Archive for the ‘equitable distribution’ Category

Credit for Payments Made to Satisfy the Other Spouse’s Legal Obligations

Saturday, October 25th, 2014

It is common for parties to make payments on their debts while their divorce action is pending.  Generally, each party is responsible for their own debts incurred after commencement of the divorce action, and, most of the time, the parties are jointly liable on any marital debt that preceded commencement of the divorce action. However, there are situations where one party is forced to make payment for the debts owed by the other party. Thus, it is important to know if one spouse pays for the other spouse’s legal obligations, does that spouse receive a credit for those payments?

In McKay v. Groesbeck, 117 AD3d 810 (N.Y.A.D. 2 Dept. 2014), the Appellate Division pointed out that a party’s maintenance and child support obligations are retroactive to the earlier of the date of filing or the date of application for them. Further, any retroactive amount due has to be paid, as the court directs, taking into account any amount of temporary maintenance or child support which has been paid as provided by DRL §236[B][6][a] and DRL § 236[B][7][a].

Generally, voluntary payments made by a parent for the benefit of his or her children may not be credited against amounts due under the court order or a judgment of divorce.  Only payments made pursuant to the judgment or order can be credited. Also, a party is not entitled to a credit for payments made to satisfy that party’s own legal obligations that were not made pursuant to a pendente lite order of support.

In McKay, there was a pendente lite order for temporary child support of $1,000 per month issued in 2006, but no payments were made pursuant to that order. However, a party is entitled to a credit for payments made to satisfy the other spouse’s legal obligations. The court held that the defendant should have received a credit towards arrears for any payments he made toward the plaintiff’s car payments and insurance, and for one half of the payments he made toward the mortgage and carrying charges on the marital home, as those payments were made to satisfy the plaintiff’s legal obligations.

Thus, the party paying legal obligations will receive a credit for those payments. This situation is likely to occur where the party receiving child support and/or spousal maintenance does not have sufficient financial resources to satisfy all of his or her debts. If the court grants this credit, both parties may benefit.

Tracing Method of Dividing Defined Contribution Retirement Assets

Sunday, September 28th, 2014

I have previously written about division of marital retirement assets which is traditionally done by computing a time based coverture fraction pursuant to the New York Court of Appeals’ decision in Majauskas v. Majauskas, 61 N.Y.2d 481 (1984). Majauskas was the seminal New York case that decided that the portion of the spouse’s pension or a retirement plan such as 401k, earned during the marriage, is marital property subject to equitable distribution. To the extent that a pension was earned or 401k contributions were made during the marriage, they are, for purposes of New York law, are considered to be marital property. The Majauskas decision sets forth the formula that normally is to be followed in dividing retirement assets and consists of a fraction computed on the basis of duration of the marriage and duration of the party’s employment.

While Majauskas has been the prevailing law for the last 30 years, a recent decision suggests that with regard to defined contribution retirement plans such as 401k or 403b plans, or their equivalents, the trial court has discretion to utilize a tracing method of equitable distribution. According to Jennings v. Brown, 43 Misc.3d 1229(A) (Sup. Ct. Seneca Co. 2014), “a small minority of cases have started to hold that use of a time-based fraction to determine the marital share of a defined contribution plan is permitted”. Tracing would allow the court to treat appreciation on any separate property portion of such retirement assets as separate property, thereby reducing the non-titled party’s interest in the asset. The court observed that utilization of time coverture fraction methodology utilized by the Court of Appeals in Majauskas may result in overvaluation of non-vested party’s interest and tracing method would remedy that problem.

In Jennings, the plaintiff argued that the tracing method should be utilized to establish defendant’s interest in plaintiff’s 401k plan. However, while accepting tracing methodology as valid, the court held that it was constrained by the terms of the parties’ judgment of divorce which referenced Majauskas method of dividing retirement assets.

While Jennings is a trial level decision, and I question at least one of the cases it relies on, it suggests that with regard to defined contribution retirement funds, tracing method could be accepted by the trial court. Under appropriate circumstances, tracing method may greatly benefit the titled spouse. It also suggests that when the case is tried, the party seeking to utilize tracing method will need to present expert testimony on this issue. In Jennings, an affidavit of a CPA was presented to the court.  Since Jennings is a trial level decision, it remains to be seen whether the appellate courts will agree with its reasoning.

Transmutation of Separate Property into Marital Property

Sunday, March 23rd, 2014

One of the basic theories in equitable distribution and divorce litigation is that of transmutation. Transmutation theory holds that by their actions, the parties are able to modify the status of the property they own from separate property to marital property. Most of the time transmutation occurs when the parties commingle separate property with marital property or place what otherwise be separate property into both parties’ names.  This was demonstrated in Fehring v. Fehring, 58 A.D.3d 1061 (3rd Dept. 2009), where the money received on account of personal injuries by the husband, would be initially classified as his separate property. However, the husband deposited check in brokerage account held and used jointly by the parties. In January 2006, husband used $50,000 from account to purchase real property. The court held that transferring separate property assets into a joint account raises rebutable presumption that funds are marital property subject to equitable distribution and that the husband failed to rebut presumption of marital property given commingling of funds. It held that the lower court providently exercised discretion in distributing equally the value of interest in real property purchased with funds held in joint account.

Another example of how separate property may become a marital asset was addressed in a recent decision from the Appellate Division, Fourth Department. In Foti v. Foti, 2014 N.Y. Slip Op 00835 (4th Dept. 2014), defendant received several pieces of real property as gift from her father. Subsequently, tax losses associated with those properties were taken on the parties’ joint income tax returns. The court held that there was a question of fact whether defendant commingled her interests in the entities with marital property and whether a joint federal tax return in which defendant reported her interest in the entities as tax losses, precluded her from taking “a position contrary to a position taken in an income tax return”.

Unfortunately, the Foti decision does not give us enough facts to find out exactly what the tax returns stated. Nonetheless, this shows that even a seemingly innocuous act of filing a tax return may change the status of the property. In my view, decisions like this one, could have been prevented if the parties had signed either a prenuptial or a postnuptial agreement. If you are contemplating divorce, be careful to avoid taking any action that converts your separate property to marital property. Once transmutation takes place, it is highly unlikely that you would be able to change the property’s status back to separate property, even with a lawyer’s assistance.

Statute of Limitations and QDROs

Saturday, June 11th, 2011

One of the questions that I was asked several times during the last year was whether there is a statute of limitations applicable to Qualified Domestic Relations Orders (QDROs)? This question usually come up in situations where one former spouse was entitled to a portion of the other former spouse’s retirement benefits, however, the QDRO was never done, and a substantial period of time has passed. If there was an applicable statute of limitations, the former spouse who has failed to act would lose his or her right to collect a portion of the former spouse’s retirement.

However, a couple of recent decisions made it clear that with respect to QDROs, there is no applicable statute of limitations and a QDRO can be submitted to the court at any time. In Denaro v. Denaro, 2011 N.Y. Slip. Op. 04409 (2nd Dept 2011), the Appellate Division, Second Department, held that “the statute of limitations does not bar issuance of the QDRO.”  Relying on Bayen v Bayen, 81 A.D.3d 865 (2nd Dept. 2011), the court held that ”[M]otions to enforce the terms of a stipulation of settlement are not subject to statutes of limitation… [B]ecause a QDRO is derived from the bargain struck by the parties at the time of the judgment of divorce, there is no need to commence a separate action in order for the court to formalize the agreement between the parties in the form of a QDRO”. Id. (citations omitted.)

While I would not recommend to anyone delaying preparing and submitting a QDRO, any such submission is not going to be barred by a statute of limitations. At the same time, any late submission is likely to cause another set of problems if the retirement asset is in pay status  and payments are being made to the other spouse.

Tax Implications in Divorce – Need for Trial Evidence

Sunday, June 5th, 2011

One of the issues that frequently comes up in divorce is cases has to do with tax implications of the divorce action.  Tax issues may involve dependency exemptions, or may involve issues dealing with allocation of taxes on income or assets subject to equitable distribution.  The courts have addressed these issues in the past and have always required some admissible proof with respect to tax implications of the relief sought in the divorce action. However, some parties still fail to present admissible trial evidence that would allow the court to make decisions allocating tax liabilities, if any.

In Bayer v. Bayer, 80 A.D.3d 492 (1st Dept. 2011), the Appellate Division had to address whether the trial court properly disregarded the tax consequences impacting plaintiff’s receipt of fifty percent of monies which defendant had earned in the fiscal quarter preceding commencement of the divorce action.  The Appellate Division held that since defendant failed to present evidence from which the court could determine the amount of such taxes, the trial court acted properly.  The Appellate Division relied upon D’Amico v. D’Amico, 66 A.D.3d 951 (2nd Dept. 2009).  In D’Amico, the court held that “[W]hile this court has recognized that the value of a pension should be discounted by the amount of income tax required to be paid by a party, where the party seeking the discount fails to present any evidence from which the court could have determined the dollar amount of the tax consequences, the computation of the award without regard to tax consequences will be deemed proper”. (citations omitted)

Therefore, if there are tax issues associated with dependency exemptions, maintenance, retirement assets or equitable distribution, in order to have trial court consider those issues , a party must present admissible evidence of any tax consequences that may result. If a party fails to do so, the trial court will not consider any tax implications. As a result, a party seeking the court’s decision with respect to tax issues will have to present expert testimony of an accountant who would be able to present admissible evidence of any tax implications.

Update of Recent Cases Involving Enhanced Earnings

Friday, November 19th, 2010

I have recently written about a trend in court decisions involving enhanced earnings toward reducing non-titled spouse’s interest to less than a 50% share.  A recent decision, Haspel v. Haspel, 2010 N.Y. Slip. Op. 08530 (2nd Dept. 2010) illustrates this issue very well.

In Haspel, the trial court granted to the wife 50% of the husband’s enhanced earnings which resulted from his acquisition of several professional licenses, including, several securities dealer’s licenses and a real estate broker’s license.  The trial court’s decision was appealed, and the Appellate Division modified the trial court’s decision.

Specifically, the Appellate Division held that the wife was entitled to 25% of husband’s enhanced earnings.  While the court did not provide specific reasons for this reduction, the parties were married for nearly 23 years before the divorce action was commenced, they had two children, and at the time of trial, the plaintiff was 52 years old and the defendant was 49 years old.  The wife was also going to receive spousal maintenance, however, this issue was remanded to the trial court for recalculation since the lower court’s decision improperly engaged in double counting of the same income for enhanced earnings calculations and maintenance calculations.

As I have written previously, the trend toward unequal division of enhanced earnings is continuing.  Divorce lawyers and their clients would be well advised to review evidence related to non-titled spouse’s contribution carefully, if an argument is being made that the non-titled spouse should receive more than 25% of such enhanced earnings.

Equitable Distribution of Businesses and Enhanced Earning Capacity Does Not Always Mean Equal Distribution

Sunday, October 10th, 2010

I have previously written about equitable distribution issues here and here.  One of the most important issues that divorce attorneys have to address in dealing with equitable distribution is division of businesses or enhanced earning capacity arising as a result of acquisition of a professional degree or a license by one of the spouses.

In distributing marital property of almost every variety, the courts have focused on the relative significance of the non-titled spouse’s contribution toward the marriage, which would almost always result in equal or almost equal distribution.  However, with respect to distribution of business interests and enhanced earning capacity, as of late, the courts have focused on the degree to which the non-titled spouse’s efforts contributed toward the acquisition of each specific asset.

In the past, the non-titled spouse’s contributions to the other party’s business, career or degree, usually resulted in equal distribution of those assets.  However, the recent trend in court decisions has been to grant the non-titled spouse less than one half of the asset.

The courts have described their reasoning as follows: “[a]lthough in a marriage of long duration, where both parties have made significant contributions to the marriage, a division of marital assets should be made as equal as possible. . . there is no requirement that the distribution of each item of marital property be made on an equal basis.”  Kaplan v. Kaplan, 51 A.D.3d 635, 637 (2d Dept. 2008). In equitably distributing a spouse’s business interest, the court must consider the direct contributions the non-titled spouse made to the business as well as the indirect contributions to the ma-rital partnership, including homemaking, parenting, and providing the necessary emotional and moral support to sustain the titled spouse in carrying on the business.  Price v. Price, 69 N.Y.2d 8, 15 (1986).
Unlike other marital assets, in valuing a non-titled spouse’s share in a spouse’s business interest, the trend has been toward awards between 25% and 35% to the non-titled spouse. Chalif v. Chalif, 298 A.D.2d 348, 349, (2d Dept. 2002)(25% award to wife of husband’s medical practice and enhanced earning capacity); Granade-Bastuck v. Granade-Bastuck, 249 A.D.2d 444, 445 (2d Dept. 1998)(25% award to plaintiff of defendant’s law practice); Giokas v. Giokas, 73 A.D.3d 688 (2d Dept. 2010)(10% award to wife of husband’s business); Kerrigan v. Kerrigan, 71 A.D.3d 737 (2d Dept. 2010)(35% award to wife of the husband’s business); Ciampa v. Ciampa, 47 A.D.3d 745, 747 (2d Dept. 2008)(35% award to wife of husband’s business); Kaplan v. Kaplan, 51 A.D.3d 635, 637 (2d Dept. 2008)(30% award to wife of the husband’s dental practice).

This has been a trend state-wide and has been followed by the Appellate Division, Fourth Department, which is located here in Rochester, New York, and to which decisions from Allegany, Cattaraugus, Cayuga, Chautauqua, Erie, Genesee, Herkimer, Jefferson, Lewis, Livingston, Monroe, Niagara, Oneida, Onondaga, Ontario, Orleans, Oswego, Seneca, Steuben, Wayne, Wyoming and Yates Counties are appealed to.

As a result, the non-titled spouses and their divorce lawyers have an uphill fight if they try to obtain a substantial share of such assets as a spouse’s business, educational degrees or professional licenses.

For Unmarried Couples, Promise to Support Your Significant Other Is Not Binding

Saturday, May 1st, 2010

Marriage of the parties creates binding legal obligations and rights between spouses, including an obligation to support your spouse financially, as well as the right to division of jointly acquired assets in the event of divorce.  Once in a while, I am asked about a situation where the parties have been in a relationship for a long time and have treated their relationship as a marriage, but did not actually get married.  In this situation, my usual answer is that neither party has acquired a right to support from the other party, and any assets that one of the parties accumulated will remain assets of that party, unless titled in both parties’ names.

A good illustration of the above took place in a recent case of M. v. F., 27 Misc.3d 1205(A) (Sup.Ct. New York Co. 2010).  In M. v. F., the parties resided together for approximately 13 years between 1994 and 2007, and have a child together.  They have never been married to each other.  The girlfriend argued that the boyfriend told her that he would always take care of her, that they would combine their efforts and earnings, and what was his was hers.  Once the parties split up, the girlfriend asked for a portion of the boyfriend’s assets, a portion of the profits from his business, and other financial support.

After the girlfriend commenced an action to obtain financial relief under various causes of action, the trial court held that the boyfriend’s promise to support his girlfriend if they ever broke up are unenforceable.  The girlfriend is not entitled to “equitable distribution” of the assets acquired during the relationship.  The court held that such statements as “I will always take care of you” and “everything that we put in, we will enjoy together” do not constitute legally binding promises.

Specifically, the court stated that even “an explicit promise that, upon separation, [the plaintiff] would be entitled to ‘equitable distribution’ of their assets, it would be unenforceable, as it would be contrary to the long-standing law and policy in New York that unmarried partners are not entitled to the same property and financial rights upon termination of the relationship as married people.”   According to the court, the absence of a marriage is the determinative factor of her property rights.  The court stated that “Unless and until the law imposes equitable distribution on unmarried couples, in New York, as least, the legal status of marriage remains vitally important to establishing the economic rights of members of a couple.”

This case illustrates the fact that marriage is the critical legal event that creates financial rights and obligations between the parties that can be enforced by the courts.  For those couples who choose to cohabit, without getting married, each party should be able to rely on their own ability to earn and not to expect any financial assistance from the other party in the event of breakup.  With respect to M. v. F., the answer would likely be different if there was a written agreement to provide support.  Any such agreement, assuming properly created and executed, would probably enforceable as any other contract.

Dividing Photographs and Other Mementos in Divorce

Sunday, April 18th, 2010

While the parties are married, they tend to accumulate personal mementos such as photographs, videos, recording, pictures, drawing and other items that represent their memories of people and places.  For many people, those photographs and videos of their children are precious and irreplaceable.  For that very reason, the courts are forced to get involved in dividing such items since parties tend to have a difficult time dividing them.

In a recent case, M.R. v. E.R., 2010 N.Y. Slip. Op. 50575(U) (Sup. Ct. Nassau Co. 2010), the court demonstrated how these issues should be approached and resolved.  In M.R., the parties resolved all of the issues in their divorce by stipulation, with the sole issue left unresolved that of the right to numerous photo albums, which contain more than 7000 photos of the parties and their children which were taken during the course of their marriage.  The husband moved for an order directing that he be awarded the photo albums and the wife cross-moved for the same relief.

In a decision and order dated November 13, 2010, the court set the motion and cross motion down for a hearing after noting that the issues raised in the papers concerned equitable distribution which were not resolvable on paper submissions.  At the time that the hearing was conducted on April 6, 2010, neither party was represented by counsel.  After hearing, the court made the following findings of fact and conclusions of law with respect to the limited issues addressed therein. The court noted that the parties rejected all settlement attempts, and at the hearing, maintained their intractable and opposite positions, to wit, to each keep all photo albums.  The court also noted that the parties did previously attempt to settle the issue, and seemingly agreed that the husband would retain all photo albums and share equally in paying the cost of reproducing the photographs contained therein. The wife testified that the agreement was based on the parties’ understanding that the quality of reproduction would be satisfactory.  The parties paid more than $2,100 to scan the photographs onto disc(s), which were admitted into evidence.  As noted, other than what is described above, there was no signed or notarized agreement regarding the distribution of the photo albums.

The court found that the husband was intricately involved with taking, compiling and cataloging the thousands of photos at issue.  In this regard, the husband testified in great detail about his meticulous cataloging of photographs, love of photography; he equated his collecting of photographs of family with the hobby of collecting rare books.  The husband described the Wife’s involvement with this process as limited, and often, antagonistic.  He believed that his wife had manufactured a dispute over the photographs, not out of any real desire to obtain them for sentimental or other qualitative value, but out of some vindictive desire.

The wife gave somewhat conflicting testimony and the court found that the wife had some involvement with the compilation of photos, but that such involvement was far more limited than what she testified to at the hearing.  She testified to her dissatisfaction with the reproductions, and several photographs (printed from disc) containing imperfections/problems were admitted into evidence in support of her contentions.

The court has reviewed the photographs admitted into evidence both on disc and in photo albums.  The disc appears to contain the contents of 75 photo albums, most of which have approximately 100 photographs. The quality of photos contained on the disc is, to the court’s view, satisfactory for the most part, although it does appear that the photographs on disc are not exactly equivalent in quality to the “hard” photographs in the albums admitted into evidence.  The vast majority of photos are of the children alone, or (apparently) with relatives or friends.  Many photographs depict vacation places or sites visited by the parties themselves or with their children. On disc, and in the albums admitted into evidence, the husband is pictured in numerous photos; the wife is pictured in far less photographs. The court accepted as credible the husband’s testimony regarding the wife’s general apathy with respect to the photographic process throughout the marriage and to his greater interest in retaining the photos, and rejected the wife’s contention that the reason she does not appear in many photographs is because she was either holding the camera or did not otherwise wish to be photographed. However, the court did not conclude that the wife desired the albums, which contain many photographs of the parties’ children, for completely vindictive reasons.

Taking into account the previous agreement of the parties, and other facts, which the court considered to fall within the “catch all” factor required to be considered in making an equitable distribution award, the court hereby awards the wife 25% of the original photos; the husband is awarded 75% of the photos.  The percentages are approximate because the court held that the selection of the photos will take place in accordance with the following method, or if parties can agree any other method.  Starting with the first album, the wife shall, counting from the first page thereof, be entitled to receive every fourth original photograph in that album until reaching the end of the album.  Selection shall continue in like manner with respect to each successive album.

In my opinion, it is impressive that the court took the time to address this issue.  In general, courts’ time is limited, and most lawyers do not want to get involved with the issues dividing such personal property. Here in Rochester, a common practice is to refer the parties to the Center for Dispute Settlement to resolve any issues involving personal property and possessions.  The problem with this approach is that the Center does mediation, and, if the parties cannot agree, they are forced to come back to the court.  I generally counsel my clients that they should make every effort to resolve those disputes since it is expensive to litigate them.

Are Lifetime Medical Insurance Benefits Subject to Equitable Distribution?

Saturday, April 10th, 2010

Once in a while I see a divorce action where one of the parties to the action is entitled to lifetime medical insurance benefits as a result of his/her employment.  For obvious reasons, such benefits may be of great value to one or both parties.  What happens if one of the parties makes an argument that such benefits are subject to equitable distribution?

In Henig v. Henig, 2010 N.Y. Slip. Op. 50546(U) (Sup. Ct. Nassay Co. 2010), the husband was a former New York City Police Officer who retired in 2007. Since his retirement on December 31, 2007, he has been entitled to and does receive lifetime medical, dental and vision benefits for himself, wife, and the parties’ children.  Wife argued that the medical insurance is a marital asset and subject to Equitable Distribution, and/or equals a benefit to be included in determining husband’s income.

Wife argued that the Domestic Relations Law contemplates an expansive view of marital property and analogized the lifetime health benefits to a pension insofar as such benefits are an asset, received only upon retirement.   She claimed that husband’s rights to the coverage matured as of his retirement, and Wife has rights independent of the husband, i.e., if there were no divorce and husband were to die, Wife and children would still receive benefits.

While wife made that argument, however, her lawyer had not submitted any documentary evidence, specific to the plan, to substantiate these claims.   Wife’s attorney also argued that lifetime benefits, like a pension, are contractual rights, which have some value because they are received in lieu of higher compensation, which husband would have earned otherwise, however, wife’s counsel again provided no proof to substantiate this claim.

Husband argued that since enactment of DRL §236 B, neither the Court of Appeals nor the four appellate divisions have held that employee-subsidized health insurance benefits are marital property subject to Equitable Distribution.  In fact, in contemplation of the loss of such health benefits, DRL§255(a) directly addresses the issue stating that ” once a judgment is signed a party there to may or may not be eligible to be covered under the other party’s health insurance plan.” Husband’s lawyer also argued that amendments to DRL§236(B) provide that loss of health insurance benefits upon dissolution of marriage are factors that a court must consider for the purposes of determining maintenance and Equitable Distribution, but that such benefits are not itself an asset, and if the Legislature intended that such benefits be included in the definition of marital asset, it would have done so as it has amended and modified other provisions concerning health insurance.

Husband further argued that wife may elect continuation of coverage under a COBRA option, or she could obtain her own health insurance benefits through full-time employment, the cost of which is a consideration in her support award, if any.  Wife’s available remedy through the election of COBRA coverage would ensure the avoidance of any possible double-dipping by ordering the husband, to pay for her health insurance.  Husband’s counsel, however, has not submitted any proof of the availability of a COBRA option to wife upon dissolution of the marriage, nor was there any proof presented with as to wife’s ability to obtain benefits through employment.

As far as the health insurance benefits themselves, the husband currently pays $15.32 per month for such benefits and an annual deductible $300.00.  The continuation of the benefits is at a continued cost to husband, and his failure to make such payments will result in the cessation of such benefits.  In further support of the proposition that lifetime health benefits are not defined like a pension, husband’s lawyer asserted that wife has already received her marital portion of the insurance having enjoyed its benefits during the marriage, and even the period after husband’s retirement and until such time that the Judgment of Divorce is entered.  Furthermore, he argued that upon divorce Husband will pay the monthly premium from his separate property, and continuation of the health insurance policy is conditioned upon payments made from separate property and therefore any marital right to the insurance terminates upon divorce.

Wife’s divorce attorney cited Walek v. Walek, 193 Misc 2d 241 (Sup. Ct. Erie Co. 2002), where the trial court held that health insurance benefits were a marital asset and subject to Equitable Distribution. The court in Henig found that case distinguishable since in Walek, the husband used a portion of his sick time, which could have been paid to him directly, to fund the 10% required premium payment necessary to receive those post-retirement, lifetime benefits.  The sick time had a value, which was arguably marital property, which marital property was then used to directly fund those lifetime benefits.

Section 255 of the Domestic Relations Law states in pertinent part that:

A court, prior to signing a judgment of divorce or separation, or a judgment annulling a marriage or declaring the nullity of a void marriage, shall ensure that:

1. Both parties have been notified, at such time and by such means as the court shall determine, that once the judgment is signed, a party thereto may or may not be eligible to be covered under the other party’s health insurance plan, depending on the terms of the plan.
2. If the parties have entered into a stipulation of settlement/agreement on or after the effective date of this section resolving all of the issues between the parties, such settlement/agreement entered into between the parties shall contain a provision relating to the health care coverage of each party; and that such provision shall either: (a) provide for the future coverage of each party, or (b) state that each party is aware that he or she will no longer be covered by the other party’s health insurance plan and that each party shall be responsible for his or her own health insurance coverage, and may be entitled to purchase health insurance on his or her own through a COBRA option, if available.
***

Section 236 B(6) of the Domestic Relations Law states in pertinent part that:

In determining the amount and duration of maintenance the court shall consider:

(11) the loss of health insurance benefits upon dissolution of the marriage; and
***

The trial court held that the threshold question was whether the lifetime health benefits constituted property and the wife has failed to submit proof establishing this.  Even if it were to be deemed property, wife has failed to provide the court with a sufficient showing to justify classifying such benefits are “marital property” or that  the post-retirement lifetime benefits involved a reduction in husband’s earned wages in order to obtain such benefits or that these lifetime benefits are provided through the employer utilizing funds set aside from a portion of the husband’s income earned through his employment.  She did not allege that husband had an opportunity to “opt out” of such benefits in exchange for higher wages.

Additionally, the argument with respect to the de minimus amount husband is required to pay for the continued health insurance and that husband’s cost for such comparable medical benefits pales in comparison to that which it would cost wife was not persuasive.  Even if this argument were accepted, the loss of benefits for one spouse has been contemplated by the Legislature in its amendment to the Domestic Relations Law to include the loss of health insurance benefits in the determination of maintenance.  Although wife’s attorney argued that such savings for Husband constitutes an asset to which Wife contributed, this argument did not persuade the court.

What is the final lesson of Henig?  I agree with the court that the health benefits are not marital property as contemplated by the Domestic Relations Law.  Furthermore, it was the intent of the Legislature to exclude such benefits from the totality of marital assets, as evidenced by the amendments to the Domestic Relations Law that specifically ensure that such loss of benefits by a spouse post-judgment is a consideration in the determination of maintenance, as well the recent language adopted to ensure that all parties are aware of the possibility of loss of such health benefits.  Wife was not left without a remedy, since the future cost of health benefits is a consideration for any award of maintenance and Equitable Distribution.