Morris County DIvorce Attorneys

What rights do people have to an equitable distribution of assets stemming from a period prior to the marriage itself?  If there is no right to equitable distribution under those circumstances, then what rights exist and what remedies can be implemented to protect those rights?  In Thieme v. Aucoin-Thieme, a post-Judgment dispute involving several interesting issues including the equitable distribution of marital assets, distribution of assets pursuant to equitable principles stemming from a pre-marital cohabitation period, and the remedy of a constructive trust in connection with an ex-husband’s receipt of a bonus, the Supreme Court of New Jersey primarily held that:

  1. said bonus received by the ex-husband (Michael) was subject to equitable distribution to the extent it was earned during the parties’ marriage; and
  2. the matter’s “extraordinary circumstances” merited imposition of a constructive trust to protect the ex-wife’s (Bernice) claim of unjust enrichment and request for a portion of the bonus earned during the parties’ pre-marital cohabitation period.

Before even getting into the details of what happened, what is, perhaps, most interesting about this matter is not the very specific facts and circumstances at issue and how such circumstances led to an understandably fair result but, rather, how this case addresses the sort of equitable claims that may arise in connection with a palimony claim that were kept alive in Maeker v. Ross.  While the 2010 amendment to the statute of frauds requires that all post-amendment palimony agreements be in writing, this case also provides a window to argue around the amendment in certain cases if no writing exists – in other words, even without a written palimony agreement for a post-amendment case, the equitable arguments discussed in Maeker can still be made to procure relief.  The case certainly is not limited to that sort of analysis, and, in because of the unique circumstances at issue it even seems to overcome prior case law suggesting that the rights of cohabitants come to an end once the marriage occurs.  With that being said, let’s take a look into what happened…

Here are the unique facts you should know:

  • Michael and Bernice cohabited for eight years and were then married for a brief time.
  • During the cohabitation period and marriage, Michael was an employee of a company called IBG.  He had no ownership interest in IBG, but the company’s principals made a written commitment to Michael that IBG would compensate him for his contributions to the company if it sold.  A written Statement of Understanding was executed, and Bernice’s knowledge as to same was the subject of dispute at the subject post-Judgment trial.
  • Based on that commitment, Michael and Bernice “made personal and financial decisions” with the expectation of such future compensation including, but not limited to, Michael working and traveling extensively for the company, Bernice foregoing employment to devote her time to the parties’ child, and the parties purchasing a new home.
  • The parties divorced and the resulting settlement agreement distributed their assets.
  • During the divorce negotiations, the parties discussed Michael’s potential receipt of deferred compensation or some form of ownership stake in the company, with Michael representing that it “may never happen,” and that he did not anticipate a “big cash payment.”  He further indicated to Bernice that they could revisit the issue in the future should something transpire with the company.
  • Three months after the divorce concluded, IBG was sold and paid Michael $2.25 million (described as a “closing bonus”) for his contributions to the company.  The bonus was paid in accordance with the earlier Statement of Understanding and was paid “to show our appreciation for [Michael’s] contributions in helping [IBG] grow into the successful organization that it is today.”  During a deposition, a company representative testified that the bonus was based on Michael’s contribution to the company over thirteen years and that Michael did not know about the sale before its completion.
  • Bernice first learned of the bonus payment when Michael deposited the money into a bank account that, unknown to Michael, remained a joint account despite the divorce.  Bernice, without notice to Michael, withdrew the funds from the account.
  • Bernice then filed an application for a share of the closing bonus.
  • The trial held that Bernice was entitled to distribution of the bonus, but only that portion stemming from Michael’s work during the marriage.  The Appellate Division affirmed the trial court.

In affirming in part and reversing in part, the Supreme Court, in a decision authored by Justice Anne Patterson, held as follows:

  • It would contravene New Jersey’s equitable distribution statute to find that the portion of the bonus earned prior to the marriage was a marital asset subject to distribution.  As a result, the Court held that the trial court properly allocated the pre-marital and marital periods in determining what portion of the bonus was subject to equitable distribution.  While arguments can be made that this component of the trial court’s decision should not have been upheld based on how the marital portion of the bonus was calculated, that is not the primary focus of the case or this blog post.
  • As Justice Patterson noted, however, the story was not over.  As for that portion of the bonus earned during the parties’ cohabitation period, the Court addressed whether Bernice had made a claim of unjust enrichment.  Addressing a claim for unjust enrichment and its related remedies, the Court provided:

To prove a claim for unjust enrichment, a party must demonstrate that the opposing party ‘received a benefit and that retention of that benefit without payment would be unjust.’

  • Bernice would also have to show that she “expected remuneration” from Michael at the time she “performed or conferred a benefit” on Michael and that “the failure remuneration” enriched Michael “beyond [his] contractual rights”.
  • In the event of unjust enrichment, a court may impose the remedy of a constructive trust to prevent such enrichment.  Legally speaking, a constructive trust is “the formula through which the conscience of equity finds expression.  When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.”  More generally, such a trust is a remedy designed to protect a party harmed by another party’s receipt or retention of property procured through unjust enrichment or some other wrongful means (fraud, mistake, undue influence, and the like).
  • Relying on its prior decision in Carr v. Carr, wherein the trial court equitably imposed a constructive trust awarding a wife a share of the marital assets controlled by the husband’s estate where the husband died during the divorce proceedings, the Court here held:

As the evidence presented at trial made clear, the prospect that [Michael] would be generously compensated was a significant factor in the parties’ personal and financial planning from the early stages of their relationship.  [Michael] and [Bernice] each relied on the expectation of deferred compensation if IBG were sold as they made important decisions for themselves and their family.

The parties’ shared anticipation that [Michael] would be paid deferred compensation was more than wishful thinking.  Given IBG’s written commitment to [Michael], and its owners’ genuine desire to reward their valued employee, both parties had reason to anticipate a significant payment in the event of a sale.

. . .

[I]t is clear that on multiple occasions [Michael] advised [Bernice] about his expectation that any sale of IBG could generate a substantial financial reward for their family.

. . .

[I]BG’s commitment to reward him was an important consideration in the decisions made by the parties throughout their cohabitation and marriage . . . In short, as they planned their finances and personal lives, [Michael] and [Bernice] anticipated that they might someday share in the proceeds of the company’s sale.

During the parties’ eight years of cohabitation, and for most of their brief marriage, [Bernice] undertook significant efforts to support [Michael’s] challenging career.

. . .

Indeed, [Michael] himself recognized that [Bernice’s] contributions to their family should be rewarded.

. . .

Accordingly, the record supports the conclusion that [Bernice’s] decision not to seek further education and employment was made, at least in part, in reliance on [Michael’s] financial commitment to her.

As family law practitioners, Thieme v. Aucoin-Thieme provides guidance as to how to not only bring an equitable claim stemming from a period when parties were not married, but also the sort of appropriate remedy that can be imposed in the event of a viable claim.  In a way, despite its specific factual scenario, it also opens the door to creative lawyering as to when these types of equitable claims could come into play.  Especially in the context of a palimony matter where other related equitable claims are raised, there is, perhaps, more opportunity to overcome an adverse party’s argument that all of the equitable claims are simply palimony claims dressed in different clothes.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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As a matrimonial litigant, you never want to feel that your lawyer does not know how best to take you through the divorce or post-divorce process.  After spending substantial sums of money on an advocate to aid you through a difficult and emotional process, let’s just say that “the blind leading the blind” is not the vibe that you want to be left walking away with.

Unfortunately, however, it happens way too often and I cannot tell you how many times I have had consults with potential clients during which I am told about how disappointed he or she was with prior counsel.  I have had several recent cases where I am left baffled and scratching my head at the inability of a matter to move forward to a trial or settlement – not because of difficult parties or issues of complicated substance, but, rather, a lawyer on the other side who simply does not seem to know what he or she is doing.

The experiences to which I allude are all the more reason to heed the following points when selecting your divorce lawyer:

  • Does the lawyer practice exclusively in the area of matrimonial law? You want a lawyer who knows the law, right?  You also want a lawyer who knows how the law has been applied, how it fits to the facts of your case, and how and when it may be changing.  While no lawyer is going to concede to you that he or she does not know the law, or that acting on your behalf will be a new experience, always do your due diligence before meeting with the attorney to see what you are really dealing with.  Aside from discussing with your referral source, perhaps review the attorney’s online profile to see what articles he or she has written, or what presentations he or she has given on family law topics.
  • Is your lawyer familiar with the judges, lawyers, mediators and experts who may be involved in your matter? This point coincides with the first point.  A lawyer who is well versed in or only practices in the area of family law will more likely be familiar with the people you will come across in the course of your matter.  Knowing how your spouse’s lawyer operates, knowing which mediator may be good or bad for your case, and knowing which expert can best address your financial or custodial needs is of great importance in properly presenting and proceeding in your case.
  • Do you feel comfortable in communicating with your advocate about the law and the facts of your case? You are going to get to know your lawyer very well.  You want to be able to confide in that person all of the good and the bad that may have happened during your marriage, as well as anything that may impact upon your divorce proceeding.  Providing your lawyer with such information and allowing him or her to best address such issues is one of the reasons why you retained that lawyer in the first place.
  • Do you strategize with your lawyer in a way that addresses many different potential approaches while also taking litigation costs into consideration? There are many, many…many different types of divorce lawyers.  There are lawyers who prefer the path of least resistance to get you to a resolution, lawyers who are always aggressive, and so many others in between.  The lawyer you retain should fit your goals and motivations of what you want or believe your divorce matter should be.
  • Is your lawyer responsive to your needs? Responsiveness is one of the issues that I hear about most often from clients who have had prior counsel.  You want to ensure that your attorney gets back to you in a reasonable time to address any issues that you may have.

These are just a few of the critical points that you should consider in retaining matrimonial counsel.  Every lawyer is different, as is every client.  Finding the right match for you is not a decision to be taken lightly, and should be based on a consideration of several factors.  Your attorney is someone who you are going to confide in more than most other people in your life, including, on occasion, your family and friends.  Trust and comfort in your lawyer’s ability to advocate on your behalf is a critical, if not the most critical decision that you may make during the entire divorce process.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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On December 5, 2016, an extremely interesting reported (precedential) opinion was released by the Appellate Division in the matter of J.S. v. D.S.  The opinion was remarkable for two reasons, one procedural and one substantive.  On the procedural side, what was interesting was that the Appellate Division proceeded to decide the case even though the matter was settled and the parties sought to have the appeal dismissed because the Court determined that “the interests of justice require a disposition of the appeal’s merits.”

44694685 - domestic violence abuse or aggression within marriage against partner wife or children

The substantively interesting part of the opinion was the holding that parties cannot consent to the entry of a domestic violence Final Restraining Order (“FRO”).  Rather, because of the far reaching implications of an FRO, a trial court must make the requisite finding that an act of domestic violence has occurred.

In this case, after the entry of a Temporary Restraining Order (“TRO”), at the date of the FRO hearing, the parties reached an agreement which called for defendant’s consent to an FRO in exchange for plaintiff’s consent to defendant’s exclusive possession of the marital home pending further order in the matrimonial proceedings.  Rather than question the plaintiff about the act of domestic violence or the defendant to see if there was agreement that the act had occurred, but rather only asked the usual questions regarding the voluntariness of the agreement.  Satisfied that the agreement was voluntary, an FRO was entered.  The defendant then filed a timely appeal asserting that the FRO was void ab initio (i.e. from the outset) because the judge mistakenly issued the FRO without taking testimony about the allegations, without finding an act of domestic violence occurred, and without determining plaintiff required protection from defendant.

Apparently, while the appeal was pending, the same or similar agreement to continue the FRO was reached again and the parties tried to dismiss the appeal but the Appellate Division would not allow it finding:

… In light of the strong public policies underlying the Act, we choose to exercise our discretion to consider the appeal on its merits. We have an obligation to ensure the FRO was legitimately entered and should not permit its wrongful perpetuation simply because it may have become a useful chip in the settlement of the parties’ matrimonial disputes.

Having rejected the parties’ request that we dismiss the appeal and having resolved to consider the merits of this appeal, we agree with what defendant previously argued: the FRO can no longer stand. A domestic violence final restraining order may not be entered by consent or without a factual foundation. See Franklin v. Sloskey, 385 N.J. Super. 534, 540-41 (App. Div. 2006).  Because the trial judge mistakenly failed to elicit a factual foundation, failed to find domestic violence occurred, and failed to determine whether plaintiff required protection as a result of defendant’s conduct, we vacate the FRO.

The matter was then remanded for an FRO hearing.

Interestingly, in a footnote, the Appellate Division provided a road map, as it were, for parties that want to consent to an FRO, when it stated:

We do not mean to suggest every domestic violence action must be tried to a conclusion or that a defendant may not accede to relief sought by a plaintiff. Nothing prevents a defendant from declining to defend against such an action or from acknowledging under oath the commission of an act of domestic violence. The consequences, however, are too serious to permit entry of an FRO merely by consent. Before entering an FRO, a court must ensure there exists an adequate factual foundation and that the defendant understands the consequences of the decision not to contest the matter. A court must also find that the FRO is necessary “to protect the plaintiff from an immediate danger or to prevent further abuse.” Silver v. Silver, 387 N.J. Super. 112, 127 (App. Div. 2006). (Emphasis added).

The take away from this case is that FROs are serious matters and that care must be taken if they are going to be used as bargaining chips to settle issues on either an interim or final basis.

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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.

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“Justice delayed is justice denied.”  I am sure that many have heard this old legal maxim.  Though the original source is unclear, what is not unclear is that it essentially means that when a legal remedy is available, but not provided in a timely fashion, it is like having no remedy, at all.

38413886 - words justice delayed is justice denied

When I speak to other attorneys in court, at mediations or at bar events, one of the things discussed most is the delay in getting matters decided.  While the discussion is sometimes about a trial decision, most of the time we are talking about routine motion practice both during active divorce cases and during post judgment cases.  For a trial, especially a long one, it is more understandable.  Very often the attorneys want to review the transcripts and otherwise have a month or more from the close of the evidence to submit written summations.  Moreover, in addition to their jam packed daily dockets, the judge needs time to review the evidence and prepare a thoughtful and comprehensive (hopefully) written or oral decision.  That said, I have been in involved in cases where it has taken more than a year from the end of a trial to get a decision.  I have heard, anecdotally, of people getting trial decisions more than 2 years after the close of the evidence.  In addition, several years ago, we heard that one judge was not permitted to start any more trials due to the number of completed trials that were not decided.  A moment ago I said that “hopefully” you then get a comprehensive decision, but very often, it seems that decisions are either incomplete, or certain findings of fact simply wrong, most likely due to the passage of time between when the testimony heard and evidence presented, and the completion of the opinion.  During this time, peoples lives remain on hold and temporary support orders which might be too high or too low remain in effect.  In the off chance that they are adjusted by the trial decision, that could create a huge arrears or huge credit to a party.  If they are not corrected, then one party had to live with a potentially unfair result for a very long time.

While there are delays in receiving trial decisions, while more understandable, this impacts fewer litigants than delays in receiving motion decisions because a very small percentage of cases are actually tried to conclusion.  On the other hand, motions are heard every Friday or every other Friday depending on the county and the judge.  Now, the rule regarding motions in family part cases, specifically R. 5:4-4(f), clearly states:

(f) Orders on Family Part Motions. Absent good cause to the contrary, a written order shall be entered at the conclusion of each motion hearing.

Unfortunately, all too often, this Court Rule is honored in the breach and the decision on the motion is delayed days, weeks, months or even years.  Yes, I said YEARS.  I have one pre-judgment motion that was filed nearly 2 years ago, in large part regarding the payment of college for the first child.  A second child is now in college and there is still no decision.  The matter, which was supposed to be tried more than a year ago, has basically been shut down for 22 months and counting.  I have another motion that is pending for more than 15 months.  We have others which have been pending for several months, including ones that are seeking either financial restraints or restraints related to children which are being flaunted while no decision is made.  I hear similar stories from many or our colleagues and adversaries.

Note too that these delays are on top of the delays in getting the motion heard in the first place.  It is not unusual for a motion to be delayed based upon an adversaries request for an adjournment.  Since first adjournment requests are almost universally granted, even when there is time of the essence on certain issues, it is most often fruitless to oppose them – though sometimes you have to.  Very often, motions are administratively adjourned because the judge’s motion calendar for the selected day is full or the judge is otherwise unavailable.  When that adjournment is added to the first adjournment request, which at that point possibly shouldn’t be granted but is granted anyway, then the motion is heard about one month after the original return date and about 2 months after it was filed.  Some judges, however, despite demanding that all papers be filed as if the motion is going to be heard, do not schedule oral argument on the motion for weeks or months.  That is then compounded when that same judge doesn’t decide the motion on the day of argument as required by the Court Rules.

What is the outcome of this delay?  For a party who is cut off financially by their spouse, they could go weeks, if not months, with little to no money at all.  When it is an enforcement motion, the violator is often empowered by the lack of a decision and doubles down in his or her violation of court Orders because they feel impervious to sanctions.  When restraints are sought and adjudication is delayed, the risk of a new status quo being improperly created or parties or children harmed because you cannot “put the genie back into the bottle”, or the money is gone, or worse yet, a child is physically or emotionally hurt, are real results of justice delayed.

The other outcome is that the harmed litigant loses faith in the judicial system. They have not been treated fairly by the delay and feel that they will never receive a fair result from the judge that they believe does not care about their case – or worse yet, they feel that the judge is harming their case if not their children and/or their life. Sometimes this results in them losing faith in their lawyers too.  Sometimes it makes cases harder to settle because decisions that could have nipped issues in the bud or shaped a fair resolution of the case do not happen or come too late and then the fight is how to fix the mess created by the delay or counsel fees created by it.  And who do you complain to?  Do you risk a negative result on the pending motion or future appearances before that judge by writing to the Presiding or Assignment Judge?

The only ones who seem to benefit from this delay are mediators or arbitrators, who the parties now have to pay because they cannot get timely relief from the court.  There is something very unfair about that, though this happens every day.  Clients suffer and the system as a whole suffers as a result.

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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.

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Every family uses its money in different ways. Some families spend every cent they have on everything imaginable, others save every last possible cent for the proverbial “rainy day”, and many families fall somewhere in between. Once a marriage comes to an end, however, will both spouses be able to continue spending or saving in the same way they did during the marriage as part of the lifestyle lived?

New Jersey case law has long held that a trial court may consider a savings component as part of an alimony award to protect a dependent spouse from the potential future loss of income by allowing her to accumulate a post-Judgment safety net. One question that has never been answered until now, however, is whether a history of regular savings during the marriage as part of the marital lifestyle should be considered in setting an initial alimony award even when there is no need to protect the dependent spouse.

According to the Appellate Division in the newly published, precedential decision of Lombardi v. Lombardi, the answer is a resounding yes.

Kid counting money
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FACTS TO KNOW:

During the parties’ marriage, savings was the largest component of the parties’ lifestyle, but the trial judge rejected inclusion of a savings component when awarding alimony because the payee-wife did not need such funds to protect herself from a potential future loss of alimony. The parties jointly decided to live a comfortable lifestyle during which they saved approximately $70,000 per month, and budgeted most of the earned collective income so that the parties would have no worries about finances when paying for college and entering into retirement. In fact, the parties budgeted so efficiently that the payor-husband could retire at age 45 with an accumulation of $5 million in assets that could generate sufficient income to help fulfill the family’s lifestyle.

THE TRIAL COURT’S DECISION:

At trial, the wife indicated that she needed approximately $16,000 per month for herself and the three children to live a standard of living comparable to that lived during the marriage, exclusive of a savings component that she requested in the monthly amount of $30,000. She also sought $5,000 in monthly child support and for the husband to be responsible for all child-related supplemental expenses.

The trial judge acknowledged the existence of savings component during the marriage, but awarded a monthly permanent alimony payment of $7,600 based on a finding that the parties lived an undisputed “modest middle-class lifestyle” with a monthly budget of $14,516 (excluding savings). The $7,600 was calculated as sufficient to cover the shortfall in the wife’s budget after accounting for child support, monthly after-tax income estimated she could generate by investment of her share of equitable distribution (each party was receiving half of the roughly $5.5 million estate), and her after tax net income from part-time work.

Based on each party’s anticipated share of equitable distribution, the trial court found that each party had a significant opportunity to save and invest, even though the husband’s substantial income provided him with a far greater opportunity than the wife. Specifically, the court noted that the parties monthly average savings of approximately $87,000 was a “component of lifestyle” (whether for an early retirement or to enhance the parties’ economic security), but should be included in an alimony award “only [ ] to the extent it was necessary to ensure a dependent spouse’s economic security in the face of a later modification or cessation of support, which were not issues here.”

Even without a higher amount of alimony (inclusive of a savings component) the court noted that the wife could save (albeit at a lesser extent than that seen during the marriage) when considering:

  1. some “overlap” in the presented alimony and child support budgets;
  2. the wife’s right to claim the children as exemptions for tax purposes; and
  3. her “ability to work and retain earnings to use for savings . . . because of the maturation of the children . . . such that she would have more time to spend working if she chose to do so.”

The court also noted the wife would have no obligation to pay for college or any unreimbursed medical expense, the cost of extracurricular activities was covered by the “above guidelines” child support award, and if she wanted to work more she would be “protected against any claim that her alimony should be reduced or that she has lesser need,” and the alimony would likely never be reduced because of the husband’s income and assets. Summarizing its determination to exclude a savings component, the court held:

The [c]ourt finds that a permissible savings component which it elected not to do or not to include was because there are potentials for [plaintiff] to accumulate, earn, and otherwise be protected from a reduction by virtue of, one, reasons having to do with the current budget and the room in the budget to still save, the ability to work more without worry about a reduction in alimony, the investment opportunity that might enhance the return on the over $2 million that she will receive, the life insurance to protect against the death of the defendant, and the likelihood of a continued appreciation and increase in assets and earnings that . . . would protect her against any arbitrary . . . reduction in alimony based upon early retirement or otherwise.

The wife’s appeal followed.

THE APPELLATE DIVISION WEIGHS IN:

On appeal, the Appellate Division agreed with the wife’s position that the subject award allowed only the husband to maintain the standard of living experienced during the marriage, and that required Case Information Statement form, on its face, suggests that a savings component is a “fundamental element of the family lifestyle” because the savings category was specifically added to the budget portion of the form after its initial issuance.

Reviewing seminal New Jersey alimony law, the Court reminded that each party is entitled post-divorce to live a lifestyle reasonably comparable to that lived during the marriage, with neither party having a greater entitlement to do so than the other (as codified in the 2014 statutory amendments to the alimony law). As a result, the alimony award designed for the supported spouse to achieve such lifestyle that is ultimately the “touchstone for the initial alimony award.”

While noting how case law has long recognized that a savings component in an alimony award can protect a dependent spouse against the potential future termination of alimony, or to provide for future events such as retirement, the Court provided:

The most “appropriate case” in which to include a savings component is where the parties’ lifestyle included regular savings. Because it is the manner in which the parties use their income that is determinative when establishing a marital lifestyle, see Weishaus, supra, 180 N.J. at 145, there is no demonstrable difference between one family’s habitual use of its income to fund savings and another family’s use of its income to regularly purchase luxury cars or enjoy extravagant vacations. The use of family income for either purpose over the course of a long-term marriage requires the court to consider how the money is spent in determining the parties’ lifestyle, regardless of whether it was saved or spent on expensive purchases. The fact that the payment of the support ultimately is protected by life insurance or other financial tools, does not make the consideration of the savings component any less appropriate.

Rejecting the husband’s argument that the court appropriately considering savings through its equitable distribution award, the Appellate Division held:

The argument runs afoul of the rule that “equitable distribution determinations are intended to be in addition to, and not as substitutes for, alimony awards,” which are awarded to provide for the maintenance of the marital lifestyle post-dissolution. Steneken, supra, 183 N.J. at 299. Moreover, it is not equitable to require plaintiff to rely solely on the assets she received through equitable distribution to support the standard of living while defendant is not confronted with the same burden. As expressed under the alimony statute’s current version, the court must recognize that “neither party ha[s] a greater entitlement to that standard of living than the other.” N.J.S.A. 2A:34-23(b)(4).

In finding that its holding went beyond what most other jurisdictions provided regarding the savings component issue, the Court concluded:

We therefore hold that the Family Part must in its assessment of a marital lifestyle give due consideration to evidence of regular savings adhered to by the parties during the marriage, even if there is no concern about protecting an alimony award from future modification or cessation upon the death of the supporting spouse.

The issue of how to treat savings as part of the marital lifestyle under the type of circumstances present in Lombardi has long been discussed amongst family law attorneys without definitive judicial guidance.  Now that such guidance is here, this may not be the last we hear from the Lombardi family as perhaps the Supremes will ultimately weigh in.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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Perhaps Kurt Cobain knew when writing the song “All Apologies” that one day his daughter would be embroiled in a nasty divorce battle.  While the lyrics, “Married, Buried, Married, Buried”, may not sound uplifting, they are undeniably classic Nirvana.  Fans of the band would largely agree that the most well known live performance of the song was the acoustic version played during the band’s “Unplugged in New York”, which took place shortly before Cobain’s death.  Now it is the guitar used by Kurt during that performance which lies at the center of Frances Bean Cobain’s divorce from her husband.

nirvana

Specifically, Frances’s husband is in possession of the guitar – thought to be worth several million dollars – and refuses to return it to her while alleging that she gave it to him as a wedding present.  Not surprisingly, Frances denies ever giving it to him at the start of their short-term marriage, and is taking the position that he has no right to any money from her fortune (Kurt’s estate is valued at approximately $450 million).

With that said, and straight from Seattle to the swamps of New Jersey, how would a court here potentially address the issue?

I Think I’m Dumb, or Maybe Just Happy:  Well, for starters, is there a prenup protecting Frances’s rights and interests in Kurt’s estate and, as part of the estate, the subject guitar?  I don’t know the answer, but even if Frances was blinded by her love for her now soon to be ex-husband, she would hopefully be smart enough to have had some sort of agreement drafted and signed protecting her from the claim now being made (unlike Paul McCartney in his divorce from Heather Mills, for example).  Such agreements often have language addressing so-called separate property and whether separate property is exempt from equitable distribution.  Language regarding interspousal gifts is also common and can be crafted in a way to ensure that even if she did gift the guitar to him during the marriage, it could still remain separate property exempt from distribution.

And For This Gift, I Feel Blessed:  At the heart-shaped box of this matter is whether the guitar was an interspousal gift from Frances to husband during the marriage.  This is essentially what husband is claiming.  In New Jersey, an interspousal gift is subject to equitable distribution.  Husband can take the position that even if the guitar was originally a non-marital asset exempt from equitable distribution (for instance, as an inheritance or gift to Frances, or by agreement), it lost that exempt status and became marital property subject to distribution once she gifted it to him.  If proven, Frances loses the right to claim that the guitar is exempt from equitable distribution at the time of the divorce.  With a guitar worth several million dollars, husband may look at his share of the guitar as the proverbial meal ticket in a short-term marriage where his rights are likely otherwise limited.

Hey!  Wait!  I’ve Got a New Complaint:  To rebut husband’s claim and supporting evidence/testimony that Frances gifted him the guitar, Frances would have to establish that there never was any gift.  In other words, there was no intent by Frances to gift him the guitar – a fact that perhaps she could establish by testifying about how she told husband at the time, and/or at other times during the marriage, that it was her/her family’s guitar, rather than husband’s guitar.  Maybe husband simply took it from the home and is now fabricating the entire story.  Credibility and the surrounding factual circumstances will play a large part in the final result.  Also, even if the guitar was ultimately deemed to be an interspousal gift, Frances may be aided in the actual allocation of the asset by New Jersey’s equitable distribution factors, especially that regarding who brought the subject property to the marriage.  Keeping the guitar in the Cobain family would seemingly be an important consideration for a family court judge, and may sway any determination regarding whether Frances could ever have intended it to be a gift.

It will be interesting to see how this matter unfolds and ultimately concludes.  Whether the litigant is Frances or anyone else similarly in her shoes, learning the law regarding gifts and equitable distribution may leave the litigant forever in debt to such priceless advice.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*image courtesy of google free images.

While we do not often, if ever, blog about decisions in the area of employment law, the Supreme Court of New Jersey earlier this week in the decision of Smith v. Millville Rescue Squad held that our state’s Law Against Discrimination precludes discrimination and retaliation against an employee based on “marital status.  The meaning of “marital status” was found to include not only being single or married, but also “employees who have declared that they will marry, have separated from their spouse, have initiated divorce proceedings, or have obtained a divorce”.

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The case involved an employee who was terminated from his employment after he told his supervisor that he was having an affair with a co-worker, he was separated from his wife (who was also a co-worker), and was about to commence divorce proceedings.  Notably, the supervisor’s response to learning of such information was that he could not promise it would not have an impact on the employee’s job, and he later indicated his belief that the divorce would be “ugly.”

Written documentation regarding the termination, however, referred only to a corporate restructuring and the employee’s allegedly poor performance.  Notably, the employee testified that during his term of employment he was never subjected to formal discipline, was promoted twice, and received annual raises.

The trial court granted employer’s motion for an involuntary dismissal and, in so doing, found that employee failed to present evidence that he was terminated because of his marital status.  In finding that management properly acted out of concern that the divorce would likely be contentious, the trial judge found that such action did not constitute discrimination pursuant to marital status under the NJ LAD.

The Appellate Division disagreed, finding that “marital status” included being separated and involved in a divorce proceeding.  The Supreme Court agreed.  In so holding, the High Court provided:

The LAD prohibits an employer from imposing conditions of employment that have no relationship to the tasks assigned to and expected of an employee.  It also prohibits an employer from resorting to stereotypes to discipline, block from advancement, or terminate an employee due to a life decision, such as deciding to marry or divorce.  The LAD does not bar an employer from making a legitimate business decision to discipline or terminate an employee whose personal life decisions, such as a marital separation or divorce, have disrupted the workplace or hindered the ability of the employee or others to do their job.  However, an employer may not assume, based on invidious stereotypes, that an employee will be disruptive or ineffective simply because of life decisions such as a marriage or divorce.

The decision makes substantive and practical sense in defining the term “marital status,” which is not defined in the terms of the LAD, itself.  Separately, as noted in a post on this case from our Employment Discrimination Report blog, employers may not rely upon any religious exception for this prohibition.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*image courtesy of google free images.

Family law practitioners know that in this area of practice, perhaps more so than in any other practice, hearsay statements are often an important part of motions brought before the trial court for every kind of relief imaginable.  A hearsay statement is a statement made outside of the court that is offered for the truth of the matter asserted.  Unless one of many exceptions apply, hearsay statements are inadmissible.  For example, if mom in her certification filed with a motion asking the court to address parenting time includes statements from the parties’ daughter that mom is asking the court to consider as truth, the daughter’s statements constitute inadmissible hearsay.  In other words, the court should not consider the daughter’s statements when rendering its decision.

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As we have frequently written, however, oftentimes anything goes in family law.  Hearsay statements are commonly no exception.  I have heard many times from Family Part trial judges that the rules of evidence will often be relaxed, including the hearsay rule, especially when issues of custody and parenting time are before the court to ensure that the best interests of the child are fulfilled.  It is for that reason why practitioners and litigants often put whatever they can before the trial court to convince the judge to rule in his or her favor.

In Arrowood v. DiBenedetto, a recently unpublished (not precedential) Appellate Division decision, the Court addressed the trial court’s rejection of various hearsay statements from the subject child provided by mom in denying mom’s motion to terminate overnight parenting time with dad because he continued to smoke in the child’s presence against doctor’s orders.  Addressing mom’s application, the Court noted:

What we glean from the record provided is defendant’s most recent motion relied on her daughter’s hearsay statements and a certification from [dad], the content of which is not before us. A trial court generally does not abuse its discretion by not relying on hearsay statements, because there is always a question about the exact content of such statements, especially when they are recounted by a party with an interest of the outcome of a decision. The law controlling the presentation of evidence in our courts excludes hearsay in numerous contexts. We certainly cannot conclude from the scant record before us that the trial court here abused its discretion by not imposing the drastic sanction of terminating parenting time based on hearsay.

Notably, however, the Court suggested that there still may not have been an abuse of discretion had the trial court considered the subject hearsay statements, especially since the matter involved the subject child’s health:

That is not to say we are insensitive to either defendant’s arguments or her frustration. Although she has not provided us with the transcripts or the statement of reasons for the court’s previous orders, at least one order appears to have been based on her firsthand observation. Notions of fairness and confidence in our system of justice often dictate that a court enforce its orders. That would appear to be especially so when a child’s health is at issue. But enforcement motions generally present competing versions of events and often require courts to balance profound competing interests. That is particularly so in family matters involving children and parental rights. That is also why Family Part judges are vested with broad discretion, and why we review their discretionary decisions with deference. Here, the record does not establish such an abuse of discretion.

So what is the takeaway here.  Sometimes the Rules of Evidence apply and sometimes they do not, although there is no specific rule indicating that the evidence rules should not always apply.  In practice, it depends on the factual circumstances, the litigants, the trial judge, and the like.  Especially when a child is at the center of the dispute, as opposed to more straightforward financial issues, a court is more likely to stretch its discretionary muscles to protect the child’s best interests above all else.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*image courtesy of freedigitalphotos.net

In many custody disputes, a primary area of concern is one parent’s ability to relocate with the children after the divorce is over.  Relocation requests have been characterized as often resulting in “heart-wrenching” decisions.  As we have previously discussed on this blog, the legal standard to be applied to a parent’s interstate removal application differs if the parent is the primary caretaker as compared to an equal/”shared” physical and legal custodian with the other parent.  The two standards are briefly explained below:

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Equal/”Shared” custodial parents:  If the parents “truly share both physical and legal custody,” then the moving parent must prove that the best interests of the children would be better served by residential custody being primarily vested with the relocating parent.

One primary custodial parent:  On the other hand, if one parent is the primary caretaker, that parent’s request to relocate with the children is governed by the two-prong Baures test – specifically, the moving party has to prove by a preponderance of the evidence that (1) there is a good faith reason for the move; and (2) the move will not be inimical to the children’s interests.  The Baures test is analyzed in the context of twelve (12) factors set forth in that case, and is more favorable to the primary custodian seeking relocation.  In fact, it is this favorable standard that often sees non-custodial parents claiming “de facto” equal custodial status in response to a primary custodian’s relocation motion so as to convince the trial judge to utilize the best interests standard.  As an aside, there exists pending legislation that would alter this favorable legal standard.

What happens, then, if there exists a so-called non-relocation agreement and a primary custodian seeks to relocate interstate?  The Appellate Division was faced with that issue in the newly published (precedential) decision of Taormina Bisbing v. Bisbing.  Here are the facts that you need to know:

  • The parties were married in 2005 and the children were born in 2006.  Both parties were highly-paid professional employees, with wife earning more than husband.
  • In early 2013, husband investigated job opportunities in Colorado and California.  The parties separated in August, 2013 and, in November, wife began a long distance relationship with a Utah resident who had children from a prior marriage.  The Utah resident owned a business in Idaho and had business interests requiring him to frequently travel to California and Louisiana.
  • On March 8, 2014, the parties entered into a marital settlement agreement wherein they agreed to joint legal custody, and that wife would have primary residential custody under the condition that she would not relocate outside of New Jersey.  The MSA also provided that dad would have “broad, reasonable and liberal timesharing” of the children – Father’s Day, his birthday, every other weekend and on one weeknight during the weeks when he did not have parenting time, every other Thanksgiving, Christmas Eve, Christmas Day, New Year’s Eve, New Year’s Day, and school breaks.  Each parent was entitled to attend all sporting events and activities regardless of which parent was scheduled to have parenting time.
  • As to relocation, the agreement provided:

The parties agree that each shall inform the other with respect to any change of residence concerning himself or herself or the said   minor Children for the period of time wherein any provision contained in this Agreement remains unfulfilled. The parties represent that they both will make every effort to remain in close proximity, within a fifteen (15) minute drive from the other. Neither party shall permanently relocate with the Children from the State of New Jersey without the prior written consent of the other. Neither parent shall relocate intrastate further than 20 miles from the other party. In the event either party relocates more than 20 miles from the other party, the parties agree to return to mediation to review the custody arrangement. In the event a job would necessitate a move, the parties agree to discuss this together and neither will make a unilateral decision. Neither party shall travel with the minor Children outside of the United States without the prior written consent of the other party.

The parties hereby acknowledge that the Children’s quality of life and style of life are provided equally by Husband and Wife.

The parties hereby acknowledge a direct causal connection between the frequency and duration of the Children’s contact with both parties and the quality of the relationship of the Children and each party.

The parties hereby acknowledge that any proposed move that relocates the Children any further away from either party may have a detrimental impact upon the frequency and duration of the contact between the Children and the non-moving party.

  • On April 16, 2014, a final judgment was entered that incorporated the terms of the settlement agreement.  Husband represented that, after the divorce, he was very involved in the children’s lives, coached their teams, took them to activities, and attended school events.
  • One month after the divorce, wife sent an email to husband telling him that, although she received no alimony, she was planning to leave her job on July 1, 2014 to be a full-time stay-at-home parent, which she did.
  • On January 8, 2015, wife called husband to tell him of her intention to get married to the Utah resident and relocate to Utah.  Wife asked for husband’s permission to relocate with the children.  Husband refused, indicating that she could move and leave the children with him.
  • On March 16, 2015, wife filed a motion to relocate with the children to Utah without the need for a plenary hearing.  The court granted the motion – without a hearing – so long as a visitation schedule could be established through mediation.
  • On July 14, 2015, after unsuccessful mediation, with only wife suggesting a parenting plan, the court issued a supplemental order establishing a parenting time and communication schedule using most of wife’s suggestions.  Eleven days later, wife and the children “left for a vacation to Utah.”  Three days thereafter, she permanently relocated with the children in Utah.

In reversing and remanding for a plenary hearing, the court found:

  1. The best interests of the child standard should be applied if wife was found to have negotiated the settlement agreement in bad faith.
  2. If no bad faith finding is made, the court is to consider whether wife proved a substantial unanticipated change in circumstances “warranting avoidance of the agreed-upon non-relocation provision and simultaneously necessitating a Baures analysis.”
  3. If the settlement agreement was deemed to have been negotiated in good faith, but wife fails to prove a substantial unanticipated change in circumstances, the court is to apply the above-referenced best interests of the child standard.
  4. In other words, wife could only receive the “benefit” of the Baures standard if wife was found to have negotiated in good faith and proved a substantial unanticipated change in circumstances.

Under such guidance, the Court distinguished from the notable prior trial court decision of Shea v. Shea,wherein the father accused the mother of of manipulating the Baures procedure by settling the divorce, and immediately thereafter filing for removal so as to reply upon the more favorable burden of proof.  Here, the Court critically found that husband was entitled to a hearing to prove whether wife manipulated the situation to obtain “favorable Baures removal procedures” that:

  1.  When wife entered into the agreement, she may not have definitely known of the “material facts and circumstances forming the good faith reason for the removal request” (i.e., moving to Utah to marry her boyfriend).
  2. The non-relocation provision did not exist in the earlier matter.

In so holding, the court found:

Similar to the situation in Shea, the close proximity between the parties’ agreement and [wife’s] plans to relocate provides evidence of suspicious circumstances requiring a plenary hearing.  If, after holding a hearing, the family court finds that [wife] negotiated in bad faith, it should then analyze the relocation request under a “best interests” analysis.

The non-relocation was to be considered even if wife is found to have negotiated in good faith, “without manipulative intent” premised on New Jersey’s strong public policy favoring agreements that resolve marital disputes.  In damning tone, the Court found:

Thus, [wife], in a written and voluntarily agreed-upon contract, specifically surrendered her “freedom to seek a better life” in another state while obtaining primary custody of the children, and was well aware of that agreement when she chose to remarry and move far away.

While the relocation language of the agreement considered new employment as a basis for moving, it did not mention remarriage, thereby leading the Court to suggest that testimony would reveal whether remarriage was a considered eventuality at the time of the agreement and, thus, not an unanticipated substantial change in circumstance.  The Court also noted that, if the Baures standard was to ultimately apply, the trial judge would be charged with analyzing the effect on the children of moving away from both parents’ extended families.

When I first read the facts, I was saddened, but not at all shocked at what seemed to be a clear manipulation of the prevailing legal standards discussed above.  I have been involved in many cases on both sides of the relocation argument, and have seen the devastation that can result.  A difficult situation becomes all the more tragic when it is clear that one party is not proceeding in good faith.  What wife seemingly did here is just as bad as the non-custodial parent who claims de facto equal custodial status just to have the best interests standard applied.  It is for these reasons, in part, why the pending legislation mentioned above makes sense in some form – to remove this sort of gamesmanship from the equation when children are involved and the relationships with one or both of their parents is potentially at stake.  The Appellate Division certainly got it right here with a just result.

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Robert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*Photo courtesy of Google free images.

Suffice it to say, the issue of cohabitation under the amended alimony statute has been a hot topic of late in New Jersey family law. With several recent notable seminars on the topic, and two recently issued Appellate Division decisions (one published and the other unpublished) addressing when the amended law applies, practitioners and potential litigants hungrily consume these new cases looking for any morsel of guidance on how the statutory language will work.

Back when the law originally passed, I wrote an article for the New Jersey Law Journal analyzing cohabitation law past, present and future. A year and a half later, I am not only unable to confirm how a trial judge would apply the new statute, but if the discussions from each of those recent seminars are any indication, different judges may and will likely apply the statute very differently.  In other words, some trial judges may favor applying the pre-amendment legal analysis, some may strictly apply the new statutory language, and some may even implement some sort of combination of the two.

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Thus, as a very strong introductory caveat – We have no idea how the new will be applied given what we have heard judges say about it, and the fact that there is no law to guide us.  Now, with that being said…

Just to briefly refresh, what did the old law say? Well, cohabitation was described by the Supreme Court of New Jersey as:

  • An “intimate,” “close and enduring” relationship that requires “more than a common residence” or mere sexual liaison. The relationship “bears the generic character of a family unit as a relatively permanent household,” is “serious and lasting,” and reflects the “stability, permanency and mutual interdependence” of a single household.
  • It involves conduct whereby “the couple has undertaken duties and privileges that are commonly associated with marriage.”

Indicia may include, but is not limited to, long-term intimate or romantic involvement; living together, intertwined finances such as joint bank accounts, shared living expenses and household chores, and recognition of the relationship in the couple’s social and family circle.  The so-called “economic benefits” test would come into play after the payor made an initial showing of cohabitation, at which time the court would determine if the third party contributed to the dependent spouse’s support, or if the third party resided in the dependent spouse’s home without contributing anything to household expenses.

Now what does the new law have to say? The law defines cohabitation as involving a “mutually supportive, intimate personal relationship in which a couple has undertaken duties and privileges that are commonly associated with marriage or civil union but does not necessarily maintain a single common household.” A trial judge presented with a cohabitation allegation is required to consider: (1) Intertwined finances such as joint bank accounts and other joint holdings or liabilities; (2) Sharing or joint responsibility for living expenses; (3) Recognition of the relationship in the couple’s social and family circle; (4) Living together, the frequency of contact, the duration of the relationship, and other indicia of a mutually supportive intimate personal relationship; (5) Sharing household chores; (6) Whether the recipient of alimony has received an enforceable promise of support from another person within the meaning of subsection h. of R.S. 25:1-5; and – of course, since this is family law that we are dealing with – (7) All other relevant evidence. So we now know that, at the very least – under the amended law – cohabitation does not require the couple to live together on a full time basis, which was unresolved pre-amendment.

Also to clarify what I indicated earlier, some trial judges have suggested that because the family part is one tasked with imparting an equitable result, they may still apply the economic benefits test and potentially modify – rather than suspend or terminate as the statute says – an existing alimony obligation. Notably, as I wrote for the Law Journal, those amended portions of the law addressing an alimony change in the event of the payer’s retirement or down income use the word modify as a possible option, but that word is nowhere to be found in the cohabitation section. Was that deliberate, favoring the notion that the law is more payor friendly, or was it unintentional and not meant to wipe away the old law?  We do not yet know the answer.  Also notable is how a recent case addressing the retirement language section of the amended statute relied upon statutory interpretation and construction, rather than a broader interpretation that perhaps some practitioners were expecting. This does not mean, however, that the cohabitation portion of the statute will be similarly analyzed and applied.

Other trial judges have indicated that the statute requires a suspension or termination, although a separate question exists as to when a suspension would occur. Perhaps as a sign of rulings to come or, perhaps, also inadvertently, the Appellate Division in one of those two cases I mentioned above indicated that alimony “shall” terminate upon cohabitation by the payee. This, however, was neither an issue or holding in the case, and even the statute uses the word “may” rather than “shall.” Also, when should a so-called suspension of alimony even occur? Should it only occur during a cohabitation proceeding and potentially be reinstated if cohabitation is ultimately unproven? Should it occur as a final result and be subject to reinstatement if the cohabitation ends?  The answers are unknown at this point.

What about making the initial cohabitation showing?  As is true with any case, judges are going to look at the same set of facts differently from each other. For instance, while one judge may find it sufficient for the payor to establish that the couple has been living together at least four days per week for a month, another judge may want more. While one judge may deem sufficient intertwined finances via a single joint bank account and the couple holding themselves out as in a relationship on occasion, another judge may disagree. All judges present at the seminars seem to agree, however, that the more information and evidence of cohabitation to be considered in the initial filing, the better. We even discussed a good old fashioned garbage inspection, where you never know what kind of gems may turn up in a payee’s trash bin – in other words, one payee’s trash may be one payor’s Exhibit A to a Certification.

Thus, no matter how the law is to apply once cohabitation is established (suspension, terminate or modify), the process by which a payor spouse is to gather information for a motion to “address” alimony due to cohabitation seems to remain the same. Private investigators will often still be a potentially key part of the puzzle, and, to the extent the couple somehow cannot manage to keep themselves from discussing the relationship on social media, such evidence is often, but not always, the equivalent of the goose that laid the golden egg – in other words, the online version of the garbage can.

It was those recent seminars that really brought back to the forefront for me how much has yet to be determined under the amended law and, perhaps more importantly, how each case leaves unanswered the question of what gets a moving party passed that first litigation hurdle, and what a payee spouse can do to successfully fend it off. For both sides, the picture remains cloudy in some ways and crystal clear in others, and that is without any of the sort of guidance that we have recently seen with the retirement portion of the amended law.  We will all continue to stay tuned as to what this portion of the new law can do once tested.

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 Robert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*Photo courtesy of mondspeer (Google free images).