In a case we have now, the typically personal type expenses on the business tax return seemed reasonable but the Cost of Goods Sold on the tax return for a business that didn't sell anything seemed abnormally high.  In reviewing the bank records, the personal expenses were buried in the cost of goods sold. 

Then there is cash or "unreported income" which is a topic unto itself but something which must be determined to determine the true income of a party and value of the business.

The point is that you have to look behind the numbers on a tax return when someone is self employed or employed in a family business.  Our firm is well versed in these kinds of cases.        ERIC S. SOLOTOFF

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We have previously posted many blog entries regarding modifying alimony and child support based upon job loss and/or reductions in income in light of the historic, current economic down turn.  To see some of my prior posts, click here, here, here, here, and here.

In our practice we have seen many clients coming in to address these issues and have heard anecdotally from judges that the increase in these kind of motions has hit the courts.

That said, there is still little consensus on how these cases are being handled.  There is no consensus amount the courts regarding how long you have to wait to come to Court.  There is no consensus amount the court's regarding how much of your assets you have to go through, or whether you have to incur debt before you can file.

There seems to be a focus on the lifestyle of the support payor, i.e. has he or she reduced their lifestyle.  While that is an appropriate consideration, it may be too simplistic.  Looking at the house someone lives on or the car that they drive likely does not tell the whole story.  Can the person reasonably sell their home in this market without facing a deficit?  How long would it take to sell the house anyway?  Maybe the car is leased or if financed, there is negative equity and they cant rid of it to reduce their expenses. 

The bigger question is whether despite a clear loss or reduction of income, whether the payor has to strip their lifestyle to bare bones, or whether the undisputed reduction of income should be enough. 

Court's also have to beware the opportunist who is using the bad economy in general to try to reduce or limit their support obligation when there is no real credible evidence that they have or will be affected. Scrutiny in this regard is particularly difficult when the payor is a business owner and has the ability to control their income in various ways.  The skepticism and scrutiny in these cases is heightened.  I have two cases now represented service providers - one of whom has lost many long term clients because they have simply gone out of business - and the other, who has received less than half of the orders and deposits then have historically been received by this time of year (and it is a seasonal business). 

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In reaction to the Supreme Court's decision in Mani v. Mani (which held that non-economic fault was not relevant to alimony except in "egregious circumstances") and the Appellate Division's decision in Calbi v. Calbi (which did not preclude alimony to a woman who beat and kicked her 14 year old son to death during an alcohol related incident), on April 17, 2009, Governor Corzine signed a bill that did the following:

• It amended the alimony statute to deny alimony to a person convicted of murder, manslaughter, criminal homicide, death by auto, aggravated assault of a similar office in a other jurisdiction if the crime results in the death of a child and is committed after the divorce.
• It eliminated inheritance rights for a surviving parent that abused, abandoned, committed a sexual offense against or negligently endangered the child
• It eliminated under the worker's compensation statutes recovery by a parent who committed those same acts against their child. 

We previously blogged about the tragic Calbi case.  To see that post, click here.

The new law takes effect in July 2009.

Though the Appellate panel in Calbi invited the Legislature to amend the law, it will be interesting to see if there will be further legal challenge to these laws, particularly as to the alimony  and worker's compensation aspects, because of the specific purpose of those laws. 

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New Jersey has upheld the long standing principle that permanent alimony awards are subject to review, modification and possibly termination based upon changed circumstances.  (Lepis v. Lepis, 83 N.J. 139 (1980).  However, it is not enough to paint a bleak picture of a payor's financial circumstances in order to succeed in a downward modification or termination of alimony.  The applicant must also show the Court that the financial difficulties being encountered are not temporary and/or subject to contingent circumstances.  Innes v. Innes, 117 N.J. 496 (1990).

In the recent unreported Appellate Division decision of Norych v. Norych (A-2633-07T1 decided April 16, 2009), while the payor applicant provided the court with very grim descriptions of his personal financial situation and the financial affairs of his law firm, the applicant miserably failed to substantiate his professed circumstances.

In the Norych matter, the parties were divorced in 1992 and at the time of the divorce, the ex-wife received a permanent alimony award of $1,000 per month partly based on ex-husband's law firm income of $70,000 per year and ex-wife's income as a teacher of $25,000 per year.  Ten years later, the alimony increased to $1,100 per month.  In October 2007, ex-husband filed a Motion seeking to terminate his alimony obligation based upon  what he characterized as two devastating and shocking events. 

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The end of the Court year in  New Jersey in June 30th.  With that will come pressure, perhaps unnatural pressure, but pressure nontheless to resolve cases. 

While the fact that there are judicial shortages in many counties may provide relief, I suspect that it will do little to quell this rite of Spring.

As the legal system is very statistically driven, a court's performance is often measured in how many cases they clear, and more particularly, whether there is backlog (i.e. is the case too old for the case type that it is).  My undertanding is that a divorce case in in back log when it is over 1 year old. 

One tool that Court's use to clear more cases this time of year is to hold "blitz weeks."  During a blitz week, the oldest cases in a county are scheduled for trial and all of the family part judges clear their calendars to allegedly try cases during these weeks.  Whether or not cases actually get tried during blitz week is another story.  However, the threat of trial, along with the court's active assistance in trying to settle cases often clears many cases from the docket.

Also, in the cases that are naturally scheduled for trial during this time of year, adjournments become more difficult.  Regularly, multiple trials are scheduled for a judge for the same day.  The reason for this is that most cases settle or get adjourned so if only one case were scheduled, a judge could have open court time.  Often you will learn where you are on the list in terms of which is the oldest case and can get a sense as to whether the trial date is a real one.  In fact, usually the first and second trial date are not "real" dates, but rather dates when a court will try to get you to settle. 

That said, at this time of year, if you want to try to adjourn these dates, it becomes more difficult, with the hope that you will settle.  There is an old joke that goes, what is the easiest way to get an adjournment, tell the court you are ready for trial.  In reality, it works in the reverse.  That is, when you seek an adjourment of a trial date, courts often deny this expecting that it will help force a settlement. 

In my practice, if I appear for a trial date, I am prepared for trial.  I learned early on that the best way to be prepared to settle a case it to be prepared to try a case.  That way you are negotiating from a position of strength and very often, the other side really isn't prepared for trial  - making favorable settlement terms more likely.

In any event, if your case is getting close to a year old, expect pressure from the Court to get it done before June 30th.

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Though we have blogged about this issue in the past, as it is particularly topical given the article in today's NJ Biz that New Jersey area (including the New York Metropolitan area) job losses are outpacing the national addresses. 

As noted on prior job posts. the standard for modifying support is that there has to be a substantial and continuing change of circumstances.  Moreover, in order to get relief, you must document your job search efforts to show the court that you have made a good faith effort to find a new job.

When a client loses their job, the following things should be done:

1. Retain all documentation from the employer showing that the job loss was involuntary.  If there is a severance agreement and any other documentation, that should be maintained as well as the final paycheck showing the severance received (if paid in a lump sum).
2. Keep a detailed log of all efforts made to find new employment with as much information as possible (who you contacted, when you contacted them, what they said, etc.)  If the communications were in writing, keep copies of all emails, resume's, cover letters, rejection letters, if you applied for a job on lie (i.e. Monster.com), confirmation that you applied for work.
3. If the problem is industry wide, any newspaper, trade or other articles or documentation showing that the industry has contracted or is having problems.

The question arises regarding what you do when offered a job that is not consistent with your prior earnings.  If you have been out or work for a short time, this creates a tough decision about whether to take this job or wait.  If you do take this job, my suggestion early after losing a job, my suggestion would be to continue your job search if at all possible.

If you have been out or work for some time and you have made a good faith job search, while possible, I find it hard to believe that a court would penalize someone for taking work - especially in this economy.

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The New Jersey Appellate Division has held that an application seeking to set aside a Property Settlement Agreement (PSA) under Rule 4:50-1 of the New Jersey Rules of Court should be granted "sparingly."  It was this very type of application that formed the basis of the Appellate Division's recent opinion in Heald v. Heald, found here.

The parties were married for 28 years and had 4 children before the Final Judgment of Divorce was entered in November 2006.  They had separated in 2005 and, for a significant period of time, negotiated the terms ultimately encompassed in a PSA, executed in April 2006.  Notably, the parties agreed to use the Husband's 2004 income to determine his support obligations.  The PSA also contained language that the parties were knowingly waiving their right to discovery regarding each other's income and assets.

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When most parties enter into what is commonly referred to as a Property Settlement or Marital Settlement Agreement, they do so with the intention that this is a comprehensive agreement, resolving all the issues and a document that will govern their dealings with an ex-spouse going forward.

Oftentimes people are shocked to learn that some provisions in those agreements can be subject to modifications by a court.  Such is the case of the recent unpublished appellate division matter of Anello v. Anello, Decided March 23, 2009, A-2405-07T3. 

These parties were married in 1982 and divorced in 2002 by way of a dual final judgment of divorce incorporating the terms of their Property Settlement Agreement. ("PSA")  Two children were born of this marriage.  In the PSA entered into by the parties, the husband was entitled to alimony, to which there was a specific and detailed waiver of this right.  Husband waived the right to receive permanent alimony and gave wife a greater share of equitable distribution in exchange for a total and permanent waiver of a child support obligation for both children.  Husband did agree to contribute to college expenses and non-recurring extraordinary events for the children.  Husband's waiver of permanent alimony was expressly conditioned upon his non-payment of child support.

Some four years after the agreement was entered into, husband filed a motion seeking custody of the son, child support, alimony and counsel fees.  The parties entered into a Consent Order resolving this motion, which reserved the issues of child support and alimony pending discovery.

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Mark Ashton, a partner in our Exton, Pennsylvania office, and the editor of the firm's Pennsylvania Family Law blog, wrote an excellent post on that blog entitled "Stock Option Developments."  To read the post, click here.

Stock options have become a large part of executive compensation over the last few decades.  Moreover, they have become common additional/incentive compensation even for non executives who work for large public companies.  We have had to deal with the issue of options both in terms of the division of them in equitable distribution and as a component of income for determining alimony and child support.

Mark's post raises interesting food for thought regarding the issue of the re-casting and/or re-pricing of options, post-complaint. 

Stay tuned for updates as the law develops regarding this topic.

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Given the current economy, a major issue being discussed by family law attorneys and judges is how to handle the issue of support modification where due to the current economy, someones income is eliminated or greatly decreased.  The standard for modification of support is that there has to be a showing of a substantial and continuing change of circumstances.  One of the major issues being discussed is how long does one have to be out of work before making an application to the Court. 

The second issue is even if the change is temporary - whatever that now means - should there still not be some temporary relief because if the existing Order or Agreement is not fair.  A general proposition of law is that Agreements can only be enforced to the extent that they are fair.

Earlier this week, the Appellate Division decided the case of Baker v. Baker which leads me to believe that help may be on the way. To view the case, click here.

In Baker, the parties were divorced in 1998.  At the time, the husband worked was a Managing Director at Pershing Trading Company and earning nearly $800,000 per year, the great
bulk of which came in the form of an annual bonus.  The parties agreed that he would pay alimony in the amount of $10,000 per month.

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This was a good and bad week for Martin Brodeur, the goalie for the New Jersey Devils.  On a good note, he passed Patrick Roy as the all time winningest goalie in NHL history.  On a bad note, he lost his appeal of an alimony award in the Appellate Division.  To see the opinion, click here. This is the second appeal in this case.  To see the opinion in the first appeal, click here.

This was a 7 1/2 year marriage from the date of marriage until the date of separation.  It was clear that it is was the parties' intention that the wife would be a full time, stay at home caretaker of the children.

In the first appeal of this case, the Appellate Division affirmed the award of alimony to Melanie Brodeur in the amount of $500,000 per year but reversed the award of permanent alimony.  In this case, the Appellate Division affirmed the award of limited duration alimony until the youngest child graduated from high school.

In the first appeal, the Appellate Division held that:

limited duration alimony is particularly suitable for a situation such as here when the marriage was of short to intermediate duration and the woman is young and has young children. The judge is able to fashion an award that provides financial support to the former wife while she cares for the children.

The Court then addressed the factors that should  be considered in the decision of the length of the term, as follows:

The term should be informed not only by the age of the children, but also by the parties' decision that plaintiff should be the primary and full-time caretaker of the children.

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In the recent unpublished Appellate Division matter of McDermott v. McDermott, A-0631-07T1, Decided February 20, 2009, the Appellate Division remanded the matter to the trial court for further proceedings on the amount of loans taken during the marriage from plaintiff's family and the distribution of responsibility for repayment of those loans.

The parties were married for nearly 30 years.  Plaintiff/husband was an attorney with a solo practice and defendant worked at his office for many years, helping to raise their five children and eventually finding employment outside the home with a local school district.  During the marriage, the parties primarily relied upon the income earned from plaintiff's law practice.  This income fluctuated throughout the years, in part due to the economy and in part due to plaintiffs bouts of depression.

During the 15 day trial in this matter, testimony was offered that during the course of the marriage, plaintiff made some unilateral decisions with regards to the parties' finances, including taking loans from his family and purchasing property without notifying defendant, who only found out during trial.  Defendant claimed that she only knew of very few of the loans given by plaintiff's family, however evidence submitted at trial indicated otherwise.  Plaintiff's sister offered credible testimony that the total amount of loans given was $283, 398.50 of which only $6,300 was repaid. 

After the trial, the trial judge issued a written decision, which in part, obligated defendant to repay plaintiff's sister the amount of $57,165.31 as her share of loans made to the marital partnership; valued plaintiff's law practice at $100,000 of which defendant was entitled to half; compelled plaintiff to pay $2,000 per month in limited duration alimony for a period of 6 years; and ordered plaintiff to pay $49,000 of the $80,202.70 counsel fees incurred by defendant in the divorce litigation.

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On February 3, 2009, my colleague, Katherine R. Sookhoo, an associate in or Philadelphia office,  wrote a very interesting article on cohabitation in our Pennsylvania Family Blog entitled For Love or Money.  I found the blog interesting for two reasons.  First, the rule of law between Pennsylvania and New Jersey are significantly different.  Second, although different, the difficulty litigants have in either jurisdiction in proving that their ex-spouses are cohabiting is the same. 

Pursuant to the Pennsylvania Divorce Code, divorce litigants are not entitled to alimony if they cohabit after they have been divorced.   However, in Pennsylvania, in cases resolved by way of Property Settlement Agreement, the Pennsylvania Divorce Code provision applies only if the agreement specifically states that cohabitation terminates alimony.

Unlike Pennsylvania, New Jersey statutory law does not prohibit receipt of alimony payments based upon cohabitation.  In New Jersey, while cohabitation may be considered a change in financial circumstances that permits a review and/or a modification of alimony, the fact that an ex-spouse cohabits does not necessarily mean that alimony will be terminated.  Konzelman v. Konzelman, 158 N.J. 185 (1999). 

While Pennsylvania and New Jersey have differing laws regarding cohabitation, both jurisdictions are plagued with the uncertainty of how the Court's define "cohabitation".  In Pennsylvania, there has to be a showing of a financial, social and sexual link, by sharing the same residences.  Miller v. Miller, 508 A.2d 550 (1986).  In New Jersey, the New Jersey Supreme Court  noted that “to constitute cohabitation, the relationship must be shown to be serious and lasting” and that  “a mere romantic, casual or social relationship is not sufficient to justify enforcement of settlement agreement provision terminating alimony upon dependent spouse's cohabitation; such a provision must be predicated on a relationship of cohabitation that can be shown to have stability, permanency, and mutual interdependence” Id.  

Therefore, does cohabitation exist if your ex-spouse and her paramour switch back and forth in sleeping in their respective residences?  If they stay together only on weekends?  If they have resided together for a month?  How about a year?  What if their finances are totally separate? In either Pennsylvania or New Jersey, the answers to those questions are not entirely clear and Courts determine the issues on a case-by-case basis.

Because there is no exact definition of "cohabitation", proving that cohabitation exists may be tricky and requires a thorough analysis of the circumstances before raising the issue in Court.  If a litigant is going to allege cohabitation, before doing so, they should make sure that factually and legally, they have enough to get beyond the "grey" area because (1) if you are going to proceed in Court, you want to prevail; and (2) you don't want to go to Court, lose, and give your ex-spouse the ability to further avoid termination of alimony now that they know your on to the cohabitation.   

 EDITOR'S NOTE:  Apple is absolutely correct regarding the grey areas. That said, there have been a number of unreported Appellate Division decisions over the last year or so that have been more permissive in what amounts to cohabitation.  Specifically, many of the cases suggest that staying together every single night may not be required, and that the location is not entirely important (ie. some nights at her house and some nights at his house.) 

However, once some semblance of cohabitation is shown, unless the divorce Agreement specifically calls for the termination of alimony, and most don't, the next issue to address is the financial interdependence between the former spouse and cohabitant.  Put another way, cohabitation is not enough to terminate alimony in the typical case.  You have to look at the financial impact of the cohabitation.  Eric S. Solotoff

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 We all hear that in bad economies, divorce filings traditionally decrease.   There are many reasons for this, many of which are a subject for another day. Yet a prevalent concern that many of my potential clients express is the fear of the next step financially. Starting over is difficult and indeed overwhelming in the most amicable divorce where the parties both have substantial income. When the money is tight, is adds an additional layer of stress.  Some people mistakenly believe that they simply cannot afford to divorce their spouse.

One of my first questions to a new client is to find out if they have an accountant and financial planner of their own that they trust. If they do not, having them find one is near the top of my “to do” list for that client.   This is because, in most cases, there will be an equitable distribution of assets that have to be invested, whether it be a new home, a new IRA, or a new investment account. My client has to plan for his or her future early on and this may mean very different planning that occurred during the marriage. Even when there is a distribution of debt, there must be consideration of how to best pay that debT. Is a home equity loan appropriate? Should the debt be paid from assets that may not have as much capital gains given the current economic state? What are the tax consequences? These are all issues that need to be discussed with the client and financial specialists.

Another concern for many clients is purchasing a new home. For some, it may be the first time they are purchasing a home. Clients are concerned about obtaining a mortgage in these difficult economic times. It seems as if forces are colliding against some clients. For instance, we have all heard that banks are only lending to people with excellent credit scores. Yet during a divorce, many people experience financial stress and their credit rating suffers, often because of the other spouse. So what to do? First, many people do not realize that there are banks that are lending and there are mortgage brokers who cater to people who find themselves in a divorce. Also, rates are down and there are incentives for first time homebuyers. Clients already have most of their financial information ready as a result of the divorce. There are people and banks out there. It is just a bit tougher to find them in these times.

At the end of the day, my client has to make the decision that is best for his or her situation.  But I have to make sure that the client has to tools to make the right decision. 

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On February 13, 2009, the Appellate Division issued an interesting unreported decision in the case of Chopoorian v. Chopoorian dealing with a topic that we have blogged about frequently as of late - modification of support obligations. To review the full text of the opinion, click here.

The parties were divorced in 2005.  During the marriage, the husband operated a highly  successful advertising business which provided him with an annual income of over $900,000 in 2003. The parties also owned several valuable pieces of real estate.  The divorce agreement required the husband to pay $187,500 per year in permanent alimony and $50,000 per year in child support.  Of note, the Agreement stated:

Husband’s earned income as defined herein may increase to $650,000 gross per year (before taxes) before Wife is entitled to file a Motion to modify/increase alimony
based on an increase in Husband’s earned income. Husband’s earned income must decline to $400,000 gross per year (before taxes) or below before he is entitled to file a Motion to modify/decrease alimony based on a decrease in earned income.

The husband was also supposed to pay the wife $1.3 million over time for her share of the business interests.

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Usually, the "you snooze, you lose" defense is not often a successful legal tactic.  However, in the recent unreported Appellate Division decision in Adler v. Adler the former wife's application seeking unpaid child support, alimony and other obligations brought some 30 years later was denied essentially because she waited to long to collect.  To read the full text of the decision, click here. 

Pursuant to the Judgment of Divorce entered in 1973, the ex husband was required to pay $235 per week as undifferentiated child support and alimony until the oldest child was emancipated, at
which time the weekly support was to be reduced by $50 per week.  That same $50 reduction was to occur when each of the two younger children became emancipated. The JOD also obligated
defendant to pay: the mortgage, taxes, insurance and utilities on the marital home; all reasonable and necessary medical expenses for the children; health insurance premiums for ex-wife and the children; $3,500 to the ex-wife on or before August 15, 1973; $6,231.85 for various unpaid bills arising during the marriage; college tuition for the parties' three children; and orthodontic treatment for the parties' two sons.  Other than an enforcement Order from November 1973, there were no other Orders in the case.  In addition, in 1975, the Probation Department closed their account, though arrears existed at that time, due to direct payments being made.

Between 1975 and 1978, the ex-husband stopped making payments.  There was an enforcement motion filed in Maine in April 1978 and another Order entered later that year in Delaware County, New York that held the husband in contempt. Another enforcement motion was filed in late 1979 but their appears to be no further enforcement efforts taken thereafter.

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Litigants who get caught lying about their income in their filed submissions to the Court subject themselves not only to denial of their request for relief from the Family Part Judge but they also open the door for problems with the IRS, the State of New Jersey Division of Taxation, the Prosecutor’s office and the Social Security Administration. 

In the recent unpublished Appellate Division decision of Lucci v. Lucci, Defendant ex-husband filed an application in 2008 to permanently terminate his alimony obligation on the basis that his income significantly decreased. Notably, between the time of the divorce in 2000 and the time of the application, Ex-Husband had been successful in reducing his alimony obligation on two separate occasions. First, by consent in 2004, he was able to reduce alimony from $300 to $150 per week. Then, by consent in 2005, he was able to suspend his alimony because he was “unemployed”.  In 2008, he was seeking to permanently terminate his alimony obligation.

Ex-husband stated in sworn Certifications filed with the Court in the 2005 and the 2008 proceedings that he was laid-off of work, went through periods of unemployment and was finally able to obtain employment with much lower compensation. The Ex-Husband also certified that during his periods of unemployment, he received unemployment benefits. 

In opposition to the application, Ex-Wife presented the Court with a sworn Certification from a Company that was never disclosed by Ex-Husband.  The Company stated that it had employed Ex-Husband including the period during which Ex-Husband received unemployment benefits, that Ex-Husband misrepresented his employment status to the Court, and that he had earned income in an amount comparable to that which he earned when the Order of support subject to the Motion was filed. The Company further advised the Court that Ex-Husband provided two conflicting Social Security numbers to the Company. Finally, the Company advised that the income reported on Ex-Husband’s tax returns did not include his income from the Company.

Ex-Husband’s attorney did not know about Ex-Husband’s employment with the Company.

Not only did the Court deny Ex-Husband’s request to terminate alimony but the Court also wrote a letter to the IRS, State Division of Taxation, the Sussex County Prosecutor and the Social Security Administration.   Moreover, the Court granted Ex-Wife’s request to reinstate alimony at $300 per week effective in 2004 and granted her counsel fees. Despite the fact that Ex-husband was reported to the authorities for what the Court perceived to be intentionally wrongful conduct, the Ex-Husband had the gall to appeal the decision to the Appellate Division.

The Appellate Division affirmed the trial Court’s decision with the exception of the effective date of the reinstatement of alimony. The Appellate Division noted that while it was clear from Ex-Husband’s filed submissions to the Court in 2005 that he had provided misleading information, it was unclear whether he provided misleading information in 2004. If Ex-Husband did not provide misleading information in 2004, the Appellate Division noted that the effective date of the reinstatement should be in 2005 when Ex-Husband was required to pay $150 per week in alimony. The Appellate Division directed the trial court to determine the issue after further Court proceedings.

The moral of the story is if you get caught lying in submissions to the Court for which you certified under oath that your statements were true, be prepared to not only pay the consequences to the other litigant but you may also have to pay a hefty price to authorities. 

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In an interesting unreported decision in the matter of Valente v. Valente, on January 27, 2009, the Appellate Division reversed the award of permanent alimony to the wife after an 11 year 9 month marriage.  To view the full text of the case, click here.

The relevant facts are as follows:  During this 11 3/4 year marriage, the court deemed that the marriage was "traditional"  in that the husband was the sole income earner while the wife was the homemaker and caretaker of the three children. The husband  was a successful businessman who owned fifty percent of an insurance agency. He earned an average of $323,000 over three years prior to the filing of the complaint not including perquisites addressed brief in the opinion.  The wife had  a high school degree and worked in the clothing industry after high school until just before the birth of her first child, earning about $24,000 per year.

In reversing the aware of permanent alimony, the Appellate Division held:

"In our view, alimony of limited duration is appropriate in this case. The marriage of eleven years and nine months was of intermediate length. Considering plaintiff's age and intelligence as well as the fact that her children are both of school age, we see no reason why she cannot obtain employment within a reasonable time, and an award of limited duration alimony will give her incentive to do so. Moreover, at the end of a limited alimony term, plaintiff may seek permanent alimony or an extension of limited alimony if her earnings are insufficient to maintain her lifestyle without alimony."

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Early on in a case, the lawyer and client will have to determine what experts will be necesary to resolve a case either for settlement or trial.  In fact, at the first Case Management Conference, the uniform Case Management Order requires that you identify the types of experts you need and how they are going to be paid for. 

What is an expert and why do we need them?  Per the Rules of Evidence, "If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise."  Simply put, an expert is a tool to help determine a fact.  Experts provide information that the parties cannot generally provide themselves.

What kind of experts are used in these cases?  The following are some examples:

• Forensic accountants to value busineses, determine actual income, trace income and assets (including tracing premarital assets), to provide lifestyle analysis, to provide cash flow reports based upon proposed alimony and child support scenarios and a variety of other financial related issues,
• Business valuation experts (sometimes they are not accountants)
• Experts to value stock options or other exployee benefits - often but not always accountants
• custody evaluators - usually forensic psychologists, but occasionally forsensic psychiatrists and social workers, who will give an opinion of custody and parenting time
• educational experts - to determine which school or school district is better, what program is better, public vs. private school issues, educations issues regarding children with special needs
• employability experts  - to determine what someone can and/or should be earning.
• pension appraisers - usually actuaries, to determine the value of a pension, parse out premarital shares of 401ks, and draft Qualified Domestic Relations Orders
• Real estate appraisers
• personal property appraisers
• jewelry appraisers
• art, coin, antique appraisers
• medical doctors - to assess disabilities or sometimes personal injuries
• handwriting experts
• computer forensics
• Interpreting services (for documents in foreign languages)
• experts to value intellectual property

There are probably many other types of experts.  This list does not even include other professionals that may help the parties, but probably not testify, like financial planners, stock brokers, insurance agents, parent coordinators, reunification therapists or for that matter any treating therapists.

Over the years, we have worked with most or all of these types of experts as the need has arisen.  Should an issue requiring an expert come up in one of our client's cases, we are well equipped to handle it.

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Mark Ashton, a partner in our Exton (Chester County), Pennsylvania office and the editor of our Pennsylvania Family Law Blog, wrote an interesting post entitled "Property Settlement Agreements: Be Careful What You Sign Up For", on that blog. 

To read the full post, click here.

The post discusses how the Bankruptcy laws impact on divorce matters.  The bottom line is that while a debtor may be able to avoid all kinds of debts in a bankruptcy proceeding,  if your obligation is to a spouse or your kids, the rules are different and those obligations are going to survive your bankruptcy. The bottom line is that you should make an agreement that is realistic and reasonable, that you can actually pay and not one that you hope you will be able to pay.

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My clients often ask “will I get the same thing that my neighbor received in his divorce” or “why can’t my ex share in transportation-- my cousin has to share with her ex” or “my friend earns so much more than me and his support is much lower than mine”. I always tell my clients that as a rule, don’t compare your situation with the situation of someone else. 

While the same laws concerning family law actions are applied to each case, each case is different and therefore, the outcomes are different. It is true that many cases have similar factual patterns but most of the time they are not exactly the same. Using one of the examples above, while someone may be earning more but paying less in support than another litigant, it could be that the ex-spouse of the litigant had other available resources generating income like an inheritance or the ex-spouse could have received more of the family assets as a trade-off for less support. While it is very tempting to compare your situation with that of another person, keep in mind that more likely than not, you are not getting the full story from that person. Also, sometimes misery loves company and it could be that the only part of the story you are getting is what the other person painfully remembers the most.

Also important to note is that in New Jersey, the statutory factors for an award of support or for a custody determination are numerous. The Courts apply each factor to the given situation and then completes a balancing of all of the factors prior to rendering a determination. It is in this application of the facts that results in different determinations among cases. Moreover, litigants should also recognize that Judges are vested with a certain level of discretion in weighing the factors which is yet another reason why the outcome of cases differ. 

Notably, if one was to review a significant amount of family law decisions published by the Court concerning the same exact issue (child support, alimony, custody, etc.), it is very unlikely that a person would find a decision with the same exact fact pattern as their given situation. 

In short, save yourself some frustration and make it a rule not to compare your family situation with that of someone else during a litigation and focus on your facts with your attorney.   After all, as I tell my clients, it is your facts that we will be presenting to the Court and not the facts of your neighbor, cousin or friend.

EDITOR'S NOTE:  i once had a client who used to say that no one could believe how much temporary support he was paying and that it was the most anyone ever heard of.  My answer was, "Do they make a million dollars a year like you? No.  Do they make a half a million a year?  No  Do they make $250,000 per year?  No.  The moral is that he was talking to people whose finances had no similarity to his and reacting to their shock.   That goes exactly to Apple's point - while friends and relatives are good for support and a shoulder to lean/cry on, they are not usually a good source of legal advice or information.           ERIC S. SOLOTOFF

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I was reading an unreported Appellate Division case released today and gasped when I read the following sentence, " ...Moreover, the permanent alimony figure was negotiated and presumably contemplated defendant's retirement since he was fifty-three years old when he appeared before Judge Piscal on September 19, 2000."  To read the full case, click here.

While the facts in this case may have justified the denial of the former husband's motion to modify alimony, that statement struck a chord.  In this case, the parties were married for 32 years, a long term marriage by any standards.  However, by current standards, we often start talking about long term marriages being 15 years or more and if alimony is appropriate, the discussion is about permanent alimony begins.  Moreover, although there is a well known Appellate Division case authored by Judge (now Supreme Court Justice) Long suggesting that it is better practice to negotiate the issue of retirement, the reality in practice is that it is rare that the party receiving alimony will concede the issue of retirement in the agreement.  Often it is just too speculative.  At best, you may get a recognition that there can be an application for a review upon retirement.

Given that you typically cannot get any concession about retirement and there is no doubt that this was a permanent alimony case, is the above quoted statement a fair or a realistic view?  I don't think so. 

Assume a long term marriage where all assets, including retirement assets are equally divided.  The law is clear that you cannot look to assets divided in equitable distribution for support.  Post-divorce assets can be considered.  If in the 8 or 10 or 12 years after the divorce, after paying alimony and perhaps child support, the payor does not accumulate substantial assets, then what.  What if he bought a new house with his equitable distribution and did contribute the max to his 401k during the post divorce years.  In this economy , the value of the home and the 401k could be down substantially.

More importantly, one would think by this sentence that someone who agrees to permanent alimony can never retire.  This, however, is wrong as a matter of law.  Thus, for a court to determine that a retirement by a person who was age 53 when he agreed to permanent alimony was contemplated in the agreement, is both practically unrealistic and legally incorrect in my opinion. 

That said, as noted above, the denial of the motion to modify under the specific facts in that case made perfect sense.

However, I think it is essential, if possible, to at least get recognition in a Marital Settlement Agreement, that, if nothing else, the issue of retirement was discussed but unresolved to best preserve the issue for another day.

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On December 12, 2008, the Appellate Division released a reported decision in the case of Rogers v. Gordon which addressed the enforceability of a pre-statute prenuptial agreement.  To review the full text of the case, click here.  The case is interesting because it addresses again the standards to be applied to an agreement signed before the enactment of the Uniform Premarital Agreement Act in NJ.

In this case, the parties entered into a prenuptial agreement as a young couple.  The wife was a graduate of the Wharton School of Business and came from a wealthy family.  The husband was a high school graduate working for the Postal Service.

The parties married in 1981, had four children and were married for more than 24 years before the wife sought a divorce.  During the marriage, the wife went to work for her father's business, which she eventually purchased from him during the marriage.  In 1990, the husband left the Postal Service to work as a machine operator for the business.  In 2002, he was promoted to plant supervisor.  Not surprisingly, when the divorce commenced, he was demoted to a machine operator again.  The trial court made a finding that at the end of the divorce, there was not a "snowball's chance" that he was going to keep the job given the wife's intense animosity for him evidence during the trial.  In fact, the judge found her to be totally incredible regarding this topic.

At the time of the divorce, the husband's income was $63,000 - the wife's was more the $600,000.

The Uniform Premarital Agreement Act was enacted in NJ in 1998 and applies to all agreements entered into after its enactment.  As such, because the agreement in this case was entered into prior to the Act, the Court had to apply the case law from prior to the act.

In citing the Marschall case, the court noted that there was a three prong test for enforceability, as follows:  1) there was full financial disclosure; 2) that the party sought to be bound knew and understood the terms and conditions and 3) that the agreement, be fair and not unconscionable, ie. that it not leave a spouse a public charge or close to it, or with a lifestyle far below what was enjoyed before or during the marriage.

The court also cited the D'Onofrio case which said that the alimony provisions in the agreement need not cover all contingencies because the Lepis or change of circumstances standard would apply.

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There has been much talk in the news, on family law list serves and in other media that the economy is slowing divorce rates.  In following some of the anecdotal evidence, this may be true in some states and places and not as true in others who report that divorce filings have not changed.  Other than the usual slow down right before the holidays (which is usually followed by the New Years resolution rush of divorce filings), I have not seen much of a slow down.

That said, these times should by necessity to cause people to think out of the box in terms of the usual paradigms that we had been following over the last several years.

Yes the real estate market is down.  That may be good for a party wanting to stay in a house.  Or, maybe parties will consider working together to defer distribution until some future time when the real estate market rebounds.  That may be a fair resolution.  To read a related post on the value of real estate in divorce matters, click here.

Maybe someones income is down or has lost their job because of the unprecedented economic times.  If this is a real loss/reduction of income as opposed to divorce planning, maybe things such as a review of alimony and child support in a year or two or three, may be fair.  Maybe a formula approach may be fair where the support is based upon some base amount of income perhaps higher than someone is earning but lower than the historical income, with a formula to share in income above the base, up to some cap.  While typically a yearly exchange of income information is disfavored, maybe that needs to be considered where income now is not what it was.  To see a related post on this topic, click here.

While it is true that the economy may create challenges, it is not necessarily an absolute impediment from people freeing themselves from what they see as an unhappy if not impossible situation.  Rather, it may take creative thinking, if not a cooperative approach to get to a fair result.

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The Appellate Division issued an interesting unreported (non-precedential) opinion on November 20, 2008 in the case of Freda v. Freda wherein the Court found that it was error for the trial court to not equalize the parties' Social Security benefits.

In this case, both parties were in their 70s and had been married for more than 50 years.  Their means were limited and this was not an alimony case, as they are typically before the Courts.  The wife, however, requested that their Social Security benefits be equalized so that post divorce they both had the same amount of money (the wife's Social Security benefit was $797 and the husband's was $1,400).

Typically, after 10 years of marriage, at a legally appropriate age to collect, a spouse is able to collect based upon their earning record or their spouse's, whichever is higher.  It is my understanding generally that when you collect on a spouse's record, a recipient gets half of what the spouse's entitled would be (this does not reduce the spouse's entitled, however.)

The Appellate Division stated  "We find the trial court's decision unreasonable under the
circumstances of this case where, after fifty years of marriage, the parties should share equally in their joint income as well as their assets."  As a result, the husband was ordered to pay the wife $300 per month as alimony

To view the full case, click here.

The wife's request in this case was one that is seldom seen in these cases and I have heard arguments that such a claim could be preempted by Federal law.  That said, if the amount of/right to receive Social Security is based upon earnings during a marriage, then like a pension, or for that matter any other asset acquired during the marriage, why should it not be divided too?  Perhaps that the answer is that this is not an asset, but rather a right, but that said, the arguments are analogous.  This is definitely food for thought in cases involving long term marriages.

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Pursuant to the statute, the general rule is that the tern of limited duration alimony cannot be extended without unusual circumstances.  A recent Appellate Division decision shed some light on what those circumstances could be.

Jane and Samuel had been married for less than seven years when they got divorced.  They had two children, ages 6 and 4 at the time of the divorce.  Both parties were attorneys although Jane stopped practicing law after the birth of their first child, within the first year of the marriage.  The parties negotiated and entered into an agreement designating Jane with residential custody of the minor children subject to Samuel's visitation and limited duration alimony in the amount of $500 per week for a period of four (4) years.  In addition, Samuel paid $500 per week in child support and child care related expenses to be paid 80% by Samuel, 20% by Jane.

At the time the parties negotiated their agreement, it was assumed that Jane would be able to obtain per diem employment in the law field.  Also, at that time, the oldest child was having difficulties with school and may have had ADD.  Since the time of the divorce, he has been diagnosed with ADD, Asperger's, Obsessive Compulsive disorder and Bi-Polar disorder.  As a result of these diagnosis, Jane argued that she was unable to obtain significant employment such that was contemplated at the time of the divorce.  Jane filed a motion seeking a continuation of her limited duration alimony, an increase in the amount of alimony, the production of financial information or in the alternative an increase in child support, and to establish a fund for their son's medical care.

The trial court denied Jane's application in its entirety.  She appealed and the Appellate Division reversed and remanded. the matter back to the trial court.  The Appellate Court held that an award of limited duration alimony may be modified based either upon changed circumstances or upon the non-occurrence of circumstances that the court found would occur at the time of the award.  A court may modify the amount of such an award but shall not modify the length of the terms except in unusual circumstances.  N.J.S.A. 2A:34-23(c).

In this case, the Court found that Jane had established a change of circumstance for an increase in the amount of the limited duration alimony as well as an increase in the term based upon unusual circumstances, i.e. the health of the parties' eldest child.

The court was careful to explain in it's unpublished opinion that a modification to the time for payment of limited duration alimony as well as the amount would only be based upon an ability to prove changed circumstances or upon the non-occurrence of circumstances that the court found would occur at the time of the award.  Thus, the burden is upon the party making the application (i.e. the recipient spouse) that circumstances have changed such that a modification is necessary and just.  Here, the child's condition was far worse than anyone anticipated at the time of the divorce and Jane simply could not work as contemplated when the matter was settled. 

To read the entire case, click here.

EDITOR'S NOTE:  This case in interesting because there is little law on extending limited duration alimony.  What  is also interesting is that the Appellate Division applied a similar analysis that is used when someone seeks to either extend rehabilitative alimony or convert it to permanent alimony.  Rehabilitative alimony is meant to provide a person with the opportunity to improve their earning ability in order to become self-sufficient, without the need for alimony.                                       Eric S. Solotoff

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One need only pick up any newspaper, turn on any radio or television or even have water cooler conversation, even with those who never used to speak about the economy, to know of the serious economic crisis that this country and the world appear to be facing.  Even today, we read that the stock markets took yet another tumble based upon the news of increased jobless rates.

These realities will no doubt start hitting the family court system if they have not already begun to hit. Specifically, there will be motions by people paying alimony and child support to reduce their support because they have lost their job or have suffered a significant decrease in income.

In the seminal NJ Supreme Court case of Lepis v. Lepis, the historical standard for a modification of support is the showing of a substantial and continuing change of circumstances.  We also know that temporary changes do not form the basis for a modification. 

In fact, in order to get relief, a litigant usually had to show that they have made a significant, diligent job search and despite their best efforts, they could not obtain comparable employment.  How long this had to be depended on the circumstances, but it was probably more than 90 days, or even more than 6 months. 

The question during these times is have we entered a brave new world.  Will someone who worked on Wall Street earning $500,000 per year who has lost their job be expected to get comparable employment?  Should they?  What about the financial professional whose income is based in large part on either commissions or a large yearly bonus that they always used to carry them for the entire year who wont be getting a bonus this year or their commissions are 50% less than last year? 

In the past, when someones income was sporadic, the case law and Child Support Guidelines require that you take an average of 3 or maybe 5 years.  Is that fair now when doom and gloom about the economy is being predicted?  Put another way, is the 3 or 5 year average indicative of what the payor can really earn in this economy? Will the earn at historical levels during the foreseeable future? 

If we use an average now, or impute the last income earned, is that fair?  Is only the payor being forced to sacrifice in that case (assuming for the moment that they even have the ability to pay the prior support which may be unlikely)? If they are forced to pay support based upon passed income, will they ever get the money back when then show in a year or two or three that their income has not and may never be the same> The answer is that this is doubtful. Is this fair?

While representing the recipient, what choice will attorneys have to argue that the laws of imputation and averaging, as the case may be, must be followed by the Courts?  I do not think that we can argue a deviation from the law, to the detriment of our clients.

On the other hand, attorneys for the payor's have to be bold in their arguments that the existing law is distinguishable based upon the current circumstances.  I also think that Judge's must be courageous in their decisions so that the reflect the economic realities.

If the current economic circumstances are ignored, then I foresee a lot more enforcement proceedings, if not a lot more arrest warrants issue for failure to pay support.  In the end, if things continue as they are economically, attorneys and judges should try to work together, creatively, to strive for fairness for all of the parties based upon the economic realities of today.

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Mark Ashton, a partner in our Exton (Chester County), Pennsylvania office and the editor of our Pennsylvania Family Law Blog, wrote an excellent post entitled "Do I Need A Business Appraiser? And Just What is a Forensic Accountant?" on that blog.

To read the complete post, click here.

EDITORS NOTE:  Forensic accountants are also used in matrimonial cases to reconstruct income, prepare lifestyle analyses (how the people spent their money), to trace income to make sure it is all accounted for, to trace premarital assets to establish exemption or partial exemption, to value stock options and other compensation and for other similar tasks.  In complex cases, forensic accountants, the divorce attorneys and of course, the client, work together as a team.  The key is to select the right expert and there are many excellent ones that we work with.  - Eric Solotoff

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Mark Ashton, a partner in our Exton (Chester County), Pennsylvania office and the editor of our Pennsylvania Family Law Blog, wrote an interesting post entitled "The Owner Know Thy Business" on that blog.

To read the complete post, click here.
 

EDITORS NOTE:  Mark's post leads to a discussion of several interesting issues that are frequently encountered in matrimonial cases.  It is not unusual in cases where one or both parties are self employed that there is either unreported income and/or personal expenses being paid through he business.  In those cases, the tax returns are obviously unreliable for support purposes and you have to get the business books and records, credit card records and other documents to determine the business owner's actual income/cash flow.  I say cash flow because that person is not paying taxes on the expenses being paid through he business and the expenses are not added to that person's income.  In some cases, though there are some personal expenses that are paid through the business, that is neither unusual nor problematic from an income tax perspective.  A perfect example is the deduction of automobile expenses.  While this is acceptable, within limits, per the IRS, those expenses have to be added back to income per the Child Support Guidelines.  In fact, all personal expenses are supposed to be added back.  I have been involved in other cases where the husband was declaring just enough income to pay the mortgage, taxes and utilities on the parties' $2 million dollar house and there was no other declared income apparent to pay their other expenses which amounted to a few hundred thousand per year.  In that case, we had to use a forensic accountant to reconstruct the income through the parties' budget because, there were, surprise, sparse records. 

An interesting question, and unanswered question,  is how these non-taxed expenses should be treated for support purposes.  If some declares $100,000 in taxable income and has another $100,000 in non-taxable perks, what is the income number for support purposes.  $200,000 doesn't seem right because only half is taxed.  A normal, taxpaying citizen may have to earn $240,000 or more to have the same net after tax spending power.

A bigger issue to address which deserves its own separate blog entry is what to do when the case has these issues because of a NJ case called Sheridan v. Sheridan.  The rule as per Sheridan is that when a judge hears evidence of unreported income, they are duty bound to refer the matter to the IRS.  As Mark suggests, filing amended tax returns makes the most sense when confronted with this issue - as long as it doesn't happen too late - as was the case in the example in Mark's post.                        -Eric Solotoff

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In order to determine alimony and child support, the court must know what both parties earn.  In fact, the child support and alimony statute requires the court to look at the parents "earning ability" (in the child support statute) and "earning capacities" (in the alimony statute).  Don't ask me why the terminology is different but the concept is the same.  That is, if someone is not earning up to their capacity, the Court needs to know what they can/should be earning.

This often comes up when one parent, by agreement or otherwise, was a stay at home parent or worked part-time in order to care for the children.  The other instance where this comes up is one someone is a malingerer or otherwise unmotivated to work.  In fact, in a trial court opinion, when discussing imputation of income in one of these situations, there is an amusing reference to a dictionary definition of a parasite.

Notwithstanding, if someone is not working or is only working part-time, the court can and usually should impute income to that party.  Of course, if child care will be needed to replace the care that that parent gave, the court must also assess and offset what appropriate child care would be. 

The New Jersey Department of Labor publishes statistics on wages for numerous occupations, providing statewide statistics and statistics broken down by groups of counties.  In addition, the charts provide the mean, median 25th percentile and 75 percentile of income for the particular job.  To go the the Department of Labor website regarding this information, click here. 

Courts have the ability to take judicial notice of these statistics.  Some judges will - some wont.  In addition, these are merely cold statistics and may are may not provide definitive income regarding what someone can earn. 

Another method of providing evidence of what someone can earn is to employ an employability expert to assess the underemployed party.  Note however, there are some judges who do not allow employability experts, at all.  Of course, in a case where that same judge said that a wife's part time income should be doubled to get to a full time wage for support purposes, the Appellate Division reversed that finding because it lacked evidence in the record to support it.

I have heard other judges say that they do not put much weight to the reports/testimony of any of these experts, though they will permit them.  Just recently, an adversary during a trial objected to the scientific basis of employability experts, seemingly in general (though the expert was permitted to testify and the report was received in evidence).

While I suppose there can be a debate about the science, I for one am a proponent of employability experts, where appropriate.  A good expert will meet with the party, get a detailed history, perhaps do some testing, if appropriate, then do research.  Part of this research typically includes resources looking at job availability in the industry.  They also look at wage statistics such as those set forth above and other sources.  More and more, the experts will do a labor market survey in where they contact employers in the target field to determine whether the candidate would be considered for the job and what the range of pay is.  The good thing about the labor market survey is that it can buttress the statistics.  The bad thing, at least at trial, is that it is a ripe area for damaging cross examination.

That said, employability experts are an effective tool to help the court determine what an unemployed or underemployed person can earn.

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In the September 2008 ABA Journal, there was an article entitled 'Til Death Do Us Pay? As retired boomers head to the golf course, courts look at limits on alimony by Wendy N. Davis.  Discussed in that article is alimony after long marriages when the parties are nearing retirement age. This article got me thinking of a scenario we see in New Jersey frequently enough to make it worthy of discussion. 

Picture a 30+ year marriage where one party was the major breadwinner and the other did not work outside of the home (or if he or she did, there was a substantial disparity in incomes).  The knee jerk reaction is to say that this is a permanent alimony case, without question.

Now picture that there are substantial assets, including substantial retirement assets, that are going to be equally divided.  Does that change the assessment?  Maybe.

Now picture that each party is 62 years old.  Does that change the assessment? Maybe it should.
 

Presumably, the parties had discussed and considered retirement.  Even if they did not discuss it, retirement at 62 or 65 or 67 or some other reasonably anticipated age is not a far fetched concept.

In this case, one would expect that the alimony award entered could possibly equalize the parties' net incomes.  Even if it did not, the parties would likely be reasonably close in net income.  They will also have the same amount of assets.

Will the paying spouse be able to acquire substantially more assets in the few years before retirement? This is unlikely.  As the aforementioned article mentioned, will he be forced into "indentured servitude" to pay alimony so that the other spouse can be retired?  If so, is that fair?

The problem when negotiating settlements in these cases when representing the wage earner is that the other side will usually cling with a death grip on the notion of permanent alimony.  On top of that, in many cases, they will not even agree to language which gives the wage earner a right of review upon retirement - essentially leaving them to their devices to make a motion showing a change of circumstances (as opposed to skipping to step 2 which would be the financial analysis regarding whether the payor can still pay alimony based upon income and assets acquired post-divorce). 

This would seem contrary to the admonition that Judge (now Justice) Long included in a seminal case regarding retirement as it relates to alimony.  Specifically, she urged that it would be prudent to negotiate the retirement issue in a marital settlement agreement.  Despite that admonition, this is often easier said that done.

When it is not in the settlement agreement and the parties divorce at age 62, I can envision a defense to the retirement motion made just a few years later that "we agreed to permanent just a few years ago and retirement as foreseeable."  In short, the notion of permanent alimony will have been used as a shield and a sword. 

In any event, might it make more sense to agree to alimony for a term of years, with either a review at a certain age, unless the wage earner continues to earn as he/she has in the past and then it would continue until retirement.  While I know that few would agree to an automatic termination at retirement, shouldn't discovery and a financial review be automatic at this point.  While people always talk about wanting to avoid or narrow litigation - this would be a way to do it.  That said, it would be unusual to see someone giving up the advantage of the permanent alimony "right" without getting something back in return.  Under these facts, is that fair?

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Previously, I blogged about the trial in the McGreevey divorce.  In that entry, I wondered whether it was the desire for retribution that was driving the case and whether the legal and expert fees exceeded the matters at issue.  To see my prior post, click here.

The decision of the Court was released yesterday and unfortunately I was right.  As for the one party playing the victim throughout and until the end, that was evidenced by Ms. Matos McGreevey's statement released even before the decision was released. 

As to the decision, it was decidedly in favor of Mr. McGreevey on the major issues raised by his wife.  Whether the issues raised were ever real and bona fide issues, that is another story.  In any event, the trial judge was clearly frustrated with the parties and it showed in her decision.  To read the decision click here.

Some of the highlights of the decision and Judgment of Divorce are as follows:

-There is no obligation to pay alimony.  In fact, the Judge found that to the extent that there was a need for alimony, it was caused by the legal fee debt associated with the case.

-Mr. McGreevey's income for support purposes was $175,000 - approximately $25,000 more than his employability expert opined and significantly more than he claimed he could earn as a seminary student. Child support was based upon that income and his wife's former income (she was laid off just prior to the end of the trial.) The Child Support Guidelines were used and then enhanced slightly due in large part to the fact that Mr. McGreevey was being supported by his partner.  He did not get a credit for the support for his other child because he was not currently paying it.

-The wife's claim for celebrity goodwill did not fly nor did her claim that marital lifestyle should be fixed based upon the lifestyle provided by the State of New Jersey to the Governor and First Lady.

-Each side had to pay their own legal fees. 

-The wife's fees total fees were more than $525,000   after receiving a courtesy discount of approximately $125,000.  Only $50,500 had been paid to date.  Mr. McGreevey's fees totaled $498,000 and he had paid only approximately $170,000. 

Given the costs and the results, could it have possibly been all worth it?  Based upon the Court's decision, it seems unlikely.  That is, unless there was a desire to drag the other through the mud and exact vengeance in a public arena.  If that was the victory sought and received by either or both of the parties, then the system failed.

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With the slew of recent celebrity or notorious divorces in the news lately (i.e. Christie Brinkley, Jim McGreevey, Bill Murray, A-Rod, to name a few), one would think that adultery and other marital fault is really dealt with in the courts and that people are punished for these actions by a Court. 

Maybe they are in other states, but it is not particularly relevant in New Jersey.  In fact, in 2005, the New Jersey Supreme Court, in the Mani v. Mani case, held that marital fault is irrelevant to alimony except in two narrow instances: cases in which the fault negatively affects the economic status of the parties and cases in which the fault so violates societal norms that continuing the economic bonds between the parties would confound notions of simple justice (examples given were attempting to murder the supporting spouse and deliberately infecting a spouse with a loathsome disease.). . 

This is not to say that the conduct is ignored altogether.  If a spouse spent marital funds on a paramour, the fault  is not considered but the other spouse by may be due a credit.  Similarly, if the conduct impacts on the fitness of a parent and/or the best interests of the children, they can be raised in custody and parenting time proceedings. 

While NJ still has fault grounds for divorce (i.e. adultery, extreme cruelty, desertion, voluntary drug addiction, habitual drunkenness, institutionalism for mental illness, imprisonment and deviant sexual conduct), they are not often plead anymore now that the no-fault "irreconcilable differences" cause of action for divorce was enacted.  That said, even when they are plead, all they get you is a divorce. 

Unless there is a limited issue where this is relevant, leave the seedy mudslinging to the celebrities. 

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I have eagerly awaited the news accounts each day of the ongoing saga of the former first family of the State of New Jersey. 

While by all accounts, there is some exceptional lawyering going on, one cannot help to think that this is a case that should have been settled or that one or more of the parties is using the trial to settle personal vendettas. 

Thankfully for the parties' child, they settled custody and parenting issues.  However, as the judge admonished at points in the case, their daughter is going to be able to read all about her parents' divorce by just typing hers and their names into Google.  And for what?

 While their marital lifestyle was perhaps unusual from the common folk, in both financial and other ways, at the end of the day, this was a short marriage. The testimony from both as reported suggests that there was no savings and few assets.  The disputes as to alimony seem absurd because even if there was a viable claim, how much could it have been for.  The legal and experts fees had to have exceeded the claim. 

Again, I don't know all of the facts and only know what I read.  However, I always tell my clients that you don't want to spend $10 in legal fees to get $5 back.  I wonder at the end of the day whether the battling McGreeveys will have done just that.  If so, that is good for no one - even the lawyers.  Moreover, I hope that the trial was not a vehicle for either to get the last of their 15 minutes of fame while at the same time, preventing parties with real issues from getting their day in court.

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In an interesting unpublished Appellate Division decision dated May 23, 2008 in the matter of Pechinka v. Pechinka, A-6089-06T3, the court affirmed a trial court decision that denied an ex-husband's motion to terminate his limited duration alimony. 

At the time of the divorce in 2002, the wife was earning $46,000.  The husband earned $116,000 per year.  They stipulated that there marital lifestyle was $7,000 to $7,500 per month for a family of four  "... in an average month on living expenses." 

In 2006, the wife earned almost $91,000 and with her alimony, she had $6,100 per month in net after tax funds.  This amounts to about 81% to 87% of the joint family net income/lifestyle before the divorce. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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In late 2007, in Calbi v. Calbi, 396 N.J. Super. 592 (App. Div. 2007),  the Appellate Division once again re-affirmed the notion that marital fault is all but irrelevant when assessing a party's right to receive alimony. 

In what was as tragic a case as any parent could imagine, Mr. Calbi sought to terminate or reduce his alimony after one of the party's two children died at the hands of the mother.  Specifically, while intoxicated, during an altercation, Mrs. Calbi kicked her son three times in the head and once in the neck.  He died as a result of the injuries he sustained.  Ultimately, Mrs. Calbi plead guilty to second degree aggravated assault for which she was to be imprisoned for approximately 3 years.  As a result of the grief and trauma associated with the loss of his son as well as the added responsibilities for caring for the parties' other son, Mr. Calbi fell behind on his alimony.  In light of all of the circumstances, he sought the reduction if not elimination of alimony. 

The trial judge ultimately that any application to terminate alimony should await Mrs. Calbi's release from prison.  However, the current support was suspended, but the prior arrears were not vacated and Mr. Calbi was ordered to pay them. 

The Appellate Division reversed holding that suspension of Mr. Calbi's alimony payments and vacation of the alimony arrears that accrued after death of parties' child was required.  Moreover, upon Mrs. Calbi's release from prison, Mr. Calbi was entitled to a hearing  to determine whether the child's death affected his ability to pay alimony. 

That said, the Court went back and reviewed the cases regarding fault, including the 2005 case of Mani wherein Justice Long held that marital fault was irrelevant to alimony except in two narrow instances: cases in which fault has affected the economic life of the parties, and “cases in which the fault so violates societal norms that continuing the economic bonds between the parties would confound notions of simple justice.”   Justice Long spoke of   “egregious fault,” which she defined as acts by their very nature, are different in kind, such as a spouse attempting to murder the other spouse; a spouse who as deliberately infected the other with a loathsome disease.  Justice Long went on to say,  "Underlying these examples is the concept that some conduct, by its very nature is so outrageous that it can be said to violate the social contract, such that society would not abide continuing the economic bonds between the parties. In the extremely narrow class of cases in which such conduct occurs, it may be considered by the court, not in calculating an alimony award, but in the initial determination of whether alimony should be allowed at all." 

Since Mrs. Calbi's actions were not deemed to be intentional, either in the criminal court or the family court, she was not precluded from receiving alimony no matter how contemptible or aberrant her conduct was. 

That said, if this conduct will not terminate alimony, then there is little by way of fault that would do so. 

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