Yesterday, I blogged on the S.W. v. G.M. case in a post entitled More from the Appellate Division on Lifestyle, Foulas and the Concept of Income Equalization.  In that blog, I noted that the S.W. court also addressed the issue of life insurance to secure alimony.

It is not necessary to get into the facts of S.W. further to address this issue here, other than to point out that in an open durational alimony case, the trial  judge relied on N.J.S.A. 2A:34-23(j)(1), which states: “There shall be a rebuttable
presumption that alimony shall terminate upon the obligor spouse or partner
attaining full retirement age.” Accordingly, given the age of the husband/payor, the judge multiplied the alimony by five years, at which point husband
would reach the full social security age.  As the alimony was reversed again, so too was the life insurance obligation.

That said, Judge Mawla went further, reminding us of the purpose of life insurance to secure alimony, as follows:

A determination of the proper amount of life insurance coverage for a support obligation requires a consideration of many variables. Where a party is insurable and able to pay the necessary premiums, a life insurance death benefit should neither only meet a beneficiary’s bare needs, nor be a windfall. In the former case, unexpected changes in circumstances can leave a beneficiary with unmet needs, whereas the latter condition exposes a payor’s estate to obligations he or she never had during the marriage.

Judge Mawla then gave guidance as to how the amount should be calculated:

In the alimony context, “once the amount of the obligation is established, the present value (or more correctly, the continuing present value as the obligation decreases) should be determined.” (citation omitted)… The present-day value methodology is appropriate where there is a “known future quantity” of an obligation. Ibid. Where the alimony obligation is not readily  quantifiable because the duration of the obligation is unknown, a
trial judge may utilize an obligor’s life expectancy to determine the duration of the obligation if it is reasonable to do so.  (citation omitted)…

Additionally, a reduction in the amount of security as the obligation is satisfied is an appropriate means of assuring alimony is secured but not subject to a windfall. See Claffey v. Claffey, 360 N.J. Super. 240, 264-65 (App. Div. 2003) (stating “it is perfectly reasonable to provide for the periodic reduction or review of the amount of . . . required security to reflect the diminishing need for it as the parties age, or circumstances otherwise change.”); (citation omitted)… In some cases, where the obligation has the potential to extend beyond an assumed end date because of a change in circumstances, or where a presumption of termination has been rebutted, it may be appropriate to decrease the death benefit in smaller increments or not at all.

In alimony contexts, determining whether to use life expectancy or the presumptive retirement age, and a fixed or declining amount of security will depend on the circumstances of each case and is a matter of judicial discretion.

In S.W., the issue was reversed and remanded because there was no testimony, and only a disputed assertion regarding the husband’s potential retirement at the full  social security age. Moreover, the Appellate Division noted that because the alimony award is of an open duration and may not necessarily
terminate when plaintiff reaches the full social security age, the methodology
that the Appellate Division set forth, as noted above,  will provide the trial judge with enough flexibility to determine the extent and amount of life insurance needed.

While not much of this states anything new, what is of note is that in open durational alimony cases, calculation of the security should not necessarily end at retirement age, in recognition that alimony could continue thereafter.

Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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 Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

 

A few weeks ago, I authored a post on this blog entitled Debunking the Myth That the Percentage Used in the So-Called “Alimony Rule of Thumb” Should Go Down as the Payer’s Income Goes Up.   That post reiterated that the Court’s cannot use formulas, but that they are often used and that people have posited a theory that when incomes go up, the percentages should go down. Therein, I showed the ramifications of that theory and juxtaposed it against the part of the alimony statute that says, “…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, with neither party having a greater entitlement to that standard of living than the other.”

Yesterday, in a reported (precedent setting) opinion in the case of S.W. v. G.M., the Appellate Division weighed in on the use of formulas (there are none), the theory of income equalization (the aforementioned portion of the statute doesn’t mean that), and required that marital lifestyle be quantified.  It also gave guidance on what should not be included in a recipient needs.  There was also an interesting discussion regarding life insurance to secure alimony which will be part of a separate post on this blog.

In this case, the parties divorced after a long term marriage.  The matter was tried to conclusion, previously appealed, and remanded back to the trial court to address the issue of alimony.  At the original trial, the court found that the five year average of the husband’s net after tax income was $1,313,000 – a finding that the Appellate Division accepted in the original appeal.  The Appellate Division also accepted the prior finding that the parties lived a wealthy lifestyle but did not save.  The Appellate Division reversed the prior alimony award of $450,000 per year because the trial judge never quantified the parties lifestyle, and thus, could not determine how the figure was derived.

On the remand, the trial judge increased the alimony to $477,504 per year net, based largely on her pendente lite budget, but again never quantified lifestyle.  Accordingly, the wife appealed again and the court reversed again.

In addressing the issue of lifestyle, the Judge Mawla reiterated the importance of quantifying the marital lifestyle, stating:

The importance of finding the marital lifestyle cannot be overstated. It is at once the fixed foundation upon which alimony is first calculated and the fulcrum by which it may be adjusted when there are changed circumstances in the years following the initial award. …

In Hughes, the parties spent more than they earned and relied on borrowing and parental support to meet the marital lifestyle. 311 N.J. Super. at 34. The trial judge discounted these additional funds and determined the lifestyle using only the family’s earned income, which the judge termed the “real” standard of living. Ibid. We held “[t]he judge . . . confused two concepts. 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.” Ibid.

In many cases, parties live above their means or spend their earnings and assets to meet expenses. In such instances, a finding of the marital lifestyle must consider what the parties spent during the marriage and not merely offer a nod to a bygone, unattainable lifestyle. In this case, the trial judge overlooked the lessons from Crews and Hughes and our instruction to find, numerically, the marital lifestyle. To the extent Crews and Hughes implicitly required that marital lifestyle be determined numerically, we now explicitly state a finding of marital lifestyle must be made by explaining the characteristics of the lifestyle and quantifying it.

In determining the marital lifestyle, trial courts were directed to consider the following:

In a contested case, a trial judge may calculate the marital lifestyle utilizing the testimony, the CISs required by Rule 5:5-2, expert analysis, if it is available, and other evidence in the record. The judge is free to accept or reject any portion of the marital lifestyle presented by a party or an expert, or calculate the lifestyle utilizing any combination of the presentations.

In this case, the Appellate Division noted that the trial court disregarded the marital budget altogether and instead supplemented the wife’s current budget with some expenses she once enjoyed during the marriage.  The Appellate Division found this methodology to be:

…problematic because it ignored the judge’s own findings that the marital lifestyle “subsumed” the entirety of plaintiff’s earnings. By application of this logic, if the judge determined the net yearly income was $1,520,268 or $126,689 per month, the alimony award allotted defendant disposable income of $36,7925 and plaintiff $89,897 per month without explanation. This was a misapplication of law because it ignored Crews and N.J.S.A. 2A:34-23(b)(4), which requires a judge consider “[t]he standard of living established in the marriage . . . and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other.”

As an interesting aside, it appears as though the Court is espousing the theory that the parties’ net income equaled their marital lifestyle.  I suspect that this will be  fertile ground for future litigation regarding the issue of lifestyle.

In rejecting the notion of either income equalization or the use of formulas to calculate alimony, Judge Mawla held:

To be clear, N.J.S.A. 2A:34-23(b)(4) does not signal the Legislature intended income equalization or a formulaic application in alimony cases, even where the parties spent the entirety of their income. Had the Legislature intended alimony be calculated through use of a formula, there would be no need for the statutory requirement that the trial court address all the statutory factors. The Legislature declined to adopt a formulaic approach to the calculation of alimony. See Assemb. 845, 216th Leg., 2014 Sess. (N.J. 2014) (declining to enact legislation computing the duration of alimony based upon a set percentage).

The Court then gave instruction regarding what should be considered, and more importantly, not considered, regarding the recipient’s need.  The court made clear that it should be the expenses related to that party, as opposed to expenses solely related to the other spouse of the children.  Specifically, the Court held:

The portion of the marital budget attributable to a party is likewise not subject to a formula. Contained in most marital budgets are expenses, which may not be associated with either the alimony payor or payee, including those associated with children who have since emancipated or whose expenses are met by an asset or a third-party source having no bearing on alimony. There are also circumstances where an expense is unrelated to either the payor or the payee but is met by that party on behalf of a child. And, as is the case here with defendant’s photography hobby, there are expenses which only one party incurred during the marriage. Therefore, after finding the marital lifestyle, a judge must attribute the expenses that pertain to the supported spouse. Only then may the judge consider the supported spouse’s ability to contribute to his or her own expenses and the amount of alimony necessary to meet the uncovered sum. Crews, 164 N.J. at 32-33.

This is interesting as it makes clear that you cannot bootstrap the expenses of the other party or the children to come to need.  On the other hand, there was no guidance as to how to deal with this added cash flow, at least with regard to child expenses that are no longer in existence.  I recently had a case where the parties while living in the same household, lived two completely difference lifestyles – one extravagant (the payer) and the other ultra conservative in terms of spending.  Had this case been decided at the time of the trial in that matter, my guess is that it would not have settled because the court may have had to fix the alimony based upon the wife’s actual expenses, as opposed to the husband’s spending- whether or not it seemed fair or squared with the part of the statute that said that neither party is entitled to a greater lifestyle than the other.

In any event, the S.W. case gives trial judges and practitioners more guidance as to how to deal with marital lifestyle.  It may also require more work of the forensic accountants who prepare lifestyle analyses as they try to parse out expenses of the payer and the children.

Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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 Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

In a recent decision, the appellate division has addressed the proper procedure for adjudicating a parent’s request to eliminate his obligation to pay child support and for college, when there is a question of whether the relationship with his child has been compromised.

In Zapata, v. Zapata, a father appealed the trial court orders denying his request to terminate his child support and his obligation to contribute to the college expenses of his daughter. The litigants had divorced in 2011 and had two children together. Their son became emancipated in 2014, at which time their daughter became a full-time college student at a private university.

When the parties divorced, they executed a property settlement agreement (PSA) which provided that their children’s college educations would first be funded by scholarships, available loans and savings allocated for college during the marriage. Thereafter, the parties agreed to contribute to college expenses in accordance with their ability to pay. Their PSA further addressed child support, which required the father to pay $246 per week for both children based upon the parents’ then-incomes.

The father filed a motion to terminate child support and his obligation to contribute to college in 2014. At that time, the parties’ son was deemed emancipated and the father and daughter were required to attend counseling. The trial court’s order further provided that the daughter’s failure to attend counseling would be deemed a waiver of her receipt of any continued college payments/support from her father. A total of five sessions were conducted and then counseling was terminated. The father claimed that the daughter terminated the sessions, whereas the daughter alleged that the sessions were jointly terminated by herself, her father and the counselor, who jointly felt they were no longer necessary.

Between 2014 and 2016, father and daughter had sporadic contact. In addition to the counseling sessions, the father had Christmas dinner with the daughter in 2015 and they exchanged text messages in 2016. He saw the daughter for her twentieth birthday but asked not to be invited to her birthday dinners again if he would be expected to pay. On her twenty-first birthday, the father emailed the daughter and signed it “your forgotten dad”. While the father characterized his relationship with his daughter as “strained” and accused her of refusing to communicate with him, the daughter characterized their relationship as “broken but not destroyed”.

Against this backdrop, the father filed a second motion to terminate his financial obligations in 2016. The mother cross-moved to enforce the child support obligation and compel the father to pay two-thirds of the daughter’s college costs, based upon her representation that the father earned double her income. In upholding the father’s support obligations, the trial court found that the father did not show a basis for altering the agreement reached in the PSA, or show that the daughter failed to comply with the 2014 order regarding counseling. The court further found that there was no change in circumstance warranting a modification of the support obligation. In doing so, the court only addressed the parent-child relationship factor of the test for determining college contributions set forth in Newburgh v. Arrigo. The father filed a motion for reconsideration of this decision, which was denied.

On appeal, the Appellate Division reversed the trial court’s ruling based upon several legal errors. First, the trial court erred by not conducting a plenary hearing regarding the material dispute of fact as to the parent-child relationship. While the father claimed no relationship existed, the daughter claimed a relationship was existent but broken. While the father claimed he was excluded from the college selection process, the daughter contended he paid the application fee and is a graduate of the very same college.

Second, the appellate court found no basis for allocating two-thirds of the college expenses to the father without further fact finding. The PSA requires the parties to contribute according to their ability to pay, but a review of updated financial information was not conducted by the trial court. The appellate court found that the trial court failed to review the statutory criteria of N.J.S.A. 2A:34-23(a) as well as the Newburgh factors to reach a decision regarding allocation of the college costs.

Finally, the trial court erroneously found there was no change in circumstances with regard to the father’s child support obligation. The trial court ignored the fact that (1) the original child support obligation was based upon 2 children, though the parties’ son had since been emancipated and (2) the daughter’s residence at college required a modification of the child support obligation. While the appellate division noted that child support and contribution to college are two discrete obligations, one cannot be ignored in determining the other when establishing a parent’s appropriate financial obligation.

This decision reminds practitioners and litigants that college contribution cases are fact-sensitive inquires that will more often than not require a plenary hearing in order to be resolved. Further, it serves as a reminder that while child support will be affected by an obligation to contribute to college expenses, the mere fact that a child enters college does not extinguish a traditional child support payment. However, these two distinct obligations remain symbiotically intertwined, and must be looked at together in addressing a parent’s responsibility to contribute to the ongoing support and education of their children.

_________________________________________

Katherine A. Nunziata, Associate, Fox Rothschild LLPKatherine A. Nunziata is an associate in the firm’s Family Law practice, based in the Morristown, NJ office. You can reach Katherine at (973-548-3324) or at knunziata@foxrothschild.com.

 

It has been said over and over again that there are no formula’s to determine alimony.  As I have blogged in the past, other than one legal malpractice referencing the formula or “rule of thumb”, virtually every time the Appellate Division gets a case where a formula was used, the case is reversed because the use of formulas is not permitted.  Rather, courts are required to analyze the statutory factors which are as follows;

 (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, with neither party having a greater entitlement to that standard of living than the other;

(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;

(13) The nature, amount, and length of pendente lite support paid, if any; and

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

That said, the rule of thumb, or as I have called it, the “dirty little secret”, still exists in practice.  Prior to the 2019 change in the taxability/deductability of alimony that was part of the Tax Cut and Jobs Act, you would commonly see the rule of thumb being applied as one-third of the difference between the payer’s income and the recipient’s income (or imputed income), though supposedly a lower percentage was used in South Jersey for some unknown reason.  That said, and by way of example, if the payer earned $350,000 and the recipient earned $50,000, the alimony under the “rule of thumb” was $100,000 per year.

Query how any rule of thumb squares with factor 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, with neither party having a greater entitlement to that standard of living than the other.”  Necessarily, the payer will have the ability to have the greater lifestyle than the recipient because they will have more net after tax dollars, whether the alimony is taxable, or not.  When the parties have no children or the children are grown, the results of the “rule of thumb look more stark when juxtaposed against this factor.  When there is child support paid to the recipient, it would not be uncommon for the parties’ net after tax cash flows to look similar – ignoring for a moment that on the payer’s side, that cash flow is meant to support one person, while on the recipient side, the cash flow would be to support the recipient and the children.

Aside from the tax issue addressed herein (and people used to say 1/3 for the husband, 1/3 for the wife and 1/3 for the government – though the numbers never actually worked that way), what is the justification for giving the income earner more than the recipient in light of Crews v. Crews (the seminal Supreme Court case addressing marital lifestyle) and factor #4?  For more than two decades, I have heard things like “you have to give the guy a reason to get out of bed in the morning” or “he’s the one earning the money” as reasons given by judges and mediators.  Additionally, now that the issue of a “savings component” of alimony is more of a consideration in high income/high asset cases after the Lombardi case in 2016, when combined with Crews and factor #4, shouldn’t the recipient be arguing for an alimony award that puts the parties in equipoise?  That said, despite that statement in the statute, there is no case at this point that stands for the proposition of income equalization – though I have heard the argument since factor #4 was amended in 2014.

But back to these thorny rules of thumb.  Since January 1, 2019, when the changes in the tax code began to affect alimony making it no longer deductible to the payer or includable in the recipient’s income, practitioners began clamoring for the new “rule of thumb.”  I have heard, 22%, 25%, 27%, somewhere between 22% and 27%, and even as low as 20% of the difference between the incomes (or imputed income).  I then began to hear that the higher the income, the lower the percentage because of the higher tax rates.  At first, that seemed plausible, but when put to the test – especially when compared to factor 4 – that myth can be debunked.

Lets start with the same incomes from above – $350,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $75,000 per year; using 22%, it is $66,000.  At 25%, the net after tax split is 55%-45%; at 22%, it is 58%-42%.  In this case at 22%, the payor has $148,644 net after tax cash flow per year and the recipient has $106,668 or $41,976 less ($3,498 per month).  At 25%, the difference is only approximately $24,000 ($2,000 per month).

If we use $500,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $112,500 per year; using 22%, it is $99,000.  At 25%, the net after tax split is still 55%-45%; at 22%, it goes to 59%-41%.  In this case at 22%, the payor has $199,056 net after tax cash flow per year and the recipient has $139,668 or $59,388 less ($4,949 per month).  At 25%, the difference is only approximately $32,388 ($2,699  per month).

If we use $750,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $175,000 per year; using 22%, it is $154,000.  At 25%, the net after tax split is still 54%-46%; at 22%, the spread widens to 58%-42%.  In this case at 22%, the payor has $273,072 net after tax cash flow per year and the recipient has $194,664 or $78,408 less ($6,534 per month).  At 25%, the difference is only approximately $36,408 ($3,034 per month).

If we use $1,000,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $237,500 per year; using 22%, it is $209,000.  At 25%, the net after tax split moves to 53%-47%; at 22%, it is 58%-42%.   However, in this case at 22%, the payor has $345,744 net after tax cash flow per year and the recipient has $249,672 or $96,072 less ($8,006 per month).  At 25%, the difference is only approximately $39,072 ($3,256 per month).

If we use $1,250,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $300,000 per year; using 22%, it is $264,000.  At 25%, the net after tax split stays at 53%-47%; at 22%, it stays at 58%-42%.  However, in this case at 22%, the payor has $418,416 net after tax cash flow per year and the recipient has $304,668 or $113,748 less ($9,479 per month).  At 25%, the difference is only approximately $41,748 ($3,479 per month).

If we use $1,500,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $362,500 per year; using 22%, it is $319,000.  At 25%, the net after tax split stays at 53%-47%; at 22%, it stays at 58%-42%.  However, in this case at 22%, the payor has $481,088 net after tax cash flow per year and the recipient has $359,664 or $121,424 less ($10,119 per month).  At 25%, the difference is only $44,424 ($3,702 per month).

If we use $2,000,000 for the payer and $50,000 for the recipient:  using 25%, the rule of thumb alimony is $487,500 per year; using 22%, it is $429,000.  At 25%, the net after tax split goes to 52%-48%; at 22%, it stays at 58%-42%.  However, in this case at 22%, the payor has $636,672 net after tax cash flow per year and the recipient has $469,668 or $167,000 less ($13,917 per month).  At 25%, the difference is only $49,764 ($4,147 per month).

So it seems clear that the rationale that the higher the income, then lower the percentage for the rule of thumb doesn’t really add up.  One reason is that the marginal tax rate is 35$ for income between $207,151 and $518,400.  After $518,400, it goes up to 37%.  That said, virtually all of the above scenarios, basically everything $518,400 and above fall into the highest tax bracket.  I think that most people who propose a variable rule of thumb wouldn’t apply the lower rate to $500,000, $600,000, $700,000 – maybe even not until income more than $1,000,000.  (And yes I understand that there may be a difference when discussing effective rates but query whether it is enough to justify using a lower percentage for the “rule of thumb.”)

Also, looking at the differences from a percentage basis is misleading as the income goes up.  While the use a 22% rule of thumb provided a consistent 58%-42% across the board (I did not know this until doing the calculations for this blog, and quite frankly was surprised by it and it almost blew my theory), looking at the percentages is misleading.  You actually have to look at the net after tax dollars to gauge the fairness or unfairness – especially if factor #4 is really a consideration.  Again, what the courts and practitioners should do is actually analyze the alimony factors.  But if people are still going to use these “rules of thumb” as a guide, care should be taken to show where the net after tax cash flows shake out for each party to see if result of the formula is fair and resembles in some way the goals and objectives of the alimony statute.

Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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 Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

A recent unpublished (non-precedential) decision, Steffens v. Steffens, suggests that the answer to the above question is “no.”

In Steffens, the Wife sought to set aside a prenuptial agreement, arguing that it was unconscionable, in large part because the alimony payments she was to receive under the agreement would not allow her to maintain the marital lifestyle.  At trial, the Court excluded evidence of the marital lifestyle.  On appeal, the Wife argued that the Court erred by excluding such evidence which, she claimed, should have been a part of the analysis when the Court decided whether enforcement would leave her “without a means of reasonable support.”

The trial court, however, had good reason to exclude this evidence, because the parties had specified in the prenuptial agreement itself that neither of them would have the right to assert a claim against the other to maintain the marital standard of leaving.  Therefore, the trial court only considered the question of whether the Wife would have a means of “reasonable” support if the agreement were enforced – not whether she would have a means of support that would enable her to continue to leave at or reasonably close to the marital lifestyle.  Put another way, she made her deal as to the specific amounts of support she would be entitled to in the event of a divorce at the time of the prenuptial agreement, and because she had means of support vis a vis the agreement and other financial resources, the Court enforced; it did not matter that her lifestyle would be diminished.  The Appellate Division found that this analysis was proper.

Interestingly, the Appellate Division touched upon the relatively recent amendments to the New Jersey statute related to prenuptial agreements, noting that for agreements executed after the effective date of the amendments (June 27, 2013), the question of whether a spouse will be left with a reasonable means of support is no longer relevant.  The prenuptial agreement in Steffen pre-dated the effective date.  However, for later agreements, these amendments make it even harder to set aside prenuptial agreements because those who seek to set them aside can no longer argue that they will be left without reasonable means of support if the agreement is enforced.  Instead, they can only advance arguments about the agreement being unconscionable from inception as a result of lack of full and fair disclosure, involuntariness, or lack of independent counsel.

This recent decision serves as food for thought for anyone considering entering into a prenuptial agreement applying New Jersey law.  Absent a future change in the law, the level of fairness of the result of enforcement of the prenuptial agreement matters little, if at all, and as the supported spouse you may have no recourse if the prenuptial agreement leads you to live a dramatically lessor lifestyle post-divorce than you enjoyed during the marriage.

headshot_diamond_jessicaJessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

The recent unpublished decision of Gormley v. Gormley serves as a good reminder for four polestar issues in matrimonial litigation, below, as well as to put on your best evidence in an effort to ensure that the trial court enters the appropriate decision and, ultimately, to not stop litigating up the ladder when it fails to do so:

  • Imputation of income to a party who receives Social Security Disability Income;
  • Imputation of income to a party who is voluntarily under or unemployed;
  • Determining the need for support;
  • Deviating from the Child Support Guidelines particularly in a case where the child does not have a relationship with the non-custodial parent

Relevant to each issue are the following facts:

  • The parties married in 2000, separated in 2012 and the divorce complaint was filed by Plaintiff/husband in 2015.  They had one child born in 2004, who did not have a relationship with Plaintiff at the time of trial in or around 2018.
  • Defendant/wife received Social Security Disability (SSD) benefits due to her diagnosis of Multiple Sclerosis, which diagnoses she had since prior to the parties’ marriage.  Defendant was determined disabled by the Social Security Administration (SSA) in 2002 and was out of the workforce since that time.
  • Plaintiff earned $150,000 gross per year in the two years leading up to the divorce trial through his commission-based employment, but then purposefully reduced his hours in order to study psychology and parental alienation, and to prepare for trial.

Based upon these facts, the trial court imputed income to Defendant because she did not produce further evidence of her disability beyond her SSA determination and testimony, and because of the court’s observations of Defendant during trial; did not impute income to Plaintiff for his admitted voluntary underemployment and, rather, used a six-year average of his pre-separation income – which was five years prior to trial – and totaled less than $100,000 per year as compared to $150,000 he earned in the two years leading to trial; reduced Defendant’s budget without any reasoning on the record; and, entered child support deviating from the New Jersey Child Support Guidelines primarily because Plaintiff did not have a relationship with the child.  All of the foregoing was subject to a Motion for Reconsideration that the trial court denied and then became subject of this appeal, which lead to reversal, remand and vacating those aspects of the decision.

The Appellate Division reviewed each area of the trial court’s decision and correctly found flaws in all, as follows:

  • Imputation of income to a litigant who receives Social Security Disability Income – Golian v. Golian remains the controlling case on this issue and holds that the litigant who was declared disabled is subject to a rebuttable presumption that he/she is unable to work, and the opposing party then bears the burden to rebut that presumption.  The court in the instant matter confirmed that to the extent the trial court decision of Gilligan v. Gilligan has contrary holdings to Golian, Golian prevails.  Specifically, Gilligan requires the disabled party to first produce more evidence beyond the SSA disability determination before the adverse party is required to rebut the presumption.   In Gormley, the Plaintiff failed to rebut Defendant’s disability and, thus, the Appellate Division found the the trial court erred in imputing income to Defendant based upon its own observations of Defendant.
  • Imputation of income to an underemployed litigant – The Appellate Division again found error in the trial court’s decision, this time by calculating Plaintiff’s income for purposes of paying support using a six-year, pre-separation average – ending five years prior to trial – and ignoring his last two years of income prior to trial, when failing to consider whether Plaintiff was earning at his full capacity.  The Appellate Division, citing to Lynn v. Lynn, specifically noted that it is a fatal error to leave out the amount of the payor’s income leading to the trial when averaging income to determine an ability to pay support.  Thus, it is an obvious error to average income over the six years prior to separation, particularly when that time period was five years prior to trial, and to ignore his income for the two years leading to trial.
  • Need for Support – In the third error in this matter, the trial court failed to explain why it reduced Defendant’s budget from $7,700 per month for $4,300 per month, which is undoubtedly erroneous and leaves the Appellate Division without a specified decision to review.  This issue was remanded (sent back) to the trial court for an explanation as to is calculation for this budget reduction.
  • Deviating from the Child Support Guidelines – To add icing on the cake, the trial court deviated from the Child Support Guidelines because Plaintiff did not have parenting time with the child (noting, however, that prior to the reconsideration decision the trial court did not place any findings on the record as to why it deviated from the Guidelines).  First, the Guidelines include the amount of overnights a parent does/does not have so this should not even be an issue.  Moreover, as the Appellate Division reiterated, the Guidelines allow for deviation when the non-custodial parent spends more time with the child than contemplated in the Guidelines calculation but not in the manner as the trial court ordered in Gormley.  Most Notably, the Appellate Division found error by the trial court’s failure to consider the best interests of the child when deviating from the Guidelines, which is arguably the material consideration when determining a child support award and, frankly, when evaluating any child-related issue.

Gormley serves as another lesson regarding the importance to lay out all relevant facts for the trial court to absorb and have at the ready to incorporate into a decision (including in pre- and post-trial memoranda) and to not stop litigating upon receipt of a poor decision when the trial court has provided the groundwork for a successful appeal.

Lindsay A. Heller is an associate in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.

Lindsay A. Heller, Associate, Fox Rothschild LLP

For many divorce attorneys, the busy season starts after the first of the year. For the last several years, I have posted on the phenomenon of the New Year’s Resolution Divorce. For whatever reason, this post has struck a chord and has been both well received and cited by other bloggers. As such, given that the new year is near, I thought I would share that piece again, updated slightly for the new year.

Over the years, I have noted that the number of new clients spikes a few times of the year, but most significantly right after the new year. Before writing this article for the first time, out of curiosity, I typed “New Years Resolution Divorce” into Google and got 540,000 results in .29 seconds. There are even more results when you do the same search now. While not all of the search results are on point, many were extremely interesting. It turns out that my intuition about this topic was right and that there are several reasons for it.

One article on Salon.com put divorce up there with weight loss on New Years resolution lists. Also cited in this article was that affairs are often discovered around the holidays. Another article linked above attributed it to “new year, new life”. Another article claimed that the holidays create a lot of pressures at the end of the year that combine to put stress on people in unhappy or weak relationships. Family, financial woes, etc. associated with the holidays add to the stress. Turning over a new leaf to start over and improve ones life was another reason given. This seems to be a logical explanation for a clearly difficult and perhaps heart wrenching decision.

In my experience, people with children often want to wait until after the holidays for the sake of the children. There is also the hope, perhaps overly optimistic, that the divorce will be completed by the beginning of the next school year. These people tend to be in the “improving ones life” camp.

So as divorce lawyers, we hope to avoid or at least resolve in advance the holiday visitation disputes that inevitably crop up, then relax and enjoy the holiday as we await the busy season to begin.

In the last several years, the phenomena started early for us and many other attorneys. We were contacted by more people in December in the last few years than in any years in recent memory. In some recent years, the calls started in November at a pace more robust than in prior years. Moreover, we have heard of more people telling their spouse it “is over” before the holidays this year. I suspect that in some, it was the discovery/disclosure of a new significant other or perhaps pressure being exerted by that person that was the cause. In other cases, the person just didn’t want to wait until the new year to advise their spouse.

Those who divorced in 2019 were the first to test the new tax laws eliminating the deductibility of alimony.  That created new support paradigms that attorneys and divorcing parties are working with.  Those who divorce in 2020 may still enjoy a booming economy and not the  slowing economy that many predicted for 2019 and some still predict for 2020.  Bad economies historically mean more divorces, either because of the stress it creates or because one or both parties is being opportunistic.  On the other hand, someone who might be a support recipient might be opportunistic on the other end of the spectrum – getting out while incomes and asset values are high.

Whatever the reason, we await those who see 2020 as a chance for happiness or a fresh start. Happy New Year?!?!

Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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 Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

The holiday season is here, which means your inbox is probably flooded with e-mails about sales, promotions and must-have purchases. If you are unhappy with your current counsel and a new divorce attorney is on your shopping list this year, here are some important considerations to remember selecting new legal representation:

  1. Don’t be afraid to browse. Any seasoned consumer knows you have to shop around a bit before making a purchase. The same principle applies when picking a new attorney. Ask for referrals and then speak to several attorneys before making your decision. You will spend a significant amount of time working with your selected counsel, so it is important that it’s a good fit. A  trustworthy attorney should encourage you to explore your options before making a choice, so you are confident in your decision and feel comfortable with your new counsel.
  2. Read the reviews. Once you find someone you like, do some research! Your new attorney should have experience in handling matters similar to your own. While any lawyer can tell you they have the necessary qualifications, the right one will have examples to back it up. Reviewing their bio, LinkedIn, blog posts and articles will help you do your homework.
  3. Make a shopping list. You should identify and write down your objectives at the outset of your search. Why are you unhappy with your current counsel? Is your current lawyer too easy-going? Too aggressive? Unresponsive to your inquiries? When consulting with a potential new lawyer, explain your dissatisfaction and ask targeted questions to ensure that the switch will remedy those concerns.
  4. Don’t miss the sale. Timing is critical. Whenever an attorney takes over a case in the middle, it takes time to get up to speed. Your new attorney will need to review the file and become knowledgeable about what has happened in your case to best assist you. If you think you want to change counsel, don’t hesitate and wait until you have an upcoming trial date or other big court appearance. Unless the court will grant an extension or adjournment, the right attorney for you may not have the capacity to get on board so quickly.

Happy shopping!

 

Katherine A. Nunziata, Associate, Fox Rothschild LLPKatherine A. Nunziata is an associate in the firm’s Family Law practice, based in the Morristown, NJ office. You can reach Katherine at (973-548-3324) or at knunziata@foxrothschild.com.

 

In a recent published (i.e. precedential) decision, C.R. v. M.T., the New Jersey Appellate Division elaborated upon the legal standard proving that a sexual encounter during which one party was intoxicated was non-consensual under the Sexual Assault Survivor Protection Act (SASPA) N.J.S.A. 2C:14-13 to -21.

Although we have blogged frequently on domestic violence restraining orders obtained under the New Jersey Prevention of Domestic Violence Act, SASPA offers another avenue to obtain restraining orders for victims of sexual assault.  In C.R., the plaintiff commenced an action under SASPA in order to restrain the defendant from having any contact or communication with her.  The question in dispute was not whether a sexual encounter occurred – both parties agreed that it had – but rather whether the plaintiff was capable of providing her consent for the encounter and, if so, whether she had in fact done so.

Under SASPA, the first factual hurdle that a plaintiff must overcome is proof of “the occurrence of one or more acts of nonconsensual sexual contact sexual penetration, or lewdness, or any attempt at such conduct.” This must be proven by a preponderance of the evidence, meaning that the plaintiff must convince the finder of fact that it is more likely than not that there was a sexual encounter that was non-consensual.  Furthermore, as the trial court acknowledged, consent given out of fear and/or consent that is ultimately revoked is treated under the statute as a lack of consent.  As stated in the decision In re MTS, 129 N.J. 422, 444 (1992), “Permission to engage in sexual relations must be freely given and that willingness may be inferred from acts or statements reasonably viewed in light of the circumstances.”

The second prong that the plaintiff must establish in order to obtain a restraining order is that such protection is needed due to “the possibility of future risk to the safety or well-being of the alleged victim.”

The Appellate Division decision addresses the first prong, namely the question of adequate proof that the sexual encounter was non-consensual. One way in which the statute permits a lack of consent to be established is via temporary mental incapacity, which can be generated by the victim’s intoxication. In this case, the plaintiff argued that she was so intoxicated from drinking alcohol that she temporarily lacked the capacity to provide her consent to the sexual encounter.  The trial judge agreed.

The Appellate Division described this issue as having two components.  First, whether the plaintiff expressed or conveyed her consent to engage in the encounter and, second, whether, if not, she was too intoxicated to be capable of consent.  The trial judge correctly found that both parties presented versions of events from the encounter in question that were equally plausible.  On the plaintiff’s side, she testified that her original consent was provided only out of fear and that, eventually, she revoked it.  She further argued that, regardless, she was not capable of providing consent because she was temporarily mentally incapacitated.  It is that terminology that the Appellate Division focused on in its analysis.

SASPA defines a sexual assault victim as “one who the actor knew or should have known” was, among other things, “mentally incapacitated” at the time of the encounter.  The statute defines mental incapacitation as:

that condition in which a person is rendered temporarily incapable of understanding or controlling his conduct due to the influence of a narcotic, anesthetic, intoxicant, or other substance administered to that person without his prior knowledge or consent . . . .  N.J.S.A. 2C:14-1(i).

The Appellate Division interpreted this statute as saying that a victim may prove the lack of consent a mental incapacity brought on by either voluntary or involuntary intoxication.  Put another way, whether the victim voluntarily drank to the point of intoxication (which, in this case, it was not disputed that she did this) or was involuntarily intoxicated (i.e. forced to become intoxicated or given something which would cause intoxication without her knowledge) is of no moment.

The Appellate Division next considered the level of intoxication necessary to establish mental incapacity, or an inability to consent.  The Appellate Division found that in order to establish this, “[a]n alleged SASPA victim must prove intoxication to such a degree that her faculties were prostrated to the point of being incapable of consenting to the sexual encounter,” which may be established by a preponderance of the evidence.

Undoubtedly, the Appellate Divisions’ examination of these issues provides some important clarification.  However, when considering the required proofs, it is all too clear that in many cases, the ability to establish these facts by a preponderance of the evidence will often  come down to the comparative credibility of the parties and their respective versions of events, as it did in this case where the trial judge believed both parties’ recitations of the events of the night in question to be “equally plausible.”

headshot_diamond_jessicaJessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

One of the hardest lessons I learned in my early days of practicing family law is that a case is never really over when we think it’s over.  I remember walking out of my first uncontested hearing so proud that I helped finalize a client’s divorce, emotional for their loss (yes, it happened to be a case where each party cried and hugged) and hopeful for their future.  I still have those feelings but, over time (and it didn’t take long), have become less blinded by the proverbial success of “putting through” a divorce because it’s never really over, especially when children are involved.  Instead of focusing on getting across the finish line sooner rather than later, the focus shifts to preparing agreements that will hopefully enable the parties to have their uncontested hearing as the last piece of the puzzle, and not the start of a new jigsaw.  Admittedly, this is not always easy.  Sometimes in that 3rd, 4th, 5th mediation session, when it’s 8:00 at night,  stomachs are rumbling and the caffeine is wearing off, and agreements are complete but for certain issues that seem minor at the time, it’s hard for clients to walk away without a signed writing just because of an ancillary thought that, in the moment, may seem resolvable down the road.  What if the parties are amicable and you are trying to convince a client to open up an issue that he/she may not want to address with their spouse because they know it’s a trigger and doubt they will ever become acrimonious down the road?  However, the price to pay in the days, months or years to come is worth the extra time to resolve issues now to the extent that they are ready for resolution.  But, as hard as we try, we have all been there!

In a recent unpublished (non-precedential) decision Soler v. Stark,  the issue at first glance appears to be the children’s religious upbringing when each parent observes a different faith.  However, when reading between the lines, the crux of the case is really the importance of comprehensive settlement agreements without leaving ripe issues for future resolution down the road.  Put another way, it seems apparent that a difficult, and possibly impossible to resolve issue was kicked down the road, even though it was foreseeable that future litigation would ensue.

In Soler, the parties entered into a marital settlement agreement, with an incorporated custody parenting time agreement.   Plaintiff was designated as the parent of primary residence for school enrollment only.  The parties explicitly agreed to share equal decision making rights regarding all integral decisions for their children.  The parties acknowledged in their agreements that they each have different religious and cultural backgrounds (plaintiff/mom is Catholic and defendant/dad is Jewish).  They  agreed to later submit to mediation any unresolved issues regarding the cultural and religious upbringing of their children.  It seems that they did allocate parenting time for holidays of both religions because, as relevant to this decision, Defendant had parenting time for Easter Break every year but Plaintiff had parenting time on Easter so long as Defendant was not traveling with their children.  All seems standard and not unlike many agreements that I have reviewed/drafted.  So, what comes next?  The parties disagree about their children’s religious upbringing.

In 2018, Defendant filed an application seeking to complete their youngest child’s conversion to Judaism, to enroll the twins in Hebrew School and also enroll their youngest child at the relevant age, as well as to compel Plaintiff to bring their children to Hebrew School during her parenting time and restrain her from making derogatory comments about the religion to their children.  In opposition, Plaintiff sought to have their children exposed to both religions/cultures and for Easter Sunday parenting time every year.  The trial court heard oral argument but did not require a hearing.  Briefly, in support of his application, Defendant certified that Plaintiff took classes in Judaism before their marriage, that they agreed to raise their children in the Jewish faith and that their son was circumcised in a Jewish ceremony but his conversion was not complete.  In opposition, Plaintiff certified that she went to the class to support her then soon-to-be husband, that she never agreed to raise their children in the Jewish faith/send them to Hebrew School and only partook in certain rituals during their marriage due to Plaintiff’s pressure to do so, as well as claimed that Defendant wrongfully withheld Easter parenting time from her in 2018 when he brought their children to a local amusement park.

Ultimately, the trial court determined that their youngest child would complete his conversion to Judaism, that Defendant may bring their children to Hebrew School during his parenting time but that Plaintiff need not do so during her parenting time, and granted Plaintiff’s request for Easter Sunday parenting time every year commencing in 2020, as well as permitted her to educate their children with her religious and moral values.  This appeal followed.

The Appellate Division ultimately held that (1)  Each party was free to raise their children in their own religious beliefs during his/her parenting time; thus, the trial court’s decision allowing Plaintiff to do so was affirmed; and, (2) The trial court improperly modified Easter parenting time with a showing of changed circumstances and the court did not conduct a hearing to determine if the modification was in their children’s best interests; thus, the modified Easter parenting time schedule was reversed.  The Appellate Division noted that Plaintiff may be entitled to compensatory parenting time for her loss of Easter parenting time, but even if Defendant violated the schedule, one violation does not equate to changed circumstances warranting a modification to their parenting time schedule.

Notably, the Appellate Division reviewed case law regarding superior rights bestowed upon primary/custodial parents to make decisions on behalf of their children, which was not relevant here given the language of Plaintiff’s designation being for school enrollment only, as well as case law regarding disputes for religious upbringing and each party’s constitutional right to religious freedom.  This was all required because the contractual agreement lacked a decision with respect to their children’s religious upbringing.  The Appellate Division also reviewed the parties’ conflicting certifications but could not determine whether they had an agreement to raise their children in the Jewish faith because the trial court did not conduct a plenary hearing.  Of note, had the court done so, each party would have spent a substantial amount of time and money litigating this issue that was held in abeyance.

While the case law history is interesting, and I recommend a read to brush up on who gets to determine a child’s religion, the puzzle is really solved by addressing all relevant issues to the extent we can at the time the agreement is finalized.  This also enables you to be the person who chooses the outcome, rather than asking the trial court or Appellate Division to determine material child-rearing issues on behalf of your family.

Lindsay A. Heller is an associate in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.

Lindsay A. Heller, Associate, Fox Rothschild LLP