Equitable Distribution of Veterans Disability and Social Security Benefits


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An undecided question in the Second Department (covering Nassau and Suffolk Counties) is how to distribute benefits earned by a military member. The departments are split on this issue and the Court of Appeals, the highest court in New York, has yet to definitively rule.

The fourth department has held that while disability benefits obtained from other sources may be considered for purposes of maintenance, veteran’s disability payments are precluded from consideration. 10 U.S.C. § 1408. The third department held the opposite, stating that veterans benefits can be considered when deciding on equitable distribution. With respect to social security benefits, it is well settled that Social Security Disability Benefits are separate property and are not subject to equitable distribution. DRL § 236(B)(1)(d)(2); Miceli v. Miceli, 78 AD3d 1023 (2d Dept.2010). However, Social Security Disability Benefits, unlike veteran’s disability benefits, are to be considered by the Court when determining a payor spouses ability to pay maintenance.

In Alvarado v. Alvardo, a case decided January 15, 2013, the trial court in Richmond county, dealt with the issue of what should happen to veteran’s and social security benefits. Mr. Alvarado, served in the U.S. Marines from 1965-1969. As a result of his service, he was awarded veterans benefits. The parties were married in 1980 and now seek to dissolve the marriage. Ms. Alvardo seeks to have her husband’s veteran’s benefits as well as the social security he is entitled considered part of the marital property for equitable distribution purposes.

The easier issue is that of the Social Security benefits. Clearly, the benefits he gains from social security will not be considered for purposes of equitable distribution, however, if the Court were to deem maintenance appropriate, the Court will consider the husbands benefits as part of his income when determining his ability to pay maintenance. Addressing veterans benefits, a topic which is hotly contested, the Court held that absent a contractual agreement otherwise, veteran’s benefits are not to be considered when distributing assets as part of equitable distribution.

In addition to the vague guidance given by the Courts regarding this issue, if you are military member, you are entitled to many benefits which civilian courts are not accustomed to seeing. BAH, OHA, special pays etc. will be foreign concepts to most Courts. If you are a military member and are proceeding with a divorce in New York, be sure your attorney is prepared to explain all of these benefits so that you are not being held responsible for monies that you are not actually receving.

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Valuation of Businesses

A typical scenario which some clients have concerns about is their “share” of a business which they helped their spouse build during the marriage. A client will come in and tell us that they provided tangible and non-tangible support to their spouse while they built a business and now that they are getting divorced, they are interested in how much of the business they are entitled.

The first step is to determine the value of the business. Generally, the business is valued as of the date of the commencement of the action, though there are some courts which will use the date of trial. One would think that the Court of Appeals would have rendered a decision as to which date should be used when valuating the business. One would be wrong. Regardless of the date used, valuation is a complicated matter normally requiring independent experts. While there are many different approaches to valuating a business, most trial courts favor the comprehensive approach recommended by the Internal Revenue Service. This approach uses eight factors to determine the value of the business. The factors are: (1) the nature of the business and the history of the enterprise from its inception; (2) the economic outlook in general and the condition and outlook of the specific industry in particular; (3) the book value of the stock and the financial condition of the business; (4) the earning capacity of the company; (5) the dividend-paying capacity; (6) whether or not the business has good-will or other intangible value; (7) sales of the stock and the size of the block of stock to be valued; and (8) the market price of the stocks of corporation engaged in the same or similar line of business having their stocks actively traded in a free an open market.

The valuation is the easy part! Once the valuation is complete, the Court must fashion an equitable way in which to distribute the business. In fashioning an award, the Court will try to avoid a liquidation of the business or making the estranged spouse a partner of the business. Typically, if there are sufficient non-marital assets, the Courts will offset the business interests and other marital assets. For example, if the Court determines that a spouse is entitled to $50,000.00 as that spouse’s fair share of the business, and there is $50,000.00 of marital property, there is a natural offset (it is never that simple!).

LEARNING POINT: Valuating a business with respect to equitable distribution is a complicated process which even the Court of Appeals hasn’t fully addressed. Experts will be needed and various factors will be analyzed, to include the business owners statement of net worth. If the spouse in question is only a partner of a business, the valuation becomes even trickery. Contact us for a free consultation to discuss this and other equitable distribution questions.

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Enforcement of Maintenance of Child Support

A common question which clients have been asking deals with the enforcement of a court order to pay child support and/or maintenance. Once a Court issues an order, one would hope that the party to which the order has been directed would follow it to the letter. Unfortunately, this is not always the case. Sometimes, a party simply cannot afford to make the payments as ordered. This usually happens when there is a legitimate loss of income. On the other hand, sometimes people simply do not pay. If this is the case, your remedy may be to seek a contempt order.

The remedy of contempt is available to punish the defaulting party. Domestic Relations Law (“DRL”) allows the matrimonial court to invoke contempt sanctions of Article 19 of the Judiciary Law as a means of enforcing the directions contained in its orders and judgments. The contempt order is the most drastic form of relief because the consequences of contempt can be either a fine or incarceration. Thus, courts view this remedy as a tool of last resort and as such, the Court must first find that the default was willful.

Failure to follow a Court order and pay maintenance and /or child support does not conclusively prove that you are in willful default; however, it is prima facie evidence of willful disobedience. Once this presumption is established, it incumbent on the defaulting party to overcome this presumption and show that their failure was not willful.

Before the Court will find a party in default, it must be shown that payment cannot be obtained in any manner, i.e. income execution, entry of judgment etc. As mentioned, willfulness is linked to the defaulter’s ability to pay. If the defaulting party raises his/her inability to pay, there must be hearing to determine the facts and circumstances of that person’s inability to pay. The typical defense to default is the defaulting party’s loss of their job which creates a financial hardship. When this is the defense, the Court will look to see if the loss of employment was willful. If you purposely quit your job or do something which causes you to be fired, you may be held in contempt. The Court may find your willful loss of a job should not allow you to escape your financial responsibilities.

LEARNING POINT: Contempt of Court is a drastic tool available for those who willfully disobey the Court’s directions. If you are subject to such an order or you are the beneficiary of such an Order, there are things you can do to either enforce the order, or defend yourself from contempt charges. Adequate preparation is key. Call us for a free consultation and allow us to prepare the best possible case for your situation.

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Pensions Are Marital Property Subject To Equitable Distribution

The Court of Appeals has held that vested or matured rights in a pension plan, whether the plan is contributory or not, is to be considered marital property subject to equitable distribution. The basic rational for this decision is that the money that went into the pension, during the marriage, is money that would have been given to the marriage but for the diversion to the pension plan. In distributing the pension benefits, the Court may order the employee spouse to grant the nonemployee spouse survivorship benefits. Should the Court direct this course of action, the non-employee would receive the increased benefits upon the death of the employee.

How do Courts treat non-vested pension plans? The Court of Appeals held that non-vested plans do not preclude equitable distribution. The rationale is that your right to the plan is continually accruing during the years. There are two approaches to the valuation and distribution of a non-vested plan. The first is to calculate the present cash value of the pension, with a discount since the plan has not vested. The discount will take into account factors such as the pension not actually vesting due to termination of employment or other issues which will terminate the pension. The second approach is to allocate a portion of each future payment to the non-employed spouse. The Court of Appeals suggested that the second approach is best only in the event that the present value cannot be determined.

Another concern that must be addressed is how much of the plan is subject to equitable distribution. There are cases were the marriage will terminate as a result of the divorce yet, the plan will continue to grow in value. What you can generally expect is that the Court will consider at the total amount of months from the date of the marriage to the date of the commencement of the action against the total amount of number of months of employment. Therefore, where a spouse continues to work after the commencement date, which is typical, the benefits earned after the commencement date will not be subject to marital distribution.

How is the administrator of a plan to know to make payouts to your spouse and in what amount? You will need to obtain a Qualified Domestic Relations Order, better known as a “QDRO.” The QDRO must specify the name and last known mailing address of the participant and of each alternate payee covered by the order; the amount or percentage of the participant’s benefits to be paid by the plan to each alternate payee or the manner in which the mount of percentage is to be determined; the number of payments or period to which the order applies; and each plan that the order applies to.

LEARNING POINT: Evaluating a pension plan is a complicated process which one should not attempt alone. There are many different approaches in evaluating the plan and if necessary protecting your assets. If you are getting divorced and either you or spouse has a pension plan, contact us immediately to begin preparing your case.

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Grandparent Visitation Rights

Domestic Relations Law §72 grants grandparents the right to petition for visitation with their grandchildren. This is different than granting grandparents the right for visitation. Simply put, grandparents, in certain circumstances, are allowed to request through the courts visitation with their grandchild. The first step in petitioning the Court for visitation as a grandparent is establishing that you are the grandparent of the child in question. Once this is established, the Court must determine whether one of two grounds has been satisfied. First, a grandparent can make an application for visitation where either or both of the parents of a minor child, residing within this state is or are deceased. If this is not the case, then the Court may allow you to petition for visitation where “circumstances show that conditions exist which equity would see fit to intervene.”

There lacks a specific test or set of criteria which would assist a Court, or grandparent, in determining what equities exist to grant visitation. As a starting point, the Courts have recognized a humanitarian concern that visitation with a grandparent is often an important part of a child’s experience, an experience that cannot be duplicated. Therefore, it is helpful if the grandparent(s) had a pre-existing relationship with the child in question. It is helpful but not necessarily essential. For instance, if the grandparent(s) are able to establish that they have attempted to have a relationship with the child however the parents have prohibited the relationship, a Court will take that into consideration when making its determination. This is an important fact. Even if both parents are in agreement that they do not want the grandparent(s) in question to see their child, a Court may allow visitation in the right circumstances.

Once the grandparent(s) are able to establish that they have the right circumstances in which equity would make sense for them to have visitation, a hearing is conducted. The hearing will determine whether the grandparent(s) may exercise visitation. The determination lies strictly in the Court’s discretion. In making its decision, the Court will rely on what it believes is in the best interest of the child.

LEARNING POINT: Grandparent visitation is a complicated matter with obstacles which have to be cleared. If you are seeking visitation as a grandparent contact us immediately to begin preparing the best possible case. The key will be showing that it is in the best interests of the child to allow such visitation.

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Filing For Divorce: On The Grounds of Adultery

With the passage of “no fault divorce”, New Yorkers rarely need to rely on other grounds for divorce. Invariably, I have clients who want to file for divorce based on adultery. Adultery is defined as the voluntary commission of an act of sexual intercourse or oral sexual conduct with someone other than your spouse. Thus an act of sex with someone other than your spouse qualifies as grounds for divorce. Technically, Adultery is a crime. See Penal Law §255.7 where in a person is guilty of adultery if he/she engages in sexual intercourse with another person while married. Adultery is a Class B misdemeanor. This crime is rarely, if every prosecuted.

If you want to file for divorce using adultery as the basis, consider how you intend on proving your case. As most affairs are usually conducted in secret, your case may need to be made on circumstantial evidence, i.e. proof of opportunity, inclination and intent. Not an easy road to travel. What constitutes good proof? Eye witness testimony from a private investigator or another person who can be a witness to the sexual conduct between the cheating spouse. A spouse’s confession can also be used as evidence however there are some caveats to this. First, this confession must be corroborated. If the confession was made to you, that may not be enough. Your credibility will be tested during cross examination. Thus, I advise that you obtain other forms of evidence along with your spouse’s statements. In addition, you cannot force a spouse to testify. Remember, the burden to prove adultery is on the moving party. You will need to prove your case with clear and convincing evidence.

There are defenses to adultery that you should be aware. They are: (1) the offense was committed by the procurement or connivance of the other spouse; (2) You forgave the cheating spouse, which can be established by the voluntary cohabitation of the parties with the knowledge of the fact (though in today’s economic times, an argument can be made that despite knowing about the adultery, the economics would not allow one party to move out of the marital estate. I have a few clients who remain living together pending the outcome of the divorce as they simply cannot afford to move out of the house. A word of caution, if you engage in sexual intercourse while living together after the discovery of adultery, then the court might take that as proof that you have forgiven your spouse); (3) the offense happened more than five years ago, in other words, you have five years from the discovery of the adultery to bring an action and (4) where the cheating party is entitled to a divorce as a result of your adultery. In other words, you cheated on your spouse and had they filed for divorce upon discovery they would have been entitled to divorce on the grounds of adultery, then neither of you might be entitled to a divorce based on adultery.

Finally, adultery, generally, has no bearing in equitable distribution of the marriage. It is also not a factor in the determination of maintenance. Thus, I end where I began, there really isn’t an advantage in filing for divorce based on the grounds of adultery. You derive no strategic advantage in your case plus, proving adultery may be more difficult than you may have originally thought.

LEARNING POINT: If you insist on filing for divorce based on adultery, be sure you have the proper evidence lined up. Consult us immediately to begin preparing your case. Keep in mind, even if we are able to prove the adultery, it will have little to no bearing on equitable distribution and/or a maintenance award.

Ground For Divorce In New York – Cruel and Inhuman Treatment

There are multiple grounds for divorce in New York. This article will briefly describe what you must be able to show to file for divorce pursuant to DRL §170(1), cruel and inhuman treatment. Cruel and inhuman treatment can be defined as such conduct that so endangers your physical or mental well-being making it improper or unsafe to cohabit with your spouse. So the question becomes what constitutes conduct which so endangers your physical or mental well- being.

The easiest example will be repeated physical abuse. Clearly, if your spouse is physically assaulting you, that would be a strong argument for cruel and inhuman treatment. Must it be “repeated?” Depends- here are two extreme examples. Say your spouse slaps you once. Doesn’t slap you again, and never has before. Is that enough to grant a divorce under DRL §170(1)? Probably not. That does not mean this behavior is excused or that you cannot get divorced if you so choose, but under the cruel and inhuman provisions, this is probably not enough for a Court to grant you a divorce under this section. On the other hand, say your spouse physically assaults you one time, however this one time lands you in the hospital with serious injuries. Your spouse hasn’t done something like this in the past. This may be enough to qualify as cruel and inhuman treatment and the Court may grant you a divorce.

What about mental abuse? Acts of verbal abuse and torment have been held sufficient to establish grounds for cruelty where they have been of a serious nature and where a pattern of such behavior could be shown. Courts have granted divorce based on this section where a spouse was able to show be subjected to constant denigration followed by lengthy bouts of outright ignoring causing severe depression requiring psychological therapy. Flaunting extra marital affairs and refusal to return to the marriage, coupled with taunting a spouse about their physical appearance and shortcomings have also been deemed enough for a Court to grant a divorce.

Courts have also held that intoxication and/or drug abuse, in the right circumstances may qualify. For example, if your spouse is an alcoholic and when your spouse is drunk engages in either physical or mental abuse, the Courts have granted a divorce based on cruel and inhuman treatment as a result of your spouses habit.

Proving cruel and inhuman treatment can be challenging. Generally speaking, such acts which rise to the level of cruel and inhuman treatment happen in the marital residence behind closed doors. Rarely are there witnesses. That being said, while the Court of Appeals (the highest court in the State of New York) has not specifically ruled on this issue, the second, third and fourth departments have expressly held that corroboration is not required to prove cruel and inhuman treatment. Clearly, medical documentation would corroborate abuse or witnesses to said abuse would strengthen your case however, as just mentioned, it not always possible. The final point to be made is that while it is necessary to draft pleadings with enough specificity to allow your spouse to defend the action, the Courts have recognized that an abused spouse rarely if ever keeps a log if every separate incident of abuse, however, generally speaking you need to narrow the times of the abuse enough as to give your spouse an ability to defend the claims you are making. Additionally, claims of abuse should be no more than five years old. Once you start making claims more than five years old, while it might be useful to show a pattern, you may run into a statute of limitation problems. Generally, misconduct occurring more than five years prior to the commencement of the action may not be used to support the cause of action.

LEARNING POINT: Getting divorced pursuant to DRL§170(1) is a complicated matter, which thankfully isn’t necessary because New York has recently allowed for no fault divorces (to be discussed in later blogs) however, if you do want to pursue getting divorced under this provision of the statute, you must be ready to discuss the various forms of abuse you were subjected to and be ready to prove them in Court. Contact us for more detailed information on how to secure a divorce under this provision of the DRL.

Which Spouse Retains Residential Custody?

Child Custody Long Island

When deciding which spouse will retain residential custody, the Court will have to determine what is in the best interest of the children in question. Until recently, NY followed the “tender years presumption” which stated that mothers were inherently better suited to assume the custody of young children. This presumption has been abolished and the law is currently gender neutral. Thus, there is no prima facie right to custody of a child to either parent. The Court will consider a host of factors when deciding what is in the best interests of the child. Factors the Court will contemplate include: (1) the parent’s physical and mental health; (2) the use of drugs and/or alcohol; (3) sexual activity; (4) lifestyle; (5) neglect abuse or abandonment; (6) physical or emotional abuse and (7) the parent’s relative economic status. These are just a few of the examples which the Court will consider. The Court will not give more weight to any particular factor it considers. Instead the Court will consider the totality of the circumstances when making a determination.

In evaluating what is in the best interests of the child, the home environment and ability to meet the child’s needs will need to be ascertained. The Court will consider the quality of the home environment each parent is able to provide for the child. Thus, the Court will be looking not only to the physical safety of the home, but each parent’s ability to provide for the child’s emotional, social and intellectual development. The Court’s prefer for the direct guidance and care of the child vice a third party like a baby sitter or nanny. So you may be thinking now, how does the financial resources of a parent effect the Court’s analysis?

A parent that makes more money may be able to provide a “better” home and nicer environment however Courts take into consideration the fact that if you are the non-monied spouse, you will also be entitled to child support which will level the playing field. On the other hand, while a third party is not necessarily looked on favorably by the Court, an argument can be made that in today’s environment, both parents need to work and someone may need to watch the child. If you have the financial resources to afford a nanny or day care, that will also be factored into the equation.

LEARNING POINT: The totality of circumstance will decide who gets custody. If custody cannot be worked out between the separating parties, consult an attorney quickly. You must start preparing your case immediately and shoring up your position. You do not want early decisions to have a detrimental effect on your ability to maintain custody of your child.

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Statement of Net Worth

The Domestic Relations Law (DRL) requires compulsory disclosure by both parties of their respective financial states in all matrimonial actions and proceedings in which maintenance or support is an issue. This is normally done through a net worth statement. Net worth means the amount of total assets including income that exceed total liabilities, including fixed financial obligations. Your Net worth statement must include all income and assets of any kind, wherever they may be located, as well as any assets transferred out of your name within the preceding three years or the length of the marriage, whichever is shorter. Transfer of money for the routine maintenance of your daily life is not necessarily included.

Your net worth statement includes the disclosure of the details of the general family data, expenses, gross income, assets (joint and separate), liabilities (joint and separate) assets transferred during the preceding three years, any support requirements- attorney fees, forensic accounts, valuation experts and the such. In addition to this data, the statement of net worth should include a copy of your most current paystub and the party’s most recently filed state and federal income tax returns. These documents are required to check on the accuracy of the representations in the net worth statement. As you may have read in previous blogs, the tax return is just the starting point. There are many situations in which the tax return may not be the final word. For example, if lost your job right after your taxes were filed, you would not want the Court to make decisions based on income that you no longer earn. On the other hand, if your spouse started a new job in the new year, you would not want the Court basing its decision on numbers that are inaccurate and to your detriment.

A party in a matrimonial action must provide a sworn statement of net worth within 20 days after the receipt of a notice in writing demanding such a statement. Normally, your attorney will make such a demand within days of being retained. This is important. If you are the non monied spouse and are in need of pendente lite relief, you will need your spouse’s last tax return and pay stub to adequately craft your motion.

LEARNING POINT: As you know from our previous blogs, New York is an equitable distribution state. To equitably divide all the assets and liabilities of the marriage, a Statement of New Worth is crucial and a good starting point. In preparing for a divorce and a statement of net worth, gather your tax returns for the last three years, and your last three pay stubs. This will give us a good picture of your financial situation and allow us to adequately represent your needs.

How Does Divorce Affect A Business Partnership?

During your marriage, your spouse opened up a professional practice and over the years it has grown. You are now getting divorced and your question is, are you entitled to any part of this business? In New York, it is clear that professional practices (law firm, medical, dental etc.) established during the marriage and prior to the commencement of a matrimonial action or execution of a separation agreement is marital property and subject to equitable distribution. Additionally, even if the practice in question was established before the marriage, the appreciation of value of the practice, where there have been contributions by the non-professional spouse, is marital property subject to equitable distribution. What will not happen, however, is that you are awarded interest in the practice. For example, if your spouse built a law practice and you are not an attorney, the Court will not say that you are now a partner of the practice. What the Court will do is to value the practice and award an offsetting interest in the other property to the non-professional spouse or, if those funds insufficient, order a distributive award to the non-professional spouse.

How will the Court value the practice? The court will analyze the value of the tangible physical assets. In addition, it will look to the good will of the practice including earnings and liabilities. The Court will use the following factors: 1.) the nature and history of the business; 2.) its particular economic outlook and that of its industry generally; 3.) the book value of the stock and the financial condition of the business; 4.) the company’s earning capacity; 5.) its dividend paying capacity; 6.) its goodwill and other intangible assets; 7.) other sales of the corporation’s stock; and 8.) the market price of stock of comparable corporations.

There are many methods of valuing good will and a particular practice. The most common is the capitalization of earnings approach, which is a weighted average of annual earnings received by the professional spouse in excess of reasonable compensation, reduced by the value of the return on tangible assets, and applied to a capitalization rate. The Court will be mindful of abnormally high and low years of earnings. The valuation will also take into account marketability, or lack thereof, of the professional business in question.

LEARNING POINT: There are many methods of valuating a practice which you and your spouse have built while you married. The practice will be part of the equitable distribution of the marital estate. It is important to start the valuation process as soon as possible, so hire an attorney to protect your interests as soon as possible.