Blog Archive

A Warning to Parents Litigating College Expenses in the Family CourtFebruary 24, 2017

In a recent decision, Ricci v. Ricci, the Appellate Division addressed emancipation and parents’ obligation to pay college costs for a child who has left the parent’s home. This case is unique in that it involved divorced parents who agreed their daughter, Caitlyn, should be emancipated. Caitlyn disagreed and legally intervened, causing years of litigation which – according to the Appellate Division – has only just begun.

There was no dispute that Caitlyn had disciplinary problems which began in high school.  These issues, which continued after Caitlyn graduated in 2012, caused significant family strife.  In February 2013, at the age of nineteen (19), Caitlyn moved from her mother’s home to reside with her grandparents.  Based on Caitlyn’s conduct and what the Ricci parents perceived to be an obvious desire to be independent of their control, Caitlyn’s parents agreed it was no longer necessary or appropriate to continue supporting their daughter financially.  The parents signed a Consent Order emancipating Caitlyn and stopping child support.

Legal action followed, and Caitlyn asked the Court to vacate the Consent Order and require her parents to provide financial support for college. The parents objected, but two Orders were subsequently entered against them “un-emancipating” Caitlyn and requiring them to contribute towards her college tuition.  The Ricci parents appealed.

The Appellate Division’s decision outlined the law governing emancipation and college contribution in New Jersey, and found that neither issue was properly considered.  The Court first advised there should have been an examination of the events triggering Caitlyn’s departure from her mother’s home in 2013 and her subsequent emancipation.  Following existing law, the Court advised: when determining if a child should be emancipated, judges must focus on whether that child has moved beyond the influence of his or her parents and obtained total independence from them.

Second, the Court could not uphold the conclusion that Caitlyn had been un-emancipated, since the trial court did not make the required findings or hold a plenary hearing (essentially a shortened trial) on the issue. Because there was no requisite finding of un-emancipation, the Order requiring the Riccis to pay for Caitlyn’s college expenses was also improper and had to be vacated.   In remanding the matter back to the trial court for a hearing, the Court underscored that the threshold question of emancipation is fact-sensitive and must precede any consideration of a parent’s obligation to contribute towards the cost of college. In other words, Caitlyn will first have to prove she was un-emancipated before the trial court can conduct an analysis about whether her parents should be required to contribute towards her college expenses.

The Appellate Division got it right in the Ricci case; i.e., the Court identified a series of procedural mistakes and ultimately remanded the case to the trial court for the proper proceedings. That’s because under New Jersey law, any time there is a significant factual dispute between the parties (which almost always occurs in Family Court matters), a plenary hearing is required. But there is some truth to the legal maxim “justice delayed is justice denied”, and plenary hearings often take months or even years to complete. Therein lies the issue. By affording the Riccis their “day in court”, the Appellate Division effectively ensured this litigation won’t be ending soon. Practically speaking, the Riccis could be sharing the cost of Caitlyn’s wedding before they resolve college costs.

Despite its holding, the Appellate Division acknowledged the trial court judges in this case made the best equitable decisions based on what was before them. They did so without requiring a plenary hearing – recognizing the limited resources of the parties and the court. This type of “swift justice” is something practitioners demand on a regular basis. However, judges will often avoid this because it’s technically contrary to applicable law and leaves most litigants feeling unsatisfied. The bottom line: litigation in Family Court is often a “no-win” for both parents and children. Although easier said than done, a family feud is best resolved without involving the courts and it’s worth exploring mediation or other forms of dispute resolution.

Related Practice: Family Law

Attorneys: Kelley Rutkowski and Mia Stollen

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Bankruptcy and Divorce – Where Should You Go To Seek Relief?May 6, 2016

On May 4, 2016, in the unpublished decision of Strunck v. Figueroa, the Appellate Division reaffirmed longstanding jurisdictional jurisprudence involving bankruptcy and divorce. In the case, the parties divorced in August 2011.  As part of the divorce, the Plaintiff was awarded the sum of $23,369 to be transferred from Defendant’s Fidelity account by way of Qualified Domestic Relations Order.  The divorce decree further directed that the Plaintiff be responsible for the preparation and cost of the QDRO. 

However, prior to the amount being transferred, the Defendant withdrew all funds from the Fidelity and filed a Chapter 7 bankruptcy petition.  In the bankruptcy petition, the Defendant listed the Plaintiff’s $23,369 claim as being incurred on August 2011 alleging that the amount was an obligation arising out of a matrimonial judgment and not a domestic support obligation. 

Plaintiff received notice of the bankruptcy petition and the inclusion of the $23,369 as an unsecured claim in that petition.  The Plaintiff chose not to file an adversary proceeding to challenge the dischargeability of the claim.  As no objection was reached by the bankruptcy court, the Defendant was granted a discharge of the claim and all other debts. 

Thereafter, the Plaintiff elected to pursue an alternative course to recover the $23,369.  More than a year after the discharge, the Plaintiff filed a complaint against the Defendant in the Superior Court alleging conversion of the asset.  He contended that the Defendant falsely stated in a bankruptcy petition that she was not holding the property of another and sought to enforce litigants rights based upon the divorce decree. 

On appeal, the Appellate Division held that Plaintiff’s decision to not file an adversary proceeding in the bankruptcy matter resulted in the Plaintiff being estopped from later seeking to collect discharged claim.  Effectively, the Court noted that the Plaintiff failed to protect his rights by not participating in the bankruptcy proceeding, including but not limited to appealing the discharge of the debt.  The decision, while unpublished, should reinforce practitioners close scrutiny of bankruptcy proceedings in a post divorce judgment world.  The warning from the courts of New Jersey is that when such a proceeding is filed, a client should avail themselves of appropriate bankruptcy counsel and appear in the bankruptcy matter if there is any dispute as to the listing of a any obligation that arises out of a divorce judgment. 

Related Practice: Family Law

Attorney: Sean Alden Smith

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Are Trial Court’s Prohibited From Suspending Alimony Upon Cohabitation?May 3, 2016

Matrimonial settlement agreement alimony termination clauses are one of the most highly negotiated provisions in a divorce proceeding. Often, the parties negotiate a provision that provides for the “termination” of alimony when the supported spouse cohabitates with an unrelated adult.  In consideration cohabitation “termination” post-judgment applications, many trial courts enter awards which “suspend” alimony obligations during the period of cohabitation.  This type of suspension order was often without prejudice which would permit the previously supported spouse to seek the reinstatement of alimony if/when the cohabitation ended.

On May 3, 2016, the Supreme Court of New Jersey in Quinn v. Quinn declared that such a suspension remedy may be impermissible.  In that case, the Court analyzed a marital settlement agreement which included an express provision that terminated alimony upon cohabitation.  After finding that the agreement was entered by fully informed parties represented by independent counsel and without any evidence of overreaching fraud or coercion, the Court reversed the trial court’s equitable remedy of suspending alimony and ruled as a matter of law that the trial court was required to apply the remedy of termination as fashioned by the parties in their marital settlement agreement. 

In so doing, the Supreme Court has now instructed all trial courts to enforce the express language of the property settlement agreement when there is no ambiguity in the provision.  Simply, the court ruled that if the language is clear and unambiguous, the trial court must enforce the agreement as written unless doing so would lead to an absurd result.  In so doing, the court found in Quinn that the parties agreed to the circumstances that would terminate the alimony obligation by contract, to wit: cohabitation = termination. 

From a practical matter, this ruling will have a significant impact in the way that cohabitation clauses and property settlements are negotiated, drafted and presented to trial courts on a going forward basis.  In representing your clients, such a provision should receive close scrutiny before being included in a marital settlement agreement.  

Related Practice: Family Law

Attorney: Sean Alden Smith

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Sometimes Honesty is Still the Best PolicyApril 15, 2016

In the recently published decision of Taormina-Bisbing v. Bisbing, the Appellate Division examined the effect of a non-relocation agreement on a subsequent request by one parent to relocate to another state.

The case involved a relocation application, which is what a primary custodial parent files when he or she want to move out of state with the children.  These cases are generally governed by a case called Baures v. Lewis, 167 N.J. 91 (2001).  Under Baures, the moving party must first show there is a good faith reason for the move.  Then, they must demonstrate the move will not be “inimical” to the child’s interests.  There are 12 factors a court must assess in conducting a Baures analysis, but overall it’s a relatively easy standard to meet.  A non-custodial parent seeking to relocate with the children is subject to a different standard.  Because he/she is essentially asking the court for a change in custody, the request is determined by conducting a “best interest of the child” analysis.  This is a much more difficult standard.

The parties in Bisbing separated in August of 2013.  A few months later, the Wife began a long-distance relationship with man residing in Utah who had children from a previous marriage.  The parties eventually entered into a Marital Settlement Agreement (“MSA”) in March 2014 and were divorced in April 2014.  In their MSA, they agreed the Wife would have primary residential custody of the parties’ 8-year old twin girls on the condition that she would not relocate out of state.  She also agreed to give the Husband “broad reasonable and liberal parenting time”.

One month after the divorce, the Wife informed the Husband she was quitting her job to become a stay-at-home mom (which she did).  About eight months later, she called the Husband and told him she was marrying her significant other from Utah and asked for his consent to relocate with the children.  The Husband refused and the Wife filed a motion.  Without conducting a plenary hearing – which is usually required in relocation cases – the trial court found in favor of the Wife and allowed her to move to Utah.  The Husband appealed. The Appellate Division reversed and remanded the case back to the trial court with a roadmap for a plenary hearing.

First, the trial court must determine whether the Wife negotiated the MSA in bad faith.  In other words, the court must first decide whether the Wife knew of her plans to move to Utah when she was negotiating the MSA.  If the Wife knew, she essentially manipulated the situation to obtain residential custody so her removal application would be subject to the more favorable (Baures) standard.  Under such circumstances, the Court instructed, the Husband would have to be restored to the position he was in before the Final Judgment of Divorce.  The trial court would then apply the best interest standard and make a new determination on the issue of custody.  This would force the Wife to prove it would be in the children’s best interest to stay with her and move to Utah.

If, however, it is found that she did not negotiate in bad faith, the trial court should next consider whether the Wife proved a substantial unanticipated change in circumstances warranting avoidance of the agreed-upon non-relocation provision in the MSA.  This would trigger a Baures analysis, which would require the Wife to show only that moving with the children is not inimical to the children’s interest. 

The Bisbing decision does not necessarily clarify an ambiguous issue or create a new test or standard to be applied in relocation cases.  However, the Appellate Division did openly acknowledge a somewhat harsh reality of the laws of this State: once a parent obtains primary residential custody, it’s much easier for him or her to obtain an Order permitting an out-of-state relocation (since the burden would be placed on the parent who wants to stay in New Jersey to show that removal/relocation is against the children’s interests).  Matrimonial practitioners should take time to explain this to clients and ask more questions regarding future plans when negotiating settlement agreements.  Moreover, although it’s still not entirely clear where to draw the line, this case seems to suggest that a party who knows or strongly suspects circumstances are likely to change soon after an agreement is signed, may later be accused of “negotiating in bad faith”.  Therefore, it is important for a party to disclose any intentions he or she may have of moving out of state, marrying, etc., prior to signing an agreement, as these major events typically constitute a change in circumstances warranting a modification of custody/parenting time, alimony/child support, or even equitable distribution.

Related Practice: Family Law

Attorney: Kelley Rutkowski

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How Will Retirement Affect Your Award of Alimony? Well, That All Depends...April 1, 2016

As previously reported, in the Fall of 2014 Governor Christie signed into law an alimony reform bill that substantially amended several provisions of the existing alimony statute, N.J.S.A. 2A:34-23. Among other changes to the law, there is now a rebuttable presumption that alimony terminates once an obligor spouse reaches full retirement age, i.e., 66 years old. N.J.S.A. 2A:34-23(j)(1).  This means that in cases where a payor spouse retires and wishes to terminate alimony, the burden is on the recipient spouse to demonstrate that alimony should continue.  Previously, it was the payor spouse’s burden to show a change in circumstances warranting a modification or termination of alimony.  The statute also expressly provides that the amended law does not apply retroactively.   In other words, the law applies only to alimony awards in divorces entered after the effective date of the new statute – September 10, 2014.  Unfortunately, this language caused controversy and confusion among matrimonial practitioners, who argued over whether the rebuttal presumption of subsection (j)(1) applied to all matters – including those filed before the statute was amended.  A recent reported decision addresses this precise issue.

In Landers v. Landers, the Appellate Division was asked to clarify the application of the newly-enacted amendments in cases where an obligor retires and seeks a termination of alimony.  In the Landers case, the parties were divorced in 1991 – long before the alimony reform bill was passed.  Defendant-husband was required under the Judgment of Divorce to pay alimony to his ex-spouse, which he faithfully paid for over 20 years.  After retiring, the husband filed a motion to terminate alimony.  The recipient-wife opposed the application and filed a cross-motion seeking continuation of alimony. 

Ruling in favor of the husband, the trial court terminated alimony, finding the wife had failed to overcome the presumption under N.J.S.A. 2A:34-23(j)(1) that alimony terminates when a payor attains full retirement age.  The wife appealed, arguing the recent statutory amendments did not affect the terms of their divorce judgment, which was entered before the effective date of the amended statute.  The Appellate Division agreed, finding “the particular language used in subsection (j)(3) clarifies the Legislature’s intent to apply (j)(1) only to orders entered after the amendments’ effective date.”  In reversing, the Court held:

  • Unlike other amended provisions of N.J.S.A. 2A:34–23, subsection (j) distinguishes alimony orders executed prior to the amendment’s effective date and those executed afterwards.  See N.J.S.A. 2A:34–23(j)(1), (3).  Therefore, this unambiguous legislative directive governs a court’s examination of alimony modification requests arising when an obligor retires, depending on the original date alimony is awarded. [. . .]

In sum, the Appellate Division found that based on the date of the parties’ Judgment of Divorce, the trial judge improperly followed the statutory provisions of N.J.S.A. 2A:34–23(j)(1), which incorrectly placed the burden of proof on the recipient-wife, rather than the husband, and also omitted the necessary analysis of important applicable factors. 

The Landers decision provides important guidance to trial courts when examining requests to modify alimony in cases of retirement; the analysis all depends on the date alimony was originally awarded.  Section (j)(1) applies in cases where alimony was awarded after September 2014.  This section establishes a rebuttable presumption that alimony will terminate upon the obligor spouse reaching full retirement age, and places the burden on the recipient spouse to demonstrate why alimony should instead continue.  Alimony orders that predate the 2014 amendments are governed by Section (j)(3), which contains a different standard and places the burden on the payor spouse to demonstrate that modification or termination of alimony is appropriate.

Related Practice: Family Law

Attorney: Kelley Rutkowski

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The Appellate Division “Contempt-plates” Due Process in Family CourtsNovember 16, 2015

On November 9, 2015, the Appellate Division in Ippolito v. Ippolito considered whether it was improper for a family judge to have presided over a summary contempt proceeding that he himself initiated. The Order in question was analyzed under R. 1:10-2 (although not properly captioned as such by the trial court). This rule requires contempt proceedings “not be heard by the judge who instituted the prosecution if the appearance of objectivity requires trial by another judge”.

The events that gave rise to this appeal are – unfortunately – all too familiar to family law practitioners. Plaintiff’s counsel wrote a letter to the Court alleging that Defendant-husband had violated the terms of a February 20, 2014 Order which prohibited him from “threatening or intimidating any expert” in the parties’ divorce matter. The Court did not afford Defendant an opportunity to explain or respond to the allegations contained in counsel’s letter, but instead issued an Order requiring Defendant to show cause as to why he should not be held in contempt for his failure to comply with the Court’s prior Orders in this regard. The Appellate Division noted that this “sudden leap from a complaining letter of matrimonial counsel to the commencement of summary contempt proceedings might alone suggest the appearance of objectivity had been lost.” But the events that followed made it even more readily apparent.

It is important to note that because a R. 1:10-2 contempt proceeding constitutes a charge of criminal conduct, Defendant should have been entitled to most of the safeguards afforded to criminal defendants. However, at the contempt hearing, the judge required Defendant to testify first, and made clear that Defendant “was there to explain his conduct” and to respond to the unsworn allegations in counsel’s letter that led to the contempt proceeding. What’s more, the judge did not call any other witnesses to testify – not even the expert who was allegedly threatened/intimidated by Defendant. The Appellate Division found that in doing so, the trial judge effectively created a new burden of proof and deprived Defendant of “the presumption of innocence, the privilege against self-incrimination, the right of cross-examination, proof of guilt beyond a reasonable doubt, and the admissibility of evidence in accordance with the rules of evidence.” Ultimately the Appellate Division held that the “appearance of objectivity” unquestionably required trial by another judge in this case. The Order under review was vacated and the matter was remanded to the assignment judge for the designation of another judge to preside over the summary contempt proceeding.

Perhaps most significant to family law practitioners was Plaintiff’s unsuccessful argument that “what occurred was not actually a summary contempt proceeding, but rather a proceeding of the type permitted under R. 1:10-3” – a mechanism routinely utilized by matrimonial attorneys for the vindication of litigant’s rights. The Court outright rejected this argument, finding that the trial court demonstrated “a clear understanding of the difference between the proceedings permitted by R. 1:10-2 and those authorized by R. 1:10-3.”

It appears the lines have been blurred, among both bench and bar, between R. 1:10-2 and R. 1:10-3. Family law practitioners should read this decision and carefully review both of these rules. This will help ensure the relief sought in future R. 1:10-3 enforcement motions is appropriate, and that family court judges do not exceed the scope of the proceedings permitted under R. 1:10-3 when disposing of such motions.

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"See You in September": Parenting Time and the Battle for Summer VacationJune 30, 2015

In a recent New Jersey trial court decision, the court grappled with the familiar debate of whether a parent may take a child on vacation out of the country over the other parent’s objection. The facts of Lyle v. Lyle are similar to many cases where divorced parents cannot agree on their child’s summer vacation plans. In Lyle, the mother wanted to take her son to the Netherlands for the entire summer to visit with the maternal grandparents. On the other hand, the father categorically disagreed with the vacation plans. The court found that both parents were unreasonable in their positions. The mother wanted to monopolize the full vacation time while the father wanted to prevent any travel with the mother. The court reached a compromise, allowing the son to visit the Netherlands for two weeks thus permitting the father to exercise vacation time with the son as well.

The facts of Lyle could be transposed with many other divorced families where neither parent can agree on how they want their child to spend vacation time. Lyle is unique in the sense that the travel requires a passport, a fact which the trial court also addresses, but it could otherwise be any two parents disagreeing on the amount of time and location of a vacation. The importance of Lyle is the emphasis on the child’s enjoyment of the summer. The court recognized that “for a great many kids, some of the most positive and happy memories they have are of family vacations and travels with each parent.” Unfortunately, as the court also discusses, parents can lose sight of the positive aspect of vacation and spend time and money fighting the other parent’s decision to travel with the child.

As we near the 4th of July holiday, the court in Lyle encourages parents to put aside their differences and ensure a safe and enjoyable vacation for their children. While this is not always easy in contentious cases, the memories children make on the trips is worth a brief ceasefire.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Careful What You Post: Supreme Court Rules on Threats Made Through FacebookJune 3, 2015

Recently, the United States Supreme Court considered whether violent language on an individual’s Facebook page constituted a threat.  Anthony Douglas Elonis posted lyrics under the pseudonym “Tone Dougie” including violent statements regarding his wife who recently left him.  Mr. Elonis’s wife subsequently filed a restraining order after viewing the statements.  The case made its way to the Supreme Court after Mr. Elonis’s employer informed the FBI regarding the posts and he was charged and convicted with communicating a threat under 18 U.S.C. §875(c).  Under §875(c) it is a felony to transmit “in interstate or foreign commerce any communication containing any threat to . . . injure the person of another.”

While the Supreme Court focused on whether the trial court provided adequate jury instructions as to mental state, the case raises issues in the context of a divorce, separation, or domestic violence proceeding.  Frequently individuals use social media to express their opinions and feelings with the belief that their statements are protected under the First Amendment.  Even Mr. Elonis thought he protected himself from liability by including disclaimers and statements that his lyrics were fictitious.  The Supreme Court found that for the purpose of §875(c) whether a reasonable person receiving the message viewed it as a threat did not matter, rather, conviction requires a showing that the individual purposefully issued a threat and knew the statement would be viewed as a threat. The Supreme Court’s ruling did not address exactly what mental state is required for conviction.  Therefore, individuals, especially those with potential divorce, custody, or domestic violence proceedings should proceed with caution when posting on social media.  There may also be State laws that would make similar activities criminal or actionable.

Although the Supreme Court reversed and remanded the conviction against Mr. Elonis based on the inaccurate jury charge, this should not provide any comfort to the individual who continues to use the internet as a forum for venting.  Justice Alito’s concurring and dissenting opinion summarized the issue best when he wrote that “the fact that making a threat may have a therapeutic or cathartic effect for the speaker is not sufficient to justify constitutional protection.”  Furthermore, the Supreme Court failed to rule on what mental state is required to constitute a threat.  This leaves the door open for courts to determine whether the angry spouse’s statement is a venting exercise or rises to a criminal act.  Maybe it is best to adhere to the idiom, “keep your opinions to yourself.” 

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Credit Damage in DivorceOctober 15, 2014

Divorcing couples probably already realize how intermingled their assets and finances are, but they may not think about their credit. A party’s credit report can be significantly affected by their spouse’s actions depending on whose name the debt is in. For example, if the family has a joint credit card with one party as the primary user and the other as an authorized user, both parties’ credit scores may be harmed if one individual fails to timely pay the bill or if their spending exceeds the credit limit.

Some attorneys and experts argue that the innocent spouse, whose credit is harmed by their partner’s actions, should be compensated. Credit damage or credit reputation harm can have far reaching effects on the victim including increased fees and costs, higher interest rates, and the inability to qualify for loans or financing. Although difficult to quantify, these negative effects may add up to considerable financial harm. 

Currently, there are few legal remedies for a spouse whose credit is harmed in connection with their divorce. The best solution, although only preventative, is to require both parties to pay off or refinance all marital debt upon the conclusion of the divorce. This prevents either party from taking actions that harms the other party’s credit. If credit damage is a concern it is also helpful for a party to obtain a credit report at the outset of the case and at the conclusion for comparison purposes. Maneuvering the financial hurdles in divorce are complicated and often issues, such as credit scores, arise when least expected. If you are concerned about your credit or finances being affected by divorce it is important to get legal advice right away. Brach Eichler’s family law attorneys are experienced in issues related to credit and finances during divorce and may also recommend financial professionals that can be helpful in navigating difficult financial issues if necessary.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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How New Alimony Statute will Effect Millennials and Generation XSeptember 19, 2014

The alimony reform movement aligns with the changes in family dynamics in Millennials and Generation X.  Couples are entering marriage later in life after completing secondary education and beginning their careers.  The new alimony laws reflect these changes and recognize that upon divorce, the spouses are not necessarily on unequal ground with regard to earning capabilities.  The notion that one partner requires support for life is becoming antiquated in generations where women outnumber men and colleges and universities.  That being said, some new laws contain a formulaic approach to the alimony calculation, which removes a courts ability to analyze the unique circumstances of each family to determine fair and equitable awards.  The extent to which the new law will affect future alimony awards is unknown, but they will certainly require skilled counsel to assist clients in understanding the changes and how they might be applicable to their particular case.  The new law has implications for younger adults that are marrying and may now require planning at the outset with the use of premarital agreements and other mechanisms to ensure ongoing support in the event of divorce.  Brach Eichler's family law department stands poised to assist anyone dealing with a matrimonial controversy or is planning to marry and can assist with questions and concerns involving how these sweeping new changes may affect them.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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How to Protect Assets with New Alimony StatuteSeptember 16, 2014

With the growing trend to modify alimony laws, partners who live in a marriage where the other party earns substantially more may need greater protection through prenuptial agreements.  There is no longer a guarantee that the supported spouse will be supported for life, and upon divorce they may be surprised to learn just how short in duration their alimony may be.  While a prenuptial agreement provides some protection, at the end of the marriage the supported spouse may need to consider relief such as a higher share of equitable distribution, a portion of the retirement accounts, and rehabilitative alimony to cover education and job training.  This may put greater importance on seeking rehabilitative alimony for the supported spouse.  Rehabilitative alimony is awarded based upon a plan in which the payee shows the scope of rehabilitation, the steps to be taken, and the time frame, including a period of employment during which rehabilitation will occur.  The payee may also seek reimbursement alimony, which may be awarded under circumstances in which one party supported the other through an advanced education.  Although the amendments appear to have made it easier for the payor spouse to retire and stop or modify his or her alimony payment, the payor must also consider protecting assets to ensure their stability upon retirement.  With the reform there will be new challenges for divorcing couples depending on whether they are the paying spouse of the supported spouse.  The extent to which the new law will affect future alimony awards is unknown, but they will certainly require skilled counsel to assist clients in understanding the changes and how they might be applicable to their particular case.  Brach Eichler's family law department stands poised to assist anyone dealing with a matrimonial controversy or is planning to marry and can assist with questions and concerns involving how these sweeping changes may affect them.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Going Through a Divorce is Protected Under the Law Against DiscriminationJuly 23, 2014

The New Jersey Appellate Division recently held for the first time in Smith v. Millville Rescue Squad, --- A.3d --- (2014), that the “marital status” protection under the New Jersey Law Against Discrimination (LAD) extends to persons who are in the process of getting divorced.  In Smith, a married couple worked for the same employer for several years.  They began the divorce process after the husband was discovered having an extramarital affair with another employee.  The employer’s executive director told the husband that he did not want an “ugly divorce” in the workplace and subsequently terminated the husband (but not the wife), purportedly for performance-related issues.  The Court ruled that the employer improperly relied upon stereotypes of divorcing persons, namely that they cannot be civil and cooperative in the workplace.  The takeaway from Smith is that the broad interpretation of the scope of “marital status,” which is not a defined term in the LAD, now covers discrimination against about to be divorced persons.   

Related Practice: Family Law

Attorney: Carl Soranno

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Agreement Provision Linking Spousal Support Payment to Children's Education Invalidates Alimony DeductionApril 17, 2014

April 14th is a tough day for most Americans as we rush to complete our taxes, but it was especially difficult for Allen H. Johnson because the Tax Court ruled that his alimony payments were not deductable because under the Tax Code they constitute child support.

Like most divorced spouses who pay alimony to their ex-partner, Mr. Johnson deducted his alimony payments on his tax return and his ex-wife included the payments as gross income on hers.  Under the Tax Code, a payment is alimony if made in cash and:

  1. The payment is received by a spouse under a divorce or separation instrument;
  2. The divorce or separation instrument does not state that the payment is neither includible in gross income nor allowable as a deduction;
  3. The payor and payee spouses are not members of the same household when the payment is made; and
  4. The payment obligation terminates at the death of the payee spouse and there is no liability to make either a cash or a property payment as a substitute for the payment after the death of the payee spouse.

Johnson v. Comm'r, T.C. Memo. 2014-67.

Mr. Johnson's separation agreement with his ex-wife complied with the Tax Code requirements for alimony, except it failed to take into account the definition of child support under the Code.  Under I.R.C. § 71(c)(2) support subject to "contingencies involving [a] child" are considered child support.  The spousal support for Mr. Johnson's ex-wife would terminate upon the occurrence of several events, one being their youngest child's graduation from high school.  This contingency qualified all spousal support as child support under the tax code despite the fact that Mr. Johnson was paying separate child support.  The Tax Court held that the intent of the parties does not apply, only the specific requirements of section 71.

Many settlement agreements include language detailing when alimony will terminate, and often the termination date centers around events involving the children.  Although the parties may intend the date to be used merely as a reference, or are factoring in the payee's ability to return to work after the children reach a certain age, the IRS will not take these factors into account for tax purposes.  It is important that parties understand the tax implications of their settlement agreements because the consequences can have far reaching effects.

Related Practice: Family Law

Attorneys: Carl Soranno and Mia Stollen

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Child's Right to SupportApril 7, 2014

News headlines across the country took sides over a New Jersey Superior Court case where 18 year-old Rachel Canning sued her parents over their failure to pay her high school tuition, child support, and college tuition.  This would be a run of the mill case except for one fact; the family is still intact with both parents married.

The Canning case raises an interesting question regarding the right of the child to support.  In New Jersey courts have the power to order divorced parents to pay child support and college costs for their children.  The applicable case law requires a fact sensitive investigation to determine whether divorced parents are required to contribute to their child’s college education under the Newburgh v. Arrigo case.  Although the child is most likely over the age of 18, the parents may still have a duty to provide support until emancipation, a determination that is not solely based on age.  Up until the Canning case, the law has only been applied to children of divorced parents, essentially creating the argument that children of divorced parents have more rights than children of intact parents. 

Rachel Canning recently dismissed her case after she moved back home with her parents, however the discussion of a child’s right to support during college will certainly continue.  On March 24th, the New Jersey Senate Judiciary Committee approved a bill that would terminate child support once the child turns 19.  Although a parent may petition for support to continue beyond the age of 19, the bill places that burden on the person receiving the funds, instead of on the person responsible for paying the support.  As with previous cases, the bill makes no distinction between children of intact families and children of divorced families.

While much of the state has already made up their mind on the Rachel Canning case, the law is still unclear.  Because the case was dismissed, we still do not know whether a judge would be willing to order child support for a child of an intact family, however as the law stands, if the child is not emancipated, the judge may have no other choice.  Children, no matter what their family dynamic, have a right to support under the current laws.  Therefore, it should make no difference whether the parents are married, separated, or divorced.  
 

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Johnson v. BradshawMarch 14, 2014

Child support statutes and regulations vary from state to state but the Uniform Interstate Family Support Act ("UIFSA") unifies all states on enforcement.  In a recent Superior Court decision the court looked at how to apply UIFSA when dealing with a temporary child support award when all parties no longer live in New Jersey.

The case, Johnson v. Bradshaw, involves the football player Ahmad Rashad Bradshaw who in 2011 was playing for the New York Giants and living in New Jersey.  Bradshaw and Johnson had a child together who was born in Virginia.  The child and Johnson never lived in New Jersey but Johnson brought an action for child support in the state.  A temporary support award was entered with the intention that the parties would return for a full hearing after obtaining all necessary financial discovery.  However, the parties did not return and Bradshaw left the New York Giants and moved to Virginia.  Bradshaw then filed a motion to dismiss the complaint for lack of jurisdiction.  In a case of first impression, the Superior Court ruled that although the court had power to enforce the child support award under UIFSA, now that all parties lived outside the state of New Jersey the Court could not modify the child support award even though it was temporary.

In many families after divorce or separation, one or both parents may move out of the state.  If none of the parties or children remain in the state of New Jersey, New Jersey no longer has jurisdiction to modify the child support award.  Even temporary awards cannot be modified because they too are considered child support and are covered under the same definition as permanent awards.  Because each state has different statutes regarding procedures and standards for modification UIFSA may have a significant affect on a parent's ability to modify child support.  What may constitute grounds for modification in New Jersey may no longer apply in another state.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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How Do You Divide a Pension Upon Divorce?December 30, 2013

For many families, their 401(k) or pension is the largest asset after the marital home. When determining how to divide the asset upon divorce, it is especially important to understand the different methods of valuation. In New Jersey, there are three accepted methods for valuing a defined-benefit pension plan.

Present-Value Offset Distribution

Under this method, the pension is valued as of the date of complaint, as if the pensioner-spouse terminated participation in the plan as of that date. The non-pensioner spouse receives the present value, offset against the value of another asset. Often this method is used when the parties agree that one will receive the marital home with the other receiving the pension.

Deferred-Distribution

When using deferred-distribution a court must first calculate what is called the coverture fraction. The coverture fraction is the percentage of the pension that is subject to equitable distribution based on the length of the marriage. For example, if the pensioned spouse was a member of the pension for ten years, but was only married for five of those years the coverture fraction would be 5/10 and only 50% of the pension would be subject to equitable distribution. 

Once the coverture fraction is determined, the parties must obtain a Qualified Domestic Relations Order (“QDRO”) to distribute the non-pensioner spouse’s share upon retirement of the pensioner spouse. It is important to know that under this method the parties are dividing a benefit that is contingent upon the pensioned spouse reaching retirement age. Additionally, both parties must pay their respective tax consequences.

Partial Deferred-Distribution

This last method is a hybrid of the deferred-distribution, where the non-pension spouse receives the current value of any non-contingent portion of the pension as well as their share of the deferred-distribution if/when the pensioned spouse retires.

A recent unpublished New Jersey Appellate Court decision, Tominus v. Tominus, No. A-0202-12T1, 2013 WL 5658460 (N.J. App. Ct. Oct. 18, 2013), held that courts must consider each of the possible distribution methodologies. A court may only deviate from one of the three methods after making appropriate findings of fact. The decision is a reminder of how complex pension division can be and just how important it is to complete it in the most equitable way possible.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Litigation Privilege – Protecting Advocacy in Family CourtDecember 27, 2013

The litigation privilege is a historical protection created to provide immunity to an attorney for particular civil liabilities incurred during the course of a case. The purpose of the privilege is to encourage zealous advocacy; allowing the attorney to make their case with the knowledge that they will not later be sued for defamation. The litigation privilege is especially imperative in family law cases where attorneys are required to defend their client’s right to the things most important and personal in their life.   

Recently, in a Connecticut Supreme Court Case, Simms v. Seaman, the protection was expanded to include claims of fraud, when an attorney was given immunity after allegedly concealing his client’s financial information in a divorce proceeding. Importantly, the court analogized fraud to that of defamation. Even though the family court ruled that the ex-wife’s attorneys improperly concealed information regarding an inheritance from the ex-husband, the ex-husbands claim of fraud against the attorneys was barred under the litigation privilege. 

At first the decision may seem unfair to the ex-husband who had to defend his claim without accurate information. However, upon closer inspection, the Court acknowledged that the ex-husband had additional remedies available to him including but not limited to filing a formal ethics complaint or asserting a claim of vexatious litigation for prosecuting an improper claim with malice. For practitioners, this decision illustrates the expansive scope of the litigation privilege to ensure that attorneys are not timid in their defense of clients – especially in matrimonial actions where emotions run high.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Minkowitz v. Israeli - Can a Mediator After Mediation Also Serve as an Arbitrator?November 18, 2013

As more cases turn to alternate dispute resolution in an effort as an alternative to litigation and on over burdened court system, the New Jersey Appellate Division has issued an opinion clarifying the role of arbitrator after conducting the mediation.

Upon filing for divorce, the parties in the case of Minkowitz v. Israeli agreed to engage an arbitrator.  However, after an initial conference, the parties entered into settlement and mediation discussions with the arbitrator acting as a mediator.  The parties reached a series of agreements that were incorporated into the arbitration.  Plaintiff then sought to set aside the agreements claiming the arbitrator exceeded his powers by acting as a mediator and then reverting back to the role of arbitrator.  The Appellate Division held that unless "the parties' contract to the contrary, once a neutral assumes the role of mediator, he or she may not assume the role of arbitrator."

The decision goes to the heart of the purpose of an arbitrator versus a mediator, stating that "an arbitrator's role is evaluative, requiring the parties to present their evidence for a final determination," while a mediator "encourages confidential disclosures" in an effort to reach a final agreement.  These two roles are at odds with each other, and if a mediator then assumes the role of arbitrator, the parties' confidential information may be used against them when the arbitrator makes a binding determination.

Importantly, the court recognizes that objectivity in family law matters is especially imperative due to "already suspicious adverse parties."  Allowing a mediator to later serve as an arbitrator on the same matter not only deteriorates the integrity of the process, but it also raises the potential for increased litigation of arbitration decisions.

This shows an ongoing trend in New Jersey to define the parameters surrounding alternate dispute resolution.  In a case decided earlier this summer, the New Jersey Supreme Court inWillingboro Mall, Ltd. v. 240/242 Franklin Ave., LLC held that an agreement reached through mediation must be in writing to be enforceable.

Both cases reflect an effort to cut back on litigation following mediation.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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Ramifications of the New LLC Act on Issues in Divorces Affecting AccountantsOctober 24, 2013

New Jersey has adopted the Revised Uniform Limited Liability Company Act (RULLCA) which governs all New Jersey limited liability companies formed after March 18, 2013 and which, after March 1, 2014, when the 1996 LLC Act is repealed, will govern all New Jersey limited liability companies whenever formed.

Divorce May Lead to Dissolved LLC

Business owners and financial advisors are probably already aware that New Jersey has enacted the Revised Uniform Limited Liability Company Act, but they may not be aware of how the new LLC statute will affect an entity during a divorce. Under the new statute, the court is given broad powers to dissolve and LLC, including on the basis of oppression or harm toward the applicant. N.J.S.A. 42:2C-48(5)(b).

While we are waiting for a case in New Jersey to interpret the statute in the context of a divorce, a recent Texas Court of Appeals case provides some guidance. In the case of Kohannim v. Katoli, the wife was awarded her husband's 50% interest in an LLC. After the transfer, the wife filed an action to dissolve the LLC upon several grounds including oppression. The court held that the other owner "engaged in wrongful conduct and exhibited a lack of fair dealing in the company's affairs to the prejudice of the [wife] and dissolved the LLC.

Going forward, LLC members need to be aware that transfers of ownership, whether through divorce or otherwise, may pose significant risks to the stability of the LLC.

Inspection of LLC's Records

The right of members to be able to inspect books and records of the LLC is not new, it is a right often exercised on behalf of the member by his or her accountant.  Indeed, the new statute expressly authorizes inspection rights through "an agent". N.J.S.A. 42:2C-40e.

The inspection rights afforded by the statute may, however, be modified by the LLC's operating agreement, and those modifications will apply to the accountant sent in to conduct the inspection. Consequently, before undertaking an engagement to inspect an LLC's books and records, an accountant needs to become familiar not only with the limitations to Section 40 of the statute, but also the limitations contained in both the operating agreement and any additional limitations the LLC is authorized to impose pursuant to subsection g. of the statute.

Members have inspection rights, spouses do not. If a member spouse assigns his or her economic rights to the other spouse, the new statute is clear that (unless permitted by operating agreement) the transferee spouse does not have access to the LLC's records except from and after dissolution. N.J.S.A. 42:2C-42a(3)(b). This is something to be considered in connection with Property Settlement Agreements in a divorce proceeding.

Related Practice: Family Law

Attorneys: Carl Soranno, Sean Alden Smith and Mia Stollen

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