New Jersey Divorce and Family Lawyer Blog

TAX UNDER-WITHHOLDING: EXERCISE CAUTION IN NEGOTIATING SUPPORT OBLIGATIONS

March 6, 2019 | Kevin M. Mazza, Esq.

At the end of 2017, the U.S. Congress passed the most sweeping tax changes in over 30 years, referred to as the Tax Cuts and Jobs Act of 2017 (TCJA). While there were many provisions of the federal tax laws which were impacted, the most publicized changes were the reductions in the income tax rates along with the reduction and/or elimination of various deductions or exemptions. Most of these changes went into effect for the 2018 tax year. However, when it came to family law matters, the biggest change brought about by this tax law was regarding the deductibility and taxability of alimony. Until this law, alimony payments were deductible by the payor and had to be included as income for the recipient, albeit subject to certain regulations and phase-out provisions. While this tax treatment was “grandfathered” for pre-existing alimony obligations, alimony obligations established after January 1, 2019 were no longer tax deductible to the payor or considered taxable income to the recipient under the TCJA. Indeed, there was a mad dash to finalize divorces prior to December 31, 2018 to take advantage of the prior tax treatment of alimony; so much so that many counties continued to make Family Court judges available during their winter recess to put through divorces.

While the tax treatment of alimony may be considered the most prevalent provision of the TCJA impacting family law, it is becoming evident that there is a more subtle, but no less important, impact which is only now coming to light. Again, one of the major changes in the tax law was the across-the-board reduction in the individual tax rates. As a result, the IRS promulgated revised withholding schedules, which adjusted [downward] the amounts being withheld from one’s paycheck for federal taxes during 2018. Since the vast majority of taxpayers are W-2 wage earners, these revised withholdings applied. What people saw was some sort of increase in their net pay each paycheck. Who wouldn’t enjoy having a little more money in your pocket?

What’s the problem? UNDER WITHHOLDING!

New Jersey Appellate Division Addresses Whether Waiver of a Military Pension Constitutes a Change in Circumstance Warranting an Award of Alimony

March 1, 2019 | Elsie Gonzalez, Esq.

In the recently published opinion of the Appellate Division in Fattore v. Fattore,A-3727-16 (App. Div. 2019), the Appellate Division the husband appealed a trial court order requiring him to indemnify his former wife for the loss of her share of equitable distribution of his military pension, which was waived as a result of his receipt of disability benefits. The wife filed a cross appeal arguing that the trial court should have granted her request for alimony to replace the value of her lost pension benefit.

In this case, the Fattores divorced in 1997 after a thirty-five year marriage. In the marital settlement agreement, both parties waived any claim to alimony from the other. As part of equitable distribution, the husband’s Army National Guard was divided equally between the parties. A Qualified Domestic Relations Order (QDRO) to divide the pension was completed in 1999. In 2002, the husband became disabled. At that time, the husband collected his pension and disability benefits without any impact on the pension payout. In 2010 the wife inquired why she had not received any pension payments. She was advised that a portion of her former husband’s pay was based on disability, which cannot be divided under the Uniformed Services Former Spouses Protection Act. The disability amount is used as an authorized deduction. In this case, once the disability was deducted along with the survivor benefit from the husband’s pay, there was nothing left for the distribution to the wife.

The wife wife filed a post-judgment motion in the family court seeking to compel her former husband to compensate her for the loss of her equitable distribution share of the military pension. The trial court decided to compensate the wife for her lost pension benefit based on the decision in Whitfield v. Whitfield, 373 N.J. Super. 573 (App. Div. 2004). At the time of the trial court’s decision, the U.S. Supreme Court had not yet decided the case of Howell v. Howell, 137 S.Ct. 1400 (2017). The trial judge appointed a pension appraiser to determine the value of the wife’s coverture interest in the husband’s pension and, in the interim, ordered the husband to pay the wife $1,800 per month, not as alimony, but as an equitable distribution payment. The trial court denied the wife’s request for alimony because alimony is not a compensation for equitable distribution and the parties waived alimony.

Distribution of Retirement Assets in Divorce: An Overview (Part II)

February 9, 2019 | Kevin M. Mazza, Esq.

In my last blog post, I provided a brief overview of retirement assets which have been funded individually, such as IRA accounts, and how they are dealt with for equitable distribution purposes.

In this second blog post of the series, I will now provide an overview of employer-sponsored retirement assets and how they are dealt with in divorce.

While some people may accumulate retirement assets in IRA’s, most people accumulate retirement assets through their employment. Such employment-based retirement assets usually come in two forms, to wit (1) a defined benefit plan or (2) a defined contribution plan. Exceedingly less common than in years past, a defined benefit plan is what most people remember as a traditional pension plan. Generally employer-funded, these types of plans generate a monthly “benefit” or payment to an employee upon retirement either for a specified number of years or during his or her lifetime. That monthly benefit is determined based upon a formula considering factors such as earnings, duration of employment, age and life expectancy. Only a dwindling percentage of private employers offer such defined benefit plans at this juncture. These types of “benefit” plans remain the norm for most public or government employees; however, they are generally not considered “qualified” which impacts how they are distributed upon divorce. Most private employers sponsor defined contribution plans, most commonly in the form of 401k accounts. In these types of plans, an employee may voluntarily elect to contribute a certain amount or percentage of his gross income into a dedicated retirement savings/investment account, a portion of which contribution may or may not be “matched” by the employer. The amounts contributed are “pre-tax”, meaning that you do not pay taxes on it during the year of contribution, and that monies accumulated in that account grow tax-free.

New Jersey Supreme Court Addresses the Improvement of Division of Child Protection & Permanency Can Improve Ability to Locate Parents in Guardianship Cases

February 4, 2019 | Elsie Gonzalez, Esq.

In the matter of New Jersey Division of Child Protection and Permanency v. A.S.K. (A-50-17 ___ N.J. ___ (App. Div. 2018), the New Jersey Supreme Court reviewed the trial court’s decision to terminate the parental rights of E.M.C. (“Eric”) to his son, A.E.C. (“Adam”) based on the record and the application of the best-interests-of-the-child test. Although the Supreme Court affirmed the decision to terminate Eric’s parental rights, the Court found that the Division of Child Protection and Permanency (“DCPP”) made errors regarding the inability to locate Eric, which delayed the child from receiving permanency for an additional 2 1/2 years. The Supreme Court stated that DCPP’s processes would be enhanced by conducting a new search for a parent at each phase of litigation and implementing procedures that retain a party’s past contact information.

Termination of parental rights is warranted when DCPP establishes by clear and convincing evidence that the codified four prongs of the best-interests-of-the-child test are met. The four prongs of that test are: (1) “The child’s safety, health, or development has been or will continue to be endangered by the parental relationship;” (2) “the parent is unwilling or unable to eliminate the harm facing the child or is unable or unwilling to provide a safe and stable home for the child and the delay of permanent placement will add to the harm. Such harm may include evidence that separating the child from his resource family parents would cause serious and enduring emotional or psychological harm to the child;” (3) whether “[t]he [D]ivision has made reasonable efforts to provide services to help the parent correct the circumstances which led to the child’s placement outside the home and the court has considered alternatives to termination of parental rights;” and (4) whether “[t]ermination of parental rights will not do more harm than good.”

In this case, the child, Adam, was born on November 14, 2009 and he began living with Eric in March, 2012. Before Adam came to live with him, Eric had last seen him in July 2011. Adam lived with Eric until July 2013. During that time, DCPP received referrals in April 2012 and September 2012. Eric cooperated with both investigations. Because Adam was residing with Eric, an allegation of abuse and neglect against Adam’s mother, A.K. (“Ali”) resulting from the April 2012 referral was deemed unsubstantiated.

New Jersey Appellate Division Addresses How Courts Should Handle Complex Custody Disputes in Non-Dissolution Cases

January 18, 2019 | Karen T. Willitts, Esq.

It is not uncommon as a family law practitioner to experience a difference in the way the family courts handle cases involving the children of divorced or divorcing spouses (where they are matrimonial cases bearing an “FM” docket number) in the dissolution unit, and children of non-married parents in the non-dissolution unit (those bearing a docket number starting in “FD”). Non-dissolution cases are typically far more summary in fashion and are handled more quickly than they are in the in the cases of divorcing parents. The good part of this is that the children’s cases may be processed more quickly and there is less uncertainty in their lives because the children are not enduring a longer, more drawn out litigation than children of divorcing parents sometimes have to survive. In non-dissolution cases, however, because they often are so summary, the court does not have the opportunity to become as familiar with the facts and circumstances.

In the recently published Appellate Division opinion in the matter of J.G. v. J.H., A-1312-17 (App. Div. Jan. 2, 2019) expressed some disagreement over how summarily a family court judge resolved a custody dispute between unmarried parents.

John was born in 2012 to mother Jane and father Joseph. In 2014 the parties entered into a non-dissolution order that provided for their agreement to share joint legal custody of John, with Jane having primary residential custody and Joseph having liberal visitation with him. In 2015 the parties attempted to reconcile and vacated that order. The reconciliation did not last. Jane became engaged to another man and became pregnant. Joseph filed an order to show cause accusing Jane and her fiance of drug use and asserting that she should not leave John alone with her fiance, asserting that he was a known drug user and convicted felon. Joseph was awarded temporary sole custody of John based on the concern for violence in Jane’s home. The court directed that Jane’s visitation with John be supervised and that it occur outside her home.

Distribution of Retirement Assets in Divorce: An Overview (Part 1)

January 10, 2019 | Kevin M. Mazza, Esq.

While each divorce case has its own unique set of facts, circumstances and complexities, there are certain core issues which may need to be addressed, namely (1) the custody and support of any children of the marriage; (2) the necessity, extent, duration and amount of any spousal support or alimony; (3) any contributions toward professional fees; and (4) the equitable distribution of marital assets and liabilities. This series of blog posts will focus on the last item, equitable distribution, and specifically, the distribution of retirement assets in divorce.

First, let me give a brief summary of what is meant by equitable distribution. Note that I use the term “equitable” and not “equal”. Under the applicable New Jersey Statute, NJSA 2A:34-23(h), it refers to the court’s authority “to effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired by them or either of them during the marriage”. While it is possible that certain assets may be divided equally, depending upon the nature of the asset and/or the duration of the marriage, NJSA 2A:34-23.1 lists a multitude of factors that a court must consider in order to determine the extent to which a distribution of property would be “equitable”. That statute also provides that there is a rebuttable presumption that each party made a substantial financial and non-financial contribution to the acquisition of income and property while the parties were married. Addressing these factors, the court is to make findings as to an asset’s eligibility or ineligibility, its valuation, and finally, its “equitable” distribution. In preparing their case, whether for settlement, discovery or for trial, the parties and their attorneys should go through the same sort of analysis in identifying which assets may be subject to equitable distribution, their values and how they should be divided between the parties. With certain qualifications, marital assets subject to equitable distribution are generally defined as those acquired between a date of marriage and the date the complaint for divorce is filed.

In years past for most “average” divorce cases, the principal and usually most valuable asset of the parties which was subject to equitable distribution was the marital home. Whether due to declining real estate values or equity positions, or the lack of affordability in home ownership, this is no longer as true today. In many cases now, retirement assets accumulated by the parties during the marriage are the most valuable. What is meant by a “retirement asset”? Generally this refers to monies, funds or benefits which the tax laws allow to be saved or accumulated “tax-deferred” to be used, accessed or paid at some future time, presumably when the person is retired from active employment. There are rules and limits as to what would qualify as a retirement asset. They may be funded individually or through one’s employment. This blog post will focus on retirement assets which have been funded individually.

Sorry, Not Sorry. Why You Might Not Want To Say “I’m Sorry to Hear That” When Hearing of Someone’s Divorce

January 4, 2019 | Elsie Gonzalez, Esq.

It is a social norm for one to state, “I’m sorry to hear that” in response to the hearing the news of a death or divorce among ones friends of family. While it an appropriate response of condolence when a someone dies, is it always appropriate to state the same when there is a divorce? Maybe not. In the words of comedian Louis C. K., “Someday, one of your friends is gonna get divorced, it’s gonna happen, and they’re gonna tell you. Don’t go, ‘ohhhh I’m sorry.’ That’s a stupid thing to say. First of all you’re making ‘em feel bad for being really happy, which isn’t fair. And second of all: divorce is always good news. I know that sounds weird, but it’s true, because no good marriage has ever ended in divorce. It’s really that simple.” In my opinion, congratulations may be in order in order.

Deciding to divorce can be an extremely difficult decision to make. Without a doubt, your friend or relative likely experienced the highs and lows associated with a divorce. They have definitely felt the societal induced feeling of failure, especially for women. Divorce is for many people life altering. Both parties may not have wanted to divorce. It can be hard to know what to say to someone who has gone through this. Instead of ignoring the herculean strength it can take to divorce and dismissively stating, “I’m sorry” thereby potentially resurfacing feelings of loss or failure as a result of your most likely in appropriate and well-intentioned apology, perhaps complimenting your friend or relative on their strength and courage is a better approach. As an attorney, I can tell you that divorce is not something one slipped, tripped and fell on by accident. It takes two to tango, and it takes two to divorce.

Life can be better for everyone involved, including the children, in a divorce and no one should be sorry for that. Staying married for the children is not really for the benefit of the children. How can one think that staying in an unhealthy marriage is something that you should do for yourself or model for your children? Researcher Constance Gager of Montclair State University and her colleagues conducted a national survey involving nearly 7,000 couples and their children, focusing on how harmonious their homes were and whether or not they stayed married. https://www.livescience.com/6648-divorce-bad-kids.html The result was that children who had grown up in high conflict families actually faired better in their own adult relationships whent heir parents divorced and allowed the children to escape that household conflict. The survey also revealed that children of happily married parents did not necessarily go on to have happy marriages.

Enjoying the Holidays With Your Children When You are Newly Divorced or Separated

December 21, 2018 | Karen T. Willitts, Esq.

For family law attorneys, it’s beginning to look a lot like Christmas . . . fights over holiday parenting time. The holiday season is often a time of stress, and sometimes of sadness, for everyone. For separating or divorcing parents or newly divorced parents, fighting over how to divide holiday time with their children, there is additional sadness and distress. Every year as a matrimonial attorney I see the stress on separating couples and their children as they either try to adhere to traditional holiday celebrations for the sake of their children, or as they try to adjust with their children to the inevitable new traditions that are going to have to be made as parents separate and cannot spend the full holiday season with they traditionally would, but have to share it. The stress can be additional as grandparents weigh in and wish to spend time with their grandchildren, and when one or both parents begin new relationships that pulls on them or whispers in their ear at holiday time as well.

How can you avoid some of the pitfalls of disputes with your “ex” that can derail the holidays with your children? Here, are a few tips:

Consider the stress and worry that you and your ex are putting the children under when you argue about holiday parenting time. Parents usually want Christmas to be a magical time for the children. It is not magical when they are aware that their parents are fighting over them. Also, children often come to feel that they are the cause or the source of what their parents are arguing over. This can create needless feelings of guilt, worry and unhappiness that can ruin the holidays for them.

Protecting Against a Free Wheeling Spouse

December 14, 2018 | Kevin M. Mazza, Esq.

In a number of my divorce cases, a client will complain that the other spouse is a spendthrift or is reckless with finances. They may recount that the other spouse has a gambling problem, has an addiction, or has made poor business decisions. They may express concerns that the spouse may have incurred debts and liabilities as a result of these actions. They question the extent they may also be liable for same in the disposition of the divorce matter. They wonder whether their marital assets, and most notably the marital home they own together, is at risk as a result. To the extent the marital home or other assets were owned as “tenancy by the entirety”, the recent case of Jimenez v. Jimenez, 454 NJ Super 432 (App. Div. 2018), appears to protect same, at least from the reach of third-party creditors themselves due to the actions of a “free-wheeling spouse”.

Before discussing this case, what exactly is meant by a tenancy by the entirety. A tenancy by the entirety is a form of joint property ownership available only to spouses that is created when property is held by a husband and wife with each becoming seized and possessed on the entire estate. Each co-tenant enjoys the right of survivorship, meaning that after the death of one, the survivor takes the whole. Historically it was predicated on the presumed unity of spouses, and was a means of protecting marital assets during the marriage and to serve as security for one spouse on the death of the other. A tenancy by the entirety is created when a husband and wife together take title to an interest in real or personal property under a written instrument designating both of their names as husband and wife. It is also created when a husband and wife become lessees of property containing an option to purchase it, or when an owner spouse conveys or transfers and interest in that property to the non-owner spouse and the former jointly, in both circumstances there being a written instrument and a designation of both of their names as husband and wife.

The Jimenez case involves third-party creditor rights in regards to real estate held by spouses as tenants by the entirety. In this matter, a husband and wife had purchased a tract of vacant land in Mansfield, New Jersey. Subsequently, persons related to the spouses filed a complaint in the Law Division against the husband seeking repayment on a line of credit they allegedly extended to him as well as repayment of additional funds he allegedly owed them. A Consent Judgment was ultimately entered into between the creditors and the husband. When other efforts to make collection on this judgment failed, the creditors moved to compel the partition sale of the Mansfield property. The trial court declined to do so relying upon the provisions of N.J.S.A. 46:3-17.4. The creditors appealed. The Appellate Division affirmed.

Celebrity Child Support Disputes Illustrative on the Process of Modifying Child Support

December 7, 2018 | Elsie Gonzalez, Esq.

It is not unusual for a parent to claim that they are paying too much in child support or for a parent to claim that they are not receiving enough child support. In recent celebrity news, Robert Kardashian is claiming the former. According to an article in People Magazine, Mr. Kardashian claims that he can no longer afford his $20,000 per month child support payments to Blac Chyna, the mother of his child, and he is asking for a modification in his child support obligation. He also claims that his volatile relationship with Blac Chyna and the domestic violence complaint that she filed against him last year damaged his career and is preventing him from earning money. Mr. Kardashian claims that his monthly income has been reduced from nearly $100,000 per month to less than $10,000 per month since their split as he is no longer appearing on episodes of Keeping up With the Kardashians. He claims, however, that Ms. Chyna’s monthly income has increased, and that her monthly income is nearly $60,000.00. Mr. Kardashian is asking that Ms. Chyna pay him child support of $2,864 per month on behalf of their daughter, Dream, with whom he shares equal custody and parenting time. According to the article, Mr. Kardashian and Ms. Chyna are in the process of exchanging financial documents.

I have blogged before about calculating child support in high income cases, including a blog about another celebrity, Angelina Jolie, seeking “Meaningful Child Support” in which I pointed out that child support orders are modifiable, even in high income cases. The seminal case in New Jersey on modification of support obligations is Lepis v. Lepis, 83 N.J. 139, 151 (1980), which allows for a potential modification of support based on “changed circumstances”. Among the changed circumstances that can result in a review or modification of child support obligations is a decline in the income of the parent who is paying child support. Conversely, the parent paying child support is entitled to a reconsideration of child support where there has been a significant change for the better in the circumstances of the parent receiving child support. A change for the better or worse in one of the parent’s incomes is not the only kind of change in circumstance that a court can consider. For instance, maturation of the child may result in a modification of support, some change in the need of the child, or some change in overnight parenting time arrangements. The change in support should not, however, be only temporary.

Either parent can file a motion to increase or decrease child support.The party seeking to modify support (either to increase child support or decrease it) bears the burden of establishing a threshold (a “prima facie”) case of changed circumstances. Lepis, 83 N.J. 139 (1980). If the moving party does not establish at least a threshold burden, then the moving party will lose. If that “prima facie” case of changed circumstance is presented, however, then the court will order the parties to exchange documents as to their financial circumstances and the needs of the child. If there is a substantial issue of genuine fact that is in dispute, the court may order a hearing or trial, but will not do so in all cases.