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On October 12, 2018, the Appellate Division handed down an unpublished decision in K.D.E. v. J.E., a post-judgment matrimonial matter in Monmouth County.
The parties married in 1988, had two children, and divorced in June 2009. The parties negotiated a Marital Settlement Agreement (MSA) which was incorporated into their Judgment of Divorce. At the time of the divorce, both parties resided in the marital residence. The MSA allowed for Plaintiff and the children to remain in the marital residence until it sold. It also allowed Defendant to remain in the home until she found alternate housing approved by her GAL.
Defendant moved out of the marital residence approximately one month after the parties signed the MSA. Plaintiff and the children ended up living in the marital residence for six years thereafter. Plaintiff later claimed that he tried to sell the home but that Defendant refused to cooperate; however, Plaintiff did not file a motion in those six years. Finally, the parties agreed to list the home for sale in 2015 and the house sold on November 30, 2015.
The parties were unable to agree on how the sale proceeds should be distributed, so Plaintiff filed a motion seeking certain credits, including a credit for the mortgage principal he had paid down in the six years following the divorce. Defendant opposed Plaintiff’s motion and pointed out that Plaintiff received the benefit of the mortgage deduction on his taxes as well as the benefit of not having to spend more money to buy/rent a new residence. The trial court did not hold a plenary hearing on the matter, but instead, issued a written decision based upon the conflicting certifications filed by the parties. The trial court granted Plaintiff’s request and commented that the parties did not anticipate the lengthy delay in the sale of the home and that Defendant was the sole cause of the delay. The decision did not address Defendant’s arguments that Plaintiff reaped tax benefits and saved money by not moving. Defendant appealed.
The Appellate Division lamented about the fact that there was no language in the MSA stating that the Plaintiff was supposed to receive credit for reducing the mortgage while remaining in the home, and that the language was ambiguous at best. The Appellate Division ultimately reversed the trial court’s decision and remanded the case for a plenary hearing to be held as to the issues concerning the proper interpretation of the MSA. Further the Appellate Division commented that when courts are determining the meaning of matrimonial agreements, they must “discern and implement the common intention of the parties.” Pacifico v. Pacifico, 190 N.J. 258, 266 (2007) but not use extrinsic evidence to rewrite the MSA. (citing Conway v. 287 Corporate Ctr. Assocs., 187 N.J. 259, 268-70 (2006)). Ultimately, the Appellate Division reversed and remanded the case for the trial court to hold a plenary hearing to parse out the parties’ conflicting stories and their intentions with respect to their MSA.
When you are getting divorced, there are different ways to deal with the marital home. If there is equity in the home that the couple accrued during the marriage, it will be divided between the spouses in some manner, in conjunction with the parties’ overall property division.
Selling the marital residence and splitting the proceeds is one of the easier ways to resolve the issue. This may be a necessary option if neither spouse wishes to remain in the marital residence, or neither spouse can afford to remain in the marital residence. The spouses will have to cooperate to the extent necessary to sell the home, but they will each receive liquid assets as opposed to real estate, which can enable them to make a new start or purchase another home.
Another option, if one spouse wishes to remain in the marital residence and can afford to do so, is for that spouse to buy out the other spouse’s share of the equity in the home. Perhaps the simplest way to finance a buy out is to refinance the home solely in the name of the spouse who wishes to stay living in it. This procedure allows the other spouse to remove his or her name from the mortgage, which relieves that spouse of financial liability. During the closing, that spouse also will receive his or her share of the equity in the home.
If a spouse wishes to remain in the marital residence, but cannot afford to refinance or buy out the other spouse’s interest, another option may be for that spouse to remain living in the home, without any distribution of equity to the other spouse, for a certain period of time. This situation may be particularly appropriate if the parties have minor children. For instance, it is not uncommon for the custodial parent to be able to remain in the home until their youngest child reaches the age of 18 or graduates from high school. At the end of that time period, the spouse living in the home must either sell the residence or refinance the home and pay the other spouse his or her share of the equity. The downside to this option, however, is that the name of the spouse who is not living in the home likely will remain on the deed to the house, as well as on the mortgage loan. If the spouse living in the home defaults on mortgage payments or property taxes, the other spouse would be jointly liable for these debts. It is also could preclude the other spouse from being able to move forward with his or her own purchase of a new home. For obvious reasons, this is not a commonly accessed option.
Divorce and separation is never easy, and it can be particularly painful in some circumstances, such as when a spouse fears that he or she can no longer afford to maintain the marital residence. In times like these, it is difficult to make financial decisions that are truly best for you and your family. It is in these kinds of cases that a New Jersey divorce lawyer can be most useful to you and truly make a difference in the outcome of your case. Visit our website at http://argentinolaw.com. You also can email us at firstname.lastname@example.org, and one of our staff members will get back to you right away.
Over the past several years, there has been an increasing trend of divorces among couples over the age of 50, many of whom have been married several years. This trend may be attributable, at least in part, to individuals living longer, less societal stigma associated with divorce, and a simple unwillingness to remain in an unhappy marriage. While every divorce involves different issues, so-called “gray divorces” raise some special concerns that are unique to older individuals.
First, when a “gray divorce” occurs, the individuals are closer to retirement than many divorcing couples. Divorce can have a significant impact on an individual’s finances, especially when one spouse has been out of the workforce for an extended period or has few job-related skills. From this perspective, an older individual who divorces may find himself or herself having a more difficult time recovering from the financial fallout of the divorce. This can cause one or both spouses to have to work well beyond their anticipated retirement age and live a much different lifestyle. If you find yourself in this situation, you will need to carefully consider your financial situation and determine whether you need continuing support from your spouse or additional assets to adequately support yourself.
Legal fees, negative tax consequences, and early withdrawal penalties on retirement accounts all can negatively impact the existing marital assets, which result is not beneficial to either spouse. Maintaining the bills and taxes on the marital home may no longer be a possibility for either spouse; the fact is that when one household splits into two separate households, there is simply not as much money to go around. Since the parties have been married for a longer period of time, they are more likely to have accrued assets that then must be divided in the divorce. This can lead to lengthy and contested divorce proceedings, additional attorney’s fees, and serious tax consequences.
“Gray divorce” raises a number of issues and concerns that are not as likely to be present during divorces involving younger spouses. If you are in this situation, you need to be aware of these issues. At Argentino Family Law & Child Advocacy, LLC, we understand that every case is unique, so we pride ourselves in crafting an individual approach for every family whose interests we represent. Our family law attorneys are skilled in handling family law, divorce, and other cases involving children. Contact our experienced team of attorneys today so that we can assess your case, answer your questions, and present the options that are available to you. We will provide you with the information that you need to make the best decisions for you and your family.
Tax planning is an essential aspect of the divorce process, yet many individuals who are going through a divorce fail to adequately understand the tax consequences that may apply to them. The fact is that tax issues can have a significant impact on a divorce and even the strategy that each spouse uses during the divorce process. Furthermore, as our nation is on the brink of major changes to federal tax law, the outcome of certain tax-related situations may be uncertain in the context of a divorce. As always, you should be sure to get the most up-to-date advice from your tax professional if you have questions about how the new tax laws might affect your situation. However, there are some basic tax rules that you should be aware of as you go through your divorce.
First, there are certain aspects of federal tax law that apply to parties with minor children who are in the midst of the divorce process. Child support payments are neither deductible for the payor nor taxable income for the payee. Only one parent can claim the child for the purposes of the dependency exemption, who is typically the “custodial parent,” or the parent who provides more than half of the child’s support for the tax year. However, there are situations in which a custodial parent can be ordered to release the exemption to the non-custodial parent, if all other requirements are met. Only the parent who claims the child as a dependency exemption is eligible to claim the child tax credit, which has become much more valuable to taxpayers beginning in 2018. Although the new tax law eliminates personal deductions, it doubles the size of the basic child tax credit, from $1,000 for each eligible child to $2,000 for each eligible child. Additionally, the amount of money available as a refundable credit will rise, and the income levels at which the credit previously phased out will increase substantially.
For the past 75 years, alimony has been deductible to the payor to the extent that it is countable as gross income to the payee. However, the new tax law repeals the alimony deduction and the spouse receiving the alimony no longer is required to pay taxes on it. Some experts foresee this change as detrimental to an efficient and affordable resolution to many divorces. The concern is that the lack of a deduction for alimony will result in less money for the family in general, and, in particular, the spouse in need of support, which could make reaching a settlement in some cases more difficult. However, this provision of the tax law does not take effect immediately; the repeal of the alimony deduction will only affect divorces finalized after December 31, 2018. This change also may necessitate changes to provisions of existing prenuptial agreements, which assumed the existence of the tax deduction.
These are only a few examples of how taxes substantially impact divorce proceedings, as well as how the new tax law may result in changes to certain aspects of divorces. Taxes are only one aspect of the financial matters involved in New Jersey divorce cases. We know how difficult, complicated, and emotionally draining divorce cases can be. Contact Argentino Family Law & Child Advocacy, LLC, today and we will show you how we can help with your New Jersey divorce case. Our attorneys focus their practice primarily on family law and issues related to children, so we are sure to have the skills that you need for proper representation in your divorce case. We are here to answer your questions, settle your concerns, and assist you through the often difficult process of contested divorce and family law cases.