Carrying Costs and Temporary Maintenance in a Pendente Lite Application

Upon commencement of an action for divorce, frequently the “non-monied” spouse will file a pendente lite motion with the Court. Said motion normally seeks temporary relief pending the litigation. Typically one asks for temporary maintenance, temporary child support and attorney’s fees. There are other things a movant may ask for however, these are the three big topics which are sought. Unfortunately, temporary maintenance is not clearly defined, which leads to differing opinions as to what temporary maintenance covers. Recently, in Woodford v. Woodford, a Second Department decision, the Court attempts to shed some light on temporary maintenance.

In Woodford, the wife moved pendente lite, for temporary maintenance, 100% of the carrying costs of the marital estate and for her attorney’s fees. The Supreme Court ruled that the husband was to pay 100% of the carrying costs, temporary maintenance and to pay $10,000.00 as and for attorney’s fees, with leave to apply for more money should the need arise. As you may know, carrying costs are essentially the costs associated with maintaining and running the household. It includes the mortgage or rent, utilities, cable, internet, phone, the other costs associated with the home. Husband appeals to the Second Department arguing that temporary maintenance should include the carrying costs, thus he should not have to pay both carrying costs and additional monies for maintenance.

Domestic Relations Law §236(B)(5-a) sets for formulas in which the Court is to use to determine the presumptive temporary maintenance award. After determining what the presumptive award should be, if the Court wishes to deviate from said award, it must explain why such deviation was deemed necessary. What the statute does not address is what temporary maintenance is to cover. The Court held in this case, that it is reasonable and logical to think that the temporary maintenance statute was intended to cover all of the wife’s basic living expenses. Therefore the Court vacated that part of the ruling which ordered the husband to pay for both the carrying costs and temporary maintenance and directed the Supreme Court to reconsider the wife’s motion.

This ruling seems to say that carrying costs are part of temporary maintenance. One would think then that the Court, if it wants to award both temporary maintenance and have the “monied” spouse pay for the carrying costs, the Court would then award a larger temporary maintenance award to cover both the carrying costs and provide for temporary maintenance. Ultimately, since the statute is vague and ambiguous as to this point, it rests in the particular Court to which you are arguing your motion. Until the legislature either repeals this statute or clarifies it, the Courts will continue to interpret the temporary maintenance statute in their discretion. Each case will produce different results based on the particular facts of the case, which will then be interpreted in the discretion of the particular Court hearing your motion. Therefore, in preparing your motion, it is imperative that you carefully explain to the Court all your needs so as to put yourself in the best position to obtain an adequate temporary maintenance award.

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Qualified Domestic Relations Order “QDRO”

It is well settled that pension plans are marital property subject to equitable distribution. Thus, when divorcing, it is important to ascertain what, if any, pension plans exist. The Court of Appeals has held that because marital property is that which is acquired after the marriage and before the execution of a separation agreement or commencement of a matrimonial action, it is necessary to separate from the plan what interests a spouse may be entitled. This is accomplished by comparing the number of months from the date of the marriage to the date of the commencement of the action against the total number of months of employment.

Once this is figured out, how does the pension plan administrator know to pay a former spouse? The answer is the Qualified Domestic Relations Order, commonly referred to as the QDRO. This court order requires that the plan administrator separate a designated portion of the employee spouse’s account into a separate account for the non-employee spouse. A QDRO must: (1) recognize the existence of an alternate payee’s right to, or assigns to an alternate payee the right to receive all or a portion of the benefits payable with respect to a participant under a plan; (2) meet certain technical requirements. These requirements are: (a) the order must specify the last known mailing address of the participant and each alternate payee covered by the order; (b) state the amount or percentage of the participants’ benefits to be paid by the plan to each alternate payee or the manner in which the amount or percentage is to be determined; (c) the number of payments or period to which the order applies; and (d) each plan to which the order applies. In addition to the above, the QDRO must not: (1) require a plan to provide any type or form of benefit not otherwise provided in the plan; (2) require the plan to pay increased benefits; and (3) require the payments of benefits to an alternate payee which are required to be paid to another alternate payee under another QDRO.

An important provision in a QDRO that must not be over looked deals with when the non-employee is allowed to collect benefits. Make sure that the Court directs that the alternate payee be entitled to receive pension benefits upon the employee’s actual retirement eligibility date vice the day the spouse retires. This avoids a spouse waiting for the ex-spouse to actual retire. For example, if your ex-spouse is able to retire at 62, but decides to keep working past that date, you want to make sure that you are able to collect at 62 vice some date in the future. Additionally, as a practical measure, you want to make sure that the plan has a survivor benefit in your favor. That way, in the event your ex-spouse passes away, your benefits are protected.

LEARNING POINT: When dealing with pension plans, it is important to have them evaluated and if appropriate, have a QDRO entered. Of course, in negotiating a settlement, you may want to waive off your rights to a pension in exchange for a lump sum payment or some other asset. As the owner of the pension, you may want to offer a buyout of benefits. For example, if you are divorcing it is possible that sometime in the future you may want your pension to go to someone other than your ex-spouse. In that case, you may want to figure out a way to offset the rights your soon to be ex-spouse is entitled. These are complicated matters which we will be happy to guide you through.

Qualified Domestic Relations Orders

Can My Spouse Spend Our Assets Pending the Divorce?

divorce assets and martial propertyYou have decided to get divorced.  You wisely hired an attorney and your fear is that pending the divorce your spouse will spend down the assets and/or get rid of marital property.  While the commencement of a matrimonial action serves to terminate the acquisition of marital property, it might be months or even years before the property is distributed.  Thankfully, Domestic Relations Law (“DRL”) §236 has contemplated this very real concern and has a remedy.

DRL §236 provides for “automatic orders.”  What does this mean?  It is an order restraining parties from dissipating marital assets pending the divorce.  By rule, automatic orders are filed with the summons with notice or summons and complaint.  The order goes into effect, from the plaintiff’s perspective, upon filing of the summons or the summons and complaint.   From the defendant’s perspective, the automatic orders take effect upon service.

What’s in the automatic orders? There are five statutory restraints: (1) neither party may sell, transfer encumber or dispose of any property without the written consent of the other party except in the usual course of business or to pay for the customary and usual household expenses; (2) neither party can transfer, encumber assign, withdraw or dispose of stocks, or other assets in an IRA or other pension plan without the written consent of the other party; (3) neither party may incur unreasonable  debts unless in the normal course of business or for household expenses; (4) neither party may remove the adverse party or any children from existing medical coverage; (5) neither party may change the beneficiaries of any existing life insurance policies and must keep all policies in effect pending the outcome of the divorce.

Essentially, these orders are in place so that neither spouse can spend assets without prior consent of the other party.  Further, assets can only be used in the normal course of business.  The “normal course of business” whether it is an actual business expense, or running a house hold, isn’t actually defined.  A court will need to take into account life styles, the asset used, the purpose and whether, considering all relevant factors, the expenditure was a violation of the order.

LEARNING POINT:  Once a divorce action is filed, automatic orders, which are filed contemporaneously with the action, will prevent either party from either wasting marital assets or incurring significant debt.  If you are in the middle of a divorce and you have not retained counsel, seek out an attorney immediately! They can advise how you can use the marital assets pending the divorce.

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