Posts Tagged ‘divorce’

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Ratification of Settlement and Separation Agreement

Saturday, January 14th, 2012

I have previously written about settlement agreements, their contents, modification, validity, and formalities related to their execution.

Even in situations where the agreement may have not been executed properly or otherwise invalid, if the party does not promptly act to challenge the agreement and accepts its benefits, the court may refuse to vacate the agreement. This is the situation that the Appellate Division, Second Department, addressed in Kessler v. Kessler, 89 A.D.3d 687 (2nd Dept. 2011).

In Kessler, the parties’ separation agreement was incorporated but not merged into the judgment of divorce. The parties entered into the separation agreement on June 10, 1980, after 25 years of marriage. The parties’ separation agreement, provided that the plaintiff husband would, among other things, make payments to the defendant wife for her support and maintenance and for the mortgage and carrying costs relating to the marital residence, where the defendant continued to reside. The plaintiff complied with the terms of the separation agreement and, in 2009, he commenced this action for a conversion divorce. In response to the plaintiff’s motion for summary judgment, the defendant submitted an affidavit asserting that the plaintiff had procured the separation agreement through fraud and duress, and that the agreement was unconscionable.

The defendant alleged, among other things, that the plaintiff had concealed from her his vast wealth, and had induced her to enter into the separation agreement at a time when, unbeknownst to her, New York’s equitable distribution law was about to be enacted. The Supreme Court granted the plaintiff’s motion for summary judgment, and subsequently entered a judgment of divorce, which, inter alia, directed the parties to comply with the terms of the separation agreement which was incorporated, but not merged into, the judgment of divorce. The defendant appealed.

The Appellate Division held that party who “accepts the benefits provided under a separation agreement for any considerable period of time” is deemed to have ratified the agreement and, thus, “relinquishes the right to challenge that agreement”. By contrast, when a party “received virtually no benefits from the agreement,” he or she “cannot be said to have ratified it”.

The Appellate Division further stated that assuming the truth of the allegations set forth in the defendant’s affidavit, the benefits she received pursuant to the separation agreement were far less than those she likely would have received had there been an equitable distribution of the assets accumulated during the marriage. The record, however, did not support a finding that the defendant received “virtually no benefits” from the agreement. Moreover, while “a spouse will not necessarily be held to have ratified an agreement if it is found to be the product of duress and overreaching”, the disadvantage to the defendant created by the alleged fraud and duress in this case cannot be deemed to have persisted throughout the 29-year period during which the defendant accepted the benefits of the separation agreement without challenging it.

The court held that the plaintiff made a prima facie showing that the defendant ratified the separation agreement and that the trial court properly granted the plaintiff’s motion for summary judgment.

There is a simple rule that applies to settlement and separation agreements. The party receiving substantial benefits under the agreement can’t challenge the agreement after a substantial period of time passes.

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Posted in divorce, Domestic Relations Law, New York Law, procedure, Settlement Agreements | No Comments »

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.

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Posted in divorce, Domestic Relations Law, equitable distribution, evidence, Family Law, maintenance, New York Law, Supreme Court, taxes | No Comments »

Can a Divorce on No-Fault Grounds Be Opposed?

Saturday, April 9th, 2011

One question that so far has not been resolved with any degree of certainty by the courts is whether in a divorce action brought pursuant to the new no-fault divorce statute requires specific proof that the parties’ marriage was irretrievably broken for a period of six months or longer. It is an important question since in the past divorce attorneys were able to challenge grounds for divorce and force plaintiffs to establish that there were adequate grounds for divorce. In a significant number of cases, grounds trials were held for economic reasons, i.e., the monied spouse did not want to divide assets and/or pay spousal maintenance.

Six months after the no-fault statute was enacted by the New York’s legislature, we are learning that the courts are divided on this issue, with some courts requiring proof that the marriage was actually irretrievably broken for a period of six months or longer, and with some courts holding that there is no defense to the no-fault grounds.

In Strack v. Strack, 2011 N.Y. Slip. Op. 21033 (Sup. Ct. Essex Co. 2011), the court held that the question of whether the marriage was irretrievably broken was a question of fact requiring a trial.

The facts in Strack are as follows. The parties were married on May 25, 1963 and plaintiff sought a divorce based upon the no-fault grounds contained within Domestic Relations Law §170 (7). Defendant moved to dismiss the complaint, contending (1) that the complaint lacked specificity; (2) that the conduct alleged in the complaint was barred by the five-year statute of limitations; and (3) that the complaint failed to state a cause of action for divorce under Domestic Relations Law §170 (7).

Effective relative to actions commenced on or after October 12, 2010, Domestic Relations Law §170 (7) permits divorce where “[t]he relationship between husband and wife has broken down irretrievably for a period of at least six months, provided that one party has so stated under oath.” This additional ground for divorce has given parties the option of securing a divorce without alleging fault.

Here, the allegations in the complaint were as follows:

The relationship between husband and wife has broken down such that it is irretrievable and has been for a period of at least six months. For a period of time greater than six months, Defendant and Plaintiff have had no emotion in their marriage, and have kept largely separate social schedules and vacation schedules. Each year Plaintiff and Defendant live separately throughout most of the winter months. Though they share the residence for several months out of the year, Plaintiff and Defendant have not lived as husband and wife for a period of time greater than six months. Plaintiff believes the relationship between she and Defendant has broken down such that it is irretrievable and that the relationship has been this way for a period of time greater than six months.

Having decided that the above allegations stated a cause of action and were not barred by the statute of limitations, the court stated that Domestic Relations Law §170 (7) is not a panacea for those hoping to avoid a trial. Rather, it is simply a new cause of action subject to the same rules of practice governing the subdivisions which have preceded it. By referring to Domestic Relations Law §173 which provides that “[i]n an action for divorce there is a right to trial by jury of the issues of the grounds for granting the divorce” and, here, the Legislature failed to include anything in Domestic Relations Law §170 (7) to suggest that the grounds contained therein are exempt from this right to trial.  The court further held that since the phrase “broken down such that it is irretrievable” is nowhere defined in the statute, the determination of whether a breakdown of a marriage is irretrievable is a question to be determined by the finder of fact.

In a more recent decision, A.C. v. D.R., 2011 N.Y Slip. Op. 21113 (Sup. Ct. Nassau Co. 2011), the court held that once the plaintiff makes a sworn allegation that the marriage had irretrievably broken down, a trial not required, and there is no defense to the action. The court held that the only requirement to satisfy the no-fault ground for divorce is a party’s sworn statement alleging that the marriage has irretrievably broken down. Specifically, the court stated:

It is sufficient that one or both of the parties subjectively decide that their marriage is over and there is no hope for reconciliation.  In other words, a plaintiff’s self-serving declaration about his or her state of mind is all that is required for the dissolution of a marriage on grounds that it is irretrievably broken.

As the no-fault statute requires, in order for a judgment of divorce to be entered, all the issues relating to the divorce, including equitable distribution, maintenance, child custody and support need to be resolved before a party can be granted a divorce.

While I am not aware of the court decisions on this issue here in Rochester, I hope that the courts will grant divorce solely on the party’s subjective allegation that the marriage has irretrievably broken down. Since the trial courts are split on the issue, it is likely that appellate courts will have to address this issue eventually.  I hope that the holding of the more recent case will be widely adopted follwint he Legislature’s intent in creating a true no-fault divorce in New York.

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Posted in divorce, Domestic Relations Law, Family Law, grounds, New York Law, Supreme Court | No Comments »

Automatic Orders and Contempt in Divorce Actions

Friday, February 18th, 2011

When the Domestic Relations Law was amended in 2009, it included additional requirements related to commencement of divorce actions.  Specifically, DRL §236(B)(2)(b) and 22 N.Y.C.R.R. §202.16-a included a requirement for the so-called automatic orders. Until recently, there was still a question of whether the automatic orders could be enforced using court’s contempt power since automatic orders are not signed by a judge but, instead, are signed by a divorce attorney.

In P.S. v. R.O., 2011 N.Y. Slip. Op. 21031 (Sup.Ct. New York Co. 2010), the court specifically addressed this issue.  The court held that violation of automatic orders can subject a party to civil contempt.

The wife commenced divorce on October 13, 2010, by filing summons with notice and notice of automatic orders setting forth the statutory automatic orders verbatim, which were served on husband. Parties owned joint vacation home in Vermont and had joint bank account. Upon separating, parties continued to deposit rental income from Vermont home into joint account to pay for Vermont home expenses, until December 15, 2010, when rental broker deposited $6,000 into joint account and wife transferred fund into her sole bank account. On January 4, 2011, wife transferred those funds back into joint account. Husband moved to hold wife in contempt, alleging that since May 2009, he has used funds in joint account to pay for Vermont home expenses. Wife contended that she transferred such funds out of account because she feared husband would not spend funds on Vermont home and dissipate such asset.

In addressing these issues, the court stated that to establish civil contempt, moving party must demonstrate by clear and convincing evidence that party charged with contempt violated clear and unequivocal court mandate which prejudiced moving party.

In analyzing whether the automatic orders amounted to a clear and unequivocal court mandate, the court reviewed the Court Rules, 22 N.Y.C.R.R. §202.16-a, which requires service of a copy of the “automatic orders” on defendant, and contains language identical to that found in DRL §236(B)(2)(b). The Court Rules are promulgated by the Chief Administrator of the Courts on behalf of the Chief Judge of the Court of Appeals under the authority vested in them by Judiciary Law Sections 211(1)(b) and 212(2)(b), and by Article Six, Section 30, of the New York State Constitution, to adopt rules to regulate practice and procedure in the courts. Thus, the court found that the Court Rules constitute lawful mandates of the court. It further found that the legislative history of Domestic Relations Law §236(B)(2)(b) makes clear that the legislature intended that a violation of the automatic orders would be redressed by the same remedies available for violations of any order signed by a judge.

Accordingly, the court found that civil contempt is available as a remedy for violation of the automatic orders, provided that the plaintiff has served the defendant with adequate notice of the automatic orders, as has been done in this case. However, the court in P.S. found that the wife did not violate the orders, or met the other requirements for imposition of contempt.

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Posted in court orders, divorce, Domestic Relations Law, Family Law, New York Law, procedure, Supreme Court | No Comments »

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.

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Posted in divorce, Domestic Relations Law, equitable distribution, Family Law, New York Law, Supreme Court | No Comments »

New Temporary Maintenance – How Does It Work?

Saturday, November 13th, 2010

Among recent changes to New York’s divorce laws, the legislature amended provisions of the Domestic Relations Law that deal with temporary spousal maintenance.  DRL §236(B)(5-a)(c) presently includes a formula which, if applied according to the statute, results in the presumptively correct amount of temporary maintenance. DRL §236(B)(5-a)(c)(1) describes how those provisions are applied:

(a) the court shall subtract twenty percent of the income of the payee from thirty percent of the income up to the income cap of the payor.
(b) the court shall then multiply the sum of the payor’s income up to and including the income cap and all of the payee’s income by forty percent.
(c) the court shall subtract the income of the payee from the amount derived from clause (b) of this subparagraph.
(d) the guideline amount of temporary maintenance shall be the lower of the amounts determined by clauses (a) and (c) of this subparagraph; if the amount determined by clause (c) of this subparagraph is less than or equal to zero, the guideline amount shall be zero dollars.

According to the legislative documents, the legislature intended that the temporary maintenance guidelines would only result in an award when there is an income gap between the two parties such that the less-monied spouse’s income is less than two thirds of the more-monied spouse’s income. For instance, if the payor’s annual income is $60,000 per year, the guidelines will only result in an award if the payee’s annual income is less than $40,000. The numerical guideline is only applied to the payor’s income up to $500,000 of her/his income, with a set of factors to be applied by the court to determine any additional amount of temporary maintenance on the payor’s income above this $500,000 cap.

Here are some examples of how the statute works:

Example 1

Step # 1: Determine Respective and Combined Income:
Payor‘s Income $60,000
Payee‘s Income $30,000
Combined Income $90,000
Step # 2: Perform Calculation # 1: (Subtract twenty percent of the income of the payee from thirty percent of the income up to the income cap of the payor.):
30% of Payor‘s Income (30% x $60,000) = $18,000
Minus
20% of Payee‘s Income (20% x $30,000) = $6,000
Result of Calculation # 1: $12,000
Step # 3: Perform Calculation # 2: (Multiply the sum of the payor’s income up to and including the income cap and all of the payee’s income by forty percent):
Payor‘s Income = $60,000
Plus
Payee‘s Income = $30,000
Combined Income Equals $ 90,000
Multiplied by 40% ($ 90,000 x 40%) = $36,000
Subtract Payee‘s Income from Product:
($36,000 minus $30,000 = $6,000)
Result of Calculation # 2: $6,000

Because paragraph (d) provides that the guideline amount of temporary maintenance shall be the lower of the amounts determined by clauses (a) and (c) of this subparagraph; if the amount determined by clause (c) of this subparagraph is less than or equal to zero, the guideline amount shall be zero dollars, and because Calculation # 2 is the lesser amount, specifically, $6,000, Calculation # 2 controls, and the temporary maintenance award would be $6,000.

Example 2

Step # 1: Determine Respective and Combined Income:
Payor‘s Income $120,000
Payee‘s Income $80,000
Combined Income $200,000
Step # 2:
Perform Calculation # 1: (Subtract twenty percent of the income of the payee from thirty percent of the income up to the income cap of the payor.):
30% of Payor‘s Income (30% x $120,000) = $36,000
Minus
20% of Payee‘s Income (20% x $80,000) = $16,000
Result of Calculation # 1: $20,000
Step # 3: Perform Calculation # 2: (Multiply the sum of the payor’s income up to and including the income cap and all of the payee’s income by forty percent):
Payor‘s Income = $120,000
Plus
Payee‘s Income = $80,000
Combined Income Equals $200,000
Multiplied by 40% ($ 200,000 x 40%) = $ 80,000
Subtract Payee‘s Income from Product:
($80,000 minus $80,000 = $0)
Result of Calculation # 2: $0

Because paragraph (d) provides that the guideline amount of temporary maintenance shall be the lower of the amounts determined by clauses (a) and (c) of this subparagraph; if the amount determined by clause (c) of this subparagraph is less than or equal to zero, the guideline amount shall be zero dollars, and because Calculation # 2 is the lesser amount, specifically, zero, Calculation # 2 controls and the temporary maintenance award would be zero.

Example 3

Step # 1: Determine Respective and Combined Income:
Payor‘s Income $100,000
Payee‘s Income $20,000
Combined Income $120,000
Step # 2: Perform Calculation # 1: (Subtract twenty percent of the income of the payee from thirty percent of the income up to the income cap of the payor.):
30% of Payor‘s Income (30% x $100,000) = $30,000
Minus
20% of Payee‘s Income (20% x $200,000) = $4,000
Result of Calculation # 1: $26,000
Step # 3: Perform Calculation # 2: (Multiply the sum of the payor’s income up to and including the income cap and all of the payee’s income by forty percent):
Payor‘s Income = $100,000
Plus
Payee‘s Income = $20,000
Combined Income Equals $120,000
Multiplied by 40% ($120,000 x 40%) = $48,000
Subtract Payee‘s Income from Product $100,000
($48,000 minus $20,000 = $28,000)
Result of Calculation # 2: $28,000

Because paragraph (d) provides that ―the guideline amount of temporary maintenance shall be the lower of the amounts determined by clauses (a) and (c) of this subparagraph; if the amount determined by clause (c) of this subparagraph is less than or equal to zero, the guideline amount shall be zero dollars,and because Calculation # 1 is the lesser amount, specifically, $26,000, Calculation # 1 controls and the temporary maintenance award would be $26,000.

There are several issues that are not addressed by the new statute. Initially, prior to its enactment, judges had discretion to set temporary awards based upon the actual needs of the parties. Under the prior statute, temporary maintenance was awarded to allow the non-monied spouse to preserve his or her financial circumstances and maintain the prior lifestyle during the divorce. While the goal of the prior statute was laudatory, unfortunately, the temporary maintenance awards varied greatly from case to case.

Since the new statute creates uniformity by using a formula, temporary maintenance awards are going to be consistent as far as their amount is concerned. At the same time, the new statute doe snot address duration of the maintenance and length of the marriage of the parties. For temporary maintenance purposes, a spouse in a long term marriage would receive the same temporary maintenance award as a spouse in a short term marriage. This is likely to create an incentive for parties in a short term marriage and their lawyers to extend the divorce action as long as possible.

Another problem with the new statute is that it applies to the first $500,000 of income, someone married to person who earns well in excess of that figure would receive less under the new statute than he or she would be entitled to receive under the old law, when the full income was used for determining temporary maintenance.

Finally, the temporary maintenance statute creates certain expectations on part of both litigants and judges. For litigants, there is now an expectation that any maintenance will be at the level set by the temporary maintenance formula. For judges, it is an easy way to set the final maintenance award.

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Posted in divorce, Domestic Relations Law, maintenance, New York Law, Supreme Court | No Comments »

Major Changes in New York’s Family Law Are Now In Effect

Wednesday, October 13th, 2010

Today is the day when New York’s family law begins a new era. The no-fault divorce law is now in effect and grounds for divorce will no longer preclude someone from obtaining a divorce.    In addition to the new no-fault divorce legislation, three new laws applicable to divorces and child support proceedings became effective including:

1.   a new procedure and formula for setting awards of temporary maintenance while a divorce is pending;
2.  a presumption toward grating attorneys fees to the less monied spouse during the divorce; and
3.   new circumstances for reviewing and modifying child support awards.

Here is the summary of the most important provisions of the new laws:

No-Fault Divorce

There is a new no-fault cause of action for divorce that can be granted if the spouse filing for divorce makes a sworn statement that the marriage has irretrievably broken down for a period of six months preceding the commencement of the divorce action.

Temporary Maintenance

The new law provides that maintenance is to be awarded during the divorce when one parties’ income is less than 2/3of the other spouse’s income.

The amount of maintenance is determined by the following formula as the lesser of a) 30% of the payor’s income minus 20% of the non-payor’s income or b) 40% of the combined income minus the non payor’s income.

Attorneys Fees

The  attorneys fee bill creates a  presumption that the “monied”  spouse should pay to the “non-monied” spouse interim attorneys fees in all divorce or family law case.  The purpose of the law is to make both spouses to be able to litigate their divorce case on equal basis.

Modification of Child Support

The Family Court Act (“FCA”) and matching provisions of the Domestic Relations Law (“DRL”) were amended to allow modification of an order of child support due to “substantial change in circumstances” which is now defined in a change in either party’s gross income by 15% or more.  Also, if three years have passed since the last order was entered, modified, or adjusted, the court can modify an order entered after October 13, 2010 order, unless the parties specifically opt-out of that provisions.  Additionally, a reduction in a party’s income shall not be considered as a ground for modification, unless it was involuntary and the party has made diligent attempts to secure employment.

As I have written previously, these are important development in New York’s family law and I think that it will take some time to assess their impact.  At the same time, I think that they will be welcomed by divorce lawyers in this state and will make divorce easier for the divorcing spouses. With respect to the bill establishing the formula for temporary maintenance, it is highly likely that any such temporary maintenance award is going to be used by the courts as a basis for a permanent maintenance award.

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Posted in child support, child support enforcement, Child Support Standards Act, divorce, Domestic Relations Law, Family Court, Family Law, grounds, maintenance, New York Law, Supreme Court | No Comments »

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.

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Posted in divorce, Domestic Relations Law, equitable distribution, Family Law, New York Law, Supreme Court | No Comments »

A Brief Summary of Collaborative Law – A Way Toward Amicable Divorce

Sunday, July 18th, 2010

I have previously written about Collaborative Family Law as an alternative to traditional litigation methods of resolving family disputes. Here is some additional information that describes the process and the goals of Collaborative Law.

Collaborative Law is a method for conflict resolution in which the participants focus their efforts on reaching a mutually agreeable resolution. Attorneys and other professionals are retained during the collaborative process for the sole purpose of assisting their clients in reaching this goal.

The client and their lawyers agree to work respectfully and in good faith to gather all information needed to reach an agreement, including developing the interests of each client. The participants do not engage in traditional discovery process since it tends to be expensive and lengthy. The clients and their collaborative attorneys agree from the beginning that they will produce and exchange all necessary information and documents voluntarily and in a timely fashion. Non-legal professionals are usually retained as joint neutrals and work together with the participants to define the scope of their assignment and to gather information.

The process typically includes various meetings at which the clients and their attorneys, as well as other professionals meet together to discuss the issues, make any necessary interim arrangements, and to plan for information gathering (not every professional will be present at every conference.) These conferences continue to be utilized to exchange and clarify information and to brainstorm possible options for resolution. The clients and their lawyers focus on educating everyone regarding the underlying information, each client’s interests and possible solutions. Out of this process, a settlement which meets the approval of all clients can be fashioned. Negotiations are based upon efforts to find options that will serve the interests of all clients and other affected persons, and if applicable, create the possibility for a positive continuing relationship.

The clients and their collaborative attorneys agree that they will not go to court during the time they are working towards settlement. If the clients are unable to reach an agreement, the collaborative attorneys and other professionals withdraw and litigation attorneys take the dispute to court.

Collaborative family law started with one attorney in Minnesota in 1990 and is now practiced across the United States, Canada, and internationally. Collaborative family law was started in Rochester, New York, and Monroe County, a few years ago as an attorney centered method in family law. However, more recently, other affiliated professionals including financial analysts, psychologists, counselors and coaches also became involved.  Here in Rochester, collaborative professionals belong to Collaborative Law Association of the Rochester Area, Inc. (“CLARA”) which includes among its members attorneys, child specialists, coaches, mediators and financial professionals.

Here are some questions and answers about Collaborative Law.

1. What is Collaborative Law?

Collaborative Law is a way to resolve disputes between people in a fair, open and respectful manner. In Collaborative Law, the goal is to reach a mutually acceptable settlement of a dispute that both parties will be able to abide by. The parties retain Collaborative professionals such as attorneys, accountants, financial planners, and therapists, who agree to work in good faith to gather and share all information needed to reach an agreement. The parties and their Collaborative attorneys agree in advance that they will not go to court to ask a judge to resolve their dispute for them during the collaborative process. If they are unable to reach an agreement, and one of the parties decides to go to court, the Collaborative professionals withdraw from the case. Another set of attorneys is then retained by the parties to represent them in court.

2. How does Collaborative Law differ from other methods of dispute resolution?

There are many ways to resolve disputes. Litigation is the traditional legal approach. In litigation, lawyers work hard to convince a judge (or jury) that the lawyer’s client’s version of facts is correct. Often, this includes challenging the other party’s version of the facts. Trial is often compared to a battle, in which the best side wins. However, all lawyers understand that the “best side” doesn’t always win and that in many disputes, the party who “wins” at trial still loses in other ways. In some circumstances, litigation is the only appropriate option. For example, if a party consistently hides information or is abusive, the formal procedures used in litigation may be necessary. If a party is unwilling to negotiate in good faith, a third party decision may be needed. Litigation usually costs more than other forms of dispute resolution and the outcome is typically less satisfactory.

In mediation, a neutral professional assists the parties in settling the dispute. Generally, the parties agree that all information will be shared and that they are seeking a “win-win” solution. The mediator does not represent either party and the parties do not go to court. In some forms of mediation, attorneys serve only in a consulting or reviewing capacity. In other situations, attorneys participate in the mediation. Mediation can work well for parties who have the ability to communicate their needs directly to the other person and who have similar understanding of the financial and other information being presented.

Collaborative Law combines the positive qualities of litigation and mediation. As in litigation, each party has an independent lawyer who will give her or him quality legal advice and will assist in putting forward his or her interests. Similarly to mediation, the parties and their Collaborative attorneys commit to both an open information gathering and sharing process and to resolve their differences without going to court. In addition, the parties can mutually agree to engage other professionals such as child specialists, financial specialists, coaches, vocational counselors or other neutral consultants to provide them with specialized assistance. The parties acknowledge that the best result for each of them will occur when they reach the best result for all of them.

3. How is information gathered in Collaborative Practice?

The parties do not engage in expensive legal procedures to obtain information. The parties and their Collaborative attorneys agree from the beginning that they will share all necessary information and documents voluntarily and in a timely fashion. Hiding documents or unnecessary delays are not permitted. If a party is not acting in good faith and “hides the ball”, it is the duty of the attorney to work with the client to change his or her behavior and to withdraw if the behavior continues. If a party continues to refuse to act in good faith, the Collaborative process can be terminated.

The parties decide what type of additional assistance is needed in the information gathering process and jointly engage consultants. For example, the parties can jointly hire a financial specialist to assist them in gathering and organizing financial information and to create projections for future financial possibilities. Or, they can jointly engage an appraiser to provide them with an opinion regarding the value of a particular asset.

4. How are questions relating to children addressed in Collaborative Practice?

One of the most important aspects of Collaborative Practice in a divorce dispute is the opportunity to resolve the divorce in a manner which creates a healthy co-parenting relationship so that the children’s interests and family relationships are protected. Sometimes, the parties have developed a working co-parenting relationship prior to entering the Collaborative Process. However, in many cases, the parents need assistance in transitioning from parenting in one household to parenting in two households. Divorce coaches and child specialists can assist parents in developing effective communication and in creating a parenting agreement. The Collaborative attorneys assist as needed in working out an agreement and preparing the necessary final legal documents.

5. How do the parties and professionals work together?

After initial meetings with their own Collaborative attorneys, the typical process is to start the case with a 4-way conference — the parties and Collaborative attorneys, and sometimes coaches, meet together to discuss the issues, make any necessary interim arrangements regarding children or finances, and to plan for information gathering. In addition, the parties can work individually and jointly with coaches to develop effective communication techniques and to manage the intense emotions that often accompany conflict. Additional consultants such as financial specialists, child specialists, or appraisers can also be hired to assist in other aspects of information gathering and processing. The multi-person conferences continue to be the normal means of exchanging and clarifying information and to brainstorm possible options for resolution. The Collaborative professionals work together and with their clients to plan each meeting. The parties and Collaborative attorneys focus on educating everyone regarding the underlying information, each party’s interests and possible solutions. Out of this process, a settlement which meets the approval of the parties can be fashioned.

6. Does it work to have everyone together in the same room in the middle of a conflict?

The job of the Collaborative professionals is to establish positive communication. People in a legal dispute often feel vulnerable and emotional and can be less aware of how their patterns of communication can cause problems. The Collaborative professionals help each client to present his or her interests and needs in a positive manner that will be heard by the other participants. Meeting together can help everyone to be “on the same page”, which ultimately facilitates reaching an agreement. The focus of the meetings is to find a solution, not attack each other.

7. Must an agreement be reached in Collaborative Practice?

No. All parties must voluntarily agree to the solution. No party is forced to accept a solution that does not meet his or her interests and needs. The parties understand that the goal is to fashion a solution that comes as close as possible to a “win-win” agreement, while recognizing that they won’t receive everything on their “wish list.”

8. If the parties reach an agreement through Collaborative Practice, what happens next?

The Collaborative attorneys will draft the necessary legal documents to memorialize the parties’ agreement. This paperwork is then submitted to the court for approval. A court hearing is not required.

9. What happens if a settlement cannot be reached?

If the parties cannot reach an agreement, the parties can explore other options for settlement such as mediation, arbitration, private judging and neutral case evaluation, some of which may allow them to stay within the collaborative framework. If court hearings are required, the Collaborative attorneys withdraw and each party retains a new attorney for trial.

10. Why is it necessary for the Collaborative attorney to withdraw if an agreement is not reached?

Attorneys are typically trained to approach cases with the underlying assumption that a court will make the ultimate decision. Cases are analyzed with this foundation and are settled with the backdrop being “what will happen if we go to court.” “Going to court” can often become a threat that makes communications difficult and pushes the parties apart rather than moving them toward a settlement. Since settlement has not been the focus from the very beginning, cases often do not settle until the parties are “at the courthouse steps,” after incurring substantial attorney’s fees and depleting their emotional resources.

The agreement by both the parties and Collaborative attorneys that their Collaborative attorneys will not go to court focuses everyone on creative means of settling the case in a way that is acceptable to all parties. The focus of the process stays on reaching an agreement rather than preparing a case for trial since the Collaborative attorneys will not be representing the parties in court. The tendency to “drift” to court as the default decision-making method is reduced.

11. Who should consider the Collaborative approach for their dispute?

Collaborative Practice works best for parties who wish to settle without going to court and are willing to commit to a good faith effort to do so. In Collaborative Practice, you maintain control over your decision making rather than letting a judge decide. You can also control the amount of information that becomes a part of the public record (normally, the entire divorce file is open to the public, including any allegations made by either party in obtaining temporary orders or at trial.)

People in conflict often have continuing relationships with each other, as co-parents, business colleagues, or through their circle of friends and relatives. Collaborative Practice will increase the possibility of maintaining a civil or even cordial relationship with the other person after the resolution of your conflict.

You should also consider Collaborative Practice if you wish to dramatically reduce your legal fees. A dispute that goes through the entire legal process including a trial can cost tens of thousands of dollars for each party. The formal legal procedures take much more attorney time (and your money) than the informal process used in Collaborative Law. The focus on settlement moves the case to resolution faster than the typical court-directed case, which also reduces your fees.

12. What do I do if I want to use Collaborative Practice for my dispute?

You will need to find a Collaborative attorney whom you can trust to provide you with both quality legal advice and the skills needed to work towards a settlement. You can discuss with the Collaborative attorney the ways of approaching the other parties about the collaborative process, which can include you discussing the idea with him or her, your attorney contacting the other party, or your attorney discussing it with the other party’s attorney(s), if one has been retained. In the alternative, you can contact coaches or other professionals who may be involved in the collaborative approach and discuss the process with them.

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Posted in collaborative law, custody, divorce, Domestic Relations Law, Family Law, New York Law, procedure, separation, visitation | No Comments »

Prenuptial Agreements and Waiver of Retirement Rights

Sunday, May 16th, 2010

One issue that consistently comes up dealing with prenuptial agreements is whether or not rights to future retirement benefits can be waived prior to the marriage despite the fact that any such future rights will not come into existence until after the marriage.  Prior case law wasn’t particularly clear in dealing with this issue since by necessity any such prenuptial agreement implicated Employee Retirement Income Security Act (“ERISA”).  The prior case law held that under ERISA, only a spouse can waive spousal rights to employee plan benefits, that a fiancee is not a spouse, and that such rights, therefore, cannot be effectively waived in a prenuptial agreement.

In Strong v. Dubin, 2010 N.Y. Slip. Op. 04121 (1st Dept. 2010), the Appellate Division, First Department, overturned the prior case law, including its own decisions, and held that a waiver of retirement rights included in a prenuptial agreement is valid and does not violate ERISA.

The court’s reasoning in reaching this conclusion was as follows. Initially, the parties’ prenuptial agreement, read as a whole and giving effect to all provisions, expressed an intent to opt out of the statutory scheme governing equitable distribution, which encompassed plaintiff’s retirement funds.  The prenuptial agreement provided that “[t]he parties desire, in advance of their marriage, to settle their financial, property, and all other rights, privileges, obligations and matters with respect to each other arising out of the marital relationship and otherwise, as more particularly hereinafter provided”.  Article I of the prenuptial agreement provided: ”it is the intention [of the parties] . . . that the property owned by each of them shall remain completely and wholly vested in each such person in whose ownership it presently exists.”

Article I of the Agreement expressly referenced Domestic Relations Law § 236(B)(3), which provides that a prenuptial agreement may include, among other things a “provision for the ownership, division or distribution of separate and marital property,” and reflects an intent to opt out of equitable distribution “with respect to the division of all marital and separate property either now in existence or which is hereafter acquired” (emphasis added), which encompasses the retirement funds at issue.   According to the Appellate Division, if this clause is disregarded, that would render the reference to property that is “hereafter acquired” meaningless, leaving that provision without force or effect.  According to the prenuptial agreement, the only assets specifically designated to be “marital property” are the prospective joint banking, savings or investment accounts or assets purchased from the proceeds of those joint accounts set forth in Article I, paragraph 5. The retirement assets in question were not held in joint names or funded with money from an account in the joint names of the parties and are not marital property within the meaning of the agreement.  The agreement also included a waiver which provided that

Except as otherwise expressly provided herein, each party hereby releases . . . the other, of and from all causes of action, claims, rights, or demands, whatsoever, in law or in equity (including, but not limited to claims for equitable distribution, distributive award or claims against the separate property of the other spouse) which either of the parties hereto ever had, or now has, against the other, except (a) nothing herein contained shall be deemed to prevent either party from enforcing the terms of this Agreement or from asserting such claims as are reserved by this Agreement to each party against the estate of the other; provided, however, that the claims so asserted arise out of a breach of this Agreement; and (b) nothing herein contained shall impair or waive or release any and all cause [sic] of action for divorce, annulment or separation, or any defenses which either may have to any divorce, annulment or separation action which may hereafter be brought by the other.

According to the Appellate Division, the contention that this waiver clause encompasses only property which either of the parties held at the time the prenuptial agreement was executed, to the exclusion of after acquired property, was unsupportable.  While the waiver clause stated that it is a release of all causes of action, claims, rights or demands whatsoever in law and in equity “which either of the parties hereto ever had, or now has against the other.” However, the illustrative claims listed include, but are not “limited to claims for equitable distribution, distributive award or claims against the separate property of the other spouse.” At the time the prenuptial agreement was signed, neither party had any of these delineated claims, all of which would accrue in the future, once the parties were married. Similarly the exceptions for breach of the antenuptial agreement and divorce demonstrate that the waiver clause was intended to apply to future causes of actions that would accrue after the marriage. In light of this language, to limit the claims to property that either party had at the time of the marriage would render the waiver clause meaningless in that property owned by either party at the time the prenuptial agreement was entered into would already be separate property as to which there is no right to equitable distribution or a distributive award.

The court further stated that for purposes of equitable distribution, a waiver of any interest in a pension as marital property by an otherwise valid prenuptial agreement is not prohibited by ERISA.  In New York, vested or matured rights in a pension plan are considered marital property subject to distribution in a divorce action to the extent that the benefits result from employment by the participant after the marriage and before the commencement of the divorce action.  There is nothing in the matrimonial law of New York prohibiting a spouse from waiving his or her interest in such marital property by agreement made before or during the marriage in accordance with Domestic Relations Law § 236(B)(3).

This is an important decision since it resolved some to the uncertainty associated with waivers of future retirement rights included in prenuptial agreements.  In the future, divorce lawyers can be more comfortable in including such waivers for their clients.  In appropriate situations, value of such waiver can amount to a substantial amount of money and may become subject of litigation in divorce.

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Posted in divorce, Domestic Relations Law, drafting, New York Law, pre-nuptial agreement, Supreme Court | No Comments »

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