Equitable Distribution

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I’m not usually one to place a lot of stock in celebrity gossip, but I couldn’t help but take notice of the fact that it has been rumored that Amber Heard’s monthly income is $10,000, yet she spends $44,000 a month on shopping, dining out and vacations. Her ask for spousal support: $50,000 per month, based upon the parties’ marital lifestyle.

45351836 - champagne bottle in ice bucket and two full glasses realistic vector illustration
45351836 – champagne bottle in ice bucket and two full glasses realistic vector illustration

Amber Heard may not be only one spending beyond her means. This phenomenon applies to us common folk as well.

Particularly during the economic downturn, we have seen many cases where parties have splurged during times of plenty and then failed to scale back when the economic downturn hit. As a result, the parties are living on credit or perhaps not paying their bills. It, in effect, creates an artificial lifestyle which neither party really has the ability to maintain.

This puts the Court in a tough spot. On the one hand, the Supreme Court explained in Crews, “the standard of living experienced during the marriage . . . serves as the touchstone for the initial alimony award.” On the other hand, what happens when the marital standard of living is based on nothing more than irresponsible spending?

An unpublished case was just recently decided by the Appellate Division that touched on this issue. Although the crux of the case really focused on the reversal of a judge’s suspension of alimony as a discovery sanction, what peaked my interest was how the judge dealt with what he classified as an “artificial lifestyle,” marked by the parties’ “irresponsible spending and outlandish behavior, whether going on expensive vacations to South America and Europe, or purchasing fancy cars” when awarding alimony.

In Ponzetto v. Barbetti, decided on June 28, 2016, the parties had a nineteen year marriage which ended in a contentious divorce when the parties were in their mid-forties. The parties did not have any children and the only issues in the case were equitable distribution and alimony, both of which were hotly litigated during the course of a lengthy trial.

The husband had started a sound system business when he was a teenager, for which the wife kept the books. At one point, the business was so lucrative, that it generated revenue of $500,000 per year. These were the times of plenty.

Unfortunately, the business suffered during the economic downturn. The parties’ lifestyle, however, did not. They continued to spend lavishly. By the time of the divorce, they had two Ferraris, a Harley Davidson, Pontiac Fiero and two hummers.

While typically a judge would look at the parties’ spending during the last several years of the marriage to determine lifestyle, in this case, the trial judge found that it would not be appropriate to do so in this situation, where the lifestyle was not based on income or need.

As a result, the judge declined to use “the parties’ irresponsible spending from 2006 through 2008 in determining marital lifestyle” and instead determined to “kindly” utilize the marital lifestyle from 1990 through 2006, which the judge determined to be $14,500 per month. Ultimately, the wife was awarded $400 per week in alimony.

This is just one example of how a judge has dealt with this increasingly common situation. However, judges are frequently placed in these precarious situations, where the parties have exceeded a reasonable lifestyle based upon their income as compared to their expenses. In the case of Ponzetto v. Barbetti, the judge crafted a remedy that was equitable given the specific circumstances of the case.
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Eliana Baer, Associate, Fox Rothschild LLPEliana T. Baer is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com.

If I’ve heard it once, I’ve heard it a million times: “why don’t judges enforce their own orders or take hard lines against obstructers?” Many times, litigants feel powerless. Powerless to change anything; powerless to have courts take a firm position in favor of those aggrieved; and, powerless to be heard. Clients and attorneys alike feel this frustration.

This is despite the fact that there are specific rules in New Jersey that apply to non-compliance in the family part. Rule 5:3-7 provides for very specific types of relief in specific actions:

Non-Compliance with Custody or Parenting Time Orders:

(1) compensatory time with the children;
(2) economic sanctions, including but not limited to the award of monetary compensation for the costs resulting from a parents failure to appear for scheduled parenting time or visitation such as child care expenses incurred by the other parent;
(3) modification of transportation arrangements;
(4) pick-up and return of the children in a public place;
(5) counseling for the children or parents or any of them at the expense of the parent in violation of the order;
(6) temporary or permanent modification of the custodial arrangement provided such relief is in the best interest of the children;
(7) participation by the parent in violation of the order in an approved community service program;
(8) incarceration, with or without work release;
(9) issuance of a warrant to be executed upon the further violation of the judgment or order; and
(10) any other appropriate equitable remedy.

Non-Compliance with Alimony or Child Support Orders:

(1) fixing the amount of arrearages and entering a judgment upon which interest accrues;
(2) requiring payment of arrearages on a periodic basis;
(3) suspension of an occupational license or drivers license consistent with law;
(4) economic sanctions;
(5) participation by the party in violation of the order in an approved community service program;
(6) incarceration, with or without work release;
(7) issuance of a warrant to be executed upon the further violation of the judgment or order; and
(8) any other appropriate equitable remedy.

27249354 - symbol of sanctions as a clamps

In other words, with most family part actions, the sky is the limit in terms of what remedies can be utilized to secure compliance. Moreover, in other instances of non-compliance not covered by the family part rules, for instance, filing frivolous motions to harass the other party, or failing to make discovery, other rules apply that should serve to get a litigant to do the right thing.

So why the disconnect?

Well, it appears that some judges are beginning to take a hard stance against people who just feel like marching to the beat of their own drums, people without any regard for Orders of the Court, or resultant victimization to the other party.

For example, in August, a New Jersey couple was hit with a $543,000 sanction by a Manhattan judge for interfering with their son’s divorce. Justice Ellen Gesmer said that the couple “orchestrated the litigation” between their son and his wife, caused extensive delays, and launched a legal battle designed to “intimidate” their daughter in law.

The parties were married in 2005, and had one child in 2007. Tragically, the husband suffered a brain aneurysm in 2008, rendering him disabled. The wife initially cared for the husband, but was ultimately pushed out of the picture by his parents, who actually took him to a facility and hid him from the wife for several months in 2009.

When the divorce was filed in 2010, the grandparents ran the show on behalf of the son, and directed the son’s lawyers to delay the custody hearing for as long as possible so that they could pursue 50% custody of their grandchild, based upon the pretense that it was on their son’s behalf. By the end of the litigation, the wife’s legal bills were in excess of $928,000.

The judge ultimately found that the parents “willfully interfered with (their granddaughter’s) development of a positive and loving relationship with her father…(and) purposefully engaged in frivolous litigation.”

The judge also came down hard on the father’s lawyers, ruling that they engaged “in frivolous conduct by repeatedly making misrepresentations and knowingly false statements and claims to the court.” She ordered the lawyers to contribute $317,480.67 toward the wife’s legal bills.
The in-laws were ordered to pay, in total, a whopping $543,000.

Back on the other side of the river, in a recent Somerset County case, two opposing litigants were both ordered to perform community service for what the judge found was their willful non-compliance with their marital settlement agreement. The judge also warned them that they were to comply or face the possibility of sanctions.

It appears that judges are “getting real” about compliance. Whether it means the imposition of counsel fees against an overly litigious party or community service, a more clear message is being sent by these judges that non-compliance will not be tolerated.
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Eliana Baer, Associate, Fox Rothschild LLP Eliana T. Baer is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com.

With summer just beginning, many people have visions of swimming pools, beaches and family vacations. Others in New Jersey have visions of Sallie Mae, tuition bills and book fees.

After four years of what has become obligatory college contribution pursuant to the mandates of Newburgh v. Arrigo, many parents in the state are then faced with the daunting possibility of an additional 3-4 (maybe more?) years of opening their wallets and contribute toward the cost of graduate school; sometimes for their 24, 25, 26 or 27 year old children who are not yet considered emancipated pursuant to our current laws. Many times, child support also continues during that period.

45567922 - graduate figure made out of falling sand from dollar sign flowing through hourglassIndeed, New Jersey courts have recognized that completion of undergraduate education is not the determinative factor for either declaring emancipation or terminating child support. Many times, the determination as to whether child support would continue, and along with it the parents’ obligation to contribute toward the cost of the child’s education, focused largely on the whether the child, is “beyond the sphere of influence and responsibility exercised by a parent and obtains an independent status of his or her own”.

New Jersey is in fact one of the few states in the country that still requires divorced parents to pay for their children’s college educations. Even fewer require contribution toward graduate school. However, New Jersey remained an outlier in that regard.

For example, in the 1979 case of Ross v. Ross, the Chancery Division declared that the parties’ daughter could not be considered emancipated as she was attending law school after obtaining her undergraduate degree.

As recently as 2010 in Mulcahey v. Melici, the Appellate Division upheld a trial court’s determination that a 23 year old child was not emancipation and was entitled to contribution toward her education costs as well as continued child support. Eric Solotoff previously blogged about this case in his post entitled: I Don’t Have to Pay for My Kid’s Graduate School, Do I?

The New Jersey Emancipation Statute, signed into law on January 19, 2016, is set to take effect on February 1, 2017, and may change the way courts view graduate school contribution.

Whereas previously emancipation was a fact specific inquiry focusing on the level of independence of the child, now, child support “shall not extend beyond the date the child reaches 23 years of age.”

Does this mean that the possible obligation to contribute toward a child’s graduate school education is a thing of the past? If emancipation must occur by the age of 23, and the obligation to contribute hinges on the question of whether the child is emancipated, how could a parent be required to contribute to graduate school?

Another interesting question will be whether an agreement to pay for graduate school at the time of the divorce, pre-statute will be enforced.
Recall also the New Jersey Rutgers University professor who was ordered to pay more than $112,000 for his daughter to attend Cornell Law School in 2014 because he had agreed to contribute in his divorce settlement agreement, but failed to place any cap on tuition.

The enforcement of agreements to contribute toward college is extensively addressed in Appellate Division Addresses Enforceability of Settlement Agreement as to College in New Published Decision – but it will be interesting to see if the same principles are applied when it comes to graduate school.

We will keep you posted as the case law is decided.
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Eliana Baer, Associate, Fox Rothschild LLP Eliana T. Baer is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com.

In the recent case O’Hara v. Estate of John B. O’Hara, Jr., the Appellate Division reminded us that even though the death of a party to a marriage ends that marriage, it doesn’t always end the divorce.  In Carr v. Carr, 120 N.J. 330 (1990), our Court examined what happens in the event that a party dies mid-divorce – after the Complaint has been filed, but before the divorce is finalized.  You might think that when this happens, the case simply ends – after all, if one party passes away, what is the point of the divorce?

For better or worse, things aren’t so simple.  If a party passes away mid-divorce, then the intent to divorce and to no longer be married has been expressed.  If one party’s death mid-divorce would lead to unjust enrichment for either the deceased party’s estate or for the surviving spouse, the Court must see the divorce through.  Otherwise, the surviving party might be unjustly enriched; what if he or she were to inherit everything in the deceased spouse’s estate, when the deceased party may not have wanted that?  The converse could also be true.  What if the spouse had specifically been provided for in a will, despite the divorce, but the bequest affords the surviving spouse less than (s)he would have gotten in the divorce case?

That latter is the issue at the center of O’Hara, where, in the midst of the divorce matter, the husband passed away.  While the divorce was pending, but prior to his death, the husband executed a Last Will & Testament.  The Will left the wife without any property interest in the marital assets, but created a trust for her benefit and support.  The problem with this was that, in filing a Complaint for Divorce, the Wife had asserted her right to an equitable share of the marital assets.  The trial judge permitted her to see that through by amending her complaint to include a claim against the husband’s estate.  The Court concluded that  “[w]ithout allowing the matrimonial matter to proceed to determine the value of the parties’ assets and what is available per equitable distribution, it will never be clear whether [the wife] received everything under the trust to which she is entitled, via equitable distribution.”

 

division of property

The Appellate Division affirmed.  Skeptical of the husband, the Appellate Division found that the marital estate had to be valued, and the wife’s equitable interest had to be determined before it could be said that the benefits to the wife under the trust established by the husband did not deprive her of what she would have been entitled to under the divorce.  Therefore, the lower court’s decision to impose a constructive trust – to effectively freeze the estate – was upheld and despite the death of one of the parties, the divorce litigation set to continue.

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.

I recently came across an article, Getting Financially Naked with Your Partner, by Erin Lowry, that got me thinking about a question that is bound to arise more and more in this practice.  Millennials, as a generation, are beset by student loan debt at the highest levels in history.  As they start marrying and, as a corollary, divorcing, a common question they will ask is: what responsibility do I have when it comes to my husband’s / wife’s student loan debt?

 

student loan debt graphic

As with many issues, the answer will be fact specific.  It is well-settled law in New Jersey that any pre-marital assets or debts, and any passive growth of either the asset or the debt, are the separate property of the spouse who acquired the asset or the debt.  For example, Doug Debtor may have acquired $50,000 in student loan debt when he was in college, years before he met his wife.  In principle, if that debt still exists when Doug and his wife get divorced, he is going to be responsible for the entirety of it, including any interest on the debt that accrued while Doug and his wife were married.  Of course, the facts of any individual case may very well blur that bright line rule.  For example, maybe the parties lived together (though were not yet married) when the debt was incurred, and it was used to pay for living expenses.  In that case, an argument could be made that the non-debtor party should share in the debt – after all, s(he) benefited from the loan.

However, both parties will share in responsibility for debt incurred during the marriage – including student loan debt incurred by one of the parties for his or her education.  The idea here is that the parties as a united front made the decision to take on that debt and, hopefully, reap whatever benefits come with the spouse’s education; therefore, they are both responsible for the debt.

The set of facts raised in Lowry’s article present some interesting questions.  While the debt is pre-marital and was incurred apparently before the couple ever knew each other, the “deal” they make is that when they’re married, they will live off of Lowry’s income, and use her boyfriend’s income to pay off his student loan debt.  That is a fairly explicit declaration that, although he will be responsible for paying off the debt, she will be responsible for supporting him.  In New Jersey, such an arrangement in combination with other facts could be used to show that she was the supporting spouse during the marriage and that he is entitled to alimony in the event of their divorce – and what’s more, entitled to alimony in an amount that would allow him to continue devoting his entire income to paying off his student loan debt.

Certainly, it’s important to “get financially naked” with your husband or wife – after all, you need to be transparent with one another so you can financially plan for your future.  But in the event of a divorce, it’s also important to realize that the way you dealt with pre-marital student loan (or other) debt during your marriage may have an impact on the outcome of financial issues attendant to a divorce.

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.

Lawyers and litigants alike have long understood the importance of maintaining a good credit rating before, during, and after the divorce. As the parties, particularly one who has not had significant employment during the marriage know, a positive credit rating is critical to establish a new residence, purchase vehicles, and start a new, single life. Often however, the actions of one party can have the effect of damaging irreparably the credit rating of the other. This often happens in the context of one party failing to pay the mortgage on a former marital home or refinancing the mortgage to remove the other party as obligor. Recently, this issue was examined by the court in the case of LH v. DH.

In that case, the parties’ settlement agreement at the time of divorce provided that:

…it is the intent of the parties that the wife shall maintain and keep the marital home… Husband shall execute a quit claim deed transferring his interest in the former marital home to wife, and husband’s attorney shall hold the same in escrow pending wife’s refinance of the mortgage in her name. Wife will have nine months from the date of this agreement to obtain refinance of the mortgage in her name.

This is a very common provision which is found in many settlement agreements. In this case, however, the wife failed to refinance the mortgage removing the husband as an obligor. The husband did not take any action to enforce this obligation initially. However, a couple of years after the divorce, he went to purchase a new home of his own. When he applied for a mortgage, he discovered that his credit rating had been negatively impacted, and he was unable to obtain a favorable rate for a mortgage as a result of the fact that his name was still on the mortgage for the former marital home. He then made an application in court seeking enforcement of the settlement agreement and to appoint him as attorney-in-fact to sign any documents to list the home for sale and sell it.

The court agreed with the husband and granted his request. Importantly, however, the court’s decision took notice of the fact that “as a matter of indisputable knowledge, a positive credit rating and score is one of the most valuable and important assets a party may presently possess. Simply put, a strong credit report and score can enable one with relatively limited assets or income to make substantial purchase is which he or she could not otherwise afford…. Reciprocally, a negative credit rating and score can have a detrimental and sometimes disastrous effect on the party’s financial health, often crippling the party’s ability to obtain a loan, either at a favorable rate or at all, for significant purchases such as a house, car, school tuition, or other expensive items, will potentially and simultaneously limiting the individuals healthy financial growth for years.”

This acknowledgment by the court is very significant. As a practical matter, when an agreement provides time to a party refinance a mortgage or loan, it is important for the other party to regularly check his or her credit score. Additionally, when deadlines pass under the terms of an agreement, it may be critical to take appropriate action to enforce its provisions. While this can be sometimes emotionally difficult given the fact that former spouses and often children are living in the house, the repercussions can be devastating.

As a lover of all things Coldplay, I was sad to hear that lead singer Chris Martin and his wife of more than 10 years, Gwyneth Paltrow, were divorcing. Gwyneth Paltrow announced the separation on her website Goop.com and used the term “conscious uncoupling” to describe their approach to divorce.  Although the term had been originally coined by marriage and family therapist, Katherine Woodward Thomas, as with anything else endorsed by celebrities, the phrase went viral after her post.  It was of particular interest to me personally given my chosen profession as a divorce lawyer.

As professionals, especially ones whose practice is client-centric, we are always striving for better ways to do our jobs.  In my case, that means getting clients their desired result in the most effective and streamlined way possible. After practicing for several years, experience has shown me time and time again, that people going through divorce are most satisfied with the process when they feel they have control over it (i.e., are “conscious[ly] uncoupling”) and can proceed with a form of alternative dispute resolution (such as mediation) rather than traditional, costly, protracted litigation.

Even as American culture has become more progressive and accepting, divorce is still considered taboo and is almost always surrounded by extreme negativity and hostility.  Even if the couple themselves wants to proceed amicably, they are unfortunately often allowing others in their life (parents, siblings, friends, new boyfriend or girlfriend) to control the dialogue and encourage them to dig in their heels.

Once people “dig in”, it is often impossible to “dig out”.  Protracted litigation only intensifies negativity and hostility. The idea that divorce has to be a negative experience then becomes a self-fulfilling prophecy, in which divorcing parties behavior, is influenced by their expectation that divorce must be awful.  I believe if you change the conversation surrounding divorce and allow yourself to “consciously uncouple” you will have much more satisfying experience surrounding your divorce.

I recently completed a 40-hour divorce mediation training program. This program has only solidified my beliefs that in many cases, a mediated divorce, is a better divorce. That is not to say that litigation is never necessary. There are some circumstances that cannot be mediated and some people that simply cannot effectively participate in mediation. That said though, divorce is multi-dimensional: it is legal, it is financial, and it is emotional. The great thing about mediation is that it can effectively address each of those dimensions.

(1) LEGALLY

Whether you litigate or mediate, you achieve the same end result: a legal divorce.  A mediated divorce however is often faster, less adversarial and provides more flexible and creative resolutions, narrowly tailored to your specific family dynamic.  It also allows for a more confidential process than airing out your dirty laundry in a series of public court filings and appearances.

(2) FINANCIALLY

I will never say “always” or “never” because I’ve come to learn that nothing is absolute.  A mediated divorce however, can certainly be more cost effective. Spending less to uncouple leaves more to be divided between the parties and therefore places both parties in a better position to maintain financial independence and stability post-divorce.

(3) EMOTIONALLY

Although emotions can run high during mediation, there is a much more focused approach on compromise and collaboration rather than “winning” as is seen in litigation. When people feel their spouse is negotiating in good faith and trying to be part of the solution, rather than part of the problem (i.e., zealously litigating over the smallest of disputes), they walk away feeling better about uncoupling, which leads to healthier relationships with themselves, their ex-spouse, and future romantic partners.

The takeaway from all of this is that choosing to uncouple, does not always have to be adversarial, financially draining and emotionally damaging. Take control of your divorce and find avenues in which to minimize the long-term effects.  Before deciding to wage war against your spouse, consult with an experienced and trained family law mediator to see how mediation can work for you.

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Lauren K. Beaver is a contributor to the New Jersey Family Law Blog and an attorney in Fox Rothschild LLP’s Family Law Practice Group. Lauren practices out of the firm’s Princeton, New Jersey office representing clients on issues relating to divorce, support, equitable distribution, custody, and parenting time.  Lauren also offers mediation services to those looking to procure a more amicable divorce. Lauren can be reached at (609) 844-3027 or lbeaver@foxrothschild.com.

Often, cases are given nicknames, sometimes by judges and law clerks, and sometimes by the attorneys.  Sometimes the nicknames come from who the people are – for instance, a case we had several years ago where both parties were models became the “model case” at the courthouse.  Sometimes, the names come from something that one or both parties did – a case where a spouse tried building a brick wall inside his house to divide the house before the divorce might have been the “brick wall case.” Right now, we have a case called “the money tree case.”

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We call this case the money tree case because, despite the husband’s ever present cries of poverty, money keeps materializing from out of nowhere for lavish spending.  Turn over the entire paycheck for support – sure – yet he lives like a king with no apparent income.  $40,000 is needed for a particular expense, it is wired in a day without disclosing where it came from.  Oldest child needs a car – no used car for her, she gets a new Mercedes.  In opposing a motion for counsel fees, his lawyer laments that he hasn’t been paid in a year and as soon as the motion is decided, he gets paid in full from sources unknown.

While at the same time of crying the blues that there is no money, expensive new watches appear which was a “gift.”  One if not two residences are being paid for though who knows by whom. There are expensive vacations.  Showering the children with presents.  The home equity line gets paid off, from no known source.

Of course, there is no transparency or up front disclosure about anything up front.  It is only after he gets caught, is there a lame excuse of a “gift” or a “loan” – with no proofs as to anything.

I, myself, have mused to the judge that I would like to know where to get a money tree too, because literally money keeps appearing in this case from no known source.

What is the takeaway?  When a litigant is crying poverty, you can’t let it go at that, especially when the lifestyle and known expenditures exceed the known sources of income.  Discovery must be doggedly pursued and the total cash flow (notice I didn’t say income because who knows how this person will characterize this endless cash infusion) must be calculated as best as possible.  That is the only way that support can be fairly decided.  Moreover, this money tree may also indicate an undisclosed asset or assets that is being tapped now, but which should be divided in equitable distribution.  When crying poverty, the wiping of the tears with $100 bills  is always a red flag.

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Eric SolotoffEric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

Photo credit: Copyright: <a href=’http://www.123rf.com/profile_zenstock’>zenstock / 123RF Stock Photo</a>

Thanks to Drake, we all know that can only mean one thing.

Drake at Bun-B Concert 2011
By thecomeupshow [CC BY 2.0], via Wikimedia Commons
So what happens when your hotline bling(s), and you’re in the midst of or even about to be in the midst of a divorce?

By the time they are thinking about a divorce or going through the divorce process, many clients have moved on and are ready to get out there and see other people.  And many of them are wondering how that could impact their divorce.  Here’s what I tell them:

LEGALLY SPEAKING…

Legally speaking, the fact that you’ve started dating other people generally means nothing.  With two caveats, the Court doesn’t care about your personal escapades – and that includes your dating life.  But the two caveats are important ones:

1)  Dissipation of Marital Assets:  Don’t spend your soon-to-be ex’s money on your new fling or significant other.  If you are spending money on hotel rooms, lavish presents, lingerie and so forth on your new significant other(s) that rightfully belongs to your ex, then that will have an impact on the financial outcome of your divorce.  Specifically, your ex will be entitled to a credit for his or her share of that money.  That’s going to lead to a whole lot of legal fees trying to justify what expenses you paid for that were or were not legitimate (in other words, what did you spend on yourself that was in line with what you spent during the marriage, versus what did you spend on your dating life?).  Of course, a nominal amount of spending is generally not going to be an issue; it’s when the spending becomes exorbitant that there’s a problem.

2)  Whether / How the Kids are Affected:  If your new significant other poses a danger to your kids, obviously, the Court will care.  The best interests of the children are always paramount to the Court, as they most certainly are to you.  If you are dating someone with a  criminal history, drug problem, or so forth, legally speaking (and otherwise), that’s going to be a problem for you.  A Court may find that you do not have the children’s best interests at heart and this could impact the outcome of a custody and/or parenting time determination.  And sometimes, even if the new significant other may not pose a danger to the kids, the change in the status quo might be considered too much of a disruption.  In that type of situation, the Court may impose what are called “Devita restraints,” or restraints on one’s significant other interacting with the children.

EMOTIONALLY SPEAKING…

For better or worse (see what I did there?) this area of the law comes with a lot of emotions.  It’s an outlier in the legal world, where most everything can be chalked up to dispassionate transactions and an “it’s just business” mentality.  Here in the family law corner of the profession, the path of a case is often driven by rage, sadness, anxiety, jealousy, or some combination of those.  If your ex knows you’re dating new people or have a serious relationship with a new person, that can often fuel the fire.

Maybe your ex will fabricate stories about you and your new significant other and will tell your friends, kids, or even the Court these falsehoods.  On the other hand, I’ve had cases where one party was so dejected and heartbroken by the other’s decision to move on that nothing could move forward.  In those types of cases, the grieving party just acts like the divorce isn’t happening and is completely unresponsive.  I recently had a case where the spurned spouse insisted my client was dissipating marital assets to fund her long distance relationship; his refusal to drop the (totally unsubstantiated) claim held up the matter for months.  My client was forced to go through every check she wrote and charge she made over a year-long period so she could prove her husband’s claim was bogus.

Now, it is not for us to discourage anyone from pursuing a relationship or an experience that makes him or her happy – though when you are married, one would think it would be more prudent to end one relationship before starting another.  But, the above is food for thought before you decide to pick up the phone when that hotline bling, or let it ring.

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.

In the recent matter of Perreault v. Perreault, P.P. and R.P. were divorced in 1996, after 22 years of marriage. Following a hearing, the Court ordered R.P. to pay permanent alimony in the amount of $500.00 per week. Neither the April 29, 1996 Final Judgment of Divorce, nor the August 7, 1996 Order provided that alimony would beof limited duration or would terminate upon R.P.’s retirement. P.P. also received $28,239.48 or 50% of the marital share of R.P.’s federal pension.

At the time of the divorce, R.P. was employed by the Veterans Administration Hospital and earned approximately $118,000.00 per year. At the age of 55, he retired from this job and began collecting his federal pension. After R.P.’s retirement, he continued working for other companies and in 2007 he began a consulting business with his current wife. In November 2013, he retired at the age of 65.

In April 2014, R.P. filed a motion to terminate his alimony obligation to P.P. based upon his retirement, or in the alternative, to reduce his alimony obligation. R.P. certified that he had gross income in 2013 of $96,985 derived solely from his pension, and from that amount, $28,239.48 was paid to P.P. pursuant to the Court’s August 7, 1996 Order. R.P. argued that only $25,000.00 of the remaining amount, $68,745.52 ($96,985.00-$28,239.48 = $68,745.52), could be considered for alimony purposes, and this amount was insufficient to justify an alimony award. Additionally, R.P.’s Case Information Statement showed that he had no debt, $9,891 in monthly expenses (although slightly reduced by the trial Court) and $823,000 in assets.

The trial Court determined that R.P.’s income had decreased, but that he had accumulated substantial post-judgment assets separate from his current wife from which he could pay alimony. Of the $823,000 in assets listed on R.P.’s Case Information Statement, the trial Court reduced this number by more than one-half to account for joint ownership with his current wife. The trial Court also recognized that with regard to R.P.’s pension, $40,505.04 was representative of the non-marital portion, not $25,000.00 as set forth by R.P. Additionally, the trial Court noted that R.P.’s future social security payments and his current wife’s income would assist him in paying his expenses, thereby increasing his ability to pay alimony. In contrast, P.P. would be in “dire straits” without alimony. In conclusion, the trial Court reduced R.P.’s alimony from $500.00 per week to $375.00 per week. Both R.P. and P.P. appealed.

R.P. asserted that the trial Court erred by ordering alimony in the amount of $375.00 per week because the non-marital portion of his pension, which he argues is $25,000.00, does not justify an alimony obligation and the Court erred by including his assets in determining his ability to pay alimony.

With regard to R.P.’s pension, “when a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the trial court shall not consider income generated thereafter by that share for purposes of determining alimony.” Innes v. Innes, 117 N.J. 496, 505 (1990) (emphasis added). “Conversely, the rule does not bar counting as income for determining alimony, that portion of the former spouses’ pension attributable to post-divorce employment, and therefore not subject to division as marital property at the time of divorce.” Steneken v. Steneken, 367 N.J. Super. 427, 437-38 (App. Div. 2004)(emphasis added).

What does this mean? It means that retirement assets that were equitably divided in a divorce (and other assets for that matter), cannot later be considered available for purposes of alimony post-judgment. In this case, since R.P.’s pension was equitably divided in 1996 when the parties divorced, the share that was equitably divided is not available for to consider his present alimony obligation.

However, any money contributed to his pension after the parties divorced, can be considered for purposes of alimony to the extent the post-divorce earnings enhance the value of the asset.

In order to determine the non-marital portion of the pension, the trial Court added P.P.’s 50% share to R.P.’s share of the same amount to determine that the martial portion was $56,478.96. The Court then subtracted this amount from the present value of $96,984.00 to calculate a non-marital portion of $40,505.04. The Appellate Division affirmed this calculation.

In addition, the non-marital portion of R.P.’s pension, the Court must then consider whether R.P. had other sources of income that justified the reduced alimony amount. To do this, a Court may consider the income generated by supporting spouse’s assets, but not the total value of the asset itself, when determining the supporting spouses ability to pay alimony. See Miller v. Miller, 160 N.J. 408 (1999). Here, the trial court erred by considering the total value of R.P.’s assets, and the matter was remanded for further proceedings.

Although not discussed in Perreault, a litigant who wants to terminate or modify their alimony obligation based upon retirement must begin their analysis with  N.J.S.A. 2A:34-23(j), one of the recent amendments to the alimony statute, which discusses how alimony may be modified or terminated upon the prospective or actual retirement of the obligor.