How To Tackle The Big 3 Financial Issues In Your Nj Divorce
When new clients call my office, they often have a few questions specific to their case
. But, most of their questions are along the line of, "My friend told me that I get (fill in the blank), is that true?"
With divorce attorneys being so expensive, it makes sense that people would ask an opinion from everyone they know (and even some they don't - as in "my brother's wife's co-worker's friend said ..."). But, those sources of information are usually not the best. In fact, they are often inaccurate. The friends mean well, but they don't realize the significance of the difference in the specific set of facts, and how the law applies differently to each. And, very often, the advice from friends is in the form of "make sure you get the house, my friend did," rather than an explanation of the general concepts in the divorce law.
So, here are some basic concepts in New Jersey divorce law to give you a head start. What the result will be when these basic concepts are applied to your specific circumstances will differ from the results in a case with different facts. That's why you should at least get an initial consultation with an attorney. When I talk to new clients, most of them have some idea about some of these basic divorce law concepts, but almost all of them are surprised by something in this list that I tell them.
1.Only 1% of New Jersey Divorces get resolved by a divorce judge's decision after a trial.
Amazing, isn't it? 99 out of 100 New Jersey Divorces get resolved with a divorce settlement agreement (also known as a "Property Settlement Agreement" or a "Matrimonial Settlement Agreement").
So, the entire goal of the divorce process is to get this divorce settlement agreement signed. If you get the agreement signed prior to even filing a complaint for divorce, then the divorce paperwork filing is just a formality. The uncontested divorce hearing can be scheduled fairly easily and quickly. You can sign a divorce settlement agreement at any point - even on the eve of trial, or during a break in the trial.
Of course, if there is a trial, then depending on what county you are in, your trial will generally be scheduled for one to two years from the date of the filing of the complaint for divorce. You should also know that judges really don't like trials. They would much prefer that you settle the case. Thus, generally by the end of a trial (and unless the judge truly sees a unique legal issue or factual circumstance), a judge often has a belief that one party or the other unreasonably forced the trial to occur, and may very well award attorney fees to the other party.
2.Dividing up the Assets and the Debts in a Divorce.
Generally in New Jersey divorce law (and I've only seen two exceptions in my 10 years of practicing divorce in NJ), the assets and debts are divided equally between the two of you.
Now, if you own a home, it means you usually have two options (unless I get even more creative and create more options for you): (a) sell the house and theoretically divide the proceeds, or (b) one of you buys-out the other one's interests in the house. For buy-out purposes, the value of the house is considered to be its appraised value (not a Comparative Market Analysis from a realtor) less the total balance of the outstanding mortgages.
In this economy, many people's homes are "underwater" in equity, meaning that they have a negative Net Asset Value ("NAV"), or in other words, their appraised value is less than the amount owed on them. Some people decide to list the house for sale, only to find out that it is close to being underwater given all of the closing costs, or will be underwater in the future if the listing price continues to be slashed in order to get buyers interested in it.
Now, as the debts are going to be divided equally also, the credit cards, and sometimes the car loans, are paid-off from the house sale proceeds.
When it comes to assets and debts, if the asset or debt is in your name, then it's also your spouse's asset and debt. If they are in your spouse's name, then they are also your asset and debt. There are some exceptions to this - pre-marital assets, inheritances and/or gifts that have not been co-mingled or placed into joint name, and debts used for non-marital purposes.
We should make one note about alleged non-marital debt. Many people think that if the debt (or spending that was charged to the credit card) was done without the other party's knowledge or consent, then it shouldn't be considered marital. However, New Jersey divorce law does still consider this debt to be marital even if it was acquired without the other spouse's knowledge or consent. The litmus test is really whether the expense was for a normal expense in the marital lifestyle. Generally, if the credit card charge was for a gift for a paramour (boyfriend or girlfriend), then that charge is definitely not considered to be a marital debt. However, if your spouse has been recently spending more money on clothes (let's say at Victoria's Secrets or the Harley Davidson shop), then that debt will probably be considered marital (even if you feel that you didn't get the "benefit" of those purchases).
See, generally, the Court looks at your marriage as you having made a "deal" and that you are stuck with whatever you ended up with, and that all the garbage that has happened is water under the bridge. So, if your spouse is an active alcoholic and drank your savings, then you're probably not getting those savings back. If your spouse is a spendthrift or a hoarder or obsessive and bought 20 boxes of cereal every week, (just so you could through out tons of stale cereal a year later), or kept 21 cats, and ran up $50,000.00 in credit card debt with nothing to show for it, then that debt is probably going to be considered your debt too.
Retirement accounts get divided equally also - but only the marital portion (i.e. from the date of the marriage to the date of the filing of the complaint for divorce, generally). So, if part of your pension or 401(k) was acquired prior to the marriage, then that part of the asset is exempt (that is, if it's worth it to you to have the accounts evaluated and/or appraised historically).
3.Support - Child Support and Alimony
In New Jersey, child support is calculated using a worksheet, divorce judges and attorneys use a child support software program - either EasySoft or FamilySoft. If you don't have the NJ Child Support Guidelines software, you can find the worksheet(s) at the New Jersey courts website, and do them by hand. However, you will need to insert your information, and then look up the necessary answers in the tables in the Appendix that contains the Child Support Guidelines.
However, alimony is not so neat. There is no formula or worksheet to figure out how much alimony will be or how long it will last. Rather, as to New Jersey alimony law, divorce judges must look to a statute that lists about a dozen factors that a judge should consider, and the judge has case law to guide him/her. But, none of those sources provide the divorce judge with a formula for either amount or length. So, both divorce judges and divorce lawyers are constantly guessing and adjusting at what might happen at trial, what might settle the case, what is completely out of the ballpark and what is within an acceptable range.
Here's a tip though: After the divorce judges make their determinations in light of these dozen factors, it seems that for some time now, their multitude of determinations just happen to fall in the ballpark of "one-third of the difference," meaning that the annual amount of alimony is equal to about one-third of the difference between the two spouse's incomes. There is absolutely no one-third alimony rule in New Jersey. Let's just say it's an informal observation of a plethora of coincidences.
Some of the factors that the judge is to consider in determining the type, amount and length of alimony are: each party's income or ability to work, age of the parties, health of the parties, the interference of a party's career due to child-rearing or other factors, the marital standard of living, and the length of the marriage (to name just some).
As to type of alimony, there are generally three types: permanent, limited duration and rehabilitative. Permanent alimony means that alimony would last until a major change in circumstance (e.g. retirement, remarriage, cohabitation, disability, significant change in financial circumstance). These changes are all possibilities, and other than remarriage, none result in an automatic or definite termination, increase or decrease. A request for an alimony modification (via a post-judgment motion) must be made to the court. Limited duration means that alimony would generally last for a number of years. And, rehabilitative alimony means that one party would pay for the other party to professionally "rehabilitate" him/herself (e.g. going back to school for computers, etc.).
Right now in New Jersey, generally (and with exceptions of course), if both of you are in your late 40's (or older) and you've been married for 20 years (or more), and you have an alimony case, then you're probably looking at permanent alimony. You could also be awarded permanent alimony for a 15 year marriage too - but that's definitely in "maybe and maybe not" territory, and very dependent on variables such as the judge, the county, and the other factors.
Remember, alimony is usually tax-deductible to the payor, and taxable to the recipient. In addition, you have the option (if your spouse is willing to entertain the possibility) of a lump-sum payment (a non-taxable payment) in lieu of alimony. In other words, instead of evening opening the alimony can of worms (with the possibility of future alimony modifications), the recipient spouse would receive a lump sum of money (usually from the payor's share of some asset, e.g. the house or investment/retirement account), and would waive any and all alimony now and forever. The recipient spouse who is most agreeable to this scenario is one who has the real possibility of romantic relationships in his/her future, or one who believes that he/she can advance his/her life more with a lump-sum now rather than with a stream of alimony income in the future.
There you have it - a snapshot of The Big Three financial issues in a New Jersey divorce. After you get through these, you can tackle the other divorce issues - health insurance, life insurance, the children's college expenses, cell phones, household furnishings, income tax filings and deductions. But at least, you know the ground rules on the Big Three, and you have a place to start. One more thing: Stay away from trying to convince your spouse of these ideas. If your spouse is difficult, he/she won't believe you or won't care. It's a waste of your time and energy (not to mention sanity) to try to convince him/her of the reasonableness of your position given these general ideas. Don't worry, someone (an attorney, a judge, a settlement panel, a mediator) will convince your spouse at some point, but it won't be you. In the meantime, focus on what is in your control, on taking care of yourself mentally and emotionally, and on staying sane and grounded so that you can make the best decisions possible.
by: Theresa Markham
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