What happens when an asset divided in equitable distribution really isn’t worth what you think it was? That was an issue in the Simkin case that I have blogged about in the past about involving the Madoff investment account. I even participated in a pod cast on this case. It was also an issue in the Andrews v. Andrews case that was decided by the Appellate Division on July 15, 2011.
In that case, involving parties with a reported net worth of $19 million and a husband with a several million dollar a year income, the parties settled the case dividing their assets and as a result of the asset division, the husband had no direct alimony or child support obligation. One of the assets that the wife was supposed to receive was approximately $1.1 million from the sale of stock in a private bank. However, for whatever reason, the stock was never sold, the value of the shares because worthless and the wife never got her money. It is no surprise that the parties wound up back in court.
The trial judge found that there was mutual mistake made by the parties and re-formed their agreement by requiring the husband to pay the wife half of the value that the parties previously believed the stock to be worth, plus interest. The husband, of course, appealed, arguing that he never guaranteed that the wife was going to get the amount that parties believed the stock to be valued at.
The Appellate Division affirmed the decision. Of note, in response to the husband’s argument that wife waiting too long (more than one year) to raise the issue of mistake, the Appellate Division interestingly noted that the agreement regarding equitable distribution was a substitute for child support and alimony and as such, since child support cannot be waived, the waiver/delay argument must fail as to child support. Similarly, alimony and child support are both subject to modification based upon changed circumstances.
In this case, the lesson, if any to be learned, is that distributions of property in lieu of support could possibly be modified after the support was prepaid. However, if you want a chance at making the agreement enforceable, you have to make sure that the property actually gets distributed.
Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric practices in Fox Rothschild’s Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or firstname.lastname@example.org.