Equitable Distribution

Lottery Winnings: A Dream Divided?

June 27, 2019 | Kevin M. Mazza, Esq.

“All you need is a dollar and a dream”. Mega Millions. Powerball. Pick-6. State lotteries all over the country 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.

THE GAMES [DIVORCING] PEOPLE PLAY

May 31, 2019 | Kevin M. Mazza, Esq.

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” – viewing 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.

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

March 1, 2019 | The Law Office of James P. Yudes, P.C.

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.

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.

Fake News: Family Law Style

January 5, 2018 | Kevin M. Mazza, Esq.

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.

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

Supreme Court of New Jersey Addresses Debate Over Enforcement of Premarital Promise to Share in an Asset

October 20, 2017 | James P. Yudes, Esq.

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 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 ›

United States Supreme Court Issues Ruling Addressing Divorced Spouse’s Rights to Ex-Spouse’s Military Pension

September 22, 2017 | The Law Office of James P. Yudes, P.C.

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 ›

Supreme Court of New Jersey Imposes Constructive Trust to Avoid a Spouse Being Unjustly Enriched by Avoiding Equitable Distribution of Deferred Compensation

December 27, 2016 | Karen T. Willitts, Esq.

On December 12, 2016 the Supreme Court of New Jersey decided the case of Thieme-v-Aucoin-Thieme, regarding equitable distribution and/or the use of a constructive trust in a post-judgment dispute over deferred compensation paid to one spouse after the parties’ divorce. Continue reading ›

What is the Correlation Between and Consequence of Premarital Cohabitation and Divorce?

May 29, 2015 | Karen T. Willitts, Esq.

When it comes to romantic couples “living together”, attitudes have changed from what they were a few decades ago. The negative stigma attached to couples cohabiting outside of marriage has waned and fewer people view unmarried couples who live together as inappropriate or immoral. In fact, many couples view “living together” as a way to live without marriage, as part of dating, as a means to reduce expenses or as a useful step or “test run” so to speak in the road towards marriage. Continue reading ›