Enforceability of Prenuptial Agreements

Prenuptial agreements can be used to resolve issues related to spousal maintenance, equitable distribution, and other issues that may come up in the event the parties decide to divorce. While I have previously written about different issues involving validity and enforceability of prenuptial agreements, and how the courts would analyze them, a recent case raised an issue of what happens to the prenuptial agreement if a claim is made that the parties verbally agreed to revoke it.

In Braha v. Braha, 45 Misc 3d 1211(A) (Sup Ct. Kings Co. 2014), the wife claimed that the parties agreed to revoke their prenuptial agreement which was then torn in pieces and thrown off the honeymoon cruise ship. The agreement, which was entered by the parties shortly before the marriage after an engagement of less than three week, was signed by the bride after the groom told her that his father “threatened to cut him off” if he did not sign a prenuptial agreement. According to the wife, the parties never intended agreement to be enforceable and did not even attempt to negotiate it.

After twelve years of marriage, when the husband filed for divorce, he asked the court to enforce the agreement. The wife argued that she was fraudulently induced to sign the agreement after the husband told her that the agreement would never be enforced and that once on their honeymoon, the parties had torn up the agreement and threw it into the ocean. The husband pointed out to the court that both parties were represented by counsel and was able to produce an original agreement.

In rejecting the wife’s claims that parties orally agreed that they would not be bound by the agreement, the judge noted that the prenuptial agreement contained the boilerplate provision that:

This Agreement contains the entire understanding of the parties with respect to the matters set forth herein, including, without limitation, the rights of the party with respect to the property of the other party. There are no representations, warranties, promises, covenants or understandings, oral or otherwise, other than those expressly set forth herein.

The court further held that ripping up the agreement and throwing it into the ocean did not revoke the agreement since it provided that:

Neither this Agreement [nor] any provisions hereof, including without limitation, this article, may be altered, modified, terminated, or revoked, except by an instrument executed and acknowledged by both parties with the same formalities as this Agreement.

According to the terms of the agreement, the only way this agreement could have been revoked is in writing, signed and properly acknowledged by the parties.

The takeaway from Braha is that when it comes to prenuptial agreements, anything and everything has to be done in writing, signed and properly acknowledged. The parties should negotiate their agreements and not rely on oral statements. If there is a divorce action in the future, unless the agreement was properly revoked, it will be offered in court.

Constructive Emancipation and the Child’s Conduct

I have previously written about constructive emancipation issue and also addresses some of the applicable law in another post.  Generally, a child can become emancipated through his actions when the child either refuses to have contact with the parent or voluntarily abandon’s parent’s home. However, what happens when a child engages in abusive conduct directed toward the non-residential parent?

In a recent decision, Cornell v. Cornell, 2015 NY Slip Op 25030 (Sup. Ct. Monroe Co. 2015), the court held that where a child’s conduct directed at the parent is abusive and inappropriate, the court can construe such conduct as abandonment. In Cornell, the evidence presented to the court established that the child engaged in communications that established “a substantial hatred and/or disrespect for the mother”. In the court’s view,

a child who utters such terms about their parent cannot realistically expect this court to ignore such conduct and order the maligned parent to pay any form of support for the child. A child over the age of 18, seeking reimbursement for college expenses, cannot use such language toward a parent and then, either directly or through his other parent, seek child support, and/or payment of college expenses. No one should be permitted to refer to their mother in such fashion, and then, without recanting or asking for forgiveness, seek the court’s assistance to have that person support their future life. This court will not condone such actions by an unworthy son.

Thus, the court emancipated the child and the mother was no longer obligated to contribute toward support of the child or pay a portion of his college expenses.

This decision is particularly interesting because of the court’s emphasis on the child’s negative conduct directed at the mother. The court also mentioned that the child refused subsequent contact with the mother. While refusal to have contact is significant, according to the controlling cases, the court also has to analyze the parent’s efforts to reestablish contact with the child. Unfortunately in Cornell, the court did not discuss what specific actions the mother undertook to reestablish contact with the child.

Ultimately, I think that the court has reached result.  It will be interesting to see if this decision will be appealed and what the Appellate Division’s decision will be.

Duration of Residency in New York as Prerequisite to Divorce Action

In order to have a valid divorce action in New York, certain residential requirements have to be satisfied. Domestic Relations Law §230 requires that:

1. You and your spouse were married in New York, and either of you is a resident of New York when the divorce action is started and has been a resident of New York for a continuous period of one year immediately before the commencement of the divorce action;
2. You and your spouse have resided in New York as husband and wife, and either of you is a resident of New York when the divorce action is started and has been a resident of New York for a continuous period of one year immediately preceding the beginning of the divorce action;
3. The grounds for divorce occurred in New York, and either you or your spouse has been a resident of New York for a continuous period of at least one year immediately before the beginning of the divorce action;
4. The grounds for divorce occurred in New York, and both you and your spouse are residents of New York at the time of the commencement of the divorce action;
5. Either you or your spouse has been a resident of New York for a continuous period of at least two years immediately preceding the commencement of the divorce action.

The statute requires that the residency be continuous. What happens if the party spends significant periods of time outside of New York?

In Murjani v. Murjani, 2014 N.Y. Slip. Op. 08366 (1st Dep’t. 2014), the Appellate Division held that durational residency requirements were satisfied by the defendant, despite the fact that defendant would spend significant periods of time in India and elsewhere. The court held that since defendant had maintained a permanent residence in New York and would return there with regularity, those facts satisfied continuous residency requirements. Thus, as long as permanent residence is being maintained in New York, and the party either returns or intends to return there, Domestic Relations Law §230 is satisfied and a divorce action can be maintained.

Statement That Marriage Was Irretrievably Broken Is Sufficient to Establish Cause of Action For Divorce

I have previously written about the issues associated with the grounds for divorce under the no-fault statute (Domestic Relations Law §170(7)). Prior decisions associated with issue were trial level decisions and, therefore, there were subject to potentially different result after appellate review. Now, there is some finality to this issue. Two recent appellate decision held specifically that a statement under oath that the marriage was irretrievably broken for a period of six months or longer was sufficient to establish a cause of action under Domestic Relations Law §170(7).

In Trbovich v. Trbovich, 122 A.D.3d 1381 (4 Dep’t. 2014) the Appellate Division, Fourth Department, affirmed an order which denied the plaintiff’s motion for summary judgment seeking a divorce pursuant to Domestic Relations Law §170(7). It agreed with plaintiff that the relationship has broken down irretrievably for a period of at least six months opposing spouse in a no-fault divorce action pursuant to Domestic Relations Law §170(7) is not entitled to litigate the other spouse’s sworn statement, and indicated that to the extent that its decision in Tuper v. Tuper, 98 A.D.3d 55, 59 (4th Dep’t 2012) suggested otherwise, it declined to follow it. Nevertheless, the Appellate Division held that plaintiff was not entitled to summary judgment under Domestic Relations Law §170(7) at this juncture of the litigation because the ancillary issues had not been resolved by the parties or determined by the court.

In Hoffer-Adou v. Adou, 2014 Slip.Op.  07436 (1 Dep’t. 2014) the Appellate Division held that contrary to the husband’s contention, the wife was entitled to a judgment of divorce under the no-fault provision of DRL §170(7), since her statement under oath that the marriage was irretrievably broken for a period of six months was sufficient to establish her cause of action for divorce as a matter of law. Trial court’s grant of the divorce did not contradict DRL §170(7)’s requirement that “[n]o judgment of divorce shall be granted under this subdivision unless and until the economic issues of equitable distribution of marital property, the payment or waiver of spousal support, the payment of child support, the payment of counsel and experts’ fees and expenses as well as the custody and visitation with the infant children of the marriage have been resolved by the parties, or determined by the court and incorporated into the judgment of divorce.” The parties’ separation agreement resolved the issues of child custody and support. Their subsequent commencement in the Family Court of proceedings concerning these issues did not render the court without authority to grant the divorce, since non-compliance with/or enforcement of, the separation agreement is not an element of Domestic Relations Law §170(7).

Thus, as long as the party seeking divorce is able to make a sworn statement that the marriage was irretrievably broken for a period of six months, that party will receive a divorce once all other issues have been resolved. There is no way for the defendant to challenge that statement, and the court will not permit introduction of testimony challenging it. This follows the intent of the no-fault statute to prevent grounds trials.

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

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

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.

Temporary Maintenance and Payment of Additional Expenses by Monied Spouse

One issue that comes up fairly often in divorce cases is the issue of whether the monied spouse who is paying temporary maintenance is also responsible for additional expenses incurred by the non-monied spouse. At least some of the prior decisions held that when the temporary maintenance is being paid, the recipient was responsible for his or her living expenses, including any mortgage payments or housing expenses.

However, it appears that at least some of the appellate decisions hold otherwise. In Vistocco v. Jardin,116 A.D.3rd 842 (N.Y.A.D. 2 Dept.), the parties were married in 1995 and had three unemancipated children. The wife made a request for temporary maintenance as well as for payment of carrying costs on the marital residence. The trial court awarded the defendant $3,000 per week for child support and $3,000 per week in temporary spousal maintenance, directed the plaintiff to pay the mortgage and taxes on the marital residence where the defendant resided with the parties’ children, directed the plaintiff to pay the defendant’s car insurance, and awarded the defendant interim counsel fees and expert fees in the sums of $12,500 and $3,500, respectively. The Appellate Division affirmed.

The plaintiff argued that the Supreme Court erred in directing him to pay, in addition to spousal maintenance, the mortgage and taxes on the marital residence and the defendant’s car insurance. He contended that the pendente lite maintenance award is intended to cover the defendant’s basic living expenses, which include the mortgage, property taxes, and her car insurance. The Appellate Division held that the formula to determine temporary spousal maintenance that is outlined in Domestic Relations Law § 236(B)(5-a)(c) is intended to cover all of a  payee spouse’s basic living expenses, including housing costs, the costs of food and clothing, and other usual expenses (see  Khaira v. Khaira, 93 AD3d 194). It further held that it may be appropriate to direct payment by the monied spouse of the mortgage and taxes on the marital residence and other expenses of the nonmonied spouse under certain circumstances (see id.). In light of the evidence that the plaintiff’s income exceeded $500,000 and the gross disparity between the plaintiff’s income and the defendant’s income, the trial court properly awarded additional support in the form of a directive to the plaintiff to pay the mortgage and taxes on the marital residence (Domestic Relations Law § 236[B][5-a][c][2][a][ii] ), as well as the defendant’s car insurance.

Unfortunately, until the Court of Appeals hears a case involving these issues, it is likely that there will not be uniformity among the trial court decisions. If you are non-monied spouse, you have nothing to lose by making a request for carrying costs of the marital residence, provided that there is financial wherewithal on the part of the monied spouse. Ultimately, a decision of whether such additional should be requested should be made on case by case basis.

Standard of Living, Diminished Income, Spousal Maintenance and Child Support

The courts in New York have had some difficulty dealing with situations were a claim of recently diminished income has been presented to the court in response to a temporary spousal support application. In most situations, the courts would either impute income or deny downward modification. The courts have been concerned with the parties’ standard of living for the non-monied spouse and the children despite  the claims of the income-producing spouse of diminished resources and/or income. One trial decision, S.A. v. L.A., 2 Misc.3d 7441 (Sup. Ct. Westchester Co.), illustrates the situation where the present financial situation – the husband earning a lot less income than existed throughout the marriage, has led the court consider present circumstances and to caution the non-monied spouse that she would have to deal with a new economic reality.

In considering interim spousal support, the court had to determine if it would apply the husband’s 2012 income of $819,049 or his far lesser annualized 2013 income imputed at $240,000. The husband was 56 years old and employed in the financial services industry. The wife was 64 years old stay-at-home wife and mother, who has not had any significant for 23 years of the marriage. The husband claimed that he was terminated from his old job through no fault of his own and he was forced to find new employment at a much lower rate of pay. The wife argued that he had voluntarily left his former employment.

The court had to address the principles of utilizing the current income as opposed to the income on the last tax return on a presumptive temporary maintenance calculation. The court determined that according to the language of the Domestic Relations Law §240 (1-b) (b) (5), the income rules applicable in child support proceedings may be used to determine an application for temporary spousal maintenance, as is available for interim child support.

The second part of the court’s analysis, and of great significance, was the court’s view of the parties’ present diminished financial situation from their historic standard of living even as measured by the immediately preceding year. The reduction in the family’s income from the husband’s 2012 adjusted gross income of $819,049.00 to the annualized 2013 income of $240,000.00, was accepted by the court. As result, instead of presumptive temporary support of $17,000.00 per month as requested by the wife, the court awarded $5,737.00 per month. The court further found that with the requested amount of $17,000.00 exceeded the wife’s legitimate monthly expenses, rendering the presumptive award unjust and inappropriate. The court ruled that the issue of whether the husband had been discharged or voluntarily separated from his old employment was reserved for trial.

In its decisions, the court stated that:

The court recognizes that the spousal support provisions in this decision and order will greatly affect the parties’ respective post-separation standards of living. They need to consider the financial predicament they are in, and how to deal with the future. They are now suffering the consequences of their prior high standard of living. It is beyond dispute that two cannot live as cheaply as one, and that “hardship” at any economic level follows drastic losses of income. It is time for the parties to recognize the financial reality they may well face in the future, given their ages, work experience and future prospects for employment. The court urges that the parties’ focus should be on financial planning with asset and debt liquidation. The continuance of this costly litigation will not heal their wounds, both economic and emotional, already suffered, but rather will exacerbate them.

The decision in S.A. v L.A. illustrates that during the difficult economic times, the parties may have to temper their expectations. If a monied spouse can not earn past levels of income through no fault of his or her own, the non-monied spouse is likely to have to share the hardship as well.

Updates to New York’s Child Support Standards Chart

According to the Child Support Standards Chart, prepared by New York State Office of Temporary and Disability Assistance, Division of Child Support Enforcement, and released March 12, 2014, the 2014 poverty income guideline amount for a single person as reported by the United States Department of Health and Human Services is $11,670 and the 2014 self-support reserve is $15,755. These numbers are highly relevant for child support calculations and may have a role in determining child support arrears in situations where payor’s income is less than the guideline amount for a single person. The Chart is found at this link. The Child Support Standards Chart is released each year on or before April 1.

Additionally, as required by the Child Support Standards Act, the combined parental income amount used to calculate basis economic support has been changed to $141,000. This figure is adjusted every two years (effective January 31st) based on the average annual percent changes to the federal Department of Labor’s Consumer Price Index for Urban Consumers. The basic economic support figure is highly relevant in the cases where combined parental income is substantially in excess of it since the court may utilize parental income in excess of the basic economic support figure under appropriate circumstances.

Surrogacy and Adoption

One area where New York still lags behind other states has to do with surrogacy contracts. New York does not recognize surrogacy contracts statutorily since it deems the underlying surrogacy contracts to be against public policy, and they are void and unenforceable in New York. See N.Y. Dom. Rel. L. § 122. However, what happens to a child born as a result of such contract?

In a recent decision, Matter of J.J., 2014 N.Y. Slip. Op. 24089 (Fam. Ct. Queens Co. 2014), New York Family Court held that a child born as a result of a surrogacy contract can be adopted in the State of New York, notwithstanding the fact that such contract would be void and unenforceable.  In that decision, Judge Salinitro held that a man may legally adopt his husband’s biological twins even though they were born to a woman under a surrogacy agreement that is illegal in New York State. According to the court, the best interests of the twins is the most important consideration in weighing the adoption petition, not the surrogacy agreement that resulted in their birth. According to the decision, a home study provided to the court showed that the children are thriving in the care of the parents.

Thus, the court stated that it is not being asked to enforce the surrogacy contract that forms the basis for the adoption, nor does the relief sought include claims relating to the surrogacy agreement itself. Rather, the case involved proposed adoptive parent who wanted to have equivalent legal status as the birth parent, and is prepared to assume the rights and responsibilities that accompany legal parentage.

Therefore, the surrogacy agreement with the woman who bore the children in Mumbai, India, in 2013 was of no consequence to the adoption. The court specifically found that “where a surrogacy contract exists and an adoption has been filed to establish legal parentage, such surrogacy contract does not foreclose an adoption from proceeding”.

Section 122 of Domestic Relations Law declares that “surrogate parenting contracts are hereby declared contrary to the public policy of this state, and are void and unenforceable”. The judge said she found a “paucity” of previous rulings in New York on surrogacy and none directly focused on surrogacy contracts in the adoption context. Accordingly, she called the issue before her an apparent question of first impression in New York courts.

I think that the judge made the right decision. Given that the law does not always keep up with changes in medical technology and society, the courts have to step in and address these types of issues.