Archive for October, 2008

Basics of Equitable Distribution

Monday, October 27th, 2008

The equitable distribution statute became law in July of 1980 and has evolved extensively since that time. Essentially, all “marital” property is subject to distribution except for “separate property.” Domestic Relations Law 236[B][1][c] defines “marital property” as:

All property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held, except as otherwise provided in agreement pursuant to subdivision three of this part. Marital property shall not include separate property as hereinafter defined.

Separate property is generally defined as inheritances, property owned prior to the marriage, gifts from non-spouses and income received in compensation for a personal injury. While appreciation of separate property is considered to be separate property, extensive case law has abrogated this concept significantly. In many cases, the courts have held that the appreciation of separate property may be subject to distribution. Domestic Relations Law §236 (B)(1)(d)(3) excludes from the definition of “marital property” … “property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse.” The courts have interpreted this language rather expansively, and efforts of a spouse may include such contributions as raising children, taking care of a household, and generally supporting the other spouse’s efforts at earning a living.

Marital property can be distributed even if it is held solely in the name of one of the parties. It is important to note that in terms of splitting martial assets, equitable does not mean equal. Assets do not have to be distributed equally to each party.

A significant portion of divorce litigation involves evaluating the assets and determining what percentage each party should receive of that asset. Property can include almost everything, including the marital home, vacation homes, automobiles, household furnishings, bank accounts, stock portfolios, pensions and retirement plans, interests in businesses and professional degrees. In New York, a party’s “enhanced earning capacity” which includes the value of any degree, license or certification obtained during the marriage can be distributed as well.

The court decisions addressing equitable distribution have held that there cannot be a distribution of property without a divorce or pursuant to a valid separation agreement. As a result, one of the common strategies utilized in divorce cases by the parties who do not wish to have property distributed, involves challenging the grounds for divorce.

Litigation support experts are commonly used in cases involving valuation of significant assets, including forensic and tax accountants, business evaluators, real estate appraisers and other similar experts. The use of these experts can make an equitable distribution case rather expensive to litigate.

Non-custodial Parent’s Right to Particpate in Child Rearing Decisions

Monday, October 27th, 2008

In 1996, Mathew’s parents, Jesus Fuentes and Karen Fuentes, were divorced. On August 1, 1996, “Order Directing Custody” was entered, granting Mathew’s mother exclusive custody of Mathew. Mathew attended New York City public schools, where he received special education services to accommodate his disability.

In 2000, because Mr. Fuentes believed that the education accommodations Mathew received were inadequate, he requested that Mathew be reevaluated for additional services. After the Committee on Special Education for the Hearing, Handicapped, and Visually Impaired determined that Mathew’s current services were adequate, Mr. Fuentes requested a hearing to review the committee’s determination. On January 8, 2001, the Impartial Hearing Office denied Fuentes’s request for a hearing. Its Chief Administrator based her denial on Mr. Fuentes’s custodial status. Because Mr. Fuentes was the non-custodial parent of Mathew, Chief Administrator determined that he was not the “person in parental relation” as defined in N.Y. Educ. Law § 3212 and concluded that Mr. Fuentes did not have the right to participate in educational decisions affecting Mathew and refused to process his father’s requests.

Mr. Fuentes, the non-custodial biological father, brought an action in the Federal Court for the Eastern District of New York against the Board of Education of the City of New York, under 42 USC §1983 and 20 USC §1415(f)(1) [IDEA], to review the City’s assessment of his son’s special educational needs and to be granted an impartial hearing for reconsideration of the City’s determination that his son did not need more special education than what he was receiving. After determining that, under New York law, a non-custodial biological parent has no right to make special education decisions, absent a court order or agreement between the parties affording such rights to the non-custodial parent, the Federal Court for the Eastern District of New York dismissed the complaint for lack of standing [FRCP 12(b) and (c)].

The Second Circuit held that although the First and Second Departments of the Appellate Division have held that a non-custodial parent, absent an order or agreement to the contrary, has no right to make educational decisions, the Second Circuit chose to have New York’s Court of Appeals definitively state the law of New York and, thus, certified the following question: “Whether, under New York law, the biological and non-custodial parent of a child retains the right to participate in decisions pertaining to the education of the child where (1) the custodial parent is granted exclusive custody of the child and (2) the divorce decree and custody order are silent as to the right to control such decisions.” Fuentes v. Bd. of Ed. of City of New York.

I have previously written about the custodial arrangements and the right of decision-making associated with each type of custody, and while there are many decisions on this issues from the Appellate Division, the Court of Appeals so far has not issued a definitive ruling on this issue. When the Court of Appeals decides this case, this is likely to be the controlling statement of New York law on the rights of non-custodial parents with respect to their right to be involved in educational and other decisions effecting their children. The Court of Appeals is likely to issue its decision in the next few months.

“Cohabitation” and Interpretation of Separation Agreement’s Provisions Applicable to Maintenance

Wednesday, October 22nd, 2008

A typical separation agreement that provides for post-divorce maintenance will have a number of provisions describing circumstances under which such maintenance can be terminated. One of the more common clauses speaks of the spousal maintenance being terminated where the former spouse is cohabitating with another adult of opposite sex for a period of time. Most separation agreements do not define cohabitation, but the courts have held that in order for cohabitation to take place, there must be a sexual relationship, as well as a degree of economic partnership between the former spouse and the unrelated adult of the opposite sex. In Graev v. Graev, __ N.Y.3d __ (October 21, 2008) the Court of Appeals had to decide whether the term “cohabitation” as included in the parties’ separation agreement was unambiguous, and whether the prior standard utilized by the courts was still valid. In a 4-3 opinion, a divided Court of Appeals ruled yesterday that “cohabitation” is an ambiguous term whose definition for purposes of potential violations of separation and divorce agreements depends on what the parties understood it to mean when making their settlements. While all of the judges agreed that a couple need not share household expenses or function as a single economic unit to be cohabitating, the Court was divided over how to resolve the dispute between Linda and Lawrence Graev and the $11,000 in monthly maintenance fees he contends she forfeited by living with a boyfriend for at least 60 straight days in violation of their separation agreement. Since the Court of Appeals held that the term “cohabitation” as contained in the parties’ separation agreement was ambiguous, it remanded the case back to the trial court to hold a fact-finding hearing to determine what the parties’ understanding of this term was at the time the separation agreement was executed. As the Court of Appeals pointed in the footnote, “[t]he wisest rule, of course, is for parties in the future to make their intentions clear by careful drafting.”

Custody Basics

Monday, October 20th, 2008

Joint custody means both parents will have a voice in decision-making involving the child, but does not necessarily imply equal time with both parents.

Sole custody reserves decision-making for one parent, with the other having specific, enforceable visitation rights, but more limited decision-making input.

In determining custody, the court can award joint custody or sole custody. Joint custody primarily involves joint decision making of the parties and does not necessarily mean that the parties will share the children on an equal basis. Joint custody is properly granted where the parties can demonstrate that they are capable of placing the interest of the child above their own needs. On the other hand, sole custody involves decision-making by the custodial parent.

Although New York courts are not generally willing to grant joint custody in a heavily contested matter, the real differences between joint and sole custody are presently far less than in previous years as a result of the courts providing the non-primary residential parent with significant input to medical and educational information on behalf of the children as well as providing that parent access to extracurricular activities and other day-to-day involvement with the children.

In a contested matter, the court is likely to appoints a lawyer to represent the child or children, who previously was known as a “law guardian.” Depending upon the resources of the parties, this attorney may be paid by the parties in addition to their payment of their own attorneys. The role of the attorney for the child is important in protecting the interests of the children and in making recommendations to the court.

Under some circumstances, the court may determine that it is appropriate to divide decision-making authority with respect to the children. Wideman v. Wideman, 38 A.D.3d 1318 (4th Dept. 2007). The essential consideration in custody determinations is the child’s best interest, given totality of the circumstances.

In Wideman v. Wideman, the Appellate Division upheld the lower court’s award of joint custody to the parties despite a well-established record of acrimony between the parties and the prediction of the parties and the experts that the parties would not be able to agree on decisions involving the children. The lower court’s decision to divide the decisions involving the children between the parents was held to be a sound one. The mother was granted decision making authority with respect to religion, finances, counseling/therapy, and summer activities; the father was given decision making authority with respect to education, medical/dental care, and extracurricular activities.

The factors that the court considers in making its decision include: parental guidance by custodial parent, each parent’s ability to provide for the child’s emotional and intellectual development, ability to provide for the child financially, relative fitness, stability of the household, willingness to foster relationship with non-custodial parent, and the effect an award of custody to one parent may have on other parent and child’s relationship.

Shared custody typically refers to the way the parents can agree on how to divide time between two homes and demonstrate the ability to cooperate.

Split custody is a situation involving more than one child, where one child’s primary residence is with one parent and another child’s is with the other parent. While there should be a reluctance in separating siblings, it can be done where the best interest of each child lies with a separate parent.

Child Support In Shared Custody Situations

Monday, October 20th, 2008

Child support under Domestic Relations Law §240 or Family Court Act §413 is not difficult to calculate in situations where there is a parent who clearly has a primary physical residence of the child. However, where the child spends equal time with both parents, these issues become a lot more complicated. Domestic Relations Law §240[1-b](f) requires that “The court shall calculate the basic child support obligation, and the non-custodial parent’s pro rata share of the basic child support obligation”. Therefore, which parent becomes the non-custodial parent in shared custody situation? This question was addressed in the 1998 case of Baraby v. Baraby, 250 A.D.2d 201 (3rd Dept. 1998).

In Baraby, the Appellate Division held that:

where, as here, the parents’ custodial arrangement splits the children’s physical custody so that neither can be said to have physical custody of the children for a majority of the time, the parent having the greater pro rata share of the child support obligation, determined after application of the three-step statutory formula of the CSSA, should be identified as the “noncustodial” parent for the purpose of support.

Since the statute is silent as to joint custody arrangements, the court ruled that for purposes of complying with the statute, one parent must be deemed “custodial” and the other “non custodial.” This step must be taken before a deviation from the support guidelines could be made under Domestic Relations Law §240[1-b](f) and (g). The parent with higher income is declared to be the non-custodial parent for child support calculations. This result problematic in situations where the parents’ incomes are close to each other.

For parents who are contemplating true shared custody, the issues of child support must be carefully addressed in the separation agreement to provide language explaining the contemplated child support arrangement and the reasons the parents are entering into such arrangement. Baraby does not stand for the proposition that the parent with the higher income must pay full child support. The parents are still free to opt out of the Child Support Standards Act, provided that at least minimum statutory child support is being paid, and the reasons for the opt-out are clearly stated.

If the court is deciding these issues in the contest of child support modification, then the party with the higher income should present information allowing the court to make a deviation from the child support guidelines pursuant to Domestic Relations Law §240[1-b](f) and (g).

Relocation and Modification of Custodial Arrangements

Monday, October 13th, 2008

One of the most common post-divorce scenarios is that the custodial parent wishes to relocate, the other party objects to such proposed move and argues that such move may negatively impact on the other parent’s relationship with the child. Assuming that the parties’ Judgment of Divorce, or separation agreement, does not conclusively address this issue, the party seeking to relocate will typically need to seek the court’s permission to do so.

As laid out in the leading case of Tropea v. Tropea, 87 N.Y.2d 727 (1996), the issue is to be determined is whether the proposed relocation is in the best interest in the child. In doing so, the court is to consider the following criteria:

1. Each parent’s reason for either seeking or opposing the relocation;

2. The current state of the relationship between each parent and the child;

3. The impact that the relocation will have on the quality and of the child’s relationship
with the non-custodial parent;

4. The emotional, economic and educational effects that the move will have on the
child; and

5. The feasibility of maintaining the relationship between the child and non-custodial
parent.

The trial court must weigh all of the factors and determine not what would be best for the parents but, rather, what is in the best interests of the child.

In Noble v. Noble, 52 A.D.3d 490 (2nd Dept. 2008), the mother sought to relocate from relocation from Long Island to upstate NY. The court held that the proposed relocation was in children’s best interests since the proposed move would provide economic, emotional and educational benefits for the mother and parties’ children without precluding meaningful and regular contact between children and father.

In Mallory v. Jackson, 51 A.D.3d 1088 (3rd Dept. 2008), the parties consented to June 2006 order awarding joint legal custody with mother having primary physical residence of the children. In October 2006, mother sought permission to relocate with parties’ children to North Carolina. Mother moved to North Carolina while petition was pending, leaving children with father at maternal grandmother’s home in Schenectady County. Mother was required to demonstrate by preponderance of evidence that proposed relocation would be in children’s best interests. Mother alleged that father had failed to provide her financial support throughout their relationship, and she was moving to be near a relative who offered financial assistance. The Appellate Division held that mother, who had already relocated, failed to present evidence at hearing that her financial situation in North Carolina was significantly better than while living in New York. Mother’s remaining extended family continues to reside in New York. The proposed relocation to North Carolina would deprive child of meaningful contact with father and members of their extended family and mother failed to establish existence of compelling reason to justify relocation of children to North Carolina.

If the court does not find the proposed move to be in the best interests of the children, the parent who has the primary physical residence of the children usually has a choice between staying or losing that primary physical residence to the other parent.

Failure to Pay Child Support and Federal Criminal Liability

Friday, October 3rd, 2008

In a case of first impression, defendant, the father of twin daughters, was convicted by a jury in the Federal Court for the Southern District of New York of two counts of willful failure to pay a court ordered child support obligation in violation of 18 USC §228(a). One of the questions of first impression for the Second Circuit Court of Appeals was “whether violation of a single child support order which covers two children gives rise to one or two violations of 18 USC §228.” Conviction is affirmed on one count, vacated on the second, and the matter remanded for resentencing. When Congress leaves a statute ambiguous as to the proper unit of prosecution, “the ambiguity should be resolved in favor of lenity.” Here, because the statute does not clearly distinguish between a “support obligation” and a “court order,” defendant’s willful failure to comply with the underlying order of support for his two daughters justifies the prosecution of only one count for willfully violating an order of support, rather than two counts for failing to pay support for his twin daughters. USA v. Kerley. Decided 9/25/08.