New Jersey Legislature Passes Alimony Reform Bill

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Both the New Jersey Assembly and Senate passed an alimony reform bill that has been in the works for two and a half years. The bill is currently awaiting Gov. Christie's signature.

The proposed law eliminates the term "permanent" alimony and substitutes "open durational" alimony. For any marriage or civil union which is less than 20 years in length, the total years of alimony shall not exceed the length of the marriage unless there are exceptional circumstances. All of the statutory factors which have previously been in existence will still be considered in making any alimony determination.

The bill sets forth a list of exceptional circumstances which may require an adjustment to the duration.

  1. The ages of the parties at the time of the marriage or civil union and at the time of the alimony award;
  2. The degree and duration of the dependency of one party on the other party during the marriage or civil union;
  3. Whether a spouse or partner has a chronic illness or unusual health circumstance;
  4. Whether a spouse or partner has given up a career or a career opportunity or otherwise supported the career of the other spouse or partner;
  5. Whether a spouse or partner has received a disproportionate share of the marital estate;
  6. The impact of the marriage or civil union on either party's ability to become self-supporting, including but not limited to either party's responsibility as primary caretaker of a child;
  7. Tax considerations of either party;
  8. Any other factor or circumstances that the court deems equitable, relevant and material.

The bill also allows for modification or termination of alimony upon retirement at full retirement age of the payor; however, the rebuttable presumption in favor of alimony termination at that time may be overcome for good cause.

In the event of the loss of employment, the Court may consider the application for a modification of alimony if the party has been unemployed for 90 days.

Finally, the proposed law states that alimony may be suspended or terminated if the payee spouse cohabits with another person. Cohabitation is defined as "a mutually supportive, intimate, personal relationship in which a couple has undertaken duties and privileges which are commonly associated with marriage or civil union but does not necessarily maintain a single common household."          

It is anticipated that Gov. Christie will sign this bill into law. 

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College-Age Child's Refusal to Interact with Parent May Affect the Parent's Obligation to Pay College Expenses

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The responsibility of college education expenses between divorced parents is often a source of conflict, and many times the parties end up back in court even though they have been divorced for years. Although New Jersey law obligates divorced parents to contribute to their children's college education expenses, a recent lower court case dealt with the issue of a parent's responsibility if the child wants nothing to do with that parent.

In that case, the judge ruled that a college age student, whose divorced father had an obligation to pay toward his son's college education expenses, could be compelled to attend counseling sessions with his father as a condition to receiving financial assistance.

Under the father and mother's Marital Settlement Agreement, the father and son were to attend therapy sessions together given their discord. The father wanted to go to joint therapy sessions with his son, but the son refused. The Court recognized that the parties' son, while still legally unemancipated, was an adult, and he should be held to a "different level of maturity, responsibility and accountability for his current choices and actions. . ."

While the Court stated that it could not force the son to go to counseling with his father, the Court could consider his refusal as a factor in determining whether the father had an ongoing obligation to contribute to his son's college education expenses.

As in any college contribution case, many factors come into play before a Court will determine a parent's obligation. Please note that the child's relationship with the parent is just one factor.

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New Jersey Collaborative Law Act Passes Both Houses of Legislature

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In June, both the New Jersey Senate and Assembly passed the New Jersey Family Collaborative Law Act, which is now awaiting Gov. Christie's signature.

I have written much about the benefits of Collaborative Divorce in articles and blogs contained on this website. The Act proscribes the statutory requirements for a collaborative divorce, establishes statutory privilege for members of the collaborative team, provides divorcing couples with an alternative to litigation and mediation and codifies the disqualification clause in collaborative divorce (if a client decides to litigate after beginning with the collaborative process, his/her attorney is disqualified from representation during the litigation process).

As soon as Gov. Christie signs the bill into law, I will write about the specifics of the Act.

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Domestic Violence and the Right to Counsel

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Trials held under the New Jersey Prevention of Domestic Violence Act (PDVA) are some of the most contentious in the Courthouse. The consequences of being found guilty of domestic violence are serious and the violation of a Final Restraining Order (FRO) will trigger arrest and institution of criminal proceedings. Despite such potential results, New Jersey courts have consistently held that a party in a domestic violence case does not have the right to appointed counsel if he or she cannot afford to retain a lawyer and that the court has no obligation to inform the party that he or she has the right to an attorney. The premise for this position is that unlike the criminal statutes, which are punitive in nature, the PDVA is designed to “remediate behavior”. This distinction was recently addressed in A.M v. M.M. (names redacted by the court) decided by the Appellate Division on June 16, 2014. In this case, M.M. challenged the issuance of an FRO against him based on the court’s alleged failure to advise him of his right to counsel and its further alleged failure to determine whether he voluntarily waived his right to assistance of counsel. The appellate court affirmed the trial judge’s rulings on the premise described above. The take-away is that no matter how serious the consequences of an FRO for the defendant (or the consequences of the denial of an FRO for the victim), neither party should expect a change in New Jersey law in the foreseeable future.

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New Jersey's New Adoption Law

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On May 27, 2014, Governor Chris Christie signed into law legislation that will allow adoptees in New Jersey access to their birth certificates beginning January 1, 2017 (Adoption records have been sealed since 1940).

From now through December 31, 2016, birth parents will have the opportunity to notify the State Department of Health as to whether they would prefer (1) full contact with their child, (2) contact only through an intermediary, or (3) have their names redacted from the birth certificate so there could be no contact.

If the birth parents choose to have their names redacted, they are still required to provide their family medical history, although all personal identifying information will be removed. This information is to be provided every 10 years until age 40 and once every 5 years, thereafter.

For adoptions finalized after August 1, 2015, birth certificates will be available to adoptees, but birth parents will complete a form indicating their preference regarding contact/no contact.

The purpose of this new law is to allow adoptees to not only meet their birth parents and possible siblings, but to give them information about their biological family's medical history.

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Claiming Children as Tax Dependency Exemptions-What's New?

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Most Marital Settlement Agreements (a.k.a. Property Settlement Agreements) provide a mechanism for divorced parents to claim their children as tax dependency exemptions (TDE’s) on their federal and state income tax returns. Agreements silent on the subject default to the custodial parent’s annual recurring right to do so. Assuming that an MSA permits a non-custodial parent to claim a child as a TDE, it is important to recognize that since 2009, the Internal Revenue Service requires the non-custodial parent to obtain a signed IRS Form 8332 from the custodial parent and attach it to his/her tax return even if the MSA is clear regarding the parties’ intentions. Agreements entered into before 2009 do not require Form 8332 language since the IRS will recognize the Agreement as sufficient. Further information can be obtained at IRS.gov by clicking here. In this area and others, it is essential that an MSA be drafted and reviewed by skilled family law attorneys to avoid future problems of interpretation or enforcement.

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College Expenses: Better Late than Never

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A divorced parent’s legal obligation to contribute toward a child’s college expenses has been a long standing subject in New Jersey law. Unlike many other states, New Jersey requires a divorced parent to pay for his/her child’s college expenses if the child is a full time student attending college on a consecutive semester basis. The leading cases in this area are Newburgh v. Arrigo, 88 N.J 529 (1982) and Gac v. Gac, 186 N.J. 535 (2006). In Newburgh, the New Jersey Supreme Court established twelve factors a trial court must consider in evaluating a divorced parent’s college contribution which have been the subject of previous postings on this site. In Gac, the Court stated that a parent seeking contribution a child’s college expenses from his or her former spouse “should, at a minimum, initiate the application… before the expenses are incurred [and that] the failure to do so will weigh heavily against the grant of a future application.”

It is against this backdrop that a New Jersey appeals court decided the case of Martin v. Martin on May 23, 2014. The case involved Ms. Martin’s appeal from a trial court ruling which denied her application to compel her former husband to contribute to the college expenses of their daughter because Ms. Martin delayed making her application until her daughter was in her third semester of college. The Appellate Division reversed the trial court’s ruling and remanded the case for a full evidentiary hearing, finding that the trial court’s interpretation of Gac had been “very restricted without recognizing the equitable considerations that underlie that decision” [and that] “Gac does not establish a bright line rule permitting automatic denial whenever a request has been filed after the educational expense has been incurred. The Court admonished the trial court for having failed to conduct a hearing at which it could “flush out all the information necessary to properly and fairly evaluate the Newburgh factors”. As a result, Mr. Martin will likely be liable for a share of his daughter’s past as well as future college expenses. Beyond the impact on the parties and future cases, the lesson of Martin is that family courts are courts of equity where principles of fairness will significantly impact outcomes. 

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The Benefits of "In-Kind" Distributions for Investment Accounts

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In negotiating matrimonial settlements, I often find it useful to explore the possibility of an "in-kind" distribution of an investment account that is subject to equitable distribution.

 

An "in-kind" distribution is a non-taxable division of an asset. In the context of investment accounts, in lieu of selling off all stock positions held within such accounts at the time of a divorce, an in-kind distribution avoids a forced sale by providing the option of dividing the equity positions in accordance with a pre-determined percentage.

 

For purposes of example, if Wife has a brokerage account in her individual name with 500 shares of XYZ corporation which were purchased in 2005 for $200,000 and are now worth $500,000, I would strongly advise the parties to explore the possibility of each receiving 50% of the stock value through an in-kind distribution. I would make this recommendation due to the fact that a distribution under this background would maintain a significant tax advantage.

If the Wife were to liquidate all of her 500 shares of XYZ corporation to pay Husband his 50% equitable distribution interest, she would encounter a tax liability of $300,000 ($500,000 current value - $200,000 basis in which the stock was purchased) due to the capital gain associated with the investment. By imploring an "in-kind" transfer of the same account, any taxes associated with a forced redemption to buy-out Husband's interest would be avoided by simply dividing the stock. Through an in-kind division, Husband would now be the owner of 250 shares of XYZ at the price of Wife's original purchase and absorb the taxes associated with the stock redemption if he decided to liquidate the shares for cash.

 

Another advantage remains that after an in-kind transfer, both parties retain the ability to make strategic financial planning decisions regarding whether or not they wish to redeem or hold the particular asset for tax purposes. For instance, if you receive 50% of 10 different stock positions through an in-kind distribution, after speaking with a qualified professional, you may decide that it is best to sell off stock that is underperforming in a particular tax year to offset some of the capital gains associated with a higher performing stock. If you elected to liquidate all of the stock during the divorce litigation, you would have lost the flexibility to plan out the best windows to sell off positions to lower your total tax liability.

 

The division of brokerage accounts during a divorce proceeding is often a complicated process and exploring the utilization of an in-kind transfer may be to your advantage. It is important that you work closely with a qualified matrimonial attorney to fully capture the maximum value your are entitled through equitable distribution. 

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What Typically Qualifies As A College Contribution Expense?

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It is that special time of year, caps and gowns are being handed out and high school graduations are just around the corner. While I remember this exciting time in my life with fond memories, as a matrimonial attorney, I am getting prepared for an influx of phone calls and emails from individuals regarding which college expenses they are responsible.

 

In New Jersey, while not automatic , the majority of the divorced parents have an affirmative obligation to contribute towards their child's college expenses. Often times, parties get divorced when their children are young and they draft vague provisions in their settlement agreements which do not define the exact expense categories in which they must contribute. I can write page upon page of the pitfalls associated with overly vague provisions in Marital Settlement Agreements, however, for purposes of this blog, I will outline some common college expenses that I have seen the Courts enforce.

 

SAT Preparation Classes & College Applications

That is correct, before your child even attends college, you will likely be responsible for your percentage of the SAT preparation classes (potentially tutors) and college application costs. With the weight that colleges place on SAT scores, Courts will often order each party to contribute towards SAT preparation costs. The costs associated with your child's applications colleges will also qualify as a college expense.

 

Tuition and Fees

The tuition and fees of the college are pretty much self-explanatory. It appears these days, colleges will do everything to include as many fees and costs to the student, including some charges on my client's children's bills being deemed "miscellaneous". Nothing much you can do here, my only tip is to speak with the Bursar's office to understand your payment plan options.

 

Room and Board

If your child chooses to reside on campus, you will be responsible for their room and board expenses. If on campus, the room expenses are defined as the college dormitory expense that is charged per student. Court's have also held that parents are responsible for a child's off-campus housing, if they choose to move off campus, usually during their Junior or Senior year. If your child resides off campus, in addition to the rent that they pay, you will also more than likely be responsible for the utilities associated with this housing arrangement.

 

The term "board" typically refers to meal plans for your child. Many colleges have different levels of meal plans that students can select. If your child lives off campus, I have also experienced judges that will allocate a food allowance to the student, due to the fact that they will typically not be subscribing to a meal plan that is offered through the college.

 

Books & Computer

Your child's books will be including in the college expense obligation. With the emergence of companies that rent text books to college students, this expense over the recent years has decreased and I have seen judges determine that parents are not responsible for the purchase of new text books for their children, with the Courts getting more comfortable with the notion of rented text books.

 

In this day and age, it is a necessity for college students to have their own computer. Courts are requiring parents to contribute towards this purchase when it comes to assigning college expenses.

 

Transportation

Courts are also requiring parents to contribute towards reasonable transportation expenses of the child to get to and from college. With many schools not allowing Freshman to have vehicles on campus, this expenses usually includes airfare (if applicable), bus or train expenses for your child to go to school each semester and come home during recognized breaks in the college schedule.

 

I have also seen transportation expenses recognized in the context of college visits. It is becoming more common for the expense associated with the visit of a student (and parent) to a potential college being shared as a recognized college expense. This expense usually includes, lodging for the visit, food and gas reimbursement for the parent that is accompanying the child on the visit.

 

As you can see, the contribution towards your child's college expenses can quickly escalate. My advice is to be as specific as possible when negotiating your Marital Settlement Agreement in regard to the definition of college expenses. Court's will honor agreements that limit contribution to certain categories. If you discuss these expenses in advance of your child attending college, all involved parties will know where they stand and you can hopefully avoid a future litigation regarding what is included in your college contribution obligation.

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Alimony and Cohabitation: The Recent Ruling of Quinn v. Quinn

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What happens if alimony stops based on the cohabitation of the recipient if the cohabitation ends? In the recently-decided case of Quinn v. Quinn, a New Jersey appeals court held that alimony could resume since Ms. Quinn’s cohabitation had ended and she was in renewed need of support from her former husband. The ruling was particularly interesting since the Quinn’s Marital Settlement Agreement specifically stated that alimony would “terminate” if Ms. Quinn cohabited. There was no mention of suspension, much less reinstatement of alimony. Nonetheless, the court exercised its power to ensure fairness since Ms. Quinn was once again financially dependent on her receipt of alimony. The lesson of the case is that even when divorcing parties seek to address all issues, circumstances may occur which make their Agreement subject to a court’s “equitable jurisdiction” and lead to results which neither of them expected. 

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Older Entries

April 28, 2014 — Beware of the "Child Support" Trap When Negotiation Alimony

April 18, 2014 — The State of Grandparent Visitation: A Brief Update

March 19, 2014 — Special Needs Trust and Child Support

March 7, 2014 — The Division of a 401(k) Plan Through Equitable Distribution

March 6, 2014 — Using Qualified Domestic Relations Orders (QDROs) to Collect Alimony and Child Support Arrears

March 6, 2014 — Teen Sues Parents for Child Support

March 5, 2014 — Mediated Agreements Must Be in Writing

February 18, 2014 — Uncontested Divorces and Equity

January 28, 2014 — Where Should the Children Attend School?

January 24, 2014 — Domestic Violence and Due Process

January 17, 2014 — Reconciliation After Filing for Divorce: Success or Sorrow

January 13, 2014 — High Net Worth Divorce Issues

January 7, 2014 — New Jersey Child Relocation Overview

December 31, 2013 — How Do You Equitably Distribute A Closely Held Business Interest Owned Prior to Marriage

December 13, 2013 — College Contribution

December 5, 2013 — Sharing Time with the Kids in Your Post-Divorce Life

December 3, 2013 — What Percentage of a Business Subject to Equitable Distribution is a Non-Owning Spouse Entitled To?

December 2, 2013 — Grandparent Visitation--A High Hurdle Gets Higher

November 27, 2013 — Hawaii Legalizes Same-Sex Marriage and New Jersey Surprises

November 26, 2013 — Terminal Illness and Custodial Fitness

November 25, 2013 — Alimony & Retirement

November 21, 2013 — Consider All Issues Prior To Filing A Family Law Motion

November 14, 2013 — Does Cohabitation Automatically Terminate Alimony In New Jersey?

November 13, 2013 — Equitable Distribution of Professional Practices

November 6, 2013 — New Jersey to Recognize Out of State Same-Sex Marriages

October 31, 2013 — Same Sex Marriage and Taxes

October 24, 2013 — Same Sex Marriage (and Divorce)

October 18, 2013 — Business Evaluations in Divorce Cases Must Reflect Fair Value, Not Fair Market Value

October 10, 2013 — Marital Settlement Agreements- It's all in the Details

October 9, 2013 — Divorcing the Dolittles: Sharing Time with Pets

October 8, 2013 — New Jersey Judge Rules in Favor of Marriage Equality

October 4, 2013 — Business Evaluations in Divorce Cases

September 26, 2013 — New Legislation Strengthens Enforceability of Premarital Agreements

September 16, 2013 — The Effect of Social Security Disability Determinations on Child Support and Alimony

September 10, 2013 — Treasury and IRS: All Legal Marriages are Equal Under Tax Code

September 5, 2013 — Requirements for Special Needs Trust in Lieu of Child Support

August 28, 2013 — What Issues Are Followed by Divorce?

August 16, 2013 — Does Alimony Terminate Upon Cohabitation of Ex-Spouse?

August 13, 2013 — Waiting Is [Almost] the Hardest Part

August 9, 2013 — Montgomery County Makes a Move for Marriage Equality

July 25, 2013 — ACLU Sues PA Over Marriage Equality, Attorney General Won't Fight It

July 5, 2013 — Adjustments to a Base Child Support Award Based Upon Additional Expenses for a Child

July 3, 2013 — Specifics of the Expense Categories Included in New Jersey Child Support

July 1, 2013 — What is "Imputed" Income?

June 28, 2013 — Can You Extend Limited Duration Alimony?

June 27, 2013 — U.S. Supreme Court Lets Marriage Equality Forge Ahead

June 27, 2013 — Expenses That May Be Added to the Basic Child Support Obligation

June 27, 2013 — What is "Income" for the Calculation of Child Support in New Jersey?

June 14, 2013 — Beware of What You Post Online- Especially If You Are Involved In Litigation

May 21, 2013 — Grandparent Deemed "Psychological Parent" of Child

May 15, 2013 — Equality Getting Closer to Home

May 13, 2013 — When Does Cohabitation Affect Alimony?

May 10, 2013 — Emancipation of Child Occurs if Child Working Full Time

May 8, 2013 — Dismissing Final Restraining Orders

April 25, 2013 — Hearing Required to Disestablish Paternity

April 16, 2013 — Economic Basis of Child Support Guidelines

April 12, 2013 — Marriage Equality Updates in the Region

April 10, 2013 — Do the New Jersey Child Support Guidelines Apply to My Case?

April 8, 2013 — "Why Can't I Pay My Child Support Directly to My Child"

April 5, 2013 — Impact Of Exempt Assets On Child Support

April 4, 2013 — What are Income Shares in New Jersey Divorce?

April 3, 2013 — Obama Administration Declares Support for Challenges to Same-Sex Marriage

April 1, 2013 — With the Possible Repeal of DOMA, Couples Need to Act

March 29, 2013 — How is Child Support Determined in New Jersey?

March 25, 2013 — Pending Bill in New Jersey Assembly on Alimony

March 22, 2013 — State and Republican Senator Give Support to Same-Sex Couples Ahead of DOMA Decision

March 20, 2013 — New Jersey Child Support Guidelines: Underlying Rationale

February 27, 2013 — Can Accounts in a Child's Name be Used for Their College Education Expenses?

February 18, 2013 — Relocation Update

February 13, 2013 — Can a Court Prohibit Me from Moving?

February 12, 2013 — Stark & Stark Associates to Present at Dinner Seminar Series Tonight

February 11, 2013 — College Students and Child Support

February 7, 2013 — "Palimony" Update

February 4, 2013 — Alternatives to Legal Separation in New Jersey

January 31, 2013 — Can a Child be Emancipated Over a Parent's Objection?

January 18, 2013 — Joint Legal Custody Demands Cooperative Parents

November 30, 2012 — Does Estrangement Between a Parent and Child Eliminate a Parent's Obligation to Contribute to College Education Expenses?

November 14, 2012 — Child Support and Emancipation in New Jersey

November 5, 2012 — Egregious Financial Fault as a Potential Bar to Alimony

October 17, 2012 — Recent New Jersey Appeals Court Issues Decision of Interest to Divorce Lawyers, Alimony Payers, and Recipients

September 17, 2012 — Post-Divorce Cohabitation and Alimony

August 29, 2012 — The Calculation of Child Support and Alimony with Fluctuating Income

August 24, 2012 — Name Change Requirement Held Unenforceable

August 8, 2012 — Determining Business Goodwill in Divorce Cases

August 1, 2012 — Is a Disabled Spouse Entitled to Permanent Alimony?

July 18, 2012 — IRAs May Be Executed Against for Attorneys' Fees

June 13, 2012 — Securing Alimony and Child Support Obligations

June 11, 2012 — In-Kind Income: In or Out For Child Support?

June 7, 2012 — Federal Defense of Marriage Act Declared Unconstitutional

May 31, 2012 — Considering a Divorce in New Jersey?

May 30, 2012 — Sporadic Income: How Does This Affect Child Support?

May 24, 2012 — New Jersey Child Support Guidelines Can Only Be Disregarded For Good Cause

April 26, 2012 — An Overview of How a Divorce Could Affect Your Taxes Part 3: Property Divisions, Dependency Exemptions and Child Care Credits

April 19, 2012 — An Overview of How a Divorce Could Affect Your Taxes Part 2: Alimony & Child Support

April 18, 2012 — The Use of Experts and Other Professionals in a Collaborative Divorce

April 6, 2012 — An Overview of How a Divorce Could Affect Your Taxes

March 30, 2012 — Are You A Good Candidate For A Collaborative Divorce?

March 14, 2012 — New Jersey Supreme Court Holds That When Parents Don't Agree on Their Child's Last Name, The Court's Decision Reigns

March 12, 2012 — Custodial Parent Rights to Legally Change the Name of a Child

March 9, 2012 — What is a Collaborative Divorce?