The plethora of recent ponzi schemes, frauds and scams poses a new challenge for divorce attorneys and litigants throughout New Jersey and the country. Are the accounts real or are they the subject of scam which may ultimately prove them to be worthless?
It is bad enough that many divorce litigants know that their 401K or other accounts are 50% of last years’ value, even worse if they subsequently learn that event their remaining accounts have been strip of value by “Madoff type” managers.
If, for example, one of the parties exchanges the house for an account which, subsequent to the divorce, and through no fault of either party, proves to be worthless, is there Post Judgement relief available to the party who, as a result receives nothing of value?
The answer: we don’t know.
A Post Judgment Court may find that the parties should have known of could have obtained pre divorce discovery which would have disclosed the circumstances or could find that it is a”change of circumstances” which justifies a modification of the settlement agreement or judgment.
With regard to the latter, the current status of the law in New Jersey is that a “change of circumstances” does not justify the modification of an equitable distribution agreement or award. Thus, to grant relief to the wronged party a Court may have to “create new law”.
The word of warring is “caution”.
Counsel and the parties must even more carefully than before scrutinize assets and investment accounts.,
Creative Counsel may even develop clauses for their Settlement Agreements which addresses subsequent developments which are beyond the control of the parties, but result in an asset becoming worthless.
The art form will be “which assets”, how have they failed, why have they failed and for how long is the clause effective?