First, it is important to note that the Internal Revenue Service does not permit you to file under a “married” status unless you were legally married on the last day of the previous calendar year.
However, your case does not have to stall and negotiations to resolve your matter can continue, as you are permitted to have an executed Marital Settlement Agreement prior to the end of the calendar year.  If the end of the year is approaching and you have an executed Agreement, it is common to petition the Court to adjourn the Final Judgment of Divorce hearing. While the Court has no obligation to grant your adjournment request to the next calendar year, judges often grant such requests if there is a clear financial benefit to the parties.

Strategic decisions to hold off the Final Judgment of Divorce hearing are often agreed upon between attorneys in scenarios in which one client would be adversely impacted by a forced single tax filing.  One such scenario would be the case in which marital assets were liquidated during the litigation and tax consequences exist. (i.e. capital gains taxes, early withdrawal penalties/taxes of retirement accounts, etc.)  As many of the redeemed funds were often acquired during the marriage, the parties may minimize the tax burden (lower effective tax rate) by filing jointly and avoid the need to offset the credits through equitable distribution.

I have also experienced scenarios in which the parties have made the decision to hold off a Final Judgment of Divorce to file jointly despite having an executed Agreement to maximize the amount of financial aid for their children.

Please note that before any decisions are made regarding the benefits or possible pitfalls with filing designations during your divorce matter, it is essential that you consult with an experienced divorce attorney as well as a licensed Certified Public Accountant to review the various tax implications of your decision.

I am hopeful that the following two scenarios offer some clarification.

Scenario 1 – Retirement Account Is Not Subject To Distribution: The account would need to be established prior to your marriage with no contributions made during the period extending from your date of marriage through the date of complaint. The most common scenario would be that you have a 401(k) or a rollover IRA from a previous employer that was established before your marriage. As you did not receive any benefit from your employer during your marriage (ie: employer matches, employee contributions, deferred compensation options…etc), it would follow that this asset was not accumulated during the marriage and not subject to equitable distribution.

As a practical tip, it is important to maintain an account statement displaying the value as close to the date of your marriage as possible. This will greatly aid your efforts in proving that the account was indeed premarital and not subject to any possible distribution to your spouse. Many brokerage houses will not maintain account statements longer than 10 years, so keeping a copy in your personal records may be a good idea to offer sufficient proofs.

Scenario 2 – Retirement Account Is Partially Subject To Distribution: When a portion of your retirement account was accrued prior to your marriage, the situation gets a little more complicated.

As stated above, you are entitled to 100% of the retirement account accumulated before the marriage. However, the monies deposited or supplied by your employer during your marriage are subject to equitable distribution, usually under a 50% distribution allocation.

Good recordkeeping is essential here, as you will need to provide your attorney with a statement showing the value of the account prior to the date of marriage. This will be necessary in order to develop the exempt value of the account and will assist your attorney in reaching the proper percentage that is divisible.

For purposes of example, if you had $100,000 in your account and $20,000 was pre-marital, a standard distribution to your spouse would be $40,000.

• Account Total Value = $100,000
• Marital Value = $80,000
• Spouse 50% Distribution = $40,000
• Your Portion = $60,000 ($20,000 exempt and $40,000 marital

Additionally, you are entitled to classify the growth of the portion of the account that was premarital as exempt. Without the assistance of an accountant or actuary, the isolation of the growth portion gets a little tricky. However, to simply the process, attorneys will often look at the historic average earnings of the account during the time period associated with your marriage. Once this growth is isolated, it is a fairly straightforward process to impute an estimated level of earned interest for this exempted portion of the asset.

Please remember that New Jersey is an equitable distribution state. Parties going through a divorce are not always entitled to an automatic 50% distribution of marital assets and there are various statutory factors that must be taken into consideration before a distribution percentage is established

If you, or someone you know, is going through the divorce process and has questions regarding equitable distribution or other related matters, please feel free to contact me in my firm’s Lawrenceville, New Jersey office.

• Make sure both parties are clear as to the definition of “net profits” to be divided upon the closing of the property.  Does your agreement call for the parties to be equally responsible for the closing costs, realtor commissions, outstanding utilities and taxes...etc?  In my experience, the smoothest transactions are the ones that spell out the responsibilities of each party regarding these settlement liabilities before the house is listed.
• Select a mutually agreed upon real estate professional to market your property.  I recommend that each party submit two names for potential realtors If each party suggest two professionals, the appearance of one party “getting their person” does not become an issue.  Make sure to inform the potential realtors that you are in the midst of a divorce to ensure that they understand that communication protocol that will be necessary to navigate this arrangement.
• Have a certified inspector conduct a walk-through before you execute a listing agreement with the realtor.  Knowing what work will be needed for your house to pass inspection before any potential offers are forwarded could go a long way in understanding the true market value of your property.  In the context of a divorce litigation, establishing a budget before the listing will help each party understand their financial responsibilities associated with getting the house up to code. 
• Speak to your spouse and the realtor regarding potentially setting a pre-determined timetable for reducing the listing price of the property.  I have seen many issues arise when one spouse wishes to “fire sale” the property and accept a low offer just to get the property off their hands.  This approach may conflict with a spouse that may be in a financial advantageous position, who wishes to wait out a better offer.  Agreeing to a fixed timetable to lower a listing price by a certain percentage will alleviate the disagreement each time that either spouse may wish to modify the current listing and allow all parties to remain on the same page.  An agreement like this could also be utilized regarding automatic acceptance of certain offers within a percentage range of the current listing price.

I am hopeful that these tips will assist the process of selling your marital residence in the context of a divorce litigation.

While I understand that the nuisance of going down to HR is sometimes as painful as a dentist visit, it is extremely important that you conduct this exercise as soon as possible after your divorce decree becomes final.
 

I say this because earlier this year, the United States Supreme Court unanimously held that under the Employee Retirement Income Security Act (ERISA), failing to update your beneficiary designation with the plan administrator will enable a previously named beneficiary from getting their allotted portion of your hard earned pension, 401 (k) or life insurance proceeds. This ruling may seem like a hardline approach by the Court.  However, without a written change in beneficiary notification, the true intent of the deceased individual is difficult to prove. 
 

Under New Jersey law, during a pending litigation, an individual cannot modify their existing insurance or retirement account beneficiaries (assuming they are allotted to their spouse and children) until the entry of a Final Judgment of Divorce.  Being that retirement assets acquired during the marriage are more than likely subject to equitable distribution, their division is often identified in a Marital Settlement Agreement and a subsequent Qualified Domestic Relations Order (QDRO) is entered to distribute the asset.  Identified distributions in the Marital Settlement Agreement will be protected against the payor’s estate if the payor dies before the allotted distribution.  However, a scenario could arise where the payor didn’t change his or her beneficiary designations before their death (post-judgment) and the ex-spouse will have a legitimate claim to receive their equitable distribution share, along with their designated beneficiary portion. 
 

Being that the changing your beneficiary designations immediately upon your divorce will not have an adverse impact on the ability to distribute the asset via a QDRO, there is no reason not to make this a top priority after your divorce becomes final.  Do whatever you have to do to remember to modify your beneficiaries-  make a mental note, write a reminder to yourself on a stick-it tab or hopefully your attorney will remind you at the conclusion of your matter.  Either way, do not let this important distinction fall by the wayside. A simple check of a box on a Human Resources form could have an enormous impact on your love ones’ futures.

So now what? The divorce has been over for some time, but there are still outstanding issues you would like resolved between you and your ex-spouse, but you really do not know if you are prepared emotionally and financially to invest more time into litigating additional issues.           
 

Many individuals find themselves in this place a couple years out from their final divorce decree.  Maybe a child is getting ready to attend college and you have a feeling that your ex-spouse is not going to live up to their end of the agreed upon payment allocation.  The parent who has custody of the children has decided to relocate the children to another state.  Or maybe it is even something smaller – should you pay to fight your former husband/wife because they have not provided you with updated life insurance information to cover your support payments?   
 

What are the best steps to weigh the decision to litigate additional issues that may arise after the final divorce decree is signed?
 

My best piece of advice is to meet with an attorney when you first identify a possible post-judgment issue.  Don’t wait until your ex-spouse has missed nine straight weeks of support. When you see a pattern developing, reach out to an experienced attorney for advice.  At this initial meeting, your attorney will be able to spell out the advantages and disadvantages both financially and time-wise in litigating the matter to a final result.  At this point, you will have a better understanding of your rights and can make an informed decision whether or not to move on with a filing.       
 

Make sure your attorney gives you a possible range of a budget that you can expect the entire motion and any necessary additional court appearances will cost you before making the decision to go forward. If your attorney skirts the issue of providing a budget to you, you may not want to hire that person. Most attorneys can give you a reasonable budget estimate of the costs to address and resolve your post-divorce judgment issue.
 

I state this because the costs involved in the filing of a motion to enforce the provision of a divorce settlement agreement which requires the other party to pay support or alimony by a certain date will be cheaper to resolve than a motion for permission to relocate to another state with the children where it might be necessary to hire custody experts.  Also, the filing of a motion may truly be cost-prohibitive in connection to the relief you are requesting.  For example, if your former spouse owes you $750.00 in past child support arrears, it does not make financial sense to spend $3,500.00 in counsel fees to track this money down.  I often advise my clients to hold off on the possible filing until the “ends justify the means”.
 

The second and often more important concern is the issue of time. Your attorney should be able to give you a fairly accurate estimate as to the amount of time it will take your issue to be resolved from the filing of the initial application to its ultimate resolution.  Do you and your family have the emotional strength and patience to move forward with a litigation that may take many months to decide?
 

Sometimes the timing and expense estimates will need to be modified as your case progresses. For example, your post-judgment motion might be one you believe could be easily decided by the Court on motion day but instead of issuing an order resolving the issue, the Court would like further disclosure of information from the parties before rendering a decision so it instead issues a discovery order and reschedules a court date three months from the initial court date.  Also, you have opened up the door to your former spouse to make a claim against you.  Make sure you have been compliant with your obligations under your agreement.  You have be prepared both financially and emotionally to be able to adapt to these modifications and weigh the possibility of these modifications with your attorney when making the decision to bring your post-divorce judgment application.  As always, make sure to contact an attorney that focuses their practice in matrimonial law to fully weigh your options.

It is even more dangerous when attorneys fail to give full treatment to the issue and put in language into a final Marital Settlement Agreement, such as; “The parties will divide up their personal property to their joint satisfaction”.  Newsflash - people who are getting divorced, will more than likely not be able to sit down at the dinner table and dibby up the good china!
 

So what do you do to avoid a post-judgment application regarding Aunt Eva’s Forman Grill that was given to your client as an engagement gift? 
 

The best tip I can offer is to begin dealing with the issue of personal property at the outset of the litigation.  I often have my clients develop a list of personal property and have them place a good faith value on said items.  The next step is to develop a roster of items that your client wishes to retain and identify what items the other spouse will more than likely request (sentimental value...etc).  Once I have reviewed the prepared list, I will then send over an initial distribution plan to the other side.  If there are valuation concerns, sending the proposed list early in the case allows plenty of time to work out a proper distribution method with opposing counsel.   
 

If the former marital residence is going to be listed for sale, it is critically important to establish a proper timetable for the parties to remove belongings from the residence so the real estate listing can move forward.  The removal of belongings is often a sensitive issue, as one spouse may not feel comfortable with the other party having access to the former residence.  To ease these concerns, work with your attorney to identify a neutral third party to be present and can take inventory of the retrieved goods when the removed spouse returns to the residence.  The involvement of an agreeable third party, along with an identified time frame/scope for the retrieval of your client’s belongings should help smooth this often turbulent process.
 

Another issue that often arises concerns the disposal of personal property that is unwanted by both parties.  While some clients would like to place their spouse’s belongings in a trash bag and place it on the curb, it is important to realize that there could be some identified value on personal goods that are no longer desired by the parties.  Have your attorney get in touch with opposing counsel and identify a list of goods that both parties wish to mutually dispose.  Consider your options, donating old clothing or furniture may produce a nice tax deduction that will benefit the parties.  Additionally, there are many disposal companies out there that will pay you cash for your “worthless items”.  This money can be split between the parties, or placed in a custodial account for your children.  If a moving company is necessary to dispose of these items, both parties will more than likely be responsible for sharing the cost of these services.
               

While the disposition of personal property may sound trivial, it is often the issue that holds up a final settlement of a case.  Work with your attorney from the outset of your case to get the issue out in the open and try your hardest to think with your head and not with your emotions.  If you follow these simple tips, dividing up the personal possessions acquired during your marriage should fall into place without the need for expense litigation.

The New Jersey Child Support Guidelines mandate that the custodial parent cover the first $250 per year for each child’s unreimbursed medical expenses.  With the price of co-pays and prescriptions these days, this $250 does not go very far.  All unreimbursed medical expenses above this amount are to be paid by agreement between the parties, or through a Court Order.

The most common resolution to the issue of what each party’s responsibility is towards these medical expenses is to use an “income shares” approach.  Under this method, each party’s respected income is registered a percentage in direct connection to the total combined income of the litigant.  For example, if Wife earns $100,000 per year and Husband earns $80,000 per year, Wife would have an obligation to pay for 55% (her share of parties’ total income) of the registered unreimbursed medical expense, after the first $250 credit is properly applied.  I have found that this model is the most efficient resolution to the issue.  However, it is important to note that the “income shares” approach is not a mandated or Court ordered resolution to this issue.  It is merely a practical approach that many attorneys utilize.

When drafting a Marital Settlement Agreement or a Post-Judgment Order, parties also have the option of coming up with their own agreed upon payment method of these expenses.  I have seen many litigants agree to a 50/50 split, even when their income percentages are not truly equalized.

Being that a vast majority of litigants share the designation of joint legal custody (joint decision making rights) of their children, if you are the custodial parent and wish to receive reimbursement for the medical expenses that you covered “out of pocket”, I suggest that you develop a system to inform the other spouse of these anticipated cost.  Many litigations focus on whether or not the other party had a chance to approve a medical procedure that will incur some “out of pocket” expenditure before the non-emergency procedure commenced.  Like many other areas of a successful post-divorce relationship with the other parent, effective communication is the key to avoiding a potentially costly litigation.

As always, if you predict that the payment of unreimbursed medical expenses may be an issue in your pending or existing divorce agreement, I suggest that you consult with an experienced family law attorney to fully explore your options.

Full And Complete Disclosure
I understand that it may be embarrassing to inform others of your release.  However, it is critically important to disclose your complete situation to your attorney.  Your counsel will not be able to advise you of the potential impact your change of employment will have on your matter if they are not filled in to the true and accurate picture. 

What do I mean by this?  Full disclosure includes the reasons for your release, the amount and details of the severance package and any other positions/offers that may have been offered to you in lieu of your release.  If you do not feel comfortable communicating the status of your employment to your spouse, conveying accurate information to your attorney is vital for him/her to forward to opposing counsel.

Documentation...Documentation...Documentation
As you can imagine, ex-spouses are often leery of your loss of employment during a divorce litigation.  It is often viewed as a tactic to lower a current or future support payment.  In an effort to combat this presumption, it is very important that you document all of your efforts to regain employment.  Print out all job postings you have applied to, gather information relating to any job recruiters you may have been in contact with and keep a journal of professional contacts you have utilized to secure a position.  While this may seem burdensome, it will save a massive headache if a motion regarding modification/establishment of support is in your future.

Retaining An Employability Expert
With this turbulent job market, it is more difficult than ever to determine a litigant’s true earning potential.  Being that underemployment is always a “hot-button” litigation issue in family law, if you are considering taking a lower paying position due to market demand, or you are unemployed and being imputed income at a level which is no longer reasonable, it is probably in your best interest to engage the services of a vocational expert.  This expert will be able to gauge the true state of the market and provide you with a certified earnings range that is commensurate with your education and experience.  For purposes of litigation, they will produce an expert report and can be called to testify in any potential future litigation.  These experts are often worth their weight in gold because I have found that once this expert report is registered, issues regarding support often find a way of getting settled.

After the Appellate Division released their decision in Strahan v Strahan, there has been much debate and discussion concerning whether or not that the days of liberal child support awards that exceed the established NJ Child Support Guideline amount have been “sacked” by Justice Parker’s opinion.

For those non-sports fans out there, Michael Strahan was a star defensive lineman for the New York Giants and subsequently, the recipient of numerous lucrative multi-million dollar contracts.  Strahan has recently retired from playing professional football and is currently employed with Fox Sports as a football analyst for their pre and post-game broadcasts.

Strahan and his wife went through a very public divorce in the Summer of 2006.  After 11 days of trial, the Superior Court determined that Strahan was to pay $235,000.00 per year in child support.  This obligation was established in addition to the alimony payments that he was ordered to supply to his ex-wife and amounted to $200,000.00 above the amount established by the New Jersey Child Support Guideline calculation.

Strahan filed an appeal on the grounds that his child support obligation was excessive.  The Appellate Division agreed that the trial court’s calculation of support was indeed excessive and remanded that the lower court reestablish a more accurate determination of support.

In New Jersey, child support obligations are calculated through an established formula that is primarily based on the gross incomes of the parents.  There are certain mitigating or accelerating factors such as health insurance contributions or day care expenses. However, the support obligation is heavily based on the income, or earning potential of the parties.

The New Jersey Child Support Guidelines only establish a support amount for parties that earn less than a yearly combined income of $187,200.  Once the Guidelines are utilized to establish a maximum amount of support, the Court has the discretion to enter an supplemental amount of child support that is commensurate with the additional financial needs of the child(ren).    

While Justice Parker’s decision contains many well-reasoned conclusions of law, I believe that there are two practical tips embedded in his decision that will help an individual that is involved in a case that calls for an “above-guideline” child support award.       

Be Meticulous In Distinguishing Expenses Between The Children And The Custodial Parent
The Appellate Division made it clear that a custodial parent cannot gain a financial benefit beyond what is merely incidental to a benefit conferred to a child through a child support award.  In clearer terms, expenses such as home improvements and lavish vacations may rise above the scope of an incidental benefit to the custodial parent and should not be fully accounted toward the “actual” support needs of the child(ren).  It is understood that a custodial parent will indeed reap the reasonable fringe benefits of a generous child support amount.  However, the Courts will often look at potentially excessive and questionable “child support” expenses forwarded by a custodial parent as a tactic to “backdoor” additional support that is traditionally categorized for alimony-type payments.  This classification from the Court, is one that you will want to avoid at all costs.   

As a practical tip, I suggest that while preparing your case for an above-guideline litigation, you take the time to clearly identify your family’s past expenses for a 36 month period.  Too many of these cases fall off- track because of improper accounting efforts. Once your total family expenses can be identified, it is imperative that you isolate and account for the true and accurate amount of expenses associated primarily with the your child(ren).  Be on the lookout for such expenses such as lessons, tutoring, activities and medical costs.  If your expenses are difficult to dissect, due to the commingling of funds (payment from various sources, such as credit cards and cash) to pay for various activities, I strongly recommend that you engage the services of a qualified forensic accountant to aid your efforts.

Once the expenses have been properly separated between the custodial parent and the child(ren), it is in your best interest to develop a separate Case Information Statement (CIS) for the child(ren).  Accounting for the proper expenses under these established categories will greatly aid your cause for coming to that appropriate level of support above the Guidelines.

Caveat - Don’t forget to attach the supporting documentation for the expenses that you represent on the CIS.  Compiling this documentation may seem burdensome, but it will save you a potential headache if your matter proceeds to trial.

Recognize A Non-Custodial Parent’s Influence On Raising The Child(ren)
While Courts do not disagree that children of high income parents are entitled to various benefits that occur with such position, Judge Parker warns that judges should avoid the pitfalls of over-indulgence when setting above-Guideline calculations.  He even went as far to quote an Oklahoma case in his decision that stated “no child, no matter how wealthy, needs to be provided with more than three ponies”.

Strahan throughout the trial provided testimony regarding his concerns of spoiling his children.  The Court was persuaded by Strahan’s argument that he did not want to provide a lifestyle of excessive privilege to his daughters.  He believed that providing $235,000 per year to his children would lead to this path.  It is clear that Strahan wanted to instill the concept of working hard for financial achievement and in turn, teaching his children the value of money.

His Wife characterized this argument by Strahan as a financially motivated tactic for lowering his support obligation.  However, after reviewing the testimony, the Court was not persuaded that his argument was insincere and made it clear that the non-custodial parent’s reasonable input regarding the activities and privilege of the child(ren) holds substantial weight in above-Guideline litigation.

When preparing for this issue in litigation, I believe it is extremely important to do your homework regarding the past activities and expenses of your children before the separation.  If a very expansive budget was enjoyed by your children during the marriage, you may run into difficulty at trial trying to convince a judge that you now wish to modify the “status quo” of the privilege afforded to your children.  However, the Appellate Division made it clear through this decision that judges at the trial level are to take harder looks into what the reasonable needs of the children really are when both parties cannot agree on establishing a negotiated above-Guideline means of support.

I strongly suggest that if you are involved in an above-Guideline matter, to further explore all relevant factors surrounding the establishment of support, you should consult with an experienced family law attorney to properly address all of the relevant issues.

Update Your Finances
Being that the average divorce litigation spans the course of close to a full calendar year, it is important that you work with your attorney and periodically update your financial data.  Various investment accounts that had high values when the litigation commenced, may have decreased significantly due to recent market conditions.

While I know that it remains painful to open up your investment account statements these days, it is imperative that you stay informed of your investment position.  It is impractical and expensive for your attorney to piece together a comprehensive settlement proposal without a true and accurate accounting of your assets and liabilities.  Staying informed will save both time and most importantly, litigation costs.

One Household vs. Two Households
While it may not be the ideal situation, it is becoming more common for parties that are getting divorced to live under the same roof.  It is a financial reality that most couples are barely making ends meet while they are married.  For one party to move out of the former marital residence during an expensive divorce litigation creates an additional stain on the budget that may not be economically feasible during these recession-laden times.

If you are forced to reside in the same household as your soon to be ex-spouse, I recommend that you formalize an agreement regarding payment of the necessary carrying expenses of the residence.  This will save you the headache of fighting at the end of each month regarding who is responsible for the cable bill or payment for the groceries.

For accounting purposes, it might be a good idea to open up a new joint checking account that is used to solely pay your household expenses during this period.  This will ensure that both parties have a receipt of what bills were paid and the source of the deposited funds to pay such expenses can be easily recorded.

If you have children, I strongly suggest that you and your spouse work out a provisional parenting plan.  While it may seem unnecessary and burdensome to have set parenting time while residing under the same roof, it has been my experience that these type of agreements are worth their weight in gold.  Make sure to properly assign the time that each parent will spend with the children.  Therefore, if it is your designated weekend, there will be no dispute when you take the children with you for a day full of activities.  During the holiday season, having an assigned schedule for parenting and vacation is even more worthwhile.  Most importantly, having set parenting time while living together will aid your children with the difficult transition when one parent vacates the residence.   

Acceptance Of The Situation
I find that many soon-to-be divorced individuals find it particularly difficult to accept the grim financial reality that is sweeping across our nation.  Many projections of alimony awards and child support obligations may have to be significantly modified due to the economic crisis.  Salaries are getting slashed, jobs are being cut and bonuses are becoming a rare commodity.  It is important to realize that your spouse’s reduction in pay may not be his/her fault and is more than likely tied directly to the widespread financial downturn.  Remember that if you and your spouse were still married, there would be a need for implemented household and lifestyle budget cuts.  In order to save large litigation costs, it reasonable to accept the notion that your needs during your divorce litigation might have to be modified accordingly.

1 - Whether the parent, if still living with the child, would have contributed toward the costs of the requested higher education;
2 - The effect of the background, values and goals of the parent on the reasonableness of the expectation of the child for higher education;
3 - The amount of the contribution sought by the child for higher education;
4 - The ability of the parent to pay that cost;
5 - The relationship of the requested contribution to the kind of school or course of study sought by the child;
6 - The financial resources of both parents;
7 - The commitment to and aptitude of the child for the requested education;
8 - The financial resources of the child, including assets owned individually or held in custodianship or trust;
9 - The ability of the child to earn income during the school year or on vacation;
10 - The availability of financial aid in the form of college grants and loans;
11 - The child’s relationship to the paying parent, including mutual affection and shared goals as well as responsiveness to parental advice and guidance;
12 - The relationship of the education requested to any prior training and to the overall long-range goals of the child; and
13 - Contribution made to household expenses by the current spouse of either parent [Hudson v. Hudson, 315 N.J. Super. 577 (App. Div. 1998)].