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

As is widely known, the filing date of the complaint for divorce which actually leads to a divorce is the “cutoff date” for equitable distribution, that is, assets acquired up to that date are generally subject to equitable distribution, and assets acquired after that date are generally not. This is a general rule and cannot be taken as a total brightline test since there are no notable exceptions. Among these are: (1) assets acquired by way of gift or inheritance or intestate succession (death without a will) not from a spouse; (2) assets acquired with other assets which were either from a third party as in the first example of acquired by one party prior to the marriage. An exception to the cutoff date would be an asset acquired by one party after the cutoff date but with assets which were subject to equitable distribution. Again, these are general rules and there are always exceptions or other fact situations which render a general rule inapplicable. Obviously, it is best to consult qualified counsel since each circumstance is fact-sensitive, and the result usually turns on very specific development of the facts.

          One exception to the timing of “cutoff date” rule is advantageous to the parties. Say that (for one reason or another) the parties are cooperative and want to attempt to negotiate an agreement before filing for divorce. Their hope is that they can amicable provide the other, through counsel, with sufficient documentary information upon which to adequately understand their financial circumstances and based on that understanding, negotiate an agreement, in which case, they can then file for divorce and obtain an uncontested termination of their marriage within a few weeks. Using this methodology, they can avoid certain judicial systemic entanglements.

 

          Problem: if they were to file for divorce, as stated above, the general rule is that post-complaint asset acquisitions are not subject to being divided in the divorce process. If they try to negotiate without filing, if the negotiations should fail to bear fruit and they must thereafter file and implicate the court system in their settlement process, any assets acquired between the time that they start negotiating and the time it fails and one of the files is subject to equitable distribution.

 

          One party may wish to avoid this problematic result. One way to accomplish is to stipulate a particular date as the agreed-upon cutoff date in the event that they might have to later file without an agreement. Needless to say, such an agreement should be in writing, and for safety sake, signed by both parties, not just their attorneys.

 

          Thus, under this scenario, the parties would be free to continue their efforts but with the effect (relative to equitable distribution) that a complaint had been filed.

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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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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. 

There are many times in what is deemed to be a “simple divorce” that a conflict of interest could arise. This does not mean that one party is trying to “get one over” on the other; it could be a situation in which the parties reach an agreement and simply do not understand all of the applicable issues. Take this example ( which happened to me several years back): husband and wife agree that she is going to take the house which has $100,000 in equity. Husband will take the investment account which has a value of about $100,000. 50-50 split, right? This is what they want to do. Well, it’s maybe not quite so fair, because in my example, it turns out that the investment account contains stocks that they received twenty years ago for a wedding present and there will be significant tax consequences such that husband will really only get $70,000 in after tax dollars. Take the example of a pension. Usually the parties divide the interest which was accrued during the marriage. But what about the beneficiary designation? That designation could have significant consequences on a spouse who remarries later on.

 

These is just two of thousands of examples of why each party should get independent advice in a divorce. Most cases settle and an agreement is drawn up. But the essence of a settlement is compromise, which means that each side will give up something that they are otherwise entitled to in order to reach a settlement that they are satisfied with. How can the same lawyer advise the clients what to give up without creating a conflict? It cannot be done, which is why one attorney cannot represent both spouses in a divorce.

 

That being said, there are many, many times that I am retained to review an agreement that has been prepared by another lawyer, or a mediator. And in some of those occasions, I may not recommend any changes. But at least each person has had the opportunity to make sure that their rights are protected. Sometimes, a client will come in and say that she(or he) and the spouse have worked out an agreement between themselves and only want to use one attorney. I advise my client of all the implications of the agreement. I then prepare an agreement with the terms (as they may have been modified after I have given the client my opinion), and send it to the other spouse with a stern letter advising that spouse to have an attorney review the agreement before signing it. If that spouse waives his or her rights, and does not seek to see a lawyer for advice, I note that fact in the agreement. This is to protect my client against a potential challenge to the agreement at a later date on the basis of that other spouse not having legal advice. Then, once the agreement is signed, the matter proceeds on a “uncontested basis.”

 

The fact of the matter is that the vast majority of lawyers understand that their clients are conscious about the fees that they spend for a divorce and make every effort to work efficiently while at the same time making sure that the client is educated about his or her rights and protected.

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Earlier this year, I blogged on the Houseman v. Dare case decided by the Appellate Division in a reported (precedential) opinion that held that  the special subjective worth of a pet to a party must be considered . Similarly, there were allegations there there was a specific agreement that one party would keep the dog, which was breached by the other party and Appellate Division remanded, as well, to consider whether there was an agreement. 

To see the prior post, click here.  To see the full text of the Appellate Division's decision, click here.

During the remand that was recently decided, the trial court,  in a somewhat Solomonic fashion, decided that the dog was to spend equal time with each party.  This seems to ignore the contract aspect of the case.  If more facts come out about this, we will update this post accordingly.

Per news reports, the trial judge stated that this was not a "custody arrangement" because, dogs are not children and do not get the same consideration. Despite the Appellate Division ruling, the judge reiterated that the dog was really no more than property.

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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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It would be an understatement to say that these are trying financial times.  Real estate values are done, retirement assets are down, stock accounts are down, many people have lost jobs and many other feel lucky to still have their job, albeit earning less than they once did. 

In the past, the proceeds of the sale of of the marital home was a solution to many post-divorce cash flow issues, including down payments for new homes, getting a new car and paying the lawyers and experts in a case.  With the decline in property values, many people are facing situations with negative equity or much less equity to divide. 

What I learned in the last few years, and what I have found that many attorney and many accountants do not know is that a spouse receiving a share of the other spouses retirement account in divorce (IRAs and 401ks) can avoid the early withdrawal penalty if they take with withdrawal "incident to a divorce."  Many people think  and I used to be one of them, that if you liquidated retirements assets, you had to pay the 10% penalty. 

However, provisions of Internal Revenue Code sections 72, 401 & 408 (as well as the Treasury Regulations), allow a person to avoid the penalty if the take the cash at the time of the transfer.  If the transfer is in to an IRA account and then they try to get the cash, there will be penalty.  The tax in either instance still has to be paid. 

I suggest that parties can be creative with this to get money out for both of them, if they are cooperative, transfer the money to the non-tiled spouse which will then be divided, and they agree on a fair division of the taxes. 

In any event, if the rainy day is at the end of the divorce, retirement assets to be transferred incident to a divorce could mean money for that rainy day.

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 We have all heard how the current economy has been taking its toll on the economics of divorce. Where home equity and stock accounts was once a source income, I have had many clients look to their retirements as a resource for liquid income post divorce.  Many times, the issue of access to retirement funds comes up in the negotiation of a divorce settlement. As an example, if the marital home has fallen in value, a spouse may seek to liquidate a retirement account in order to have enough for a down payment for a new house post divorce.

 

In the case of a 401(k) or IRA, this may be a realistic source of funds as long as the consequences of taking an early withdrawal, including penalties are taken into consideration. However, many people are under the mistaken impression that as long as you are willing to pay the penalty, the money can be taken out by a former spouse at any time. Such is not necessarily the case.

Many, if not most traditional pension plans provide that there can be no withdrawal until the stated retirement age in the pension plan itself. So, even if you know that you will have funds at retirement age, you may not be able to spend them until a time in the future. Others provide that a former spouse cannot receive the benefit until the time the time that your former spouse begins to receive benefits, or at least becomes entitled to benefits.

 

Seem obvious? Well, in recent weeks I have had no less than three clients who I did not represent in the divorce or the negotiation of the settlement agreement who thought that they would be able to access funds immediately, and in one case, negotiated a lower amount based upon that assumption. Lesson to be learned? Find out about the rules of your soon to be ex’s retirement and your rights as a former spouse at the beginning of the divorce process. This can easily be done by an attorney through the use of a subpoena. Find out now what your rights are and when those rights come into being to access the money post divorce so you can make an informed decision in the negotiation process.    If the early liquidation of the asset is likely, make it a part of the negotiations. And don’t forget the costs associated with the early withdrawal of any account. A $100,000 401(k) is not really worth $100,000 after consideration of taxes and penalties.

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I have previously written articles and blogged on the issue of how a former spouse’s portion of a pension is calculated, and in particular, how a military retirement differs from other, civilian retirement vehicles.

Most defined benefit plans are divided based upon a “coverture fraction” which takes into account the number of years during employment that the working spouse is married. This has always been the best available way to calculate the former spouse’s share. However, while most pensions are (as a general rule) calculated based upon an average of the worker’s last three years of salary. A military retirement is calculated with far more specificity, utilizing a “points” based system, which take into account factors such as rank, days if service and whether a member was an active duty member or a reservist ( or a combination thereof). It may be therefore, possible to more accurately calculate a former spouse’s entitlement to the military employee’s retirement. Indeed, several states have adopted a view which calculates the amount using a “points based system.”

Recently, the New Jersey Appellate Division decided the case of Leins v. Leins, which acknowledges that there are differences in members who are retiring from active duty and those who are retiring from reservist duty, as the Defense Finance and Accounting Service calculates those retirements differently.

 

The calculation of a former spouse’s entitlement to a defined benefit plan is often, but not always, a simple calculation. It is critical to make sure that, while a divorce action is pending, all plan documents are obtained and reviewed in order to protect both the pensioned and non-pensioned spouse, and to avoid litigation later.

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

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

 

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

 

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

 

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

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If you have never been through the process of a divorce yourself you may not know how, at the end of the day, things are actually decided. For example, how do attorneys or the court calculate how much of a spouse's pension or 401(k) gets divided?  How do attorneys or the court calculate the value of real property? Experts are obtained to appraise assets in order to obtain values.  Often parties each get their own experts and their are dueling appraisals.  If the parties cannot agree on a value, a court will have to hear testimony from both experts and make the call.

That was an issue that was recently addressed in the published Appellate Division decision of Pansini Custom Design Associates, LLC and Roger Parkin Joint Venture v. City of Ocean City and Patrick Newton and Saving Our Station Coalition, A-2003-07T1, decided May 14, 2009.

Many people who go through the process of divorce own real property.  If parties are unable to reach an agreement as to the value of real property owned so as to determine how much each may be entitled to, how does the issue get resolved?  Typically, the parties may either retain a joint real estate appraiser or each obtain their own real estate appraiser who will create an appraisal.  In the latter scenario, the result may be competing real estate appraisals and values.  If no resolution is reached among the parties and the issue is left to a court to decide in a trial, the importance and validity of these real estate appraisals will be tested.

There are experts available on nearly every topic if you look hard enough.  In family law, real estate experts abound.  Many attorneys have their "go to" experts or others who may solicit them for business.  No matter what, whatever expert is involved in your matter should be selected with thought and consideration to the specific facts of your case and the ultimate goals of the clients they work for.

Once an expert is selected and the real estate appraisal performed, how does the court determine which expert to rely upon when called upon to make a determination as to the value of real property? Are not all real estate appraisals the same? The answer is simply no. Courts have a body of case law that guides them on what considerations and factors they must focus on when called upon to make this determination.

A court's need for an expert to testify arises "where the fact [-] finder is not expected to have sufficient knowledge or experience and would have to speculate without the aid of expert testimony." Torres v. Schripps, Inc., 342 N.J. Super. 419, 430 (App. Div. 2001). While expert testimony is generally necessary to determine the fair market value of real property, Jacobitti v. Jacobitti, 263 N.J. Super. 608, 613 (App. Div. 1993), the court is not required to accept the testimony of an expert witness and may accept some testimony and reject other parts, Torres supra 342 N.J. Super. at 431. Where there's a question or rejection of the expert's testimony, the judge may appoint an independent expert. Id. at 436.

What it comes down to is the judge is left to weigh and evaluate the expert's opinion and credibility in order to reach a reasoned, just and factually supported conclusion. Pansini supra at p.9. The trial judge in Pansini decided to take the values and discounts given by three different experts and average them in order to reach a final number for fair market value. The Appellate Division tells us that "averaging...is not an appropriate methodology for assessing divergent values. The reasoned weight of authority provides sound policy reasons for such a conclusion. Properties are not fungible. Even with adjustments during the appraisal process, there are sufficient differences that must be weighed and considered by the fact-finder in addressing the ultimate issue in dispute." Id. at p. 13.

The Court goes on to state that averaging "will intentionally distort and skew the values to insure a high or low number without concern that the fact finder must resolve the issue with a careful analysis of data that may result in adoption of one appraisal figure over another." Id. at p. 14.

Pansini tells us that while it may seem like an easy and fair on its face solution, simply averaging competing expert's appraisal values is not sound methodology and should not be done by trial judges faced to decide such an issue as the fair market value of real property.

On another note, when using a real estate expert, don't be afraid to ask questions about comparable values used, discounts applied, etc. If the report and/or expert is going to be tested during a trial, you want to be sure that your expert can defend his/her report and will do well under the stress and pressure of a trial. Always talk to your attorney who should as well know and understand the expert's report and be able to present and defend it during a trial.

 

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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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People sometimes assume that “equitable distribution” automatically means a 50/50 division of assets. However, a court cannot simply view a list of assets and make the automatic determination that the list should be divided 50/50 between the parties. The guiding case in New Jersey to help determine who gets what or how much in equitable distribution is Painter v. Painter, 65 NJ 196 (1974).  Another frequent question is what happens to assets that one party brought in to a marriage? Also, what happens to assets gifted to one party during the marriage by family members or third parties other than their spouse?

Recently, the Appellate Division issued an unpublished decision which addressed equitable distribution of a marital home and vacation home to parties who had been married twenty years. In the matter of Miller v. Miller, A-2506-07T1, Decided April 28, 2009, defendant-husband appealed from a Judgment of Divorce where the trial judge granted the plaintiff-wife an interest in both the marital home and vacation home that defendant alleged was not subject to equitable distribution as it was alleged to be an immune asset owned by him prior to the marriage.

Defendant-husband was 64 years old and a retired osteopathic doctor. Plaintiff-wife began working for defendant as his office manager and three years later moved in with him in what became the marital home for the remainder of the marriage. This home was owned by defendant’s parents and there existed an arrangement whereby defendant agreed to pay a sum specific each month in order to buy the home from his parents. However, evidence exists that after the parties were married, defendant’s parents executed annual notes forgiving the loan each year and these notes were addressed to both parties. The vacation home was similarly acquired. The deeds to both properties were placed into joint names some time after the parties were married.

The trial judge included both the marital home and vacation home in the marital estate and awarded plaintiff-wife a 45% share in the marital home and a 40% share of the vacation home. As to the marital home, the judge reasoned that this property was maintained and improved using joint funds and that both parties contributed to its care and upkeep. Most importantly, during the marriage, legal title had vested in both parties at the same time by operation of the same deed. Prior to that deed, defendant-husband never owned an outright fee simple interest in the property. Also, in a series of annual loan forbearance agreements issued to both parties, defendant’s parents had begun forgiving the loan on this property after the parties were married ending with the recordation of the deed in both names. The judge ordered a disproportionate division of this asset recognizing defendant’s pre-existent equitable interest as trustee.

As to the vacation home, the trial judge reasoned that defendant-husband’s parents apparently gifted the property to the parties jointly, evidenced by loan forgiveness letters; the parties never made any payments to defendant’s parents; plaintiff acquired a legal interest in the property in a deed recorded in 1991 or 1992; joint funds were since invested in the property and plaintiff oversaw its reconstruction after a fire; and no prior deed was produced evidencing defendant’s pre-marital ownership. Again, the judge ordered a disproportionate division of this asset recognizing the origin of ownership and source of gifting from defendant’s parents.

Defendant-husband appealed from this portion of the JOD arguing that the judge erred in the decision by failing to recognize the properties as immune assets owned exclusively by him or alternatively that the judge erred in overvaluing plaintiff’s interest in these assets. He argued that the properties were immune from equitable distribution because he owned them prior to the marriage and did not have the requisite donative intent to create marital assets since the deeds executed were done simply to protect his assets from medical malpractice liability.

To disturb the trial court’s findings, appellate review pertaining to equitable distribution is narrow. Wadlow v. Wadlow, 200 NJ Super. 372, 377 (App. Div. 1985). The standard is abuse of discretion, keeping in mind that a trial judge should not routinely or mechanistically divide the marital assets equally. “[T]he word ‘equitable’ itself implies the weighing of the many considerations and circumstances that are presented in each case.” Stout v. Stout, 155 NJ Super. 196, 205 (App. Div.1977).

The Painter case tells us that “[a]ll property, regardless of its source, in which a spouse acquires an interest during the marriage shall be eligible for distribution in the event of divorce.” Id. At 217. The burden of establishing immunity from distribution of a particular marital asset rests upon the spouse who asserts it. Pacifico v. Pacifico, 190 NJ 258, 269 (2007).

The Appellate Division affirmed the trial court’s decision. As to the marital home, it held that the parties jointly occupied the premises for 23 of the 30 years that defendant possessed it prior to separation; plaintiff contributed to the rebuilding of the property after it burned down and to maintaining it throughout the time she lived there. Also, the parties used marital funds to maintain and improve the property and plaintiff acquired legal title five years into the marriage.

As to the vacation home, defendant failed to produce documentary evidence to show that he owned the property before the joint deed was executed in 1991 or 1992 as no deed was ever produced. This property was likely transferred to the parties jointly as a gift, there being no credible evidence in the record contradicting that determination.

In sum, defendant failed to meet his burden of proof to establish to the Court that the assets in question were owned by him prior to the marriage and that plaintiff was not entitled to share in their value.
 

EDITOR'S NOTE:  To answer the questions posed at the beginning of this post, typically, an asset that one party brings in to a marriage would be exempt from equitable distribution.  Similarly, assets acquired from third parties by way of gift or inheritance are similarly exempt.  The caveat in both situations is that the assets cannot be commingled or put into joint names.  Similarly, if marital funds are used to pay for this otherwise exempt asset, it could become non-exempt.  That said, aside from the commingling issue, there are two other important factors to remember.  First, just because a pre-marital asset is commingled does not mean that it should now be divided 50-50.  In fact, in the above case, a disproportionate distribution was ordered in recognition of the source of acquisition.  Second, and perhaps more importantly, the person claiming an asset is exempt has the burden to prove it is exempt.  Saying so is not enough unless the other side agrees (and that rarely happens easily).  Put another way, you have to provide the documents to prove that an asset is exempt.  This is not always easy as people rarely keep all of the bank records going back 10, 20 or more years.  Further, banks and financial institutions only keep records for a limited time.  That said, depending on how large the asset is, it may make sense to spare no expense to prove the exemption.                      ERIC S. SOLOTOFF

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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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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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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 "A Reminder That the World of Bankruptcy Has Changed.   To see the full post, click here.

The post reminds us how the 2005 changes to the bankruptcy code affects divorce settlements.  Specifically, divorce settlements are no longer dischargeable in bankruptcy.  Under the prior Act, payments in the nature of support were non-dischargeable but equitable distribution could be dischargeable.  The court would apply a balancing test as to the debtor and former spouse.  That balancing test is now gone.

Very often we still see clauses in property settlement agreements proclaiming that the obligations are not dischargeable in bankruptcy or "are in the nature of support."  Those clauses do not seem necessary anymore. 

Given the current economy, this issue could be one we see a lot.  That said, bankruptcy does not seem like it will provide relief to former spouses.

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On March 12, 2009, the Appellate Division issued a reported decision in the case if Sweeney v. Sweeney..  RBC Dain Rauscher Inc was also involved in the appeal.  To view the case, click here.

The parties were married in 1991.  In 1999, the wife sold a premarital business and building for $555,000 and kept the proceeds as her separate property.  She invested the proceeds with RBC, signing a standard agreement containing an arbitration clause in the event of a dispute.  The husband was a broker at and he became the broker for the wife's account. He was already
the broker for the couple's joint account and for two accounts held by RBC on behalf of the couple's minor children.

The parties divorce in 2004.  Their divorce agreement does not mention any of the parties' brokerage accounts, but it contains a standard mutual release clause in which the
parties give up any and all claims that each might have against the other by reason of any matter.

In 2006, the wife filed with NASD (now FINRA) a Statement of Claim for Securities Arbitration against RBC, alleging, among other things, mismanagement of her accounts, breach of contract,
breach of fiduciary duty and breach of the duty to supervise. In response, RBC filed in the family court where the divorce was heard a  post-judgment motion to intervene in the divorce action and to stay arbitration. RBC contended that as a result of the Judgment of Divorce, her arbitration claims were barred by res judicata and by the entire controversy doctrine. RBC also claimed that it is a third-party beneficiary of the Judgment of Divorce and that  the release of the husband released RBC. The Wife filed a notice of cross-motion to compel arbitration.

Both the trial court and Appellate Division ruled in the wife's favor.

In declining to acknowledge res judicata (an argument that the issue was already resolved) and the entire controversy doctrine (an argument that the issue should have been brought during the divorce). the court found that RBC was not a party to the divorce proceeding that no issues concerning the management of the margin accounts were raised in the divorce action. As such, RBC was not prejudiced by any decision or disposition of any issues in the parties' divorce proceeding.

As to the issue of the release, it related to marital and testamentary rights and other rights or claims personal to the divorcing parties. The court found that the releases do not purport to release persons whose obligations arise from separate relations, contractual or otherwise.

I suspect that this case may have had a different result of the wife raised the issues in the divorce before it was settled.  Because she seemingly did not, the result is not surprising. 

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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.

 

Plaintiff appealed claiming that the trial court abused its discretion in requiring defendant to only repay 18% of the loans received from plaintiff's sister considering that defendant received almost 50% of the marital assets the loans preserved; the finding that plaintiff's law practice was valued at $100,000 was contrary to evidence and an abuse of discretion; the alimony award was contrary to evidence and an abuse of discretion; the counsel fee award was not based upon credible evidence, contrary to law and should be vacated; and the trial court's naked conclusions failed to explain many of its decisions therefore the plaintiff requested that the Appellate Division exercise original jurisdiction to decide the issues it reverses.

The Appellate Division affirmed the trial court's findings as to the value of plaintiff's law practice and its distribution, the alimony award and the counsel fee award.

As for the distribution of the loans made by plaintiff's family, the Appellate Division reversed and remanded the trial court's finding of the amount of loans subject to distribution for further proceedings on whether the marital partnership received and was benefited by other loans from plaintiff's family other than those specifically found by the judge. The trial judge found plaintiff's sister's testimony to be credible, however only specifically discussed distribution of two loans, totaling $120,000. Although the trial court's written opinion may be interpreted to have rejected plaintiff's arguments as to the remaining amount of loans taken, the Appellate Division would not base its decision upon such a loose interpretation and remanded for clear findings on this point.

On remand, the trial judge should consider principles established in the Appellate Division case of Monte v. Monte, 212 N.J. Super. 557 (App. Div. 1986) for dealing with marital debt. In Monte, the Appellate Division considered the equitable distribution of marital debt when "[t]he parties' affluent standard of living continued not only during periods of time when earned income was meager but also ...when plaintiff had no income because he was unable to work for over a year." Id. at 566. The amount of debt accrued during that time to sustain the family shall also be considered. The trial judge must consider whether, under the circumstances, defendant must have been aware that there were other loans, assuming there were, and whether they were used to preserve marital assets for her later benefit at the time of equitable distribution.

Lastly, the Appellate Division refused to accept original jurisdiction over the issues remanded. Plaintiff argued that because the trial judge had been moved out of the family division, the Appellate Division should retain original jurisdiction to prevent a new judge, unfamiliar with the case, from hearing the issues on remand. The Appellate Division has held that the transfer of a judge should not "interfere[] with what was required for a fair and just resolution of" a family court matter. O'Brien v. O'Brien, 259 N.J. Super. 401, 405-406 (App. Div. 1992). Despite being transferred from the family division, the trial judge has an obligation to decide the issues on remand and has been instructed to do just that.
 

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All over the papers this week is the story of post-judgment litigation in New York.  In this case, in June 2006, the parties agreed to evenly split the $5.4 million in an account they had with Madoff Securities.  As a result, the husband gave the wife  $2.7 million in cash, and retained the account.

As a result of the alleged Madoff Ponzi scheme that has essentially rendered the account worthless, the husband has filed suit seeking the $2.7 million that he paid the wife. The husband alleges ta ht because the account turned out to be valueless, the lawsuit said, the spirit of the agreement was broken.

That said, if this case was in New Jersey, there may be the possibility of a recovery here.  Though the general rule is that equitable distribution is not-modifiable, the issue may turn on whether there was $5.7 million in the account at the time of the divorce or whether that was simply an illusion created by Madoff's alleged fraud.  If the account really had no value at that time, then the parties made a "mutual mistake".  In that case, the settlement agreement could be re-formed to create an equitable result.  If the money was actually in the account at that time, there could be a different result.  One could argue that this really wasn't any different than any other investment that loses value - though that result seems harsh.  However, assuming the husband had that money in your ordinary stock account, given the stock market over the last year and current financial  crisis, it seems unlikely that his $5.4 million would still be $5.4 million.  If there were just stock losses, it is highly unlikely that he would be entitled to any relief.  Moreover, it is not unlikely that if the wife invested her $2.7 million in stock or real estate, that she has her full $2.7 million either. 

We await the result of the suit and will post another blog entry when there is a resolution.

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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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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.

The trial judge felt it irrelevant to look at the pre-marriage lifestyle given the passage of time.  The judge found that the agreement was unconscionable and set aside the entire agreement.

An interlocutory appeal was taken by the wife and joined by the husband.  The Appellate Division reversed the Order to the extent that it set aside the entire agreement.  As to the assets, the husband knew that the wife would likely be wealthier than him at the time of a divorce given her family wealth, etc. 

However, the Appellate Division accepted the decision of the trial court as to alimony - but modified it.  The reason for this is that the husband had yet to be fired by the wife.  As such, the Appellate Division modified the trial court's conclusion to allow defendant to seek alimony if and when he demonstrates substantially changed circumstances under the standard articulated in Lepis v. Lepis, 83 N.J. 139 (1980).

Of note, the Appellate Division rejected the wife's claim that the court had to determine the issue of unconscionability when the agreement was executed, as opposed to when it was enforce.

Under all of the circumstances in this case, the Agreement did what it was supposed to do - that is, protect the family wealth.  However, given the time of execution (i.e. pre-act), the wife may ultimately have to pay alimony if she terminates the husband.  Post-act, she may not have had to pay alimony at all.

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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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Mark Ashton, a partner in our Exton (Chester County), Pennsylvania office and the editor of our Pennsylvania Family Law Blog, wrote a terrific post entitled "Advice for Troubled TImes in the Market" on that blog. 

To read the entirety of Mark's post, click here.

 

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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 a terrific post of the valuation of personal property on that blog. 

To read the entirety of Mark's post, click here.

In New Jersey, and probably elsewhere, the last things that judge's really want to get involved in is the division of personal property.  In most cases, the time spent wont justify it.  Some of the ways that personal property issues are resolved are as follows:

1) the alternate selection method (i.e. each party alternates picking until there is nothing left)

2) one party makes two supposedly equal lists and the other party gets to choose the list they want.

I have also heard of cases where, for a particular item or items, the parties had an auction between themselves on the item (particularly when the cannot agree upon a value.)

The bottom line is that these issues are best resolved between the parties, acting reasonably and rationally. 

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One of the things that we were reminded of  from the McGreevey divorce is that if a party claims that an asset is exempt from equitable distribution, they have the burden of proving the exemption.  In McGreevey, the wife shared in what the husband alleged were the proceeds of the sale of his premarital condo because he failed to prove the exemption at trial.

I just recently completed a trial, representing the wife, where we had several claims of exemption because personal property, cash and stock were either gifted premaritally or during the marriage.  In addition, there were certain inheritances during the marriage. 

The law in NJ is pretty clear all property acquired during the marriage by way of gift, devise or intestate succession is exempt from equitable distribution other than interspousal gifts which are subject to equitable distribution.  Similarly, if an asset is premarital, then by definition, it is not "acquired during the marriage" and thus exempt.

The problem arises when exempt funds are commingled with non-exempt funds.  To prove exemption, this requires the daunting task of tracing all of the funds into (and perhaps out of) the account during the relevant period of time.  Even if you can trace the funds, there are judges who believe that once an account is commingled, it should be evenly divided. 

One would think that personal property should be easier.  Usually, but not in my most recent trial, there is little dispute as to whether an asset is premarital or not.  Usually, but not in my most recent trial, there is little dispute that a birthday present or other gift to one party during the marriage was a gift to that person, as opposed to a gift to the whole family.

During my trial, the position taken at some point, perhaps after a comment made by the judge, was that since the collection was displayed in the marital home, it became a marital asset.  Of course, if the exemption of an engagement ring which is not a marital asset and often kept in the marital home is clear - then why would any other gifted piece of personal property by different.  In fact, I asked the husband on cross examination whether his daughter had collectibles - he answered yes.  I asked then whether they were displayed in the marital home and again he answered yes.  I then asked him if he was making a claim to these assets as marital and he said no. 

While clearly the game was exposed by that point, the fact remains that if you want to make sure that at item is exempt, keep it separate and try to keep records.  The burden is on you. 

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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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Natalie Famous, an associate in our Bucks County, Pennsylvania office, wrote a terrific post on who gets the family photos  on the Pennsylvania Family Law Blog.

To see the post, click here. To view the Pennsylvania Family Law Blog, click here or at the link to the right of the page.

As to personal property issues in general, aside from avoiding the fight about these issues, if that is not possible, make sure that everyone knows exactly what is being divided.  We have a case where despite the fact that most everyone would think that the use of terms such as "bedroom set", "dining room set" and "living room set" meant simply the furniture in those rooms, a party is taking the position that  those definitions include all the sheets and bedding, all of the floor coverings, all of the wall coverings, all of the serving pieces, etc. in the dining room furniture, and worse.  There have been numerous motions where the husband continued to complain that he did not get his belongings.  Only after his greater inquiry, including his deposition, did we learn what he meant.  While I have my own beliefs as to whether the way the husband is litigating is a tactic to upset the wife and run up her fees, the better practice would have been (this was done by the firm that previously represented my client)  to specifically list each piece of furniture so such discrepancies never come up. 

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