Category Archives: Family Issues

Holiday Parenting Time: Tips to Survive the Holidays During a Divorce

By Valerie Jules McCarthy, Esq.
vmccarthy@pashmanstein.com

The holiday season brings a mixed bag of emotions. Some people find it to be a time when they can slow down the normally hectic pace of everyday life, take a vacation, spend time with family, make great memories and enjoy traditions. Others find the holidays to be a time when stress is at its peak, as the holiday season often brings unwelcome guests, an exhausting list of demands; including shopping, parties, baking, cleaning and entertaining, to name just a few. No matter which camp you may belong to, going through a divorce will probably put a damper on the holiday season.

In New Jersey, when couples with children decide to divorce, one of the first issues which must be addressed is custody of their children, at least on a temporary basis until the divorce is finalized. After the parents agree or the Court makes a determination on custody of the child(ren), parenting time and visitation will also need to be determined. In some cases, parents reach a suitable agreement without having to battle it out in court. However, in other instances, a Judge must determine parenting time.

– See more at: http://www.njfamilylaw4u.com/2015/11/holiday-parenting-time-tips-to-survive-the-holidays-during-a-divorce/#sthash.uUI8Km6k.dpuf

You Can’t Take It With You, But Can Your Spouse?

Yearing, T.By Tadd Yearing, Esq.
tyearing@pashmanstein.com

 

When a party in a divorce action dies during litigation, the right to equitable distribution disappears. This is because equitable distribution is specifically awarded upon final dissolution of a marriage. The courts, however, have allowed exceptions to this principle; crafting equitable relief to prevent clearly unfair results, such as to prevent one party (or estate) from being unjustly enriched or to prevent fraud by one party upon the other.

In the 1990 case of Carr v. Carr, 120 N.J. 336, our Supreme Court reviewed the equitable distribution claim of a wife following the death of her husband. Despite the couple having been married for seventeen years, the husband’s will left the entirety of his estate to his children from a prior marriage. Because there was also divorce pending, the wife’s rights to at least a spousal share of the estate were in question. Reviewing the probate and equitable distribution statutes, the court concluded, “the principle that animates both statutes is that a spouse may acquire an interest in marital property by virtue of the mutuality of efforts during the marriage.” It thus held that, “if warranted by the evidence,” a court can act to prevent unjust enrichment where equitable distribution becomes unavailable because of the death of one party prior to the entry of a Judgment of Divorce.

Twenty years later, the Supreme Court revisited these principles in the case of Kay v. Kay, 200 N.J. 551 (2010). In that case, the roles were reversed somewhat, as the deceased spouse’s estate was seeking relief from the surviving spouse, who was accused of having improperly diverted assets. Once again, the court authorized equitable relief to promote fair dealing and to ensure that, “marital property justly belonging to the decedent will be retained by the estate for the benefit of the deceased spouse’s rightful heirs.”

This brings us to the Appellate Division’s recent unreported decision in Beltra v. Beltra, 2014 WL 8096146, decided just last month. In this case, plaintiff-wife filed for divorce after a thirty-four year marriage. She was subsequently diagnosed with a terminal illness and tragically died six months into litigation, and prior to a final hearing. The estate was permitted to substitute in and the parties had a five-day trial to determine equitable distribution. The trial court’s written opinion was scathing in its assessment of defendant’s behaviors. It noted that defendant’s, “non-verbal actions were extraordinary in demonstrating his lack of candor with the court.” It noted he was “evasive” and that his testimony was “inconsistent.” More still, the trial court found he had made substantial deposits of cash generated from his business into foreign banks, purchased foreign assets with cash payments, and had interests in a number of spin-off businesses – much of which remained undisclosed to the wife/estate even after multiple contempt orders for his failure to disclose.

The trial court entered an award of assets and husband appealed. The appellate division vacated the order and remanded the matter for further findings. Following additional argument from the parties, the trial court specifically noted that exceptional circumstances warranting equitable relief existed and reinstated the original order for distribution. The judge further imposed a constructive trust on defendant’s assets.

Defendant again appealed, this time challenging the trial court’s imposition of a constructive trust, and arguing that because the estate failed to demonstrate “the nature or value of the subject assets,” it was error for the trial court to order distribution.

Unmoved by defendant’s arguments, the Appellate Division noted that, “[t]he facts were so flagrant and defendant’s offered explanation so unbelievable, the [trial] judge reported the apparent unreported income to regulatory and law enforcement agencies.” Moreover, the appellate court called out defendant’s extreme bad faith in arguing wife’s inability to ascertain the value of the assets. It highlighted the fact that because of defendant’s efforts to hide assets, plaintiff provided what information she could obtain. Thus, it was unreasonable to place a burden of proof on the party not having access to evidence to support that burden. Finally, the Appellate Division affirmed the use of a constructive trust to remedy the inequity caused by defendant’s clandestine efforts, and to “protect the right to claim marital assets in a matrimonial action.”

This case is an extreme reminder of the complexities that can arise in matrimonial litigation. The conflicting intersection of estate and divorce law clearly shows the potential for clients to be left in a legal “black hole” of sorts. To the extent that case law has developed to limit the possibility of parties being left without recourse, it is instructive that the Appellate Division first remanded the matter back to the trial court for specific findings in support of its imposition of equitable relief. That is, the ability to avoid this possible black hole is not guaranteed. As a practical matter, then, it is important that the right to relief is not simply assumed because of one party’s untimely death.

While death itself may seem to beg the question of inequity, this is clearly not the case. It is, therefore, critical that the court be presented with an explicit basis on which to find that equitable remedies are necessary to avoid injustice. There are a myriad of scenarios where the interests of justice might suggest leaving the parties “as is,” such as insolvency, or where a surviving spouse must continue to care for an unemancipated child, or where the parties each have substantial independent wealth, to name but a few. On the other hand, where one party acts to obstruct discovery, the Beltra court’s understanding with regard to burdens of proof counsels that the other party should not be penalized for being unable to present proofs beyond that to which they had reasonable access.

As is so often the circumstance in matrimonial matters, the specific facts of any given case matter. While Beltra reinforces important guiding principles for a serious, yet infrequently occurring, situation, more than anything it highlights that ensuring fairness between the parties is what matters most.

 

 

 

The Case of Rachel Canning and A Parents’ Obligations to Pay Support and Tuition

By Tadd Yearing, Esq.
tyearing@pashmanstein.com

It seems as if last week all the news outlets, local and national, were abuzz with the case of Rachel Canning, who filed a lawsuit against her parents here in New Jersey demanding support as well as private high school and college tuition payments – all despite the fact that she has for the last five months been living with another family. The case has all the right ingredients to make it a headliner: the attractive school-girl who is alleged on one hand to be an honors student and athlete, yet on the other an entitled party-girl brought home drunk mid-week by her boyfriend’s parents. There are her parents, who continue to profess their love for their daughter, and desire to see her home, but also admit their frustration at parenting a disobedient child who they feel engages in dangerous behavior. And there is also the weird involvement of a best friend and her local politician/lawyer father, who has candidly acknowledged his bank-rolling the litigation (but is asking for reimbursement).

Since gaining a national audience, the brashness of the suit has in some respects overshadowed the serious legal issues at play, as well as the sad reality that a family’s most private affairs have been forced into the open for critique and judgment. More than anything, it is a reminder that family law deals often with some of the most emotionally raw and culturally difficult issues. It also concerns rights often viewed as fundamental to our notions of “family.” At its core, the case pits the constitutional rights of parents to parent their child as they deem fit, without interference (and judgment) from outsiders, against the parens patriae role of the state to ensure a child’s well-being.

Moreover, mixed up in this, as a delimiting factor, is whether the child is emancipated such that she even has grounds to bring her case. (I have written previously about the standards involved in emancipating a child here). Thus, the parents and the child have vastly different views on how she came to leave the parents’ home. Rachel says that she was effectively thrown out of her parents’ house while mom and dad say she voluntarily left because she was unwilling to follow certain rules and help with chores. Her emancipation status is critical to whether the case proceeds to a hearing on what, if any, support and/or college costs the parent’s might be obligated to pay.

At the hearing this past March 5, 2014, the Court denied Rachel’s emergent application, urged the parties to try to work out a settlement, and yet scheduled a return date for April 22nd. Should the parties return without a mutually agreeable resolution, the Court will likely move to schedule a hearing on the issue of emancipation as a predicate question to the larger dispute of financial obligation.

The court acknowledged the difficulty of Rachel’s position, noting, “[d]o we want to establish a precedent where parents live in basic fear of establishing the rules of the house?” Moreover, the court suggested, “[allowing the emergent order] would represent essentially a new law or a new way of interpreting an existing law … A kid could move out and then sue for an Xbox, an iPhone or a 60-in television … We should be mindful of a potentially slippery slope.”

Further highlighting the implications of Rachel’s request, the parents’ attorney suggested  that allowing the application would embolden other children to say to their parents, “I am going to live with my [significant other] no matter what you say, but you’ll still have to pay for my college.”

The choice of college as the attorney’s example is prescient. As other commentators on this matter have noted, were the issue of college costs to come up in the context of a divorce between Rachel’s parents, the court would most certainly hold them liable for contribution toward that cost. But intact families enjoy a functionally higher level of privacy and autonomy than divorced families and the decision to fund college has historically been deemed a “family” decision. Thus, if married parents decide they won’t contribute to college, their decision is typically free from questioning by third-parties.

Finally, in a likely foreshadowing that this matter may end not in a bang but a whimper, recent news sources are now reporting that Rachel has reunited with her family and siblings, though the lawsuit itself remains pending.

New Jersey Supreme Court Affords Remedies to Minority Shareholder in the Absence of Oppression

By Dennis Smith, Esq.
dsmith@pashmanstein.com

Many businesses are family-owned corporations in which ownership percentages are split among relatives.  When intra-family disputes arise about issues either inside or outside the business, it can threaten the orderly operation of the business and lead to a majority of family members ganging up against one shareholder – usually referred to as the minority shareholder (a person who owns 50% or less of the corporation).

Generally, if the minority shareholder believes that the majority shareholders have acted fraudulently, illegally, mismanaged the corporation, abused their authority or acted oppressively or unfairly toward the minority shareholder, he may bring an oppressed shareholder action under the New Jersey Business Corporation Act, N.J.S.A. 14A:12-7(1)(c) seeking, among other things, to force the majority shareholders to buy out his interest.

What happens if the family members create an intolerable working environment for the minority shareholder resulting in his voluntarily exit from the company, but a court determines that the conduct does not rise to the level of oppression?  Up until last week, the minority shareholders would be out of a job and own unmarketable shares in a corporation for which he cannot force a buyout.

Sipko v. Koger, ____ N.J. ____(2013) corrected this inequitable result.  There the court addressed a case that arose from a bitter dispute that divided a family and its successful multi-million dollar software development business.  Plaintiff Robert Sipko became estranged from his father and brother over the choice of a woman whom he was dating (and later married).  Their displeasure in his choice made the working environment intolerable and he resigned.

Because the trial and Appellate courts determined that Robert’s father and brother’s conduct toward him did not rise to the level of oppression, he was unable to force a buyout and was, in effect, left remediless.  The Sipko court corrected this injustice holding that “a minority shareholder’s failure to demonstrate conduct that rises to the level of oppression does not necessarily deprive him of a remedy.”

In so holding, the court emphasized that N.J.S.A. 14A:12-7(1)(e) does not limit the equitable power of the court  to fashion remedies appropriate to an individual case and Chancery Court Judges have a broad range of remedies available to them when adjudicating disputes over closely held corporations.   The opinion holds that even in the absence of oppression remedies available under the statute may be implemented by the court if the circumstances justify it.

The take away from the Sipko decision is that it invests broad discretion in Chancery Court Judges to formulate remedies for minority shareholders who can no longer co-exist within the majority.  No longer will Chancery Judges believe that their “hands are tied” in providing appropriate relief to minority shareholders who have not demonstrated oppression, the ropes have been loosened.

Lawyer/Client Confidentiality?

By Louis Pashman, Esq.
lpashman@pashmanstein.com

You may think it’s a pretty simple thing if you come to your lawyer and tell him that you and your wife want wills.

It’s not.

There are several rules our Supreme Court has established, called Rules of Professional Conduct, that circumscribe how we must do that.

You probably know about lawyer/client confidentiality.  Anything we learn from you relating a legal matter we are handling is confidential and we cannot disclose it.  How then are we to deal with that confidentiality if we are representing both you and your spouse and receiving information from both of you?  We must ask both of you to waive that confidentiality.  The same is true in a parent/child or sibling situation.

It can get more complex if we are representing your business and, individually, multiple owners of the business.  We may know different things from each of the owners about the business.  One owner may tell us he does not want his partner to know something we are told.

Let me give you an example of each.  You and your spouse have two children.  You have two children from a former relationship.  You intend to treat the four children equally.  Your spouse “confides” in me that she thinks your former spouse has made your life with the other children unnecessarily difficult and, consequently,  does not think your two “other” children should be treated the same as the two children you have together.  Those feelings cannot be told to me confidentially because the two of you will have waived confidentiality.

In the business setting, assume I represent the business and I have been asked to do wills for you and your spouse as well as your business partner and spouse.  In my meeting with your partner and his spouse, they “confide” in me that they do not want you to be able to bring any of your children into the business because they do not trust them.  Given the maze of professional relationships, your partner cannot assume confidentiality.

The lesson is—don’t be surprised or offended if we talk to you about these confidentiality issues.

Prenuptial Agreement Basics

By Tadd Yearing, Esq.
tyearing@pashmanstein.com

Previously in this blog, we have touched upon the use of a prenuptial agreement to shelter business interests and alternative legal mechanisms to achieve the same, or similar, results (i.e. shareholder agreements and trusts). However, prenuptial agreements, or colloquially “prenups,” may be appropriate even when there is not a business interest to protect. For people entering into a second or third marriage, and who as the primary breadwinner earn significant income, they may wish to limit their exposure to lengthy, and costly, litigation over alimony. In other instances, the prenup may specifically insulate one spouse from substantial debt either brought into the marriage by the other or anticipated to be incurred by the other sometime during the marriage. In any event, parties should have a basic understanding of how a prenup functions to better understand how it may, or may not, be a worthwhile investment.

Initiating the discussion of a prenup with your fiance’ will force you to confront some potentially difficult questions. This can no doubt chill the heat of a romance. However, parties avoid this discussion to their own detriment and true love should be able to survive the reasonable concerns that a prenup is intended to address. Much of the negative reputation comes from a lack of basic knowledge regarding the intent and mechanics of the process. As with many things, knowledge is power and can allow the parties to broach the subject of a prenup as rational adults.

Obviously the purpose of a prenup is to fix and establish the rights of each spouse as to the division of property and/or support upon death or divorce. In New Jersey, the standards of such agreements and their enforcement are governed by statute (N.J.S.A. 37:2-38). To be valid, a prenuptial agreement must be in writing. As it is a contract, it must also be supported by proper consideration. That is, there must be a bargained for exchange of the terms. It must be entered into voluntarily, without coercion, and the parties must represent their competence to enter into such agreements. Importantly, the statute provides that the parties must each make a full and fair disclosure of assets, liabilities and income. Finally, it is critical that the parties consult with independent legal counsel, or else waive their right to do so in writing. Once these requirements are met, it is difficult to set aside the agreement, whether in part or in its entirety, though it is possible per the statute. (See N.J.S.A. 37:2-38 (a) – (c)).

The results of prenuptial agreements when put into effect can be far reaching. But people are marrying later in life after having already established careers and accumulated sometimes significant asset portfolios.  Since it is good planning, and with a desire to limit costs of divorce, there is no reason that prenuptial agreements should become more commonplace and lose some of the negative connotations that it invokes.

Grandparent Custody and Visitation Rights

By Tadd Yearing, Esq.
tyearing@pashmanstein.com

We often field calls from grandparents who have been denied access to their grandchildren, and who feel that they are unfairly being left out of their grandchildren’s lives.  This sadly arises commonly when the grandparent’s own child, the mother or father of the child has died, and for various reasons the remaining parent has chosen not to permit continued contact with the grandchildren. In some situations, both parents are alive and well and have had a falling out with one or both sets of grandparents where once there was a relationship. This can no doubt be difficult for the grandparents, especially those also grieving the loss of their own child. Where the mother and father are divorced and the grandparent’s child dies, the legal bond creating the “family” as such is not even present, and there is oftentimes acrimony between grandparents and their former in-law arising out of the divorce.

What about the rights of grandparents to see their grandchildren? What about the right of fit parents to raise their children as they deem appropriate?  The right of a grandparent to petition for visitation is codified under N.J.S.A. 9:2-7.1. The statute sets forth eight factors for courts to consider in assessing applications for grandparents to have access to the grandchildren. The procedure by which courts are to apply the above statute was detailed in the seminal case of Moriarty v. Bradt, 177 N.J. 84 (2003). In that case, our Supreme Court noted that, though parental autonomy is a fundamental right deeply embedded in the American culture, in certain instances, pursuant to the state’s parens patriae power, that right can, and will, be encroached upon. Id. at 101, 114-115. The polestar, however, is harm to the child should visitation be denied. It is not, as many often confuse it, alleged harm to the grandparent at having been denied access to the grandchildren. This is a critical distinction fundamental to any application for grandparent visitation.

In Moriarty, the court took special note of the trial court’s findings relating to the relationship of the grandparents with the child. The court highlighted specifically the fact that the relationship between the grandparents and the children was extensive and significant. Moreover, the maintenance of this relationship was found to be critically important given the mother’s recent death. Contact with the grandparents was found to provide a link to the children’s mother and that branch of their family. Id. at 119. Significant as well was the attention by the court to expert testimony from a psychologist who found that the visitation plan proffered would effectively allow alienation of the mother’s family by the father. The therapist went on to point out that given the father’s overt hostility toward the grandparents, successful alienation of the children would result in psychological harm to them. Id. at 121-122.

Moriarty made clear the fact that any successful application for grandparent visitation rests on the ability to articulate specific harms to the children. Moreover, these harms need to be able to be proven through the evidence presented at the hearing. Subsequent cases have reinforced and further delineated just what kind of showing must be made, as the ability to articulate an identifiable harm to the child is paramount to justify interference with a parent’s fundamental due process rights.  See Rente v. Rente, 390 N.J. Super. 487 (App. Div. 2007); Mizrahi v. Canon, 375 N.J. Super. 221, 234 (App. Div. 2005) (noting that, “Conclusory, generic items … are not a sufficient basis to warrant such an intrusion into a parent’s decision making.”).

In practical terms, a grandparent who has been the caretaker of a child or who has stood in locus parentiat some point prior to being denied visitation with the child is in the best position to establish the kind of bond that, if removed, could cause harm to that child. Unfortunately, most grandparents do not fit this mold. And while there is no doubt that they love and care for their grandchildren, these less involved relationships are not generally of a quality satisfying the burden to trump a parent’s presumptive right to raise their child as they see fit, including to whom the children have access.