The issue of the division of deferred compensation in divorce – more particularly, unvested deferred compensation, is often one that is hotly disputed.  This is in part because there is not a lot of case law on the issue.  The case law is clear that deferred compensation (eg. stock options, restricted stock, RSUs, REUs, etc.) granted during the marriage, or even shortly after the date of complaint but for efforts that occurred during the marriage are subject to equitable distribution.  The fights arose regarding whether (1) the deferred compensation should be treated as either income and/or an asset; and (2) if an asset, should they be divided 50-50 or in some other percentage.  In fact, I blogged about this in a piece entitled Deferred Compensation – Income, Asset or Both, back in 2013.  at the time, I said:

If the deferred compensation is not vested and requires continued, post-divorce Complaint service in order for vesting to occur, that is where things get more difficult.  I have seen some simplistically argued that anything granted before the Complaint gets equally divided no matter when it vests.  More recently, I have seen a greater use of some type of calculation (coverture fraction) used to recognize the post-complaint service of that spouse.  Many believe this to be the fairer way of equitably dividing deferred compensation.

There hasn’t been much case law on this issue since that time, though a case that I will discuss later, suggests that the language of the documents granting the deferred compensation is key,  That said, late in 2018, we got some more guidance from the Appellate Division.  Specifically, in the reported (precedential) opinion in the case of M.G. v. S.M. decided on December 26, 2018, Judge Mawla gave new guidance with regard to the distribution of deferred compensation, again pointing to the importance of the plan documents.

In M.G., the plaintiff worked as a  principal consultant for a large multi-national corporation. Beginning in August 2003, and every August thereafter until 2010, plaintiff received a stock award from his employer. Plaintiff received 490 shares in 2003 and those years began to vest at a rate of 174 shares per year commencing in 2011. A similar vesting schedule was applied to the other grants.  Note that in my experience, this is an unusual vesting schedule.  That is, it is unusual, in my experience, for their to be  a 7 year gap before deferred compensation vests.  Typically, I have seen deferred compensation serially vest, over three or five years, starting with the year following the grant.  What that means is that if 600 shares of restricted stock were granted in 2018, then they would vest 200 shares each in 2019, 2020 and 2021.  Other times, you see shares cliff vest in 3 or 5 years.  What that means is that if 600 shares were granted in 2018 that vest in 3 years, all 600 shares would vest in 2021.  This is important because the argument you most often heard from the titled spouse is that the because the shares will vest post divorce allegedly based upon post divorce efforts, that they should be distributed in a less than 50-50 percentage.

Back to M.G.  At the date of complaint, only 3 of 8 awards were fully vested.  At trial, plaintiff offered into evidence plan documents that stated:

Stock-based compensation is a key component of our reward program . . . because it provides an ownership stake in the company’s success for employees who contribute over the long term. To preserve this core element of our culture, in July 2003, [we] decided to grant employees stock awards, which represent the future right to receive shares of . . . stock when a vesting requirement is satisfied.

. . . .

At [our company] we believe that employees who become shareholders maintain a long-term, vested interest in sustained individual excellence and the overall success of the company.

. . . .

Each eligible employee’s annual stock award grant is based on his or her impact, level, and country.

In my experience, the plan language for most plans is much more generic than this.  However, in this case, the plan language supported the husband’s position that his continued employment was required for him to receive the value of the options.  Judge Mawla noted:

Plaintiff’s unrefuted testimony was clear that post-complaint efforts were necessary to cause the stock, which had not vested as of the date of complaint, to become payable. The plan documents and literature adduced in evidence at trial, and attached to plaintiff’s post-judgment motion, stated vesting would occur dependent upon plaintiff’s post-complaint performance. We reject defendant’s argument that “performance” in this case required plaintiff merely to continue living and go to work. Nothing in the record supports this assertion. Indeed, all of the objective evidence in the record demonstrates much more was required of plaintiff as a high-level corporate employee in a highly competitive industry.

As we noted, plaintiff’s employer described the stock plan as a “reward program . . . because it provides an ownership stake in the company’s success for employees who contribute over the long term.” Company literature explained the stock grants were to “maintain a long-term, vested interest in sustained individual excellence and the overall success of the company.” This language does not suggest the stock would vest through mere continued employment without consideration of plaintiff’s level of proficiency. Nor does this language suggest the stock awards were for work already performed.

As a result, Judge Mawla held that the trial judge misapplied his discretion because in the absence of any evidence or testimony to the contrary, he concluded the stock was earned for work performed during the marriage.  Judge Mawla rejected both the use of a coverture fraction or applying the concept of “marital momentum” to address the equitable distribution of the unvested stock awards noting, “In instances where an asset has been granted after the date of complaint, these principles are of little help because they presume a marital component attributable to the asset in question.” (emphasis added).

In determining how to divide such assets, Judge Mawla modified a mechanism found in a case out of Massachusetts.  Specifically, the court adopted the following rubric:

(1) Where a stock award has been made during the marriage and vests prior to the date of complaint it is subject to equitable distribution;

(2) Where an award is made during the marriage for work performed during the marriage, but becomes vested after the date of complaint, it too is subject to equitable distribution; and

(3) Where the award is made during the marriage, but vests following the date of complaint, there is a rebuttable presumption the award is subject to equitable distribution unless there is a material dispute of fact regarding whether the stock, either in whole or in part, is for future performance. The party seeking to exclude such assets from equitable distribution on such grounds bears the burden to prove the stock award was made for services performed outside of the marriage. That party must adduce objective evidence to prove the employer intended the stock to vest for future services and not as a form of deferred compensation attributable to the award date. Such objective evidence should include, but is not limited to, the following: testimony from the employed spouse; testimony of the employer’s representative; the stock plan; any employer correspondence to the employed spouse regarding the award; and the employed spouse’s stock plan statements from commencement of the award and nearest the date of complaint, along with the vesting schedule.

In this case, the court noted that the unvested stock was either in whole or in part unattributed to the marriage based upon the plan documents and testimony at trial.

But before people go too wild about this decision, and simply say that all non-vested deferred compensation is the property of the titled spouse, they should really go back to square one and look at the grant documents, because many, if not most, are not like those in M.G.  In fact, in an reported case last year entitled K.C. v. D.C., a review of the plan documents lead to an entirely different result.

Rejecting the husband’s argument about his post-complaint efforts being necessary to receive the deferred compensation, the court held that the RSUs awarded were “subject to equitable distribution and shall be equally divided,” observing defendant provided no evidence to support his theory that the award was for future performance.  Like in M.G., the generic purpose of the plan was:

to aid the Company . . . in recruiting, retaining and rewarding key employees . . . of outstanding ability and to motivate such employees . . . to exert their best efforts . . . by providing incentives through the granting of Awards. The Company expects that it will benefit from the added interest which such key employees . . . will have in the welfare of the Company as a result of their proprietary interest in the Company.

Different from M.G., however, is the fact that the employee would still get the deferred compensation if they died, became disabled, or were terminated through no fault of their own.  Put another way, no post-complaint efforts were specifically required.  Accordingly, the Court held:

Aside from the generalized aspiration that “key employees” who are granted RSUs will have an enhanced interest in the welfare of Accenture, there is no requirement that the employee meet any performance goals before a batch of RSUs will vest pursuant to the schedule. The only condition for vesting is “continued employment.” Moreover, in the event the employee is no longer employed due to death or disability, all of the RSUs granted, whether vested or not, are transferred to the employee or his estate. Obviously, the transfer of RSUs following death or disability would not be based on future performance.

In sum, all the documentary evidence in the record1 states that such promotional grants are awarded based on performance ratings at the time of the award, in recognition of employees’ efforts, and no document provided to the court states defendant must meet any given performance goal to trigger the vesting of RSUs that are part of the grant. Contrary to defendant’s argument, the record was clear, and fully supported the trial court’s determination that the RSUs were subject to equitable distribution.

So what is the takeaway here.  You need more than just a party’s self serving testimony.  You need the plan documents and the documents seemingly must really require post-divorce exemplary efforts more than just staying employed, in order to exempt the deferred compensation granted but not vested during the marriage.  M.G. does not address the necessary corollary which would be that if the deferred compensation is exempted from equitable distribution, should it not then be considered as income available to pay alimony when it vests?  Seems so but we shall see.


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 the recent unpublished (non-precedential) decision of Mathurin v. Matrhurin, the Appellate Division again confirmed that (1) agreements reached in mediation are not binding unless the terms are reduced to a  writing signed by the parties and, ostensibly, their attorneys if present, and (2) absent such a writing, the court cannot consider discussions, unsigned agreements or memoranda from mediation or other settlement negotiations because such writings/discussions are confidential by virtue of the Rules of Evidence that provide privilege to settlement negotiations.  It therefore follows that such confidential writings and/or oral communications cannot be relied upon to convince a court that an agreement was reached in mediation.

The post-divorce litigation in Mathurin arose when Plaintiff/ex-husband filed a motion to enforce the Marital Settlement Agreement (“MSA”) in order to compel Defendant/ex-wife to accept the offer for sale of the marital residence.  The parties agreed to sell the home within the MSA, but after they received this offer, Defendant proposed to buyout Plaintiff’s interest in the home for the same amount.  Plaintiff did not accept this alternative resolution.  Two other enforcement applications followed – one dismissed for procedural issues and the other denied without prejudice (meaning it can be refiled) pending the parties attending mediation because the MSA had a mediation clause that requires the parties to seek such intervention before filing an application with the Court.  The mediation session that followed gave rise to this appeal.

The mediator prepared and signed a Memorandum of Understanding (MOU) listing the terms reached in mediation and further stating the parties’ agreement that the MOU reflects an enforceable settlement reached between the parties.  Plaintiff reneged on the terms in the MOU because of credits sought by Defendant that he found objectionable, and he refused to sign a formal agreement that his attorney prepared incorporating the terms of the MOU.  Plaintiff fired his attorney and filed another motion to enforce the MSA.  Defendant filed a cross application to enforce the MOU to which she attached the MOU and signed certifications from herself and both parties’ counsel wherein those parties disclosed the contents of mediation. Ultimately, the trial court found that it cannot consider the MOU and/or the certifications because they are confidential settlement documents, and that the MOU was not binding.  The Appellate Division affirmed, finding that the MOU and certifications represent confidential settlement material and that the MOU is not binding because it was not signed by the parties or counsel.

The Appellate Division cited to a New Jersey Supreme Court case, Willingboro Mall, Ltd. v. 240/242 Franklin Ave., LLC, 215 N.J. 242, 245 (2013), confirming that the all agreements reached in mediation must be reduced to a signed written agreement and that mediation discussions cannot be relied upon to prove an agreement was reached unless the parties waive the mediation privilege.  The Appellate Division differentiated this case from a 2017 decision, GMAC Mortg., LLC v. Willoughby, 230 N.J. 172 (2017), because in that case the writing was signed by the parties’ attorneys.  Although those cases are not family law matters, the same principals apply to all settlement discussions.

This issue here is one that attorneys and litigants face in mediation all to often – was an agreement reached just because there seemed to have been a meeting of the minds?  The simple answer is no.  Although we do not suggest, nor would we propose, rushing into signing an agreement, if a party in mediation wishes to make sure that the agreement reached in the session is binding, then the terms must be in writing and signed by both parties, as well as counsel if present.  This does not have to be formal – a piece of paper with handwritten terms will suffice – but there is no question that written terms and signatures are required.  At minimum, terms can be memorialized in an MOU but as we all now know, the MOU is not binding.  What may result then is a Harrington hearing, which you can read about in this post: https://njfamilylaw.foxrothschild.com/2014/03/articles/mediation-arbitration/harrington-is-still-alive/

Oftentimes in mediation, the mediator explains at the outset that nothing reached in their session will represent a final agreement unless the terms are reduced to writing and signed by those present (i.e.: parties/parties and counsel).  This is a common instruction, presumably in an effort to avoid a future Harrington situation, and one that I find beneficial so that everyone in the room is starting out on the same proverbial page.

The takeaway – it’s not over until it’s signed, sealed and delivered!


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.

For those who divorce in 2019, they will be the first to test the new tax laws eliminating the deductibility of alimony.  They may also be facing a slowing economy.  Bad economies historically mean more divorces, either because of the stress it creates or because one or both parties is being opportunistic.

Whatever the reason, we await those who see 2019 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.

In a recent decision approved for publication, the New Jersey Appellate Division reversed a trial court’s findings that the Sexual Assault Survivor Protection Act, N.J.S.A. 2C:14-13 to -21 (SASPA), could afford protection to victims of sexual assault whose attacks took place prior to the effective date of the Act in 2015.  In so holding, the court reversed the entry of a final protection order to a victim of sexual violence, who was assaulted in 2005, ten years prior to the enactment of SASPA.

The case of R.L.U. v. J.P. illustrates this principle.  In this case, the defendant pled guilty to endangering the plaintiff in 2005, when she was eleven years old.  He was sentenced to three years of jail time and parole for life.  In 2017, he interacted with the plaintiff at the convenience store where she worked and verbally threatened her.  A few days later, he appeared at the glass window of the plaintiff’s job and stared at her for five seconds before walking away.  The plaintiff applied for a temporary order of protection pursuant to SASPA.  A final protective order was then entered, after a hearing at which the trial court heard credible testimony that the defendant had intercourse with the plaintiff in 2005.  Relying upon that assault as the predicate act, the trial court entered a final order of protection pursuant to SASPA.

The Appellate Division reversed, albeit unwillingly, finding it was “constrained” to hold that SASPA was not intended to be applied retroactively.  Explaining the history and purpose of SASPA, the Court identified its purpose to extend protection from domestic violence to those individuals who do not meet the requirements of the Prevention of Domestic Violence Act (PDVA), but are victims of sexual violence.  The PDVA is the primary avenue by which an individual can obtain a protective (otherwise known as restraining) order in New Jersey.  However, to qualify as a “victim” under the PDVA, one must be a spouse, former spouse, co-parent, or person with whom the defendant had a dating relationship.  Accordingly the PDVA does not protect persons subject to sexual violence in a random encounter or in less than dating relationship.

To bridge this gap, SASPA provides that any person alleging to be a victim of nonconsensual sexual contact, sexual penetration or lewdness (or an attempt thereof) who is not a protected victim under the PDVA, may apply for a protective order under SASPA.  However, the entry of a final protective order under SASPA requires a finding of nonconsensual sexual contact, penetration or lewdness and the possibility of future risk to the safety or well-being of the victim.  Importantly, words, threats or harassment is not enough.

Here, the trial court relied upon the predicate act of intercourse with the plaintiff in 2005.  The appellate court reversed, finding that this act could not constitute the predicate act as it occurred prior to SASPA’s enactment in 2015.  The court relied upon the absence of any legislative intent that SASPA was designed to apply retroactively and the fact that the PDVA is similarly applied prospectively.

It is important to understand the different laws which protect victims of domestic violence and know that SASPA is a fairly new law which broadens the category of victim who may seek protection from such acts of abuse.  However, victims whose offenders are more akin to a stranger must be cognizant of the durational limits imposed by SASPA.  That being said, any new acts of sexual violence may give rise to a basis for a protective order under the Act and anyone who is unfortunately a victim of such violence should be aware of the legal rights and protections to which they are entitled.

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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.

We have all seen cases where one of the parties is unreasonable if not out of control.  I am not talking about taking a hard of aggressive legal position.  I am not talking about taking an aggressive if not unreasonable settlement position – at least to start.  I am talking about a client that refuses to abide by an agreement or an Order.  I am talking about a client that intentionally misinterprets an agreement or an Order because on this occasion, the clear interpretation does not favor her – only to take the exact opposite interpretation the next time when it would be to her favor.  I am talking about someone with oppositional defiance disorder and/or someone who automatically rejects something, even if it is to his or her benefit, simply because it was suggested by the other party or opposing counsel.  I am talking about someone who could either tell the truth or lie, with no greater advantage in lying, but lies anyway.  I am talking about someone that cannot help to put their kids in the middle to hurt their spouse, knowing that they are probably hurting their kids in the process.  There are many other examples I can give based upon my many years as a divorce attorney.

In a perfect world, when this happens, assuming that it is not opposing counsel that is actually causing the problem in the first place, you would hope to be able to tell your client that cooler heads will prevail. Surely you would like to be able to tell your client that opposing counsel will get control of the situation and put the matter back on track, right?  Too often, the answer is no.  Why is this the case?  Sometimes, especially early on, counsel will take their client at face value, without seeking proof or verification.  That is to be expected to some degree though a better practice might be to get more information before going off half-cocked.  But more often than not, that is not the reason at all.  In fact, sadly there are too many practitioners out there willing to do anything that the client wants, without consideration for how it impacts their client in the long run, or their personal reputation.  Don’t get me wrong, I am not suggesting that an attorney should not zealously advocate for their client’s position.  They have to – that is their ethical obligations.  But before furthering the crazy and/or throwing gasoline on the fire, is it not better practice to try and get a situation under control.  Does it really make sense to unprofessionally echo a client’s unfounded attacks to deflect a provable, documented factual account of that client’s misbehavior?  Does it really make sense to let a client take an action or file a certification that will hurt them in the long run?  Though, on the other hand, when a client asks why the other lawyer is doing something in furtherance or defense of the bad behavior or why they haven’t stopped it, I have to remind them that we have no idea what advice the other party was actually given.  Sometimes, it is as simple is that as long as the client is paying them, they will do anything that the client says, no matter if it is good for the client or not.

Again, don’t get me wrong.  There are bona fide disputes.  There are reasons that motions have to be filed.  There are reasons that things need to be litigated.  But there are things that have no business not being brought under control.  When the lawyer absurdly enflames things further and/or defends the indefensible, they become part of the problem instead of being part of the solution.  That is unfortunate for the parties, their children and the system.  More and more, it seems that there are too many practitioners that are all too willing to give credence to the unreasonable or out of control, as opposed to trying to put a case on the right track towards resolution.  That is unfortunate.

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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.

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There has been a lot of talk about the lack of preparedness for last week’s snow storm that left many people stranded in traffic for hours trying to get home.  While many have argued, perhaps rightly, that the storm turned out being much worse the forecast, at the end of the day, as with many other things in life, people focus on the end results.  In fact, my bet is that most of the people who were complaining when schools called an early dismissal the night before, when the forecast was for much less snow than actually fell, were the same people complaining about the ultimate outcome.

Divorce is very much the same way.  While you may not know exactly when the process may start, few people are really, deep down, surprised that it is actually happening because the warning signs are there, whether it is adultery, lack of intimacy, constant fighting, lack of communication, bad communication, lack of agreement regarding parenting, etc.  This reminds me of a story that a client told me many many years ago.  He and his wife were in marriage counseling for years and he ultimately decided to tell his wife that he intended on pursuing a divorce during a counseling session.  The wife responded with epic histrionics suggesting that she was shocked.  The therapist ultimately told her that she could express any number of emotions but surprise wasn’t one of them.

The point again is that divorce is seldom a surprise.  Moreover, you don’t really know how bad the storm is going to be until it happens.  Most people want an “amicable” divorce but seldom agree on what that actually means at the beginning.  Very often, emotion takes over and derails what should be an “easy”, legally speaking, divorce.  On the other hand, some matters that appear like they can be very complex resolve easily because one or both of the parties are sufficiently motivated to get a deal done.

And because the ultimate divorce is seldom a surprise, if you think that divorce is possibility, you can do two things.  One is to put your head in the sand and then be overwhelmed by the storm when it comes.  The other is to prepare for the storm, just in case.  What are the things you can do to prepare?  Here are some things you can do:

  1. Familiarize yourself with your finances – income, assets, liabilities, budget.  Perhaps prepare a balance sheet of your assets and liabilities and start putting together a budget of your historical spending.
  2. Familiarize yourself with your spouse’s income?  How are they paid?  Do they receive a base and a bonus? Is the bonus guaranteed?  Is there a target bonus? Is there deferred compensation – stock options, restricted stock, RSUs, REUs, and/or any of the other of the alphabet soup of other earned income?  Finding out if there what is vested or not, if there is a vesting scheduling, when are these things usually paid, where have they been historically deposited, do they automatically convert to cash or stock when they vest, etc.
  3. Familiarize yourself with your spouse’s benefits and perquisites, including health insurance, other insurances, retirement plans, and the like?  Is there are vehicle that the employer or your spouse’s business (if they are a business owner)?  And if they are a business owner, is there a business credit card?  What things does the business pay for?  If there is a business, is their cash?
  4. While you are doing all of the above, start assembling historical financial documents.  Five years of tax, income, bank, brokerage, retirement and credit card information is a good start but if there are other seemingly important documents in the house, on computer hard drives or online, secure copies of those, as well.  And after you go about doing that, don’t leave the documents lying around the house or in the trunk of your car where your spouse can take them.  Make copies and secure them off site.
  5. If you have assets that are premarital, received via a third party gift and/or inherited, it is your burden to prove to a court that those assets are exempt.  If you can prove exemption, then they are not divided in equitable distribution typically.  It should be of no surprise that when a divorce occurs, these documents disappear, as well.  Accordingly, if divorce is a possibility, secure these documents as well.
  6. If there are valuable items that may “disappear”, you may want to secure them – eg. putting jewelry in a safe deposit box.  You would not believe how many times a wife’s engagement ring (which is legally exempt in most cases), disappears on the occurrence of a divorce.
  7. If custody and/or parenting time could be an issue, familiarize yourself with your children’s teachers, doctors, friends, etc. both at present and in the past.  Think about who may be witnesses regarding your involvement with the children.
  8. Research potential therapists for both yourself and your children.  Even if they are not needed at the moment, once the storm comes, they may be a resource that you want to avail yourself of.
  9. Identify a solid support system.  I am not suggesting that you tell the world that your marriage may be coming to an end.  Rather, identify for yourself the people that you believe you can rely on when the storm comes.
  10. Have a consultation with a divorce lawyer – even if you are not ready to proceed.  For one, you will get some education about your rights and responsibilities.  Fear of the unknown often paralyzes people.  Moreover, based upon your specific facts and circumstances, the above list to help you get prepared in case of the storm may expand.

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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.

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I recently represented a client at mediation during which the parties were able to resolve virtually all of their issues, save for the Wife’s claim that the Husband should make a significant contribution to her counsel fees.

It was the Wife’s position that the Husband had run up her legal fees with multiple order violations, refusal to turn over discovery, and by taking totally unreasonable positions; moreover, since he made more money than her, he had a greater ability to pay her legal fees.

It was the Husband’s position that the Wife had run up his legal fees with her own unreasonable positions.  He also criticized her for choosing lawyers who are more expensive than those he chose to engage, arguing that he shouldn’t be held responsible for her choice to do so.

With this being a major impasse for the parties, it seems inevitable that a judge will decide the issue either in isolation or together with a trial on other unresolved aspects of their divorce.

Because the Family Court is a court of equity, a judge determining whether to award legal fees to one side has to consider the parties’ relative financial positions, including their respective incomes, assets, debts, support obligations, and other relevant financial circumstances.  The Court also must give due consideration to the question of whether one party acted unreasonably, or in bad faith, or violated court orders, or refused to produce discovery and therefore thwarted efficient resolution of the matter.  The Court Rule allows for consideration of legal fees already awarded by the Court, for whatever reason.  Perhaps there was a pendente lite contribution to legal fees for which the moneyed spouse should be credited.  Or, perhaps there is a history of court order violations for which fees were awarded as a form of sanction.  Whatever the reason, prior fee awards must be considered.

Ultimately, the question of whether one side must contribute to the legal fees of the other side is a question of fact, for which the Court must consider the following factors:

  1. The financial circumstances of the parties.  
  2. The abilities of the parties to pay their own fees or contribute to the fees of the other party.  
  3. The reasonableness and good faith of the positions advanced by the parties both during and prior to trial.
  4. The extent of the fees incurred by both parties.
  5. Any fees previously awarded.
  6. The amount of fees previously paid to counsel by each party.
  7. The results obtained.
  8. The degree to which fees were incurred to enforce existing orders or compel discovery.
  9. Any other factor bearing on the fairness of an award.

But here’s the rub.  Just like any other question of fact, the Court must make findings based on evidence.  In other words, there must be a trial or at least a lengthy written submission including evidence produced as exhibits.  As parties, you have to decide:  are you willing to incur the fees to try the issue, or is the amount in controversy going to exceed the fees you would spend to have the judge decide?

And, importantly, what you may view as a clear cut bad faith action or unreasonable position taken by your adversary, the Court may not be so inclined to think is all that bad.  Submitting the issue of counsel fees for a judge to decide is most definitely a gamble, and like any other wager, you should assess the odds, cost-benefit, and the possible outcomes before making the decision to fight the issue to the bitter end.


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.

All Hallow’s Eve is upon us.  All month long, I have watched my favorite Halloween movies (Hocus Pocus, anyone?), visited haunted houses, carved my Jack-O-Lantern, and engaged in all the usual Halloween festivities.  But it occurred to me:  the scariest thing that many of my clients will go through in their lives is their divorce.  And there’s a reason why the ghosts, ghouls, zombies, witches, and hobgoblins of Halloween are trotted out each year to scare us – that feeling of being up against soullessness and inhumanity is terrifying.  And it’s how many of my clients feel about the people they are dealing with through their divorce process, whether it be their ex and/or his/her attorney, a mediator, or even a judge.

Here’s what it can be like:

Zombies Abound:  It can feel like everyone you are dealing with is a soulless zombie – even your spouse.  Suddenly, your spouse may act with no emotion toward you and will forget like the past years of your life together never happened.  For example, according to him or her, you’re not the loving parent to the kids that you know you always were.  His or her attorney will treat you with no emotion at all, acting at the direction of your spouse.

Likewise, the judges, experts, and mediators – whether on your side or not – have a non-emotional role to play.  They won’t necessarily care about the personal issues that are important to you.  They will look at your case in an agnostic, non-emotional way.

Witches Cast Their Spells:  Sometimes, it might feel like there’s a hex upon you and you just can’t win.  Or, it may feel like no matter how untrue or manipulative your spouse’s claims are, the judge or the mediator believe him or her, as if (s)he’s cast a spell over them.  No matter the situation, it may sometimes feel like you have no control or that everything is going your spouse’s way, for no discernible reason.

Vampires Suck Your Blood:  Maybe this is a little too “on the nose.”  While your lawyers aren’t going to be doing unnecessary work, divorces get expensive.  If you are the “monied spouse,” you may be paying for not only your own legal fees, but those of your husband or wife – and not only for attorneys, but perhaps also for various experts, or a mediator/arbitrator.  All while continuing to support the family during the divorce.

Frankenstein Lives:  I often use the term “Frankenstein” when referring to an agreement of any kind that has been drafted, then revised, revised again, and revised some more.  It often becomes a mishmash of different thoughts that each party had at different points in the negotiation, and when taken together, makes little sense as a whole.  This is NOT what you want the ultimate written agreement (or any interim agreements) to be.

So, how do you keep your divorce from becoming a Halloween-style nightmare?  Here are some thoughts:

  • Hire a qualified, conscientious, attorney with a good reputation.
  • Listen  to that attorney.  After all, you hired him/her because (s)he is qualified, conscientious, and has a good reputation.
  • Take control of the story, and change it if you have to.  If you feel like nobody is listening to you, then whatever it is you are saying is not resonating.  For example, if you are claiming that your spouse should have less parenting time because your child has been returned to you from parenting time with bumps, scrapes, or bruises, and the judge is not moved by this information because he or she views them as typical for a child of that age…then maybe you need to try a different argument, if you have one.  Or, if you are arguing that you have tried and tried to find a new job after being fired from your old one, but just haven’t been able to find anything at your prior income level, then maybe you need to stop explaining and start showing the Court exactly what efforts you have made.
  • Keep the written agreement simple, and only make necessary revisions.  While every word in an agreement is important, trust your attorney to ensure that the agreement says what you want it to say.  Don’t over-complicate it just because you insist upon one word being in the agreement that is not there, and don’t give in to the feeling that the attorney on the other side is trying to “trick” you with revisions.  That’s why you hired a lawyer.  In the end, you want an agreement that is easily understood by a third party who knows nothing about your case, because if an issue comes up in the future, you may be assigned a judge who is just that.

 

 

Last week, I blogged about whether you should settle your retirement alimony case and the ingredients that might go into that decision. To be honest, this “why you should or should not settle” question is only the beginning of what you might be facing when you decide it is time to retire and terminate your alimony obligations. There is, of course, also the “where/when/how” of all of it. And that’s quite a nebulous concept if you’re only now beginning to think about your “whys” and whether or not you should even broach the topic. Below, I’ll give you a run-down of the possible scenarios that will at least address the “wheres” and “whens” of your journey.

In my experience, there are several possible ways in which alimony cases resolve: (1) Immediate settlement; (2) settlement following a motion; and (3) a full Court hearing wherein a judge makes a decision as to your continued alimony obligation. Examining each scenario will allow you to put the concept of “settlement” into the context of your particular situation.

(1)         Immediate Settlement: This is the path of least conflict and resistance if your spouse accepts your offer with an eye toward a termination of support. This will, more often than not, begin with a “feeler” letter to your former spouse. The letter may indicate that you are retiring, the date of your proposed retirement, provide some detail as to your financial circumstances, and ask if a termination of alimony would even be considered. Sometimes, the former spouses may negotiate directly with one another, with guidance from an experienced matrimonial attorney throughout.

If successful, this is the most cost-effective and low conflict resolution. The specifics of any settlement would be memorialized in an Agreement and simply filed with the Court, at which point, it would become an enforceable document.

But don’t be mistaken. This path is not for everyone. If you went through a very high conflict divorce, or know you’re dealing with an unreasonable ex-spouse, you may want to skip this step entirely. In the alternative, you may write a letter and the concept of termination may be rejected immediately.

If settlement at this early stage is not successful for whatever reason, you may decide to pursue litigation. That would bring us to scenarios 2 & 3, described below.

(2)         Filing a Motion: To provide some background, when someone paying alimony experiences a change in circumstances (including retirement, other reduction in income, or they believe their spouse is cohabiting etc.), you file what is known as a “Motion”, which is a formal application to the Court. You would be required to submit your current Case Information Statement, Case Information Statement from the time of your divorce, tax returns and a narrative of events leading up to your motion and describing your circumstances along with the motion.

You further file a legal brief describing the case law, including Lepis v. Lepis, which is the seminal support modification case in the state of New Jersey. Under Lepis, an alimony payor is required to file a Motion and establish what is known as a prima facie change in circumstances. A prima facie showing is simply an initial showing (on its face) that demonstrates that circumstances have permanently and significantly changed such that alimony may ultimately be modified.

Several weeks later, you would proceed to Court. This is a formal court proceeding, with oral argument from counsel, but not testimony of the parties, no formal introduction of evidence, etc. In other words, it is not at the point where the Court would conduct a full trial yet based on what has been submitted.

The Court would then review everything and determine if you meet the burden of a prima facie showing. The Court will then move you past what we call “Lepis 1”, or the initial prima facie showing, and enter an order as to whether you should move to a “Lepis 2” analysis – i.e. whether the change is substantial, continuing and permanent. As part of this analysis, the Court may also consider whether there is sufficient reason to award counsel fees to either party in connection with the motion. Because a supported spouse’s financial circumstances may be more precarious than yours, the Court may be inclined to grant counsel fees to equalize the playing field or to provide her an advance for litigation.

During the discovery phase, you are permitted to do a full examination of the other party’s finances to try and substantiate your claim. This includes written discovery, depositions, subpoenas, etc.

Typically following or during discovery and related proceedings the matter may settle. The parties have exchanged the majority of their discovery and the payee spouse, at some point, realizes alimony will end and that some concessions will need to be made. At that point, the parties will come to the table, make a settlement offer which is negotiated or reach a resolution through mediation (sometimes the Court will order the parties to go to mediation).

(3)         Court Hearing:  The matter can sometimes move toward a more contentious conclusion via a court hearing. In that regard, if all possibilities for settlement are expended and the parties have passed the discovery phase, the matter proceeds to a hearing, and the Court will hear testimony, consider evidence and make a determination based on everything before it. It is akin to a trial.

Keep in mind that neither party is obligated to agree to an out of court settlement. But as you can see, settlement at the early stages of the games provides finality without having to subject yourself to the time and effort of full-blown litigation. You also would avoid the counsel fees that go in to the discovery and litigation phases. Of course, having counsel on your side with experience in retirement alimony case will help you reach a conclusion on your terms.

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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

There has been much ado about the new alimony statute. Obligors believe they are now in the driver’s seat when it comes to disposing of their alimony obligations. After all, the statute sends a message that alimony should at least be modified upon reaching full retirement age. Doesn’t it?

On the other hand, recipients believe that the nuances within the new statute provide them with a leg-up in terms of maintaining their alimony awards “as is”. After all, the statute provides that both parties should have been able to save for retirement in the years since the divorce. Doesn’t it?

The truth is, both the obligor and the recipient are correct. The new statute does not provide any bright line rule as to what a court must do when the obligor retires. It provides the Court, instead, with factors to consider and weigh when an obligor brings a retirement application.

It helps to think of your retirement case as if there is an imaginary chef baking a cake. The ingredients and proportions will inevitably change your end result. Likewise, every case has different ingredients and produces a different result. Of course, the chef, i.e. the judge, will also bring certain ideas into the case, that could change the result one way or another depending on the “ingredients” the litigants bring before the Court.

So that brings me to my question: should you settle your retirement case? In a word, maybe.

When I become involved in a retirement case, I tell obligors and recipients alike to think of their matter as a business transaction. Typically, most of the hurt that lingered post-divorce has dissipated. Maybe, the parties have moved on with their personal lives. Most people are ready to engage in a pure cost-benefit analysis to determine if settlement is right for them.

In order to do that in a retirement case, although a bit fatalistic, it’s important to consider the health and life-span of the obligor and recipient. For example, if a retirement application is brought when both parties are 80, a settlement would look quite different than an application brought at age 65.

It’s also important to consider the parties’ respective assets so that a lump-sum buyout can be considered and discussed.

Sometimes it bears repeating that it’s important to remember that it probably does not make sense to spend more money litigating a case in Court than you would have continuing to pay or receive alimony. Because, at that end of the day, even if you believe that you have the best ingredients and proportions, you don’t want to burn the house to the ground just to see if you can get the perfect cake in the end.

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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