Although this article will not specifically discuss Prenuptial Agreements, the best advice to be given to any person who own significant assets at the time of their marriage, is to negotiate and properly execute a Prenuptial Agreement.
   

The Prenuptial Agreement should specifically itemize the pre-owned assets by description, estimated value, account number or other clear and unequivocal identification.  The Agreement should then define not only the intended distribution of such assets in the event of a divorce, but the distribution of any increase in value and whether or not either or both of the parties should receive credit for maintaining or paying the carrying costs such as mortgage payments or taxes for a pre-owned asset.
   

However, in those cases in which the parties do not negotiate and enter into a Prenuptial Agreement, the distribution of pre-owned assets can become a complex issue in the event of a divorce.
   

The general rule is that only assets which are “acquired” during the marriage are subject to distribution at the time of the divorce.  By definition, assets which were owned prior to the marriage are not “acquired” during the marriage and are, therefore, not subject to marital distribution.
   

The starting point for any analysis of pre-owned assets is to develop a balance sheet of the assets which either or both parties owned at the time of the divorce and, to the extent possible, from account statements, IRA or 401(k) account statements, pension statement or real estate tax records establish a value of the asset as of the date of the marriage.
   

Unfortunately, however, as with any general rule, there are often more exceptions to the rule than there are consistencies in its application.
   

One of the most frequently encountered exceptions is when one or both of the parties transfer pre-owned assets from their individual names subsequent to the marriage.  Many people make such transfers for tax claiming purposes, estate planning purposes or sometimes simply in order to have control over the asset in the event of the other party’s disability.
   

While the transfer of a pre-owned asset from individual to joint names may be appropriate for any of these purposes, it may also have very significant consequences in the event of a divorce.  In most instances, the law will find that there was a “transmutation” of the asset from an individual pre-owned asset which would be exempt from marital distribution into a marital asset.  It is presumed that the person making the transfer intended the other person to have a joint interest in the asset and it is further presumed that the person making the transfer understood that by doing so, the asset would become subject to marital distribution in the event of a divorce.  Although rebuttable, these presumptions are very difficult to overcome at the time of a subsequent divorce and any time a pre-owned, individually titled or owned asset is to be transferred into joint names, serious consideration must be given to the impact which such transfer would have upon that asset in the event of a divorce.
   

Further problems arise when the pre-owned asset increases in value during the marriage.  For example, a home which is owned by one of the parties at the time of the marriage may significantly increase in value over the several years of the marriage.  Similarly, a business owned by one of the parties at the time of the marriage may increase in value during the marriage.  Or, something as simple as an IRA account, a brokerage account or a bank deposit may increase in value over the course of the marriage. 
  

Any time there is an increase in the value of the asset, the increase in value must be analyzed from several perspectives. 
   

First, was the increase as a result of additional contributions to the account or, in the case of real estate, improvements to the property.  If so, such added contributions or improvements would be “acquired” during the marriage and would be subject to marital distribution in the event of a divorce.
   

On the other hand, if the asset has increased in value without added investment, contributions or improvements, the increase must be analyzed as to whether it is “active” or “passive.”  “Active,” generally speaking, means that the increase was as a result of work effort or management by one or the other of the parties.  “Passive” means that the increase in value has been simply as a result of market forces or inflation.
   

For example, a simple brokerage account which was not traded, but yet increased dramatically due to market force would probably be a “passive” increase.  On the other hand, if the account was actively managed, traded and controlled by one or the other of parties, and the increase in value could be traced to that party’s trading or management decision, the increase would likely be “active.”
   

In the case of most small businesses or professional practices, the increase in value is almost always attributed to work efforts of one of the parties.  In the case of real estate, an increase in value may be a combination of inflation and market factors or as a result of the party’s maintenance, improvement or upgrades to the property.
   

Obviously, it is very difficult to accurately and precisely separate the amount of increase which is “active” versus that portion of the increase which is “passive.” 
   

Issues arise such as How much did the home increase in value because the parties remodeled the bathroom versus how much the increase is simply attributed to an increase in the value of real estate in general.
   

Unfortunately, the difficulty in analyzing and distributing pre-owned assets and/or their increase in value does not end simply with this complicated scenario. 
   

Once it is determined that some portion of the increase was “active,” you must then determine which of the parties actively contributed to the increase in value.  If it was the spouse who owned the assets efforts which contributed to increase in value, the increased value is going to be distributed much differently than if it were the active efforts of the non-owning spouse.
   

Very often, even determining the amount of the increase is simply a matter of expert opinion as opposed to hard and fast figures.  If, for example, a property or a business has been owned for several years, in order to determine the amount of increase in value, someone has to appraise that property as it existed several years earlier.  It is, at best, a difficult proposition to go back in time, analyze comparable sales or comparable businesses as they may have existed several years earlier and then to extrapolate that data into a valid value which can be used for the purposes of determining the amount of increase in value.
  

All of this simply brings us a full circle to the subject of Prenuptial Agreements.  All of this difficulty, the sometimes subjective determination as to whether the increase in value is “active” or “passive” and the difficulty of conducting appraisals several years in the past can be avoided by the arms-length negotiation and execution of Prenuptial Agreement prior to the marriage.
   

In addition to prior owned assets, the subject of inherited assets often comes into play at the time of a divorce.
  

One or both of the parties may have inherited assets during the marriage.  If so, by New Jersey Statute, inherited assets are exempt from marital distribution and remain the property of the person who inherited them. 
   

However, as with pre-owned assets and their increase in value, there are a number of exceptions and complications in the practical application of that seemingly simple rule.  Suppose, for example, a party inherits money which they, in turn, invest in improvements to jointly owned real estate.  Or, suppose that one of the parties inherits money which the couple uses to pay down debt during the marriage thereby allowing their income to be used more fully for investment into a small business or improvements to their real estate.
   

Again, as a general rule, the principals of “transmutation” apply to inherited assets.  If a person inherits money or assets which they then title in joint names or invest into a jointly owned asset, it would usually be assumed that they intended those funds to become marital property and that the exempt nature of the inherited asset has been “transmuted” into jointly owned marital assets which will be distributed between the parties at the time of a divorce.  Therefore, whenever any married person inherits money or assets, it is important for that person to make their own individual decision as to whether they intend for those funds or assets to become marital property or whether they intend that they should continue to be individually owned, exempt from distribution in the event of a divorce and remain their sole property in the event of a divorce.  Whichever alternative a person chooses, care must be taken in defining the form and nature of the ownership of the assets after the inheritance.
   

A final and often overlooked consideration regarding pre-owned or inherited assets is a provision in the general equitable distribution statute which provides that the “source” of the funds or assets is a relevant factor in the determination as to the distribution of that asset in the event of a divorce.  Therefore, even though an asset may be “transmuted” from an individual prior owned or inherited asset into a marital asset, the fact that the “source” of the asset as it existed at the time of the divorce was initially a pre-owned or inherited asset may significantly impact the percentage of distribution which each party receives at the time of the divorce.  There is a reported case in New Jersey where a person’s pre-owned small business significantly appreciated during the marriage and, admittedly, appreciated as a result of “active” (i.e., the work efforts) of both parties during the marriage, therefore, the “active” increase in value of the asset was a marital asset and was subject to equitable distribution at the time of their divorce.  The Trial Court, however, awarded the non-owner spouse only 10% of the increased value of the asset.
   

In summary, pre-owned assets, inherited assets and/or their increase in value during the marriage are complicated and difficult issues.  The best advice to any person owning significant premarital assets is to enter into a Prenuptial Agreement.  In addition, whenever married parties are given tax, estate planning or other advice concerning the form of ownership, the unpleasant subject of what may occur in the event of a divorce must be considered. 
   

Finally, in the event of an inheritance during the marriage, the parties must be aware of and consider the impact and various alternatives concerning the form of ownership, maintenance or control of that asset during the marriage and the impact which those various forms of ownership or control may have at the time of a divorce.

This is the ninth and final installment of DurstNotes on Divorce Law, and will discuss counsel fees. This podcast will address the considerations that are taken into account when determining who will have to pay counsel fees.

You can download Installment #9 here. (4.3 MB)

Installment 9 Show Notes (PDF)

This is the eighth installment of DurstNotes on Divorce Law, and will discuss medical and life insurance coverage. The podcast will address how to change the beneficiary of your life or medical insurance, as well as how to maintain your insurance after the divorce settlement is finalized.

You can download installment #8 here. (4.2 MB)

Installment 8 Show Notes (PDF)

This is the seventh installment of DurstNotes on Divorce Law, and will discuss social security and pension benefits. This podcast will include a discussion on the differences between social security and pension benefits, and what you can expect to incur when facing these issues during the determination of your divorce agreement.

You can download installment #7 here (4 MB)

Installment 7 Show Notes (PDF)

Supervised visitation means that a person cannot be in the presence of their child without appropriate adult supervision.
   

A Parenting Coordinator is utilized to facilitate decision making when the parents are incapable of doing so themselves. 
   

These alternatives should be used only when absolutely necessary and only as solutions of last resort. 
   

Absent such extenuating circumstances, New Jersey law regarding custody of children can be summarized in the simple principle that the parenting arrangement must be in “the best interest of the child.”   Notice that the operative words are “in the best interest of the child”; not necessarily the best interest of either or both parents. 
   

Whatever the parenting arrangement, it must address two basic areas of responsibility:  physical and legal custody. 
   

Physical custody determines where the child will reside, how many days with each parent and at what times: weekdays, weekends, holidays and vacation periods.
   

Legal custody involves decision making regarding the child.  Decisions such as elective medical care, religious training, schooling decisions and extra curricular activities are the typical  discretionary decisions which are a part of legal custody.
   

In order to determine what parenting arrangement is “in the best interest of the children,” the Court must apply specific statutory criteria. Those criteria include:
     (a) a parent’s ability to agree, communicate and cooperate in matters relating to the child;
     (b) a parent’s willingness to accept custody of the child;
     (c) any unwillingness on the part of either party to allow visitation or contact with the child with
     the other parent;
     (d) the relationship of the child with the parent;
     (e) any history of domestic violence;
     (f) the safety of the child;
     (g) the preference of the child, when the child is of sufficient age so as to form an intelligent
     decision;
     (h) the needs of the child;
     (i) the stability of the home environments of the respective parents;
     (j) the quality and continuity of the child’s education;
     (k) the fitness of the parent;
     (l) the geographic proximity of the parents’ home;
     (m) the extent and quality of time that each parent spent with the child either prior to or
     subsequent to this separation of the parties;
     (n) each parent’s employment responsibilities;
     (o) the age and number of children.
   

In most cases, the Courts make every effort to maintain a continuing relationship between each parent and the child.  The Court will attempt to craft a physical custody arrangement whereby each of the parents will enjoy meaningful parenting time with the child at regular intervals and a legal custody which allows both of them to participate in the decision making responsibility for the child.     

There are many books discussing the impact of divorce upon children and the theories espoused in such books are as numerous as the books themselves.  However, there is one common theme in almost all of the reliable literature:  the greater the conflict between the parents, the more the negative the impact of the divorce will be upon the child.
   

Psychological studies show that there are certain types of parental behavior which almost always adversely affect children.  Such behavior should be recognized by both parents and each should avoid falling into such behavioral patterns regardless of their reason for doing so. Such behavior includes:   
    •    Denigrating or criticizing of your spouse in the presence of your children;
    •    Seeking to make your child your ally or confidant;
    •    Involving your child in any decision making regarding your divorce;
    •    Engaging in verbal or physical confrontation with your spouse in the presence of your children;
    •    Using your child as messenger between you and your spouse.
   

It is very often extremely difficult to fully remove the children from the emotions, hard feelings and, sometimes, the animosity which develop between the parents during a divorce.  Short sighted parents often take misguided comfort in the fact that their children are maintaining a better relationship with them than with their estranged spouse.
  

 It is, to some degree, understandable that a parent who is experiencing the loss of their spouse and the end of their marriage, takes some solace in the allegiance of their children.  Expert after expert, text after text and experience after experience, however, have shown that the involvement of the children in the emotional aspects of their parent’s divorce seldom inures to the long term benefit of the children or their relationship with either parent.  The children, no matter what their age, should be assured that the divorce is not their fault and should be told, by actions and example, that they are free to maintain a relationship with both parents.  They should not be made to feel that showing love or loyalty to one parent is a betrayal of the other and they should not be made to feel that the showing of love to the parent is necessarily an endorsement of that parent’s behavior or a condemnation of the other parent’s behavior.
   

No matter what financial results the divorce may be or no matter how indignant one or the other of the party’s feeling are regarding the divorce, the best interests of the children will be better served by maintaining as good a parent child relationship as is possible.

This is the sixth installment of DurstNotes on Divorce Law, and will discuss equitable distribution. This podcast will address how equitable is determined through a discussion of marital assets and liabilities at the time of your divorce. This podcast will also give you an outline of the procedures used to create an equitable distribution format.

You can download installment #6 here. (8.3 MB)

Installment 6 Show Notes (PDF)

This is the fifth installment of DurstNotes on Divorce Law, and will discuss alimony. The podcast will address the factors that are considered in determine alimony, a discussion on the differences between alimony and child support, and the ability to modify an alimony payment.

You can download installment #5 here. (5.9 MB)

Installment 5 Show Notes (PDF)

This is the fourth installment of DurstNotes on Divorce Law, and will discuss the payment of college expenses for a child. The podcast will address the determining factors of college expenses such as the amount of contribution being sought, the ability of each parent to pay the anticipated amount, and the financial resources of the child.

You can download installment #4 here. (5.1 MB)

Installment 4 Show Notes (PDF)

This is the third installment of DurstNotes on Divorce Law, and will discuss the emancipation of a child. This podcast will address state regulations and the exceptions to these regulations, what factors are considered when emancipation is an option, and how a family's lifestyle can determine whether or not emancipation is the best option for the child.

You can download installment #3 here. (4.5 MB)

Installment 3 Show Notes (PDF)

This is the second installment of DurstNotes on Divorce Law, and will discuss child support. This podcast will address guidelines for the amount of support that needs to be paid from one parent to another, as well as medical expenses, work-related daycare expenses, educational tutoring, athletic fees and additional extracurricular activities.

You can download installment #2 here. (3.9 MB)

Installment 2 Show Notes (PDF)

This is the first installment of DurstNotes on Divorce Law, and will discuss custody of the children. This podcast will address common aspects of child custody related matters, such as physical and legal custody, supervised visitation rights, use of a parenting coordinator, and how to agree on an arrangement in the best interest of the child.

You can download podcast # 1 here. (6 MB)

Installment 1 Show Notes (PDF)

This tenth and final installment of the Divorce Law Podcast will focus on moving on with your life after your divorce is final.

You can download the tenth installment here. (4.5 MB)

Episode 10 Show Notes (PDF)

No choice because their spouse wants a divorce or no choice because their spouse’s behavior compels them to file for a divorce.

Feeling that one is out of control of something as important as the continuation of their marriage, is sad to hear, and, I am sure, frustrating to the individual.

However, it is seldom true. You do have a number of choices beginning with how or whether you can accept your spouse’s behavior or decision to a number of very important choices from the inception of your divorce to its conclusion.

Consider, for example, the following.

Your spouse’s behavior----or expressed decision to seek a divorce--

You may find that your spouse is engaged in an extramarital affair, your spouse may be abusing alcohol or your spouse may be inattentive and unaffectionate. 

Your spouse may announce to you that he/she has decided to file for a divorce.

Although each of these are profound problems, they do not, necessarily, result in the inescapable conclusion that you have no choice other than divorce.

Your spouse’s announced intention to seek a divorce may be a cry for attention. It may be a misguided solution to pressures unrelated to the marriage.

Your spouse’s failure to communicate, show affection or engage in marital relations may be a defense mechanism to avoid what she/he thinks will be your rejection, it may be the result of a very legitimate physical condition or emotional depression.

Even an extramarital affair may be a misguided attempt to solve what she/he perceives to be a lack of affection from you, a loss of intensity in your marital relationship or simply a misdirected  attempt to validate him/herself.

If your marriage is important to you, do not simply accept your spouse’s decisions or actions as being the only alternative. Instead, consider--

*seeking counseling for yourself to explore whether there is something which you could be doing better or, at least, differently, to help change the situation
 
*express to your spouse in clear, unequivocal, but nonconfrontational, terms how much you value your marriage and want to work to save it .

*educate yourself with regard to the offending conduct. Al Anon, for example, can provide you with valuable insights into functioning as the spouse of an alcoholic. There are other support groups for virtually every form of human behavior; research and seek them out.

When all else fails, and if you still committed to maintaining your marriage in the face of what appears to insurmountable odds, simply stay the course.  Remain consistent and calm, exercise an attitude of forgiveness and reconciliation as opposed to blame and recrimination and reaffirm to your spouse your love and the importance of your marriage.

There is no guarantee that the results will be what you wish them to be, but the effort of trying can leave you with a much more positive attitude if the marriage does not survive than simply feeling forced to accept your spouse’s behavior or decision.

Make a reasoned choice in the selection of your attorney---

If, despite your efforts, the marriage fails, the selection of an attorney is one of the most important decisions you will make.

Ask for and consider the recommendations of other professionals, of persons who have been through a divorce and any others who may have insight into the competent divorce attorneys in your area.  However, do not accept such recommendations without doing your own due diligence and personally meeting with the recommended attorney(s).

In the internet age, simply Googling the names of suggested attorneys will provide considerable information.

Check the divorce specific websites. Some, for example, are the Supreme Court’s listing of Certified Matrimonial Attorneys (there are only about 100 statewide), The American Academy of Matrimonial Attorneys (there are about 1500 nationwide) and The American College of Family Trial Lawyers (there are only 100 nationwide).  Best Lawyers or Super Lawyers and Martindale Hubble are peer review ratings of attorneys and are useful particularly if used in conjunction with other sources.

After doing your due diligence, meet with the attorneys whom you are considering.   Ask direct questions: how long have you been practicing, how much of your work is divorce related, how often do you appear in the county of your residence and any such questions specifically relevant to your case.  Listen to both the answers and the tone of the answer.  Any competent or qualified

 
Attorney can provide you with answers to such questions, is very accustomed to have clients interview them and should not express any impatience to the nature of the questions. 

You will feel much more in control of the process if you diligently and intelligently attempt to make the choice.

Inquire as to alternative fee arrangements with the attorney--

Do not be afraid to openly and honestly discuss fees with the attorneys you are interviewing.

Current practice and Supreme Court Rules of practice virtually mandate that your attorney charge you by an hourly rate.  They also require that the fee agreement be in writing with very specific and detailed provisions mandated by the Court itself through its rule making process.

Therefore, you will almost certainly be told that “my hourly rate is X “, and may often be told that the attorney cannot yet project a reasonable fee estimate.

You should not accept that answer without further inquiry.

You should ask the attorney about the experience of  his/her staff and their hourly rates, you should ask how the attorney will delegate to staff in order to keep your blended hourly rate as low as competently possible and, if the attorney cannot or will not give you a budget estimate, ask when they expect that they will be able to do so and what can be done if their budget estimate exceeds your ability to pay.

Give-- don’t simply receive-- the strategic directives for your case--  

Not all cases, and not all clients are alike.

Your goals for your divorce may or may not be the same as the attorney’s expectations for your case or the goals of other similarly situated clients.

You should delegate the legal decisions and strategies to your attorney, but you should never surrender your ability to decide all non-legal strategies and goals that are often more important than the legal issues.

For example, whether or not you should attempt to retain your home is not a legal decision. Where your children attend school, what religious training they are to receive or even whether to take certain assets instead of others are non-legal decisions. These are decisions which you and you alone should make. You should solicit the advice of your attorney or others (your family, your accountant , a competent child psychologist, etc), but you must retain the right to make those decisions yourself and exercise that right.

The choices which you make will affect you and your children’s lives for years into the future and should be made by each client using their own sense of values and judgment.

Make your own choice as to whether you wish to pursue your remedies solely through the legal system or with the assistance of alternative dispute resolution------

Every divorce attorney is ethically required to advise every client as to the nature and availability of the various alternative dispute resolution mechanisms.

They may include mediation or arbitration, they may include the Court ordered and provided Early Settlement Panel or they may include using a mental professional to serve as a mediator of parenting issues or even to serve as parenting coordinator.

There are some cases in which various of these alternatives are contra indicated—for example, if there a Domestic Violence Restraining Order in place, mediation may not be an alternative.
If there is a power, knowledge or ability to communicate imbalance, any alternative resolution may be ill advised. Or, conversely where there are tax evasion problems or other personal, embarrassing or damaging issues which should not discussed in open court, alternative resolution may be highly recommended.

In the final analysis, knowledge is power and the power to consider and make alternative choices may or may not result in saving your marriage, but, if not, they will give you a much more satisfactory feeling about the conclusion to your divorce.

This ninth installment of the Divorce Law Podcast will focus on the follow-up issues you will encounter after your divorce has been settled. This includes the enforcement and implementation of the judgment from your case, including any QDROs (Qualified Domestic Relations Order) that may have been determined during your case.

You can download the ninth installment here. (4.2 MB)

Episode 9 Show Notes (PDF)

This eighth installment of the Divorce Law Podcast will focus on the actual trial of your case. This podacst will discuss the various steps and issues you may encounter if your divorce goes to trial, including a discussion on appealing the decision of your divorce.

You can download the eighth installment here. (4.5 MB)

Episode 8 Show Notes (PDF)

This seventh installment of the Divorce Law Podcast will focus on alternative dispute resolutions. This podcast will discuss the options you can address with your attorney in order to avoid an expensive and lengthy courtroom litigation, such as mediation, arbitration or early settlement proceedings.

You can download the seventh installment here. (4.2 MB)

Episode 7 Show Notes (PDF)

This sixth installment of the Divorce Law Podcast will focus on discovery. Discovery is a second step, and a more formal way, of gathering information relevant to your divorce proceedings. This podcast will discuss the various types of discovery proceedings, as well as some reasons why you may want to consider a formal discovery process with your attorney.

You can download the sixth installment here. (3.8 MB)

Episode 6 Show Notes (PDF)