A Recent Development in the Collection of Alimony and Child Support Arrears: Execution Against a Former Spouse’s Minority Interest in an LLC

New Jersey Courts have always had broad powers to enforce alimony and child support obligations. Unfortunately, when arrearages accrue over time, many such Orders cannot be enforced because there are insufficient assets and/or income to pay those arrearages. On the other hand, if any assets and/or income can be located, then the Courts will use whatever authority is available to them to collect the unpaid support. Taking this concept one step further, in the first published case of its kind in the State of New Jersey, an Ocean County trial court recently granted a former wife priority status to collect unpaid child support and alimony arrearages from a minority interest held by her former husband in a limited liability company (LLC).

In the Ocean County case, the parties were divorced in 2004 after twenty-one years of marriage. Under the parties’ Marital Settlement Agreement, the former husband agreed to pay the former wife alimony and child support. By 2012, he had accrued more than $110,000 in unpaid support. The former wife applied to the Court seeking a judgment against the former husband for the support arrearages. The former husband had no significant assets other than a ten percent interest in a company which owned a valuable piece of commercial real estate. The commercial property generated a substantial amount of rental income and was allegedly about to be sold. As a result, the former wife not only asked the Court for a judgment representing the support arrearages but she also asked to be issued a writ of execution that would allow her to intercept the former husband’s receipt of income and/or sale proceeds in the event that the property was sold. Citing both general creditor-debtor and family law statutes and Court Rules, the Court granted the former wife’s request for a writ of execution to the extent of her former husband’s ten percent interest in the LLC. In its decision, the Court emphasized that the writ of execution would place the former wife before other creditors of the former husband by giving her priority status. This, in turn, was justified by the public policy of the State of New Jersey to enforce support orders.

In summary, by giving the former wife priority status, this case re-emphasized the rights of those who are owed support and by affirming the former wife’s right to execute against a mere ten percent interest in the LLC, it broadened the field of potential sources from which a former spouse who is owed support can collect arrearages.

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