Family Law Blog
Family Law
I Received an Inheritance – Will I have to Share the Money with My Ex-Spouse?
The answer to this question can go in two different directions, depending on what the recipient did with the money. When evaluating a divorce, most states view inherited funds as separate property, whether those funds were received before or after the marriage. In Maryland (and in the vast majority of states), inherited funds are considered separate, or non-marital property. Here is the catch, though: the designation of “separate” can change based on what the recipient did with the funds. Generally, marital property is subject to division in a divorce, while separate property is not. However, inherited funds that start out as separate property can become marital property if they are “commingled”—i.e., turned into marital property by using the money for things like remodeling the marital house, paying for a vacation, paying off bills, or other similar things that benefit both spouses. Here are some other specific examples of comingling: If one spouse inherits a house and then adds the other spouse’s name to the deed, the inherited house then becomes a comingled asset. If one spouse receives funds and then puts the money into a savings account for a significant period of time under both their name and their spouse’s names, those funds are now comingled and considered marital property. If one spouse uses inherited funds to renovate the marital home, which is titled in both spouse’s names, the inherited funds become commingled. Because comingling can happen so easily and unintentionally, some couples opt for a postnuptial agreement when they inherit funds. This is an agreement that happens after marriage, wherein the parties agree that the inherited funds used for the renovation, vacation, or other mutually beneficial activity shall be and remain the inherited party’s sole and separate non-marital property, free and clear of any interest of the other spouse. It’s wise to consult with an experienced family law or divorce attorney when one receives a large sum of money from an inheritance. Even if the recipient decides not to pursue a postnuptial agreement, being aware of what actions would be classified as comingling can be extremely helpful when deciding how to use the funds. If you have any questions on this topic, please contact Sandra Brooks at sbrooks@offitkurman.com or 240.507.1716.
September 20, 2021
Family Law
So, What About Your Personal Property - Is It Yours?
Anything that you owned prior to your marriage, that you received through inheritance, or that was a gift to you (not to both of you) during the marriage, is not marital property. It’s yours. You can keep it upon divorce, and you do not need to offset the value of those items with anything that is marital. Usually, the engagement ring, since it’s given prior to the marriage, is not marital property. However, jewelry that was purchased during the marriage, even if it was a “gift” to one party from the other, remains marital, and will be divided, or it’s value will be offset upon divorce. Although that’s the law, to be frank, very few folks fight over marital property. It is expensive to do that, both financially and emotionally. Usually there is some agreement regarding furniture, home furnishings, artwork, etc. When the parties cannot agree, there are some options for resolution. Some of the options that have worked for our clients are: flipping a coin, and the winner gets first choice, then alternating until all of the marital property on the list is divided. Another option is that one party prepares two separate lists that “equitably” divide the property, and the other party gets to choose which of the lists is his/her property. Often, the parties attempt mediation, with the understanding that if they are not able to arrive at an agreement after a certain amount of time, the mediator makes the decision, as an arbitrator, and that decision is binding on the parties. Even when the division of the property that has value has been determined, there usually remains the issue of photographs, videos, movies of the family, etc. Fortunately, almost everything can now be reproduced, so that each of the parties can retain those very important memories. The issue of the cost of reproduction must be addressed. Because it can become very expensive, the parties often agree to share most of the items, rather than reproducing everything. Again, the options, should the parties not be able to agree, may be to resort to the flipping of the coin. Because physical ownership often determines control, one should either consider removing items that have great sentimental value from the marital home that one would be devastated to lose, or take photos or a video of everything in the house, so that a list can later be made that will include all of the marital personal property. In some cases, a personal property appraiser is required to assess the value of the assets. This is especially true in the case of artwork and antiques. Best advice is to keep a record of all significant items, not only in case of separation and divorce, but also in case of loss due to fire or theft.
August 18, 2021
Family Law
The Rundown on Custody Evaluations: A Q&A
When a divorce involves children and a court-issued custody evaluation, the parents can understandably be uneasy about the process, what it will entail and how it will affect the outcome of the custody arrangement. The key to successfully navigating a custody evaluation is understanding how they work and having a strategy in place with your divorce attorney beforehand. Here are the most common questions my clients ask me about custody evaluations. Q: What is a custody evaluation, and when are they used? A: Custody evaluations are sometimes appointed in highly-contested divorces involving children; A custody evaluation is the legal process in which a court-appointed mental health expert (or chosen by the parties) evaluates a family and makes a custody recommendation to the court based on the child(ren)’s best interest. You should expect a series of interviews conducted both alone with the evaluator and with the evaluator and the other parent, and with you and your child(ren). In some cases, psychiatric testing for one or multiple family members will also be part of the process. Q: What is the goal of the custody evaluation? A: The goal of the custody evaluator is to gather data from the parties, witnesses, documents and the children themselves to ultimately render an opinion on physical custody (the visitation/access schedule of the children) as well as legal custody (decision-making authority for the children). Q: What qualifications does a custody evaluator have? A: For the most part, custody evaluators are trained mental health professionals. In some jurisdictions, the custody evaluators are psychologists, but it varies. In my local jurisdiction, the court evaluators are social workers. While psychologists can do psychological testing during an evaluation, non-psychologist evaluators cannot. Most court evaluators are not licensed to conduct the psychological testing that is sometimes needed to help the family understand and address a parent or child’s mental health issues. This is when it might be more beneficial to hire a private evaluator who can do the appropriate psychological testing, but private evaluators can be quite expensive. Q: How much will it cost to get a custody evaluation? A: Some courts have the resources available to appoint custody evaluators at no expense to the parties, which is the case in my jurisdiction. Otherwise, if the evaluation is being commissioned through a court-connected program, the fees will be determined by the court’s policy. Private evaluators typically charge by the hour, and the fees can be significant. Q: How much influence does the evaluator have over the judge’s final decision? A: It is my experience that the courts do not always follow the recommendations of the evaluators; however, the courts do like to hear what the evaluator learned from their observations, and the evaluator’s perspective can certainly sway the judge in one direction or the other. Q: Should I request a custody evaluation? A: This is a question that you should discuss with an experienced divorce or custody attorney. There is some strategy involved as to whether, or not, a custody evaluator makes sense for your specific situation, and your attorney can help you navigate that. For example, if you already have significant leverage and the judge is likely to rule in your favor already, adding another layer of complexity to the case with a custody evaluation may not be the best choice. Q: What if I disagree with my ex-spouse on whether or not to get a custody evaluation? A: If the parties do not agree on whether or not to get a custody evaluation, one side may file a motion requesting a court or private evaluator; the other side will likely oppose the motion, and the court will make the decision. If you have any questions on this topic, please contact Sandra Brooks at sbrooks@offitkurman.com or 240.507.1716.
August 16, 2021
Family Law
Why Would I Pay Alimony If My Soon To Be Ex-Spouse Has a Job?
Most people understand that when there is a divorce, one party sometimes has to pay alimony to support the other party. But the details of who pays alimony, and why, can be a bit fuzzy. I deal with divorce proceedings every day, and a common question I am asked is, “Why would I pay alimony if my soon to be ex-spouse has a job?” The short answer is: There is no formula for alimony in Maryland, so a party may have to pay alimony even if their spouse is working 40 hours a week. The long answer is that there are over 10 factors that the court has to consider when determining who pays alimony and how much. Things like the length of the marriage, each party’s income, the age of the parties, the physical and mental health of the parties, the living standards of the parties, and the cause of the breakup of the marriage are all taken into consideration—which means the court ultimately has great discretion in determining how much alimony is to be paid and for how long. Should the payee have a job, but not be able to meet their needs on that salary, the payor will likely be ordered to pay alimony to supplement those needs, or to pay alimony until he/she can become self-supporting—whether that be through additional education or more time in the work force. Of course, the payor will also need to be able to meet his/her own needs while supporting the ex-spouse. The court is not supposed to order the payor to pay more than he/she can afford, because the payor needs to be able to meet personal living expenses as well. To this point, I have experienced cases where a judge orders a payor to pay more than they can afford, which just leads to more legal fees in an appeal or motion to modify alimony. Even so, divorcing parties should be aware that the court will view alimony payments as more important than saving for retirement or going on vacation, and a judge will likely not order a payor to put away money for these types of expenses instead of financially supporting the payee. Navigating divorce and alimony payments can be a bit sticky; as always, it’s best to work with an experienced attorney to help you get the best outcome for your specific situation. If you have any questions on this topic, please contact Sandra Brooks at sbrooks@offitkurman.com or 240.507.1716.
July 13, 2021
Family Law
Should You Consider a Collaborative Divorce?
A collaborative divorce—or the legal process in which a couple enters a formal agreement to work together, out of court, to settle the terms of a divorce—can be an excellent choice for spouses who are on good enough terms with one another to be able to hash out a compromise. This process usually involves a combination of mediation and negotiation to reach an agreement. One must retain attorneys who are collaboratively trained. Courts in every state encourage couples to opt for collaborative divorce, or a similar process, whenever possible. Even when litigation is filed, most Courts require some type of mediation before a trial date can be set. If an agreement can be reached on some or all of the issues, the divorce process is generally less painful for everyone involved. In every collaborative divorce is a collaborative agreement; one of the fundamentals of this agreement is that, if the collaborative process is not successful and the parties elect to proceed with litigation, the parties are not able to continue on with the representation of their chosen collaborative counsel. This requirement is an incentive for the parties to work harder during the collaborative process, as starting over with new counsel can be both expensive and emotionally taxing. As a result, some are willing to proceed with a similar process, called an informal settlement. The informal settlement does not require a change of counsel if the collaborative process is not productive. While this is not a true collaborative process, it can proceed in a similar manner. In either event, experienced collaborative attorneys have the skills to assist the parties in creating a “win-win” situation that may allow areas of agreement that are not available in the litigation process. Generally, in a collaborative divorce, a financial neutral is incorporated into the team from the start. This mechanism provides both parties with knowledge that an independent expert is gathering the data, reviewing it and preparing it in a way that will be easily understood by all parties. The basis for trust is significantly increased when a financial neutral is involved, and that factor alone significantly impacts the probability of successful resolution. Often a coach is also a part of the team, as emotions can run high, and having someone involved who has the skills to help de-escalate the situation and assist the parties in articulating their goals and concerns in a non-threatening way can be invaluable. A collaborative divorce is just one of many options for a process that may lead to a resolution without the necessity of litigation. In almost every case, there is mediation, negotiation, and, in recent years, arbitration, which will assist those going through the divorce process in arriving at a resolution without the financial and emotional expense of a trial.
July 12, 2021
Family Law
Courts Treat Pets as Personal Property in Divorces, and that is Unlikely to Change Anytime Soon in Maryland
In divorces in Maryland, pets are treated as mere personal property. In other words, the Court is not going to put a visitation schedule in place for a pet if the parties are unable to agree on who gets the pet. At most, the Court will determine the value of the pet and perhaps award a certain sum to the party who is not keeping the pet. I have thankfully never had to have a Court determine ownership or the value of a pet for a client, as my clients are generally able to reach an agreement on the issue. As the owner of an eleven-year-old rescue dog named Bernice, who cannot manage to get out of the veterinarian’s office for less than $300 a visit, I generally tell clients that the value of a pet is not worth the attorney’s fees of fighting over the pet, if the parties are unable to reach an agreement. While I love Bernice, she is more of a liability than an asset. I also know firsthand the emotional connection that you can have with a pet. In the recent case of Anne Arundel County v. Reeves, 2021 Md. Lexis 259 (Md. Ct. of Appeals June 7, 2021), however, the Court declined a suggestion that the Court re-examine the classification of pets as personal property and treat a pet as something worthy of emotional damages in the case of injury or death. I first became aware that Maryland has a statute capping damages for the injury or death of a pet as a first-year associate, when the managing partner of my former firm asked me to handle a trial involving a claim of damages to a very old, pure-bred dog. It was the type of case that older attorneys love to give to first-year associates. The client was devastated, but the statute capped damages, and the defendant disputed liability. Half-way through a full-blown trial, my client testified so well regarding her upset that the defendant offered a settlement, which my client accepted. While the emotional significance of pets has become even more accepted in the twenty years since that shining moment in my legal career, the Reeves case makes clear that Maryland is no closer to changing the legal significance of pets. In Reeves, the Court held that damages for the shooting death of a pet by a police officer were limited by statute to $7,500 and were limited to compensating for the fair market value of the pet, in the case of the pet’s death, and veterinary bills to care for an injured pet or care of a pet prior to death. The Court ruled that the statute did not allow for noneconomic damages for the death or injury of a pet, such as pain and suffering. The Reeves case and the decision not to change the legal standing of pets avoids numerous complications that would arise if the Court had decided otherwise. An obvious negative consequence that the outcome avoids is increased liability for veterinarians and kennels. A not so obvious potentially negative outcome would have been the increased complications in divorce cases if a pet is considered something more significant than personal property. Thankfully at least for family lawyers, if not pet owners, the custody of pets will not be an issue that can be disputed in Maryland divorces. If you have questions about this or any other Family Law issue please contact Catherine H. “Kate” McQueen at (240) 507-1718 or kmcqueen@offitkurman.com.
June 24, 2021
Family Law
Recent Case Makes Clear that Guardians in Maryland Cannot Change Beneficiary of Life Insurance Policy of Ward Without Prior Court Order
There is a saying that is common among guardianship attorneys, namely: “When in doubt, let the Court sort it out.” In other words, if the guardianship statutes or rules do not specifically allow you to do something, get a court order blessing your action in advance. The recent case of United Bank v. Buckingham, 472 Md. 407, 247A.3d 336 (Md. 2021) reinforces that saying, as the Maryland Court of Appeals found that the guardian could not change the beneficiary of the ward’s life insurance policy without prior court approval. The Court noted that a section of the guardianship estate addressing a guardian’s authority as to life insurance policies, namely Maryland Ann. Code, Estates and Trusts § 15-102(t), did not specifically give the guardian the authority to change the beneficiary, although the statute gave the guardian authority to conduct several other life insurance transactions. The Court rejected the reliance upon 13-203(c)(1) of the Estates and Trusts Article for authority. Section 13-203(c)(1) gives a guardian, except with specific limitations, “all the powers over the property of the minor or disabled person that the person could exercise if not disabled or a minor.” The Court found that this general language was insufficient to authorize a guardian to change a beneficiary of a life insurance policy. In the Buckingham case, one could argue that the outcome could have been due, in part, to the bad facts of the case, as it was alleged that the beneficiary designation was changed in an effort to avoid a creditor of the ward from collecting the funds after the ward’s death. The court found that the change was contrary to the guardian’s duty to preserve a ward’s estate of the ward’s heirs. Most cases I have been involved in, however, whether I have represented clients seeking guardianship, or I have been appointed guardian for someone, have starkly different facts. In many of these cases, a ward has been financially exploited by a family member, friend, or caregiver. In those cases, it is quite common for the exploiter to not only try to steal the ward’s money while the ward is living, but also to try to manipulate the ward’s estate planning framework, including beneficiary designations, asset titling, and the ward’s will, to inherit from the ward when the ward dies. I already counsel clients to seek court approval, prior to attempting to change any type of beneficiary change or other term of an estate planning framework. The Buckingham case makes clear that the Court also believes that guardians should abide by the “when in doubt” rule. If an action is not expressly authorized by the guardianship statute, a guardian is better off seeking court approval in advance, especially where there is likely to be a dispute over an asset or estate. If you have questions about this or any other Family Law issue please contact Catherine H. “Kate” McQueen at (240) 507-1718 or kmcqueen@offitkurman.com.
June 22, 2021
Family Law
Who Gets the Dog?
“But who gets the dog?” This is a question I get often. In a situation like divorce, deciding where the dog will go can be tricky, as animals often feel like part of the family. And while just a few states (Alaska, Illinois, and California) have treated dog ownership disputes like custody cases, in most states, animals are considered a type of “chattel,” or personal property—just like jewelry, clothes, and artwork. Of course, in an ideal world, the parties are able to work out an agreement in regard to their animals, but if there is no written agreement as to who gets the dog and when the dog is likely to stay with the spouse who has possession. That is, if partner X moves out of the house, partner Y, who is still living in the house with the dog, will most likely get the dog. Most people are not aware of this, but it’s something both parties should keep in mind when considering moving out. Now, if there are minor children involved, that is a different story. I am seeing a trend in case law wherein the dog is ordered to follow the children. This makes sense, as children are often bonded to their pets and the judge will not want to separate the children and the dog; in other words, the children’s happiness takes precedence over parental preferences. Even when the decision is clear, such as when children are involved, logistics can still be a little sticky. For example, in a case of split custody in which the children travel back and forth between parents, arrangements must be made for the dog while the children are staying with the other parent. In some cases, the dog will travel to and from the parents’ houses with the children, but if the children attend school or daycare, the parents will have to separately agree to transition the dog from one house to the other. There are also situations in which, children or no children, the parties agree that if the party in possession of the dog must travel, they will give the other party the right of first refusal before seeking third-party care (such as a kennel). Each situation is different and will require legal expertise to get the right agreement in place. When considering who will “get” the dog, it’s important for parties to have an experienced attorney draft language to include who will have the dog, how the dog will be transferred between the parties, and how the dog’s expenses will be paid—this will help move things along more quickly and give the party in question a higher chance of a favorable outcome.
June 17, 2021
Family Law
Divorce and Dementia – Why You Need an Attorney Knowledgeable in Both Areas
You may watch the Real Housewives of Beverly Hills and think that your life bears very little resemblance to the lives of the housewives, but one recent story line (the divorce of housewife Erika Jayne and her husband, Tom Girardi) touches on issues that many divorcing spouses face and highlights the focus of my practice, namely the intersection of divorce and guardianship. Tom Girardi has reportedly been diagnosed with Alzheimer’s Disease and dementia, which his representatives have claimed has contributed to the financial issues that his law firm has experienced. I will leave it to the creditors and Girardi’s representatives to sort out the details of his financial issues and liability. What the story demonstrates, however, is the way that dementia can cause a financial implosion of a marriage. I have counseled numerous clients about how to approach their spouse’s cognitive decline and accompanying financial mess. The first thing I generally tell clients is not to avoid doing something just because the spouse gets upset. A marriage is like a boat, and if one spouse is drilling holes in the boat, you both will sink. Do not let yourself go down with the ship just because your spouse gets upset when you question his or her financial actions or capacity. You cannot control your spouse’s reaction. You can take action, however, to try to stop the financial damage. Once we get over the client’s reluctance to cause upset, we talk about four main issues: (1) what debts are there, and who is liable for them? (2) how can we stop the bleeding in terms of financial misuse, waste, or even exploitation? (3) what care needs and costs will the spouse have and how will those be paid? and (4) what are the client’s expenses and how will those be paid? The client may have to file for divorce to protect the client’s emotional and financial well-being. If that is the path that the client chooses, the first question is whether the other spouse needs a guardian to represent him or her in the divorce. The client and spouse often have mirror estate plans established many years earlier where they name the other party as their attorney-in-fact through a power of attorney. The client, however, cannot act on behalf of the spouse in a divorce using the power of attorney because it’s a conflict of interest. If the spouse no longer has the capacity to sign a new power of attorney, a guardian will have to be appointed for the spouse. If you serve a complaint for divorce upon someone who does not have the capacity to understand a legal proceeding or advocate for themselves, that service may be ineffective, so any relief that you may obtain from the court may be overturned. Further, the court may see the client’s efforts to proceed with a divorce without alerting the court as to a spouse’s cognitive deficits as an attempt to take advantage of the spouse in the divorce process. As the divorce proceeds, you can still try to reach a settlement on the financial terms of the divorce even if the spouse is under a guardianship. While the court does not generally look behind the terms of a separation agreement between spouses, if one of the spouses is subject to a guardianship, the court will need to be persuaded that the financial arrangement is in the spouse’s best interest. The client will need to consult with an expert about the spouse’s care needs and costs and determine the best way to fund that, particularly if there is a possibility that the spouse will need Medicaid to pay for the care. When applying for Medicaid, there is a five-year lookback period to examine any transfers of assets and determine whether they have been made for fair market value. This lookback period can cause negative consequences for a transfer that in a typical divorce would be advantageous. Complex issues arise when divorce and dementia intersect. It is important to consult with an attorney experienced in both divorce and capacity issues to make sure that these issues are addressed proactively and advantageously. Attorneys whose practice includes both focuses can also provide the client with valuable connections to financial, Medicaid, and elder care professionals who can help the client with all of the issues the client is facing. If you have questions about this or any other Family Law issue please contact Catherine H. “Kate” McQueen at (240) 507-1718 or kmcqueen@offitkurman.com.
May 13, 2021
Family Law
Flying This Summer?
Nonetheless, we want to be cautious and take precautions from the time you enter the airport until you depart the airport at the end of your journey. One easy step is to register for TSA Precheck, which allows passengers to bypass crowded security lines, saving time and reducing the number of contacts. Secure your boarding passes online before arriving at the airport, which also minimizes the number of contacts you will have with airport employees. You don’t have the same level of good air filtration and airflow in the airports as you do in the planes, so you want to minimize the amount of time you spend in the airport. A carry-on bag minimizes the time spent in crowded baggage areas at both the beginning and end of your flight. Make sure that your carry-on is small enough to fit in the overhead compartment. If it isn’t, you may be able to check it at the gate. Although you will still have to deal with the baggage claim area upon your arrival, you can avoid dealing with that issue at the departure airport. If your flight is long, or if you have a layover, you should consider packing your own lunch and a snack. Many airport restaurants are not operating at capacity and packing your own food will minimize your contact with other passengers and employees as you stand in line to order. Collapsible storage containers are perfect for keeping food fresh, if you are not inclined to use plastic sandwich bags. Masks are still required on all airlines. You should bring four or five masks and change them out every three to four hours. It’s best to double mask or use an N-95 or KN-95 mask to assure maximum protection. Find one that fits comfortably, because you will be using it for multiple hours at at time. It’s also important that you wash your hands a lot when you can’t, use sanitizer. And, if you can, find one that contains a moisturizer since skin dries out in airplanes. Look for one that has at least 60% alcohol. Stay in your seat as much as you can to avoid contact with others on the plane. Although airlines report that they clean the plane between flights, it’s a good idea to wipe down the armrest, tray table, seat belt and general seat area when you first board the plane. Alcohol wipes are good for this, so put a few in a zip lock bag, so that you can easily access them and then dispose of the ones that you have already used. Check the labels to find those that kill 99.9% of the viruses. Public charging states make you more vulnerable to hacking and malware, and also require that you stand or sit close to other passengers, so bring along a portable charging device when you travel to assure that you will not run out of power for your phone, iPad or computer. If you travel frequently, consider investing in a charger that has a capacity of at least 10,000mAh. If you are taking a short, direct flight, a charger with an under 5,000mAh rating should work. Because your phone rests all over when you travel, consider investing in a portable UV light sanitizer that help keep it clean. That UV light can kill everything from bacteria and fungi to viruses themselves, although no one is sure that it will kill the Covid-19 virus. UV light can get into the nooks and crannies and is much more effective than wipes. It works like a mini-tanning bed for your phone. While the airlines often provide earphones, it is not as hygienic as bringing a comfortable pair from home. If you want to watch movies, bring headphones that can plug into the screen. Finally, consider bringing along a neck pillow. Choose one that provides a removable, washable cover. Once you reach your destination, toss the cover in the wash, so it will be ready for your next trip. Then, try to relax and enjoy your flight.
May 11, 2021
Family Law
Will New Legislation Approved by the Maryland Legislature Improve the Lives of Adolescents in High Conflict Custody Cases?
In high-conflict custody cases, parents often disagree about whether a child needs mental health treatment. Divorced parents often have joint legal custody of a child, which means that the parents have to agree on a decision regarding mental health treatment for their child. If the parents are unable to reach an agreement that a child requires mental health treatment, and it is necessary to ask the court to order mental health treatment, it can take close to a year to reach a trial date. A year is a very long time for a child to go without needed mental health treatment. Under prior law, a child age 16 or older had the same capacity as an adult (anyone age 18 or over) to consent to mental health treatment. Under the new law, any child age 12 or older who is determined by a health care provider to be “mature and capable of giving informed consent” can consent to mental health treatment. The new law provides, however, that a child under the age of 16 “may not consent to the use of prescription medications to treat a mental or emotional disorder.” Under both the prior law and the new law, a minor does not have the capacity to object to mental health treatment if it is authorized by a guardian or parent. In addition, a mental health provider may decide whether to provide information about mental health treatment to a guardian or parent, even if the child objects. It is unclear how often mental health providers will determine that a child between 12 and 16 is mature and capable of giving informed consent to mental health treatment, but the new legislation could help adolescent children caught in the middle obtain the mental health treatment they need. If you have questions about this or any other Family Law issue please contact Catherine H. “Kate” McQueen at (240) 507-1718 or kmcqueen@offitkurman.com.
May 4, 2021
Family Law
Divorce in New Jersey- Equitable Distribution
Originally posted on 3/12/2019, no content changes. Equitable distribution is the division of the marital assets and liabilities between the parties. The equitable distribution of the marital assets and liabilities is fundamentally a three-step process. The assets and liabilities acquired during the marriage must be identified. The assets and liabilities must be evaluated either by review of the account statements or other documentation, the use of appraisers or the utilization of a forensic accountant, and The method and respective percentages of the distribution must be determined. Unlike several other states (most notably California), New Jersey is not a community property state. In community property states, the assets and liabilities are divided equally regardless of any other circumstances. New Jersey is an "equitable distribution" state, meaning that the assets and liabilities acquired during the marriage must be "fairly" distributed between the parties. What is "equitable" under the facts and circumstances of a particular case is not simply a subjective determination of fairness or equity. If it were, almost every person would argue that "equitable" means that they should receive a higher percentage of the assets. They would argue that because of their perceptions as to why the marriage ended, their perceptions as to their work efforts during the marriage and their general sense of "being victimized" justifies them receiving a higher percentage of the assets. Those perceptions are, however, largely irrelevant, and the specific statutory factors which must be considered are: the duration of the marriage; the age of the parties; the physical and emotional health of the parties; any income or property brought into the marriage by each of the parties; the standard of living established during the marriage; any written agreements made by the parties either before or during the marriage; the economic circumstances of each party at the time the division of the property becomes effective; the income and earning capacity of each party; each party's educational background, training and employment skills, work experience, absence from the job market; parties' respective custodial responsibilities for the children of the marriage; the contribution of each party to the education training and development of the earning power of the other party; each party's contribution to the acquisition or dissipation of the martial assets, including:the other parties' contribution as a home maker; the tax consequences of the proposed distribution; the value of the property or asset; the need of the parent who has physical custody of a child to own or occupy the marital residence; the debts and liabilities; the need to create a trust or other fund for foreseeable medical educational expenses; and the extent to which either party deferred achieving their career goals. You should familiarize yourself with each of these factors. If there are facts or circumstances in your case which you feel relate to any of the factors, you must call them to the attention of your Attorney. As your case progresses, your position with regard to the distribution of the assets must focus upon an analysis of these factors, not your own feelings as to what is "equitable." If your case is ultimately decided by a Judge, the Judge's decision will include a specific analysis of each factor and its relevancy to the facts of your case. Therefore, in order to have some projection as to what a Judge may decide, you must analyze your case in the context of these factors. It is also important to consider that not all assets must be divided in the same percentages. It is entirely possible that some of the assets in a case could be divided equally while others, because of the relevancy of any one or more of these factors, may be distributed other than equally. For example, it is not unusual that the value of a small business or professional practice may not be divided equally between the parties. The person operating the business or professionally engaging in the practice may receive a higher percentage of the value. In some instances, the person with specific needs for certain assets, such as the household furnishings to maintain a home for the children, may receive all or substantially all of the household furnishings. Thus, it is not only important that all of the marital assets and liabilities be considered but that each asset be individually analyzed. There are also assets which may not be subject to equitable distribution and will be retained by one of the parties. Assets which are received by one of the parties by way of a gift from a third party, inherited assets or assets which are owned prior to the marriage may remain the property of the person who received, inherited or owned the assets prior to the marriage. If there are such assets, the question then becomes whether any increase in their value during the marriage is distributable. If the increase in value is solely as a result of increased market conditions or inflation, it usually will not be subject to equitable distribution. If the increase in value is the result of the efforts of one or both of the parties, it generally will be subject to equitable distribution. For example, if one of the parties owned a home at the time of the marriage and that home was renovated or improved by the parties' work efforts and/or financial investment during the marriage, the increase in value resulting from those improvements may be subject to marital distribution. If, on the other hand, the pre-owned asset was a bank account which increased in value solely as a result of interest on the account, the increase in value may not be subject to equitable distribution. If an inherited, gifted or prior owned asset is placed into joint names, sold or transferred into another asset, which is then placed in joint names, it may lose its status as an exempt asset and be converted into an asset subject to marital distribution. It is impossible to discuss all of the alternatives which may exist regarding prior owned, gifted or inherited assets in a particular case, but the point to emphasize is that you must inform your Attorney that such assets exist so as to allow them to analyze the particular circumstances surrounding those assets, and advise you as to what if any part of the value of that asset may be exempt from or included in the marital distribution. In terms of valuing the assets, some assets are very simple to value, others much more complex and the majority somewhere in between. Bank accounts, stock brokerage accounts, 401(k) accounts, or other accounts are easily valued by simply obtaining the most recent account statement. Small businesses and professional practices are very complex and difficult to evaluate. Their value can only be determined through the opinion of a competent forensic accountant who will examine the financial statements, income tax returns and nature of the business or practice and can then provide an expert opinion as to its value. Many assets may not be as simple as account statements nor as complex as small businesses but may, nonetheless, require the use of an expert or competent appraiser to determine their value. For example, a competent appraiser may have to be engaged to render an opinion as to the value of a home. Actuaries or pension experts may be engaged to offer similar opinions as to the value of pension or retirement accounts, and sometimes there are collectibles, art objects or other personal property of sufficient value to warrant retaining an appraiser as to their value. Again, it is impossible to discuss all of the alternatives as to the valuation of assets which may be subject to equitable distribution. What is, however, important is to know that you have the right to see the account statements or to obtain other competent expert opinion as to the value of the assets, and you should never settle a case without at least a reasonable level of due diligence to document and determine the value of the assets being distributed For more information on this topic, please contact Megan Smith at msmith@offitkurman.com.
August 3, 2019
