What happens when a party dies in the middle of divorce? Under the law, the divorce action abates and the matter is over. In many cases, that is to the benefit of the surviving spouse because, in most cases, they would receive all of the joint assets.
But what of cases where there are no joint assets and/or the surviving spouse is left nothing in the decedent’s Will? Under the law, the filing of the divorce eliminates the right to the elective share (what a surviving spouse would otherwise get if there is no will.) In these cases, the surviving spouse could be left with nothing because they are neither entitled to a division of marital assets (equitable distribution) because the divorce matter ends nor are they entitled to a share of the decedent’s estate. This has been called the “Black Hole.”
In 1990, the NJ Supreme Court decided the case of Carr v. Carr which affirmed the creation of an equitable remedy with the use of a constructive trust on the decedent’s assets so that the surviving spouse can make equitable arguments to make claims for the marital assets. Interestingly, the Supreme Court noted that “… in the matrimonial field the Legislature remains free to fashion its own standards for remedial relief…” Thirty three years later, the Legislature finally fashioned a statutory remedy.
Specifically, on January 8, 2023, a new law was passed amending the equitable distribution and estate statutes to allow for equitable distribution after a party dies while a divorce case is ongoing. The Synopsis of the bill states, ” Permits court to effectuate equitable distribution when complaint for divorce or dissolution of civil union has been filed and either party has died prior to final judgment; provides that surviving party would not receive intestate or elective share.”
Aside from the estate law being modified, N.J.S.A. 2A:34-23 adds a new paragraph (h)(2). The prior paragraph (h) is now (h)(1). That provision provides that in addition to alimony, the court can effectuate awards of the equitable distribution. New paragraph (h)(2) provides:
If a complaint not dismissed pursuant to R.4:6-2 of the Rules of Court has been filed for an action under paragraph (1) of this section, and (a) either party to the litigation dies prior to the entry of the final judgment, or (b) if the parties had and remained entered into a validly executed equitable distribution cut-off agreement, termination agreement, or marital settlement agreement where the underlying subject matter of the agreement is divorce, dissolution of civil union, termination of domestic partnership, or divorce from bed and board at the time of death of the decedent occurring prior to the entry of the final judgment, the court’s authority to effectuate an equitable distribution of the property shall not abate. Pursuant to subparagraph (a)(3) of R.4:3-1 of the Rules of Court, all such matters shall be filed and heard in the Family Part of the Chancery Division of the Superior Court.
Fear that a black hole issue would arise came up in the Steiner v. Steiner case that I was involved in *(decided in December 2021 ) as the husband was in his late 80s when the Complaint was filed in 2018 and over 90 at the time of the appellate decision. In this case, though the wife had substantial assets in her own name, a majority of the assets were controlled by the husband. Fearing a black hole situation and the possibility that she was not in need of an equitable remedy given the assets in her name, she sought to bifurcate the matter divorce immediately so that her claim for equitable distribution would not abate if the husband died while the matter was pending. This new statute essentially fixes her problem.
In any event, the law now finally contains a statutory provision that permits a court to effectuate post-death equitable distribution.
Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Department 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 email@example.com.