What do divorce and economics have in common? Well, a lot. But today I am focusing on the unlikely link between the theory of information asymmetry – which deals with the study of decisions in transactions where one party has more or better information than the other – and the New Jersey Divorce App.
Oftentimes I hear from clients that gathering their financial information is the most daunting task they will face during the divorce process. They picture being buried in an avalanche of documents, account numbers and canceled checks.
The New Jersey Divorce App’s Finance Tracker can help. In fact, I have recommended it to my clients before,…
Today, the New Jersey Supreme Court rendered an opinion discussing whether the creation of a Special Needs Trust for an adult disabled child may be used to eliminate direct child support payments to the custodial parent and whether a guardian ad litem should be appointed on behalf of the child when litigation ensues under these…
Mark Ashton, a partner in our Exton (Chester County, PA) office and former editor of our Pennsylvania Family Law Blog, wrote a very in depth and interesting post entitled "Qualified Personal Residence Trusts: Are These Homes Subject to Claims in Equitable Distribution", on that blog.
Mark discusses how an estate planning tool…
A recent matrimonial case points out the difficulties of when one party to a divorce is the beneficiary of one or more trusts.
In Tannen v Tannen, a recent published case from the Appellate Division, the wife was the beneficiary of a trust established by her parents. She was the sole beneficiary and was also one of the trustees along with her parents. The standard for distributions, by the terms of the trust, was for the best interests of the wife’s “health, support, maintenance, education and general welfare.” The trust was of the “discretionary” type, that is, under the terms thereof, the trustees had “sole discretion” over distributions of both income and principal, and they should make their determinations after considerations of the wife’s other financial resources, but “without regard to the duty of any person to support” her. The trust also included a “spendthrift” provision which prohibited the wife, as beneficiary, from assigning, selling, encumbering, or in other ways “alienating” income or principal distribution without the written consent of the trustees. At the time of trial, the corpus of the trust included cash and securities, investment real estate, the home in which the parties and the children lived. The trust paid for the property taxes on the home, half of the cost of a housekeeper, and various capital improvements. The trust also paid for the children’s private school tuition, but on at least one occasion, the wife’s father refused her request for distribution for a vacation trip. Without there being delineation in the body of the opinion, it nonetheless appears that income generated by the trust may have significantly exceeded these disbursements on an annual basis.
At the trial judge’s direction, the trust was named as a party to the litigation and participated at trial.
While the Appellate Division’s in the case of Tannen v. Tannen (addressed in another blog by Larry Cutler), primarily ruled that income paid to the divorcing wife as the beneficiary of a discretionary trust (the “WTT”) cannot be considered an asset available to fund alimony, that discussion naturally begged the question which was addressed in the second part of the case; namely – what effect does the actual income disbursed from the trust have on a determination of the needs of the parties in setting the alimony and child support obligation of the supporting spouse?
It is well-settled in New Jersey that the “marital standard of living” serves as the touchstone for the initial alimony award in a divorce. 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. The Court examines the couple’s “lifestyle expenses” in order to determine how much support is required by the dependent spouse to maintain that lifestyle support.
In Tannen, the trail judge sought to apply his conclusions regarding the parties’ lifestyle expenses to the calculation of the amount of support required by the dependent spouse to maintain that lifestyle. The judge acknowledged that the lifestyle expenses included those incurred by the parties and their children, however did not give any analysis as to the costs associated with the wife’s actual needs post-divorce in light of the fact that income was paid to her at least monthly by the WTT. He also failed to consider at all the husband’s post-divorce needs. The Appellate Division took issue.
A recent case was filed concerning a woman who entered into a Marital Settlement Agreement with her then husband in which the marital home was not to be sold immediately, but provided for how the proceeds would be distributed when it was. The Husband, however, was in poor health, and the agreement did not provide for…
As seen in Affluent Magazine.
Divorce for those of substantial wealth relative to those of limited wealth is an oxymoron – aspects of divorce between the two classifications are both similar and yet quite different. In final analysis, it is a question of degree – that is, the number of zeros behind the dollar signs. This summary discussion will deal with certain procedures and aspects of divorce which are similar to both. The distinctions lie in the availability and desirability of various procedural vehicles to the two groups.
Privacy and Confidentiality
Nearest to the hearts of you — the rich and famous (next to, of course, your money) — is privacy and confidentiality. None of you in your right mind wants to spread your dirty laundry in public – least of all those of you blessed with substantial wealth. With divorces of such persons being instant grist for media dissemination, generally, it is better for all concerned (especially their children on a whole host of levels) to have disposition of your matter not a matter of public spectacle. All too often, the perceived lesser-advantaged spouse may play the publicity card (or threaten to do so) in order to opt out a financial advantage – or in simple parlance – vie for “hush” money. Perception by the lesser-advantaged spouse that the financially-advantaged spouse will deal with her or him fairly (whatever that may mean) will usually go a long way toward negotiations where calmer minds prevail. Another method of seeking to assure a divorce far from the public eye is for a pre-marital agreement to address issues of confidentiality and mediation and/or arbitration out of the public limelight.