Maintenance Law in New York State – Finally Settled or as Unsettled as Ever?

No divorce, child support, or custody matter, is simple.  And with the New Year, there are a number of changes taking effect that could make things even more complicated.

Over the fall, the Domestic Relations Law was amended considerably.  These changes are taking effect on January 23, 2016.  Among the changes: for the first time, there are statutory guidelines for determining post-divorce spousal maintenance (a/k/a “alimony”) (new guidelines for temporary maintenance are already in effect).  The presumptive income “cap” for both temporary and post-divorce maintenance has also been reduced, considerably.  Also, whereas one spouse’s contributions to the other’s career could once be monetized and added to the “pool” of assets subject to distribution upon divorce, that is no longer the case.

Will the formula make determining maintenance easier for the judiciary?  It could, at least for lower wage-earners.  For higher wage-earners, however, much is still up in the air.  The formula may control, in many cases leaving the other spouse receiving less than he or she would have under the old system.  Or, the judge could rely on a number of discretionary factors to deviate from the formula.  The more that judges deviate from the formula, the more difficult it becomes to predict outcomes for purposes of settlement and trial preparation.

Have “enhanced earnings” (career contributions) truly been eliminated?  The law now requires that these contributions not contribute to the “pie”, that is the pool of assets subject to distribution; but the law still allows the contributions to arguably allow one spouse a bigger “slice” of that pie.  Again, the devil will be in the details of each case.

In short, some of the amendments’ attempts to simplify and streamline might actually make some matters more difficult to predict and more complicated to prove.  We are staying on top of these issues to maximize the benefit for our clients.  If you would like more information, please call or email us to set up an appointment.

We have prepared a more detailed and in-depth overview of these amendments and changes. Click here to view and download the featured article. 

 

Big Shift Pushed in Custody Disputes to Give Fathers More Control

I cannot believe we are still having this conversation in the year 2015. Debating whether or not kids need Dads as much as Moms. Wondering if only women can have the essential “mother’s touch” during the child’s “tender years”.

Check out this article in the Wall Street Journal. I represent many wonderful parents, male and female. Most see the value in co-parenting. And once in a while, one parent is just not terribly fit. But more often, efforts to deprive one parent of time with the other is about pay-back and control. I ask the question “what circumstance requires that the children be deprived of time with one parent in favor if extra time with the other”. Often there is no good answer, no matter how “best interests” is dressed up.

As one psychology professor in the article put it, “If dad is subject to the typical ‘Wednesday dinner and every other weekend’ arrangement, ….he is basically reduced to an Uncle”.  Substitute the word “Dad and Uncle” with “Mom and Aunt” and the import is the same.

Big shift pushed in custody disputes to give fathers more control…read the article at the Wall Street Journal by clicking on this link:  http://on.wsj.com/1IxcvaY

Addressing Issues of Business Valuation When Getting a Divorce

Often the thorniest and most complex economic issue in resolving a divorce is protecting the family business or a closely held entity. Frequently one spouse owns all or part of a business that has been the source of income for the family throughout the marriage. Sometimes the business has been in one spouse’s family for generations. The person who owns a share in the business is the “titled spouse”.

The non-titled spouse is frequently entitled to a portion of the business value…but seldom a piece of the actual business, received typically through a “buy-out”. That claim to a share in a business remains even if the spouse did not do any real work in the business. Such an interest is created in the law through the spouse’s “indirect contributions”.  Examples of such indirect contributions would include caring for children, caring for the household matters, freeing up the spouse from other duties to allow more time to be spent building the business, brainstorming and commiserating with a spouse about business matters, entertaining employees and clients, etc.

In order to determine a non-titled spouse’s claim to a piece of the action, an expert is hired to value the business. Once a value is established, discussion will begin to negotiate the percentage of that value to which the non-titled spouse would be entitled (seldom as much as 50%) and whether that sum will be paid through a trade- off of other assets, a straight buy-out, or payments structured over time. If part of the business was acquired during the marriage, but another part either existed before or was obtained as a gift or inheritance, only the marital portion will be considered.

Having experienced professionals navigate this challenging component of divorce is vital to a fair and reasoned outcome. 

Do You Need a Postnuptial Agreement – USA Today Article

Link

USA Today has done a good “fundamentals” article on who needs a post-marriage Agreement for the division of asset and debt in the event of future marital strife. It is a good starting point for consideration of such a document by anyone with substantial non-marital assets, an interest in a closely held business, or who anticipates receiving funds by trust, gift or inheritance.
USA Today - Postnuptial Agreement Article - AJ Smith – February 15, 2015

What is the Latest on Maintenance in Central New York?

In 2010, the New York State legislature did what it does well…it got half the job done, then “kicked the can down the road” to decide “later” what the law on maintenance should be in NY. Then….they never got back to us. If they do, some people will be happy they finally did, other will wish they had not.

Pre-2010, an informal formula served as a rule-of thumb for courts and practitioners.   For longer term marriages, usually maintenance would be 1/3 the disparity in income for 1/3 the length of the marriage. Shorter term marriages would trend toward ¼ in length and disparity.

In 2010 the statute was changed to create a maintenance calculator for the life of the divorce action. A promise was made to return in 2011 with a formula for maintenance after the divorce was finalized. No such law was ever passed. Abhorring a vacuum, courts have tended to use the formula for temporary maintenance as a guide for the long term amount, and the old formula for the length of term to fill the void. The calculator on the amount to be paid can be found at the NY Courts Website.

Proposals have surfaced, none having made it out of committee yet. Some provisions are scary, at least to payers. No automatic termination on remarriage for instance. Large caps on calculating disparity. And life-time maintenance for long-term couples. Add to that factors that contemplate the ex-spouse caring for the ex-mother-in-law as a factor in setting maintenance, and, well, maybe no news is good news on the legislative front.