Articles Posted in Equitable Distribution

“All you need is a dollar and a dream”. Mega Millions. Powerball. Pick-6. State lotteries all over the Lottery-300x232country encourage people to pluck down their dollars for the dream of possibly winning a fortune and being financially set for the rest of your life.

However, for one Michigan man that “dream” may have been considered more of a nightmare when he was directed in his divorce case to turn over to his ex-wife $15 million, nearly one-half of the Mega Millions jackpot he won in 2013. That decision was recently affirmed by the Michigan Court of Appeals in Zelasko-v-Zelasko (Docket No: 342854 decided June 13, 2019). Why the husband may have considered a lottery jackpot to be a “nightmare” included the fact that the parties married in 2004, separated in 2008, filed a divorce complaint in 2011 – almost two years before the winning lottery ticket was purchased – and where the wife had been the primary breadwinner, earning roughly three times what the husband earned. Why such a result? Most critically, under Michigan law “marital property” subject to equitable distribution in a divorce includes all property acquired from the date of marriage until the date of entry of the divorce decree. Hence even property acquired after a separation or after a divorce complaint is filed is considered marital property in Michigan. Since these parties’ actual divorce did not become final until 2018, the lottery winnings of 2013 were still considered marital property.

Among the other reasons this significant award to the wife was affirmed on appeal included: (1) that the determination was made by an arbitrator during a binding arbitration process which had been agreed upon by the parties, with the ability to challenge such rulings being statutorily limited; (2) the arbitrator’s ruling that such a division was fair and equitable, opining that the winning lottery ticket was probably not the first lottery ticket the husband purchased during the marriage and that as losses throughout the marriage were incurred jointly, winnings should also be shared jointly; and (3) that the dollar spent for the ticket was arguably marital money and as such a joint investment. Beyond this, the husband had not engendered much sympathy since he allegedly failed to contribute any money for the support of the parties’ three children.

Divorce is a life-altering event. For many it is an emotionally charged situation. The person you had loved and intended to share a life with is now someone who you consider your “enemy” – 6821f1126a34f02c8e256da1560d1e52-300x200viewing them from indifference to hatred. Any sense of trust has gone out the window. For some, notwithstanding the breakdown of the marriage, they sincerely want to resolve their marital issues amicably and in a fair and reasonable manner. However, for a significant number the raw emotions at the outset of the marital breakup seem to engender a need to “screw” the other person as much as possible. Depending upon your position in the relationship, you either want to “milk” the other spouse for all you can get, or want to pay the other as little as possible. One spouse may feel the need to “protect” one’s assets or income in some fashion from the claims of the other. One spouse may suspect that the other is hiding assets or diminishing income. In many cases, these feelings are borne out of the mistrust which exists and are not occurring in reality. However, in others these feelings or suspicions have some basis in fact. Claims of concealed or diminished income aside, this blog post will focus instead on concerns over the possibility of concealed or hidden assets in divorce, and provides a brief overview of what to look for and how to address them when such issues arise.

In divorce matters, New Jersey law provides for the equitable distribution of assets and property legally or beneficially acquired during the course of the parties’ marriage. In order to do so, marital assets first need to be identified, then they need to be valued, and after which they are to be distributed “equitably”. Unless the property was acquired by gift or inheritance from a third-party, it generally does not matter how or in whose name the assets or property was acquired if it was acquired during the marriage. Hence, if a divorce client suggests that because an asset or property is in his or her name alone the other spouse has no right to it or even to know about it, that person needs to be cleansed of that view right off the bat. Furthermore, if a divorce client tells his or her attorney about “secret assets”, the attorney/client privilege may not shield them from disclosure since the attorney code of ethics prohibits an attorney from facilitating a client engaging in fraudulent conduct or offering knowingly false testimony or statements under oath.

What if a divorce client suspects that his or her spouse has been secreting or hiding assets? Besides inquiring as to the basis for these suspicions, an attorney should obtain from the client their perception of the commencement date of any serious marital difficulties or their sense of when certain suspicious financial activity began, such as changes in the manner finances were being handled, records were maintained, or information shared. In most divorce cases, you usually ask for five years worth of financial records in discovery. However, if the suspicious financial activity has been ongoing for longer than five years, one should extend the time for which discovery is sought.

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 to3e728f0b3d0e026b62a8cb4b38918e95-1-300x200 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.

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 an1bb6f4a4625bab19f775bb1ede4fa94f-300x201 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.

If you have listened to local radio in recent years, (certainly those stations geared to a more mature audience), you were hard pressed to miss commercials from a “large” insurance broker toutinginsurance-300x184 his ability to obtain “affordable” life insurance coverage for persons, notwithstanding whether you had various chronic health conditions, took medications, or were otherwise not in the best of shape. Recently, that same insurance broker has been running a new series of commercials clearly geared to divorced or divorcing spouses, who may be in the position of having to secure life insurance coverage for the benefit of their ex, maybe even more than one. Continue reading ›

FAKE NEWS! It seems like every year new words or phrases enter into the lexicon of our increasingly dynamic culture and society. For 2017 the term “fake news” would be at the top of most people’s lists. Largely attributed to President Trump, many believe this refers to news stories that are false or are alleged to be. While this may sometimes be the case, most often the term is used to refer to matters reported in the news media as somehow being a newsworthy or significant when in reality they are not.Fake-News-Lincoln-300x188

In this politically polarized country of ours, the use of the term “fake news” is derided by some and cheered by others. Continue reading ›

For many years Palimony actions were proliferating. Spurned on by the original landmark palimony case filed against actor Lee Marvin by his former girlfriend in California. palimony actions gave e3bc10d77963468f2705f7119c049b73-300x199 hope that people (usually women) in long term relationships without marriage would have some financial rights when the romantic relationship went sour. Palimony served a useful social function to level the proverbial social playing field once the concept of “common law marriage” was eliminated. For Palimony created legal right of support in situations were there was no legal marriage but there was a promise of support. Continue reading ›

I would like to begin this blog post by thanking all those who are currently serving in the United States military and to all Veterans  that have served. Currently, there are approximately 22 million veterans of the U.S. armed forces and 1.5 million currently serving. On September 15, 2017, the U.S. Supreme Court issued a ruling potentially affecting their military families. The Supreme Court unanimously ruled in May, 2017, in the case of Howell v. Howell (No.15-1037) that a state court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits. Continue reading ›