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Many stepparents voluntarily support or voluntarily contribute to the support of their stepchildren while married or in a civil union. However, once the marriage or civil union ends, for any number of reasons they may not want to continue to support or help to support their stepchildren. The question then arises as to whether or not those stepparents have a continuing obligation to support their stepchildren after the divorce or dissolution because they did so during the marriage or civil union.

The answer to that question depends upon two factors: (1) whether or not the natural parent is paying support or is available to pay support; and (2) if not, whether or not the stepparent is responsible for the fact that the natural parent is not paying support and is not available to pay support. The doctrine most frequently applied by the Courts in making the decision as to whether to impose a support obligation on a stepparent is known as the doctrine of “equitable estoppel.” The doctrine of equitable estoppel basically means that a person cannot act in a way which causes someone else to rely on their actions and then disclaim those same actions if the other person has relied on them to their detriment. Put into the stepparent context, if the stepparent voluntarily assumed the obligation to support his or her stepchild and behaved in ways that prevented the natural parent from paying support, then in the event of a divorce or dissolution the stepparent may have a continuing obligation to support his or her stepchildren. Thus, there needs to be (a) an express or implied representation by the stepparent that he or she will support the stepchild; (b) reliance by the stepchild on that representation; and (c) a showing that financial detriment to the stepchild will result if the stepparent is allowed to stop supporting him or her. If all three elements exist in a given case, then the stepparent is deemed to be “in loco parentis” and the support obligation will most likely be imposed.

The easiest cases involving stepparent support are those cases in which the natural parent is paying child support and has a relationship with their child. In those cases, the stepparent was simply contributing additional funds to the support of his or her stepchild and it would be highly unlikely, if not unheard of, for a Court to impose a continuing support obligation on that stepparent. The cases become more difficult to resolve if the natural parent is not paying support and cannot be located. In those cases, the Courts will have to decide if the stepparent’s actions are what allowed the natural parent to avoid paying child support. For example, in many cases the stepparent has held himself or herself out as the natural parent, the child was never told that the stepparent was not the natural parent and as a result, the natural parent has had no involvement with the child whatsoever, including the payment of support. In those cases the Courts have uniformly held that the stepparent has a continuing support obligation after the divorce or dissolution.

The basic premise underlying stepparent support cases is that the obligation to support a child falls primarily and in the first instance on the child’s natural parents. However, a stepparent will be obligated to support his or her stepchild in the event that the natural parent is not available to pay support for reasons caused by the stepparent.

In the last blog, I discussed divorce mediation as an alternative to divorce litigation. In that blog, I explained that the primary goal of divorce mediation is to amicably resolve the couple’s divorce, but that mediation often comes with a price tag of open-endedness and a lack of finality. I also explained that the primary goal of divorce litigation is to resolve the divorce with as much finality as possible, but that litigation often comes at the expense of amicability. In recent years, a third alternative, known as a “Collaborative Divorce,” has developed and is starting to take hold in many states. Collaborative Divorces are rare in New Jersey but are expected to increase as people seek alternative methods of dispute resolution.

The Collaborative Divorce method is initiated when each party retains an attorney who has been specially trained to handle a Collaborative Divorce. The parties and their attorneys sign a “Participation Agreement” at the beginning of the process, which prohibits the parties and their attorneys from filing any pleadings with the Court. This takes the threat of litigation out of the process entirely and allows the parties to proceed without the prospect of judicial intervention hanging over their heads.

Once the Participation Agreement is signed by the attorneys and the parties, the process requires all four participants to devote themselves to finding non-adversarial, “win-win” solutions to their divorce-related issues. This is accomplished by each party empathetically addressing the concerns of the other party, rather than each party taking a position based on the law and bargaining from that position. This is referred to as “interest-based” bargaining as opposed to “position-based” bargaining. The job of the attorneys during a Collaborative Divorce is to protect their clients from a legal standpoint while also quelling and redirecting the negative emotions which will inevitably arise during the process.

As is the case in litigation, necessary documents are exchanged during a Collaborative Divorce and the parties are required to fully disclose all of the information necessary to settle their case. Thus, Collaborative Divorces should not be seen as a way to avoid full and complete disclosure by either spouse. Likewise, experts such as forensic accountants, business valuators, property appraisers or custody experts are retained in Collaborative Divorces if necessary. However, in order to retain the non-adversarial nature of the process, a single, joint expert is retained by both parties in those Collaborative Divorce cases which require an expert or experts.

A Collaborative Divorce has many benefits for the right couple in that it retains both the protections of litigation and the cooperative amicability of mediation. On the other hand, most divorcing couples will have to work very hard to make it through the Collaborative Divorce process successfully. While a divorcing couple may at first think that this is the best method for them, in reality many people going through a divorce will find it difficult over the long run to truly empathize with the concerns of the person they are divorcing, let alone put those concerns ahead of their own in order to settle the case. This is especially true in those cases in which one party does not want the divorce in the first place, or one party feels wronged by the other party. This is an important factor to consider in light of the fact that the Participation Agreement requires the parties to retain two new attorneys and start all over, emotionally and financially, if the Collaborative Divorce process fails.

Thus, as is the case with mediation and litigation, this alternative may or may not be right for you, and you should discuss it with as many professionals as necessary before you arrive at a decision as to which method is best in your case.

In the State of New Jersey, in those cases in which the parents’ Combined Net Annual Income is less than $187,200 per year, child support is fixed by pre-determined “Guidelines.” These are referred to as “Guidelines Cases.” The most important factors which drive the Guidelines formula are the parents’ respective incomes, the designation of Parent of Primary Residence (the PPR) and the Parent of Alternate Residence (the PAR) and the number of overnights the children spend with each parent per year. In fact, the number of overnights dictates which worksheet (a Sole Parenting Worksheet or a Shared Parenting Worksheet) will be used to determine child support, with the amount of child support differing significantly between the two Worksheets.

Once the amount of child support is calculated, parents want to know what expenses are covered by the child support. The answer to this question is in the New Jersey Rules of Court. They are as follow:

Food – All food and non-alcoholic beverages purchased for home consumption or purchased away from home (including vending machines, restaurants, tips, school meals and catered affairs). Non-food items (e.g., tissue papers, alcoholic beverages, cigarettes) are not included.

Clothing – All children’s clothing, footwear (except special footwear for sports), diapers, repairs or alterations to clothing and footwear, storage, dry cleaning, laundry, watches, and jewelry.

Entertainment – Fees, memberships and admissions to sports, recreational, or social events, lessons or instructions, movie rentals, televisions, radios, sound equipment, pets, hobbies, toys, playground equipment, photographic equipment, film processing, video games, and recreational, exercise or sports equipment.

Miscellaneous Items – Personal care products and services (e.g., hair, shaving, cosmetics), books and magazines, education (e.g., tuition, books, supplies), cash contributions, personal insurance, and finance charges (except those for mortgage and vehicle purchases).

These expenses do not include child care costs, which are factored separately into the Guidelines but only if they are work-related child care costs. If they are not work-related child care costs then the PAR is not expected to contribute to them.

Two types of problems arise predictably from the use of the child support Guidelines: First, while the children are in the care of the PAR, the reality is that the PAR will often incur many of the day-to-day expenses intended to be paid for with the child support paid to the the PPR. Thus, the PAR is actually paying for the same items twice. Second, the Guidelines are based upon an “average” family and therefore do not cover expenses that the “average” family does not incur, such as private school education costs, the cost of special needs children (gifted or disabled), expensive sports or activities and the like. Sometimes, the parties agree that these expenses will be shared by both parties in proportion to their incomes in addition to the payment of child support. However, disagreements often arise between the parents as to whether those types of expenses can or should be incurred and split between them after the divorce or separation. Most commonly, the reason for the disagreement is that it has become too expensive for one of the parents to afford an expense that the family may have been able to afford before the separation or divorce.

Child Support can be calculated in one of two ways, depending upon the parents’ joint incomes.

For parents with a Combined Net Annual Income less than $187,200 per year, New Jersey, like all other states, has Guidelines which govern the amount of child support. These Guidelines take into consideration which parent is the Parent of Primary Residence (the “PPR”), the number of children, the ages of the children, the parents’ respective incomes, the number of overnights that the children stay with each parent, which parent each parent pays for work-related daycare and the cost thereof and which parent pays medical insurance premiums for the children and the cost thereof.

All of these items are inserted into a computer program and the result is the amount of child support. In most cases, the calculation is simple. In some cases it can be complicated, such as cases in which different children spend differing amounts of overnight time with each parent, cases in which there are children by a second (and/or third and/or fourth etc. etc.) later-relationship and cases in which one parent is the PPR for one or more of the children and the other parent is the PPR of the other children (called “split parenting”). Unfortunately, the Guidelines do not take into account lifestyles in which a large proportion of the total available income is channeled towards the children, leaving many parents unable to afford items they were able to afford before the break-up such as expensive clothes and hobbies, overnight camps, children’s trips to the hair salon and the like.

For parents with a Combined Net Annual Income of more than $187,200 per year there are ten statutory factors to be considered in determining child support, with the last factor (as always) being “any other factors that the court may deem relevant.” Some of the statutory child support factors include the needs of the child, the standard of living and economic circumstances of the parents, all sources of income and assets of the parents, the earning ability of the parents and other factors. Often in above-Guidelines cases, Courts are called upon to balance a measure of reasonableness against the lifestyle of the parents in order to decide the amount of child support. Thus, if one parent believes that their teenage daughter must shop at only high-end stores while the other parent believes that there is nothing wrong with buying that same daughter clothes off the clearance rack at lower-end stores, the Court may have to step in. In fact, post break-up lifestyle differences will often lead to arguments over child support between parents whether they are within Guidelines are not. One parent may be able to afford expensive extracurricular activities such as hockey and horseback riding while the other parent simply can no longer afford those items no matter how much they may wish to be able to. This often leads to post-divorce litigation.

In the old days, one parent was the “sole custodial parent” and the other parent was the “visiting parent.” The “visiting parent” usually saw the children every other weekend and for one dinner a week. The “sole custodial parent” was entitled to make major decisions on their own with respect to the children without necessarily involving the other parent.

In the early 1990’s, all of that changed, even the labels. The terms “sole custody” and “visiting parent” are almost extinct now as are alternating weekend visitation arrangements unless that’s what the less-involved parent wants. Therefore, if you do hear about a couple that has this type of antiquated arrangement it is because that’s what they both wanted. Don’t expect to attain this for yourself or be relegated to this arrangement if you or your spouse wants more involvement with the children. Absent unusual circumstances, parenting time Orders are far more expansive these days.

These days, one parent is the “Parent of Primary Residence” (also known as the “PPR”) and the other parent is the “Parent of Alternate Residence” (the PAR). The designation is not driven by how much time the children spend with each parent, but rather by twelve statutory factors which impact on the custody decision. Examples of these factors (to list just a few) are: the interaction and relationship of the child with parents and siblings; the needs of the child; the stability of the home environment offered; the continuity of the child’s education; the parent’s employment responsibilities and other factors. The umbrella term for all of these factors is the “best interests of the child.” Parents often think that the PPR/PAR designation tracks which parent spends more time with the children; however, time spent and PPR/PAR designations are two separate baskets of apples and oranges.

It is important for parents to be aware that there is a qualitative difference between having the designation “PPR” and having the designation “PAR.” Unfortunately, some attorneys don’t adequately explain the difference between the designations. Here is the difference: if you are the PPR you are legally obligated to consult with the PAR as to major issues regarding the health, welfare or education of the children. However, if a difference of opinion arises as to one of these major issues, then the PPR’s opinion will trump the opinion of the PAR. This is because Courts have to defer to one or the other parent, so they assume that the PPR has more knowledge regarding the children and they always default to the parent who has the PPR designation. It does not matter if your Divorce or Custody Agreement says that both parents have equal decision making authority, or that the designation will have no bearing on decision making; the reality is that if push comes to shove and you end up in court over a major issue involving your children, if you are the PAR your opinion will not matter. This rule does not apply to minor issues, since it is assumed that those get decided by the parent who has parenting time at the time when the decision is to be made.

The parents’ respective designations (“PPR” or “PAR”) can be determined in one of several ways along what may be visualized as a spectrum:

• agreement reached between the parties between themselves;
• agreement reached between the parties through the courts’ Parent Custody Education and Mediation programs;
• agreement reached between the parties with the assistance of counsel;
• obtaining a “Custody Neutral Assessment” which is an inexpensive but superficial custody evaluation offered by the Court system (talk to your attorney about whether not a CNA is right for you) and reaching an agreement based on the CNA;
• obtaining a private custody evaluation which is a more expensive but also a much more in-depth custody evaluation using a private custody expert and reaching an agreement based on the private custody evaluation;
• going to trial or arbitration, having the custody expert(s) testify and having a Judge or arbitrator make a decision.

Custody litigation to decide who will be “PPR” and who is “PAR” is time-consuming, expensive and emotionally difficult, especially for the children. Therefore, before you undertake this route, you need to discuss the pros and cons with your attorney.

Some attorneys and many private mediators have been promoting the idea that “PPR” and “PAR” designations aren’t necessary at all. They have no legal authority for this; they just believe that designating one parent as “PPR” is more trouble than it’s worth and that parents can always return to mediation if they cannot work out a major problem. This approach may be admirable in theory but it may wreak havoc in reality. For example, what if there is no time to attend mediation? If there is a medical emergency that requires decisive action and the parents disagree as to what course of action to take, there may be great harm to the child while the parents are arguing. This is not pure academics-we have seen it in our own practice. Even if there is more time available, such as a question of school enrollment or a disagreement over a non-emergent medical procedure, parents should not assume that the Courts will intervene on their behalf and make a decision for them. Instead, the Courts will take between four and six weeks to hear the initial application, then send the parties to Court-Ordered mediation at the Courthouse which may involve another two or three months, then the Court will generally take another four to six weeks to hear the matter again if mediation fails. In short, Courts don’t want to make these decisions for the parents, so if there is no “PPR” designation and the parents cannot reach agreement on a major decision, they may be in for a long wait and a big-time runaround.

During the divorce process, there are a great many financial issues that often need to be addressed including the need for a marital lifestyle analysis, the impact of investment income on support, Innocent Spouse Status, unreported income, the filing of joint or separate income tax returns while the parties are going through the divorce process, passive or active appreciation (or depreciation) of assets and many other financial issues. However, one of the most common financial issues that we see in divorce cases is the identification, valuation and distribution of ownership in a business. When the stock in a company is publicly traded, it is obviously easy to value. However, closely held businesses require a business valuation expert specially certified to do business valuations. The parties to a divorce can either select a single “joint” expert or they can each select an expert of their own choosing. Often, if a spouse has had no involvement in the business and therefore has no knowledge of its internal finances, that spouse will want to retain his or her own expert. Alternatively, when both spouses are sufficiently involved in the business, then a single joint expert is going to be less expensive and less time consuming. This choice will be made with the assistance of counsel. Even if the parties retain separate experts, the two experts will communicate during the valuation process and will attempt to agree on a value to which they can both stipulate after they have completed their investigation and analysis but before the reports are written. This approach both protects the uninvolved spouse and also saves the parties (1) time; (2) the stress of arguing over value; and (3) money for the cost to write the reports and for the attorneys to litigate value. Just as in all other types of litigation, the valuation process during a divorce begins with discovery. If the parties are sharing an expert, then that expert will simply obtain the documents from the business owner and begin the process. If the parties are retaining separate experts, then experts provide the respective attorneys with either a short list of the initial documents they will need in order to begin their analysis or a lengthy list of every conceivable document they might need to conduct the valuation. Often this decision depends upon the degree of cooperation they are expecting from the business-owning spouse based upon their discussions with their client. Cooperative business owners who provide the requested documents to the opposing party’s attorney save everyone time and money; uncooperative business owners who don’t provide the requested documents cause their spouse’s attorney to apply to the Court for an Order compelling their cooperation and usually end up paying the cost for those applications to the Court out of their own pocket and not from the marital estate. After the documents are obtained, whether voluntarily or by Court Order, the valuation expert will interview the business owner or owners to obtain information and they will conduct a site visit. Additional documents may be requested as the process unfolds and the valuator learns more about the business. Prior to writing the report, among other things, the valuator will do a historical financial analysis of the business. He or she will normalize income by making adjustments (for example add-backs for personal and non-recurring expenses), determine reasonable compensation and obtain industry data to compare the subject company to the industry, if possible. As part of the valuation process, the valuator will also select an approach to determining value: the asset or cost approach, the market approach, and the income approach. It is up to the valuator to decide which approach is the appropriate one in each case, depending upon the facts. The final report will explain each approach and then will explain why one approach was selected and the others were rejected. After the valuation is completed, if necessary, a lengthy report is written and provided to the attorneys. With their attorney’s assistance, the parties must then decide how to distribute the business asset. In New Jersey, case law strongly dissuades the Courts from ordering that the non-owning spouse retain stock in the company after a trial. However, if the divorcing parties wish to reach an agreement whereby the non-owning spouse retains stock, they can do so at their own peril. Usually, the parties agree upon a buy-out, which may be in a single lump sum or over time. If the buy-out takes place over time, it needs to be secured and usually includes interest at current rates.

Not all assets are subject to equitable distribution; some assets are either exempt or partially exempt from equitable distribution.

The New Jersey statute says that any property “real, personal or otherwise, legally and beneficially acquired by them or either of them during the marriage or civil union” is equitably distributable property acquired by way of a gift or inheritance which is never subject to equitable distribution no matter when they are received.

The only exception to this exception is gifts between the parties which ARE subject to equitable distribution. Note also that property which is subject to equitable distribution can be in the name of either party; it doesn’t matter in whose name it is titled.

One of the most important phrases in the statute is “during the marriage or civil union.” Generally, this means that the acquisition must take place between the date of the marriage or civil union and the date of the filing of the divorce or dissolution complaint ending the marriage or civil union. Thus, assets which are acquired before or after the marriage or civil union are not equitably distributable. It should be noted that assets clearly acquired “in contemplation of” a marriage or civil union such as the house in which the couple intend to reside is considered to be “during” the marriage or civil union.

If a party signed a valid Prenuptial, Pre-Cohabitation, Reconciliation or Mid-Marriage Agreement, any property which is identified in that Agreement as ineligible for equitable distribution will also be exempt.

Assets that are not eligible for equitable distribution are known as immune assets. The party claiming that an asset is immune from equitable distribution has the burden of proving that the asset is immune. However, even if a spouse has shown that an asset is immune under the statute, it may be only partially immune. There is still the question of whether or not that asset increased in value during the marriage or civil union and, if so, whether or not that increase in value is equitably distributable.

If the increase in value during the marriage or civil union can be tied in any way to the efforts of the non-owning spouse, then any increase in value is subject to equitable distribution. It is important to note that “the efforts of the non-owning spouse” encompasses many tangible and intangible things such as being primarily responsible for raising the children, providing emotional support and the like. Therefore, if an immune asset increases in value during the marriage or civil union, it is most likely that the increase in value during the marriage or civil union will be equitably distributable. Arguments are sometimes made that the non-owning spouse was nothing but a detriment, caused heartache and loss of time from work and generally interfered rather than promoted the ability of the owner spouse to increase the value of his or her immune asset. However, since almost all dissolutions involve some degree of accusations of a lack of support during the relationship, the success of these types of arguments are highly fact-dependent and they are difficult to sustain.

Sometimes, otherwise immune assets are “co-mingled” with joint assets, thereby rendering them subject to equitable distribution. This is most common when someone takes a pre-marital asset, an inheritance or a gift from a third party and deposits it into a joint account or uses it to purchase a joint asset such as a house. Generally, once an immune asset is co-mingled in this manner, it loses its exempt status and is equitably distributable. However, there are exceptions to this general rule.

New Jersey has several different types of alimony. Those types are: rehabilitative alimony, limited duration alimony, reimbursement alimony (very rare) and permanent alimony. If one of these types of alimony applies to your case, it is most commonly paid in periodic payments such as monthly or weekly. Very rarely, a spouse may make a single lump sum payment to buy out the alimony obligation, but don’t count on this happening in your case mainly because of the possibility that the dependent spouse will receive the lump sum buyout and promptly remarry.

There are other reasons, but that is the main reason for which payors don’t usually opt for the up-front-lump-sum buy-out option. If you absolutely want an up-front-lump-sum-buy out for alimony and you are the payee spouse, you may have to take a significant discount on the dollars owed to you for that privilege.

There are thirteen statutory factors that in theory determine alimony. Since the thirteenth factor is “any other factors which the court may deem relevant,” there are really an infinite number of factors that theoretically go into the alimony determination. Of these thirteen plus factors, however, from a practical point of view they can be boiled down to the following factors which really do drive the determination: (1) the actual needs (expenses) of the recipient spouse and the ability of the paying spouse to pay alimony; (2) the duration of the marriage or civil union; (3) the age and health of the parties; (4) the standard of living established during the marriage or civil union; (5) the length of any absence from the job market (6) the earning capacities and the employability of the parties; and (7) the parental responsibilities of each party during the marriage or civil union. The other factors may be taken into consideration, but the factors listed above are always considered.

Before you focus on these factors, consult with your attorney. These are just factors and they may be discounted or even ignored by the Court under the factual circumstances of some cases. There are reams of published cases regarding alimony that drive Courts in one direction or the other, so a simple recitation of the statutory factors will not answer the question in any one case.

If your case is an alimony case, sometimes the parties’ attorneys will retain vocational experts to impute income to one or both spouses. These experts are necessary to assist the Court in deciding the actual need of the recipient spouse and/or ability of the paying spouse to pay alimony. Similarly, if the parties cannot agree on the standard of living attained during the marriage or civil union, the parties’ attorneys may retain accountants to go through the parties’ charge cards, checking account and cash withdrawal records to reconstruct the marital standard of living.

Unlike equitable distribution, alimony can be modified based upon a party’s “substantial change in financial circumstances.” This has become an especially delicate issue during the recession.

The answer to this question, at least in New Jersey, is a resounding yes, if you have the right facts. In Russo v. Hoboken Board of Education, A-1861-10T4 (App. Div. November 29, 2011), the petitioner filed a claim petition on February 24, 2004. He alleged that pulmonary injuries caused by asbestos exposure principally between 1990 and June 30, 1993 caused his metastatic brain tumor and lung tumor which were diagnosed in 2000 and 2001. He filed his claim petition on February 23, 2004. (more…)

After a year in 2011 in which workers’ compensation rates actually declined for the first time in decades, the new rates in 2012 have renewed the steady ascent which commenced in 1980.

The Workers’ Compensation rates effective January 1, 2012 are: (more…)