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Category: Divorce and Family Law

Who Chooses the Child’s Religion?

In a New Jersey Divorce, Who Chooses the Child’s Religion? 

In a New Jersey divorce–particularly one with young children–the following questions may arise:

  • Should the children be raised to practice a particular faith or religion?
  • If yes, how active should the children be in that religion?
  • Should the children attend religious education?  If so, what if that interferes with the parenting schedule?  For example, in a divorce case where the wife is of Jewish faith and the husband is of Catholic Faith, if the parents agree to raise the child Catholic should the mother be required to take the children to CCD classes during her parenting time?
  • Should the parents agree to split the costs for religious education?  For instance, in the above example should the mother be required to help pay for her children’s holy communion luncheon or confirmation dinner?
  • How often should the children attend religious ceremonies?  For instance, should a parent be required to attend church/synagogue/etc., with the children even if they are not of the same faith?
  • If the parents agree on raising a child in a specific faith, to what extent do they agree or not regarding parochial/private school in that religion versus public school?
The Role of Courts in Determining New Jersey Divorce Religious Choice Issues

In New Jersey most parties have joint legal custody when they divorce. This means that both parents are supposed to have a say in determining important issues of education, religion, health, and the like regarding their children. This can present a unique challenge when a stalemate arises between the parties. 

For instance, in the above example the Wife in the hypothetical is of Jewish faith and the Husband of Catholic faith. Perhaps the parties have a newborn at the time they divorce–or they have not yet agreed upon the proper faith/religion in which to raise the child. Now that they are divorcing, this may become an important issue for them.  Perhaps the Husband is convinced it is in the child’s best interests to be raised in the Catholic faith–like the Husband.  And perhaps the Wife is equally convinced it is in the child’s best interest that the child be raised in the Jewish faith–like the Wife. Assuming the parties cannot work out this issue, it would come before a court at the time of trial?  But how would the Court react? 

The answer is that there are few issues Court’s abhor deciding more than religion.  First Amendment (and other constitutional) issues are at play, judges are loath to make any decision (as it may appear they are preferring one religion to another); and moreover courts recognize that for any type of plan to work it will likely require buy-in by both parents. This is an issue that courts may “punt” entirely. 

For instance–the children shall be raised in both faiths.  Or: the Court takes no position on this issue. If the parties have a parenting coordinator then perhaps they can assist in such an issue (and mediation may help), but if not, what can be done? 

 Some guidelines that parties may wish to consider in such an instance may include: 

  • How religious (or not) each party is?
  • The religious roots for both families;
  • The importance of the issue to each party;
  • Which parent will be more committed to the responsibilities associated with raising children in their respective faiths;
  • Prior to the divorce have certain steps been taken to raise the child (or children) in any specific faith?
  • Have other children of the relationship already been baptized/etc., or otherwise been raised in a specific faith?
  • To what extent is both parties acting in good faith raising such issues?
  • To what extent will the parenting plan allow for the children to be raised in their specific faith. For instance, if there is a language component to a specific religion/faith, how will the parenting schedule allow the children to learn same to meet their religious requirements? 

It will ultimately be very much up to the parties in such circumstances to put aside any animosity they may have toward their ex-spouse (or soon to be ex-spouse) and to cooperate in the best interests of the children to make such determinations. 

Conclusion 

To the extent that courts will interfere, they will utilize the nebulous “best interests” standard to assist in making any determination.  But as noted above, courts are generally unable or unwilling to take affirmative steps regarding ultimate decisions regarding such delicate matters. 

If you are confronting this issue then you will need to work with your ex to act in the child(ren’s) best interests to reach a determination on how to proceed and which language and requirements to include (or not) in a Marital Settlement Agreement (a/k/a divorce agreement).

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

 

Who Provides Health Insurance for the Children in a Divorce

In a New Jersey Divorce, Who Provides Health Insurance for the Children? Who is Responsible for out-of-pocket (i.e. unreimbursed) medical expenses?  Read on to learn more about this area of New Jersey Divorce Law…

During a marriage, it is common for one party to provide health insurance for the whole family.  For instance, my wife works for a school district.  Therefore, she is able to provide health insurance for me and our children through her work policy.

In a divorce situation, courts strive to preserve the status quo during the marriage.  Accordingly, prior to the divorce being finalized, the party that has always provided health insurance should continue to do so.

Likewise, if there are any out-of-pocket expenses they should be paid in a manner consistent with any pendente lite support orders (court orders in place during pendency of divorce proceedings).

What About After a Divorce is Finalized? 

In New Jersey, the divorce agreement should set forth all of the obligations between the parties.  This would include the treatment of unreimbursed medical expenses (i.e. out-of-pocket medical expenses) as well as requirements to maintain health insurance coverage.

Health Insurance Coverage for a Spouse 

Regarding spouses, the obligation to maintain health insurance generally ends the day the divorce is finalized.  Even if you wished to maintain your spouse on your policy, most workplace or other health insurance policies would foreclose your doing so.  The most one can do is offer the other spouse COBRA insurance, generally to be paid to the spouse who lacks health insurance.  The COBRA insurance can generally last up to 18 months. Accordingly, the finalizing of a divorce generally requires both parties to, moving forward, maintain their own health insurance policies. 

Health Insurance Coverage for Children

The divorce agreement should set forth which parent will maintain health insurance for the children. Any out-of-pocket costs a parent pays towards a child/children should also be considered when calculating child support. The agreement may set forth alternative future considerations, setting forth, for instance, what would occur if a party were to lose their access to health insurance.  If neither party has health insurance then the agreement may set forth the actions to be taken to obtain health insurance and the division of any costs, as applicable.

Unreimbursed Medical Expenses for Children

The divorce agreement should also set forth how unreimbursed medical expenses will be handled.  Under general New Jersey law, the parent of primary residence is responsible for the first $250.00 each year (per child) and the parties thereafter will divide any additional out-of-pocket costs (such as co-pays, braces, dental work, or other out-of-network or out-of-pocket expenses).

The parties may agree to divide the costs (beyond the first $250.00 each year, per child) evenly (50%-50%) or they may agree to divide them in a proportionate manner (in accordance with their income). The parties may also include language in the divorce agreement addressing additional details, such as stating that both parties will endeavor to stay in-network absent an emergency, that the parties will keep the other party informed and advised, that proof of out-of-pocket expenses will be shown in a timely fashion, etc., (these are just examples as the parties can within reason include any additional language they wish).

Conclusion

The above issues are fact-sensitive and should be considered as part of any divorce settlement as applicable. As health care costs rise and health care and medical expenses become an increasingly important consideration in our society, it is important to be mindful of such issues when contemplating, negotiating, or finalizing a New Jersey divorce.

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

 

 

 

Divorce Settlement Agreements

What Should a Divorce Agreement Address?

For couples considering a New Jersey Divorce, the ultimate goal is reaching a divorce agreement, commonly known as a Marital Settlement Agreement (“MSA”) or a Property Settlement Agreement (“PSA”).

It may take months or years to reach agreement.  Throughout your divorce process, the divorce agreement will likely feel as though extended in space–just out of reach.  Some couples can find common ground in a matter of hours, whereas others require extensive discovery, court motions and actions, and hundreds of hours of negotiation.

But one thing I find is that many clients are uncertain about just what can be addressed in a Marital Settlement Agreement.  The purpose of this blog post is to briefly summarize some of the considerations in a standard Divorce Agreement.  In future blog posts I will further define and explain the specific clauses and considerations.

The Standard Divorce Agreement Considerations 

I hope the above assists you at the outset of a divorce (or even if you’re just considering a divorce) to better understand the types of issues that may be at play in your New Jersey divorce matter. 

 Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

 

 

Can My Spouse Waive Alimony?

Is Alimony in New Jersey Automatic? Is Waiving Alimony Allowed?

Even in the age of alimony reform, it is common for a party to be entitled to some form of alimony at the time of divorce. Alimony in New Jersey is gender-neutral, meaning that if the Wife is the breadwinner she may be required to pay alimony to the Husband.

Some of the types of alimony factors considered include: the income levels of the parties, whether additional income may be imputed based upon prior education or experience, the age and health of the parties, the marital standard of living, and the length of the marriage. But what if a case presents a clear-cut alimony case but the other party is not interested in alimony? Can your spouse waive their alimony claim even if they are entitled to it? The short answer is yes, provided that the Marital Settlement Agreement is freely and fairly entered into and contains certain language (known as Anti-Lepis language) stating that alimony will be waived permanently and no future change in circumstance can alter such waiver.

Child Support Cannot be Waived

Interestingly, unlike alimony child support cannot be waived by a parent.  This is because the law considered child support as a right belonging to the child.  Thus, even though child support payments are made to the recipient spouse, they are (as a matter of law) intended to be utilized for room/board and other appropriate expenses for the child.  Accordingly, it is important to remember that child support cannot be waived if due (unless proper consideration for the child is otherwise undertaken).  Thus if you enter into an agreement waiving child support it could later come back to haunt you in the form of retroactive payment obligations. 

Alimony May be Waived

There are many reasons why a spouse may not wish to pursue alimony.  For some, it is a point of pride.  For others, perhaps a reflection of some inward guilt.  Others still may merely desire a quick divorce and are willing to leave money on the table in order to speed up closure of the marriage and minimize divorce counsel fees. Regardless of the reason, the courts are expected to bind consenting adults to contractual determinations.

To that end, assuming there is no duress, you or your spouse may waive a right to future alimony payments. As noted above, in order to effectuate a permanent waiver it is advisable to include “Crews” language noting the marital lifestyle during the marriage and the impact the divorce will have on the parties’ lifestyle post-divorce (this should be standard in every MSA). More pertinently, the MSA should also include what is known as “Anti-Lepis” language.  Lepis is a case that allows changes in child support or alimony based upon “permanent and substantial” changes in circumstances.  Your MSA will essentially state that you waive the right for future modification under Lepis, and is thus known as “Anti-Lepis” language.

What if I Want to Waive Alimony? 

Although every case is fact-sensitive, you should be very careful about waiving your right to alimony. If a MSA properly addresses the issue then it will be difficult or impossible to later petition the Court for alimony if you waive it.  The future is unknown to all of us and it’s possible that circumstances could change (including how you feel about things) in the future but at that point in time not have a recourse. You should consult with a lawyer to understand your alimony obligations or rights before entering into any such MSA. This is particularly true if the marriage has been emotionally or otherwise draining.  In such an instance you may be considering waiving alimony merely to move forward, but you will likely come to regret that decision (or see it as another element of control) in the future when options are no longer available. Alimony waiver is a serious step for either party to take: having a divorce lawyer to guide you can help level the playing field.

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

 

 

 

 

5 Ways Tax Reform Will Impact NJ Divorces

New Jersey is a High-Tax State, How Will the Tax Reform Bill Recently Passed Impact New Jersey Divorces?

I recently wrote about how the Tax Cut and Jobs Act (aka Tax Reform) would impact the tax treatment of alimony commencing in 2019.  This angle has been pretty well covered, both nationally and within New Jersey.

Now that a few days have passed and I’ve had the opportunity to further reflect on the recently signed federal legislation, however, it is clear to me that this legislation will also impact New Jersey divorces in a myriad of more subtle ways. In this blog post I’ll attempt to review some of the more nuanced tax changes (not providing tax advice) and attempt to forecast how they may impact New Jersey residents seeking divorce in 2018 and beyond.

  1. Increased Child Tax Credit.  Currently (subject to a phase-out) parents may receive a tax credit of $1,000.00 per child.  The Tax Reform bill has doubled this amount to $2,000.00.  In divorces the child tax credits are generally evenly divided between the parties. Accordingly, if there are two (2) unemancipated children from a marriage, both parents will claim one of the children.  If there is one child, the parents will alternate even and odd years claiming the children. I like to add language to my divorce agreements that if a parent cannot benefit from a deduction in a given year that they will allow the other parent to claim the child. This provision increases the value of child tax credits and instantly makes it twice as important a consideration for future divorces.
  2. State and Local Tax Deductions and Property Taxes – The reform no longer allows residents to deduct state or local income or sales taxes. It also limits property tax deductions to $10,000.00.  Nobody that resides in New Jersey needs me to remind them that we’re a heavily taxed State with high property values (and high property taxes as well), but how does this impact couples seeking a divorce in New Jersey? For one thing, many experts are forecasting that home values may be reduced, particularly for properties with $10,000.00 or more in property taxes. Just as many people attempted to pre-pay their property taxes before the changes go into effect, there may be more people considering filing for divorce before the values of their homes decrease. For most individuals their largest single asset is their home.  If their home decreases in value then so does the marital pot for purposes of equitable distribution. Thus this too requires careful monitoring, particularly as we enter the post-holiday divorce season.
  3. The Divorce Rate May Momentarily Increase – Maybe I’m subscribing too much to the idea of “chaos theory”, but I’ve always observed money to have greater force than the flapping of butterfly wings. Divorce lawyers tend to refer to tax return season as divorce season.  There is a sense of finality to the prior year and the tax refund is often sufficient capital for a divorce retainer. With the holidays firmly in the rear-view mirror, this is the time of the year that divorce consults are generally at their busiest. Whether you are for or against the tax reform bill, it is evident that over the next several years more citizens than not will be paying less in taxes.  Moreover, the alimony tax deduction will be taken out of the code commencing January 1, 2019.  Thus, for better or worse it figures to be a buy divorce year in 2018.
  4. Businesses May Be More Profitable While Appearing Less Profitable.  With the corporate tax rate being significantly reduced and even pass-through companies receiving greater deductions, the evaluation of businesses and their value will have to be tweaked moving forward.  That said, on paper businesses may appear less profitable than usual as from 2017-2022 the 50% cap on business expenses will be replaced by businesses ability to fully deduct certain business expenses (such as a new computer).  Accordingly, it may appear on paper that businesses were less profitable and there is perhaps greater room for gamesmanship when addressing these issues.
  5. Alimony Deduction Eliminated – And yes, the issue I have already covered on this blog but the most well-known impact of the reform – commencing January 1, 2019 you can no longer deduct alimony payments on your taxes and alimony received will no longer be considered income. This portion of the Act will eliminate a 75 year old tax provision and has been referred to by some as a “divorce penalty.”

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

 

 

Alimony Deductions and the Tax Cut and Jobs Act

As 2017 draws to a close, one of the biggest national news stories has been the proposed changes to the Federal Tax Code.  As I previously wrote on this subject of tax reform alimony impact, it’s not often that federal laws or regulations impact New Jersey family law–but this is one such rare occasion.

The “Tax Cuts and Jobs Act” is now a reality, and will have an impact on the nation’s business, “pass-through” and personal tax rates and deductions. In the realm of divorce law, however, the biggest question was whether or not alimony deductions would be repealed.

The House Bill eliminated such deductions for alimony payers effective January 1, 2018.  The Senate, however, has revised the bill so that the deduction for alimony payments is now eliminated effective January 1, 2019.

As currently structured, alimony law has been taxable to the receiver (obligee) and tax deductible to the payer (obligor).  Commencing January 1, 2019 it will not count as income to those that receive alimony, but those that pay (who are often in a higher tax-bracket) will no longer be able to deduct such expenses. (Note that child support remains a non-taxable event, as before). As divorce attorneys often negotiate divorces based on the tax impact of alimony, this is something that will have to be implemented in future divorce strategy.  One likely result may be demands by those that are required to pay alimony in future divorces that the amount to be paid should be increased. This law will also have a large impact on alimony buy-outs, as there will no longer be a need to “tax-effect” such payments.

For those that are already divorced (or will be divorced by the end of the day on December 31, 2018), and paying long-term or permanent alimony (particularly those that divorced prior to NJ Alimony Reform), this tax code change is currently going to be applied prospectively–meaning their should be no change for those divorced prior to January 1, 2019.

Accordingly, for those considering divorce this is another factor to consider when finalizing a divorce agreement commencing in January 2019.

If you’re ready to discuss your options and believe my firm may be a good fit, please contact me.  If you would like to read a more in-depth analysis of New Jersey Divorce Law, click here to download my free ebook: New Jersey Divorce Law: The Path Forward. 

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

Removing Children Out of State Following Divorce

can i move out of state with the children? Relocation Law in New Jersey.

One thing most of us take for granted is the ability to live anywhere we choose.  Moving can mean uprooting your family, changing your job, or otherwise going on an adventure.  But for those who are divorced or separated, moving out of state with children can also trigger serious legal considerations.

Removal Law in New Jersey 

Removal law is governed by N.J.S.A., 9:2-2, which provides that when the Superior Court has jurisdiction over the custody and maintenance of the minor children of parents divorced, separated, or living apart…they shall not be removed out of its jurisdiction against their own consent, if of suitable age to signify same, nor while under that age without the consent of both parents, unless the court shall otherwise order.

In O’Connor v. O’Connor, 349 N.J. Super. 381, the Court addressed some of the differences between parents that share physical custody (regardless of whether same is “de facto” shared physical custody or court-ordered/agreed to shared physical custody v. where one parent is the parent of primary physical custody and the other parent has secondary or alternate physical custody.

Some of the language in O’Connor includes:

“In a child custody modification context in determining the standard to be applied to a parent’s removal application, the focus of the inquiry is whether the physical custodial relationship among parents is one in which one parent is the ‘primary caretaker’ and the other is the ‘secondary caretaker.’ If so, the removal application must be analyzed in accordance with the criteria outlined in Baures.   (Emphasis Added).

Conversely, in a child custody modification context, if the parents truly share both legal and physical custody then an application by one parent to relocate and remove the residence of the child to an out-of-state location must be analyzed as an application for a change of custody, where the party seeking the change in the joint custoidal relationship must demonstrate that the best interests of the child would be better served by residential custody being primarily vested with the relocating parent.

If one parent is the primary physical custodian, however, then if that parent can demonstrate they are not leaving the state for bad faith reasons, then it is up to the non-relocating parent (non-custodial parent) to prove that the move would be inimical to the children’s best interests. Thus procedurally, the first step of a removal test considers the type of parenting arrangement between the parties.

As the two (2) prong analysis in Baures v. Lewis, 167 N.J. 91 provides: A custodial parent will, absent joint physical custody, be permitted to move if (1) that party has a good faith reason to do so; and (2) the children will not suffer from the move. Baures provides a whopping twelve (12) factors to assist in this analysis.

Thus, procedurally, the first step of the removal test considers the type of parenting arrangement between the parties and whether the matter is actually an application for a change in custody as opposed to a removal case. For example, a removal motion by a party in a case where the children rotate between houses, with each parent assuming full parental responsibility half of the time, is clearly an application to change the custodial status which cannot be maintained from a distance. In contrast, an application by a custodial parent to move away in a case in which the noncustodial parent sees the children once or twice a week and is not seeking to change that state of affairs, is a removal motion. The possible scenarios are limitless; whether the motion should be viewed through the Baures prism or as one for custody will depend on the facts.   In a custody case, the focus is entirely on the child’s best interests. In a removal case, the parents’ interests also take on importance. Morgan v. Morgan 205 N.J. 50.

Let’s imagine a case where the Plaintiff is the parent of primary residence. She is merely seeking relocation to New York, and the Defendant’s parenting time will not be interfered with in any manner. The parties own consent order, signed as part of settlement in a previously disputed paternity case, demonstrates that although they share joint legal custody, it is the Plaintiff who is the parent of primary residence and exercises the majority of time with the child.

The twelve (12) factors in Baures are as follows would include:

(1) The Reasons Given for the Move;

(2) The Reasons Given for the Opposition;

(3) The Past History of Dealings Between the Parties Insofar as it Bears on the Reasons Advanced by Both Parties for Supporting and Opposing the Move;

(4) Whether the Child will Receive Educational, Health, and Leisure Opportunities at Least Equal to What is Available Here;

(5) Any Special Needs or Talents of the Child that Require Accommodation;

(6) Whether a Visitation and Communication Schedule can be Developed that Will Allow the Non-Custodial Parent to Maintain a Full and Continue Relationship;

(7) The Likelihood that the Custodial Parent will Continue to Foster the Child’s Relationship with the Non-Custodial Father;

(8) The Effect of the Move on Extended Family Relationships;

(9) If the Child is of Age, his or her Preference;

(10) Whether the Child is Entering his or her Senior Year in High School;

(11) Whether the noncustodial parent has the ability to relocate;

(12) Any other Factor Bearing on the Child’s Interest.

The Court would view each of these factors in crafting a decision.  Leaving for legitimate reasons such as a change in work or to be close to family will be viewed in a better light than merely a desire to leave the state.

It should be noted that the non-custodial parent may leave the state any time they desire, but doing so would likely open them up to a potential motion to change parenting time.

The law in this area is constantly changing and very fact-sensitive, so it is best to discuss these issues with an attorney before you plan to relocate.

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

 

Who Pays the Divorce Counsel Fees?

Who Pays counsel fees in a divorce?

If you’re considering a New Jersey Divorce, you may be concerned regarding how you will pay for the attorney and counsel fees.  If your spouse attempts to cut you off from the marital funds, then you may need to pursue court action, but may be involved in a “Catch-22” situation where you can’t retain an attorney due to not having funds.  Likewise, you may be in a marriage where your spouse earns substantially more than you or has access to greater assets than you with which to fund litigation.

New Jersey generally operates under what is known to lawyers as “the American system.”  In general, this means that each party to a litigation is responsible for their own legal fees.  In addition, absent a “fee-shifting” statute, even if you win it is difficult to get reimbursed for the costs of litigation.  (The other primary system is known as “The English System,” wherein the loser pays both sides counsel fees.

But divorces are different—they generally involve a pot of communal monies.  So in the divorce setting, who pays?

Which Party is Responsible for Divorce Counsel Fees? 

Subject to the provisions of Court Rule 4:42-9(b), (c), and (d), the court in its discretion may make an allowance, both pendente lite (i.e. during the pendency of the divorce) and on final determination, to be paid by any party to the action [in the family part]. R. 5:3-5(c) for the award of counsel fees.

In determining the amount of the fee award, the court should consider, in addition to the information required to be submitted pursuant to R. 4:42-9, the following factors:

(1) The financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained: (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.

Statute N.J.S.A. 2A:34-23 also authorizes an award of counsel fees in a matrimonial action and further requires the judge to “consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties and the good faith or bad faith of either party.” An application for an allowance of counsel fees must be supported by an affidavit of services addressing the factors enumerated by the Rules of Professional Conduct 1.5(a) ((RPC 1.5(a)). R. 5:3-5(c).

Issues such as acting in bad faith or refusing to act in a reasonable manner may inure to the imposition of counsel fees against a spouse. The Court will also look to the financial circumstances of each party to determine whether counsel fees should be awarded or advanced.  Courts will particularly emphasize any financial disparity between the divorcing parties.

Most counsel fee awards are without prejudice, meaning that the Court reserves the right to address the final award of counsel fees at the time the divorce is finalized.

If you do not have the funds to seek a divorce but your spouse does, you should discuss this issue during an initial consultation with your attorney to determine if appropriate action may be taken to ensure you can afford to keep up with the divorce litigation expense.

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

How Does My Personal Injury Award Impact My Divorce?

Equitable Distribution for personal injury awards, employment discrimination awards, or workers’ compensation – the impact on new jersey divorces

You or your spouse recently received or will receive monetary payouts for personal injury, for workers’ compensation, or for employment discrimination; what impact will receipt of such monies have on a subsequent divorce action or the drafting of a prenuptial agreement?

PERSONAL INJURY TORTS AND NEW JERSEY DIVORCE 

Personal injury matters stemming from “slip and falls” and car accidents are among the most commonly encountered torts. With awards potentially ranging into six figures and beyond, it’s imperative to understand how to address such awards in a family law setting. The basic legal principal for the treatment of personal injury awards in equitable distribution was enumerated in the New Jersey Supreme Court case Landwehr v. Landwehr, 111 N.J. 491,495 (1988).  The Landwehr decision held that the portion of a settlement intended to compensate for personal pain, suffering, and mental and physical disabilities was personal and therefore is not subject to distribution. Likewise, any award for loss of consortium to the non-injured spouse was not distributable to the injured spouse and would therefore remain the non-injured spouse’s separate property. Finally, any portion of a settlement compensating for lost earnings, medical expenses, or the like, are subject to equitable distribution. ”

The philosophy behind this determination was that wages are generally marital in nature, and any reimbursement for lost wages must therefore be distributed. Likewise, medical expenditures deplete the marital estate. One interesting point not addressed directly by the case law is how such distribution impacts alimony, or when such awards may lead to an inappropriate “double dip.”

The Landwehr decision also informs that the injured spouse has the burden of demonstrating what portion of his or her award represents separate property. As such, to the extent a party seeking to avoid equitable distribution fails to prove a portion of an award is separate; same must be classified as a marital asset subject to equitable distribution

In the chancery division case Ryan v. Ryan, 283 N.J. Super. 21 (Ch. Div. 1993), the court held that funds received for pain and suffering could be transmuted into joint funds subject to equitable distribution when commingled between spouses, unless it is demonstrated that there was no intent to so commingle and encumber the funds.

WORKER’S COMPENSATION AWARDS, DISABIILTY PENSION, MALPRACTICE, EMPLOYMENT DISCRIMINATION – IMPACT ON NEW JERSEY DIVORCES 

 The “dual-classification” holding evidenced by Landwehr helps to form the cornerstone of the intersection between family law and personal injury awards. For example, with respect to workers’ compensation awards, the portion of a workers’ compensation award attributable to loss of wages or reimbursement of medical expenses is subject to equitable distribution. The portion of an award meant to compensate a worker for permanent disability reducing future earning capacity, however, is ordinarily not subject to equitable distribution. See Lentini v. Lentini, 236 N.J. Super. 233,565 (App. Div. 1989).

Similarly, the portion of a disability pension representing the retirement portion is subject to equitable distribution, whereas any income compensation or reimbursement for personal loss from the disability would not be subject to equitable distribution. See Avallone v. Avallone, 275 N.J. Super. 575, 583-84 (App. Div. 1994), which also demonstrates how difficult a burden of proof it may indeed be for a party seeking exemptions as to a disability share.

The court in Weir v. Market Transition Facility of New Jersey, 318 N.J. Super. 436 rendered the interesting holding that an employer or carrier that provided workers’ compensation benefits to an injured employee is generally barred from asserting a workers’ compensation lien against that employee’s spouse’s per quod share of recovery obtained in any third party action.

In the realm of medical malpractice, the same “dual-classification” principals hold (see Amato v. Amato, 180 N.J. Super. 210 (1981). In Amato the Appellate court also addressed the issue of rights to sue for medical malpractice or other personal injury. For instance, if a divorce is finalized at a time when such claims remain pending, how should such “inchoate” or putative rights be addressed?

The Amato court made reference to the utilization of special jury interrogatories utilizing R. 4:39-1, 2 to address the proper disposition of such interests by way of future percentage (%) of any recovery. Although this portion of the Amato decision rests strictly within the realm of dicta (i.e. is not binding law) and therefore lacks statutory or case-law weight, this demonstrates a likely outcome for a case involving these issues should the parties fail to agree upon a reasonable allocation of such inchoate rights. The Amato court also stated that if either party thereafter believed the final determination of such rights was unfair, they could make application before a family court judge to determine pro rata responsibility.

Regarding employment discrimination or similar such claims, although there are no published cases directly on point, it is evident by analogy that any pain and suffering attributed to an employment discrimination lawsuit would likely not be subject to equitable distribution, whereas any lost wages or lost opportunities likely would be.

PUNITIVE DAMAGES: EQUITABLE DISTRIBUTION IN NEW JERSYE DIVORCE

 There is no New Jersey case directly on point addressing distribution of punitive damages. Looking to other jurisdictions employing similar “dual classification” principals, case law is similarly scarce. In Lundquist v. Lundquist, 923 P 2d 42 (Alaska, 1996), the Supreme Court of Alaska held that punitive damage award distribution in a divorce should mirror the percentage (%) of the claim awarded to each party underlying the punitive damages. It is likely New Jersey courts would follow this or a similar approach should this issue arise. As a practical matter, it would be rare in actual practice to come across a divorce case where distribution or division of punitive damages would be in issue. If so, Lundquist provides a roadmap for arguments to be made.

ADVISING CLIENTS REGARDING THE INTERPLAY BETWEEN PERSONAL INJURY ACTIONS AND FAMILY LAW MATTERS

The first thing family law practitioners must do is ascertain whether or not personal injury or related claims, whether actual or “inchoate,” may impact a case. This issue should be discussed as early as the initial consultation. Both equitable distribution and support obligations should be viewed through this lens to ensure an appropriate outcome. If a matter is pending, your attorney may wish to speak with your personal injury attorney, for example, to determine how the settlement may be structured. Care should be given to not interfere with the personal injury attorney or to not inappropriately meddle with the structure of such an award. Evidence, however, should be maintained throughout the process should a hearing be ordered involving inchoate personal injury rights. To that end, discovery should be tailored—and perhaps depositions ordered—addressing such issues to ensure that these issues are aggressively pursued and resolved.

Because pain and suffering claims are generally not taxable (but lost wages generally are subject to taxation), there is already an inherent incentive in personal injury actions for the injured individual(s) to seek lump sum pain and suffering payouts. This course of action, however, could potentially cloud a fair distribution of marital assets in a subsequent divorce action as to the non-injured spouse. Cases such as Amato could, by extension of legal argument, potentially provide the non-injured spouse an avenue of collateral attack to seek a portion of such funds. Should the parties have children, even more complex issues of trusts or allotment to children may become an issue in either the personal injury action and/or the divorce proceeding. Care should also be given to the date the injury accrued, as same may either trigger or bar equitable distribution to the non-injured spouse.

Although family law attorneys and personal injury attorneys often attempt to avoid any overlap between proceedings, such ensnarement may potentially occur and you should help as a client to facilitate such dialogue. A greater dialogue between both sets of practitioners, along with perhaps estate attorney practitioners, will provide a more holistic approach to these types of issues. Such dialogue along with a more nuanced understanding of the relevant case law can only assist clients and those attorneys confronting such issues on a regular basis.

Like most of family law, distribution of funds from worker’s compensation, personal injury, and the like is extremely fact-sensitive.  Accordingly, it may be important to meet with an attorney to determine how your specific facts may be applied, particularly in a post-alimony reform world in New Jersey.

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.

NJ Alimony Reform Tips

On September 10, 2014 the Legislature enacted the Alimony Reform Act.

The basic factors judges will consider when determining an alimony award may now include:

1) The actual need and ability of the parties to pay;

2) The duration of the marriage;

3) The age, physical and emotional health of the parties;

4) The standard of living established in the marriage and the likelihood that each party can maintain a reasonably comparable standard of living;

5) The earning capacities, educational levels, vocational skills, and employability of the parties;

6) The length of absence from the job market and custodial responsibilities for children of the party seeking maintenance;

7) Parental responsibilities for children;

8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;

9) The history of the financial or non-financial contributions to the marriage by each party, including contributions to the care and education of the children and interruption of personal careers or educational opportunities;

10) The equitable distribution of property ordered and any payout of equitable distribution, directly or indirectly, from current income, to the extend that this consideration is reasonable, just and fair;

11) The income available to either party through investments of all assets held by the party;

12) The tax treatment and consequences to both parties of any alimony awards, including the destination of all or a portion of the payment as a nontaxable payment;

13) The nature, amount, and length of pendente lite support paid, if any; and (new)

14) Any other factors the court may deem relevant.

But what does the above really mean?  How will these factors coalesce into an alimony award—assuming an alimony award is appropriate at all?

When I explain alimony reform to new clients, I do not focus on the above factors.  The truth is, those factors do not form the heart of real life alimony negotiations.  Instead, you should understand the following:

1) Alimony is, legally speaking, now “gender neutral.” Although in application we may not have reached 100% gender neutrality, we are getting close.  If the Wife is the breadwinner in a long-term marriage, then she may expect to pay alimony.

2) The length of the marriage is extremely important. There are different types of alimony that may be awarded in New Jersey, including open durational alimony (analogous to what was previously referred to as permanent alimony).  (there is also rehabilitative alimony, limited duration alimony, and reimbursement alimony. Also, permanent alimony for those divorced prior to the reform continues prospectively). Most breadwinners want to avoid paying long-standing or open durational alimony. The longer the parties are married, however, the greater the chances are that they will be faced with such a burden. This is particularly true of marriages that exceed twenty years in length, although there is no hard and fast rule to determine whether alimony is “open durational” or not. The alimony reform statute does state, however, that “For any marriage or civil union less than twenty years in duration, the total duration of alimony shall not, except in exceptional circumstances, exceed the length of the marriage or civil union.”  The factors for “exceptional circumstances” for an award to last longer than the marriage include: (1) the age of the parties at the time of the marriage or civil union and at the time of the alimony award; (b) the degree and duration of the dependency of one party on the other; (3) Whether a spouse or partner has a chronic illness or unusual health circumstances; (4) Whether a spouse or partner has given up a career; (5) Whether a spouse or partner has received a disproportionate share of equitable distribution; (6) The impact of the marriage or civil union on either party’s ability to become self-supporting; (7) Tax considerations; or (8) any other relevant factors.  

3) Alimony has generally been taxable to the payee and tax-deductable to the payor.  I have often advised my clients facing an alimony obligation that this is the one silver lining for those that pay alimony.  They often contest it being much of a silver lining, but the tax benefit is helpful, particularly when compared to child support payments—-which provide no such tax relief. However, this clause may be modified under the pending federal tax reform act. Click here to read my recent blog post on this subject.  

4) “Lump Sum Alimony”.  This can be bargained for if both parties are interested in pursuing this over payments made over time. Such buy-outs are generally “tax affected” which leaves this option somewhat up in the air given the pending tax reform.

5) Life Insurance Obligation.  There may be an obligation to provide life insurance “security” for the alimony due. 

6) Good faith retirement, cohabitation, or remarriage.  These additional factors  may provide sufficient reasons to terminate, suspend, and/or modify alimony.  Assuming there is no language to the contrary, “permanent and substantial” changes in circumstances may also provide reasons to amend and—in some instances—to even terminate an existing alimony obligation.  The Alimony Reform Law made substantial changes to cohabitation and particularly to good faith retirement, including the creation of a “rebuttable presumption” that alimony should be terminated upon the obligor reaching a good faith full retirement age. However, this rebuttable presumption could be overcome based upon other factors including the age of the parties at the time they applied for retirement, the ages at the time of the entry into the alimony award, the degree and duration of economic dependency, the duration or alimony or amount already paid, the assets, sources of income both earned and unearned, and other factors as deemed relevant by the court. 

Like most of family law, alimony law is extremely fact-sensitive.  Accordingly, it may be important to meet with an attorney to determine how your specific facts may be applied, particularly in a post-alimony reform world in New Jersey. 

Your New Jersey Divorce Lawyer:

If you’re considering a New Jersey divorce or Family Law action contact me to discuss your options.  You can schedule an initial consultation by calling my office at 908-237-3096 or by scheduling your own divorce consultation online by clicking here.