New York Family Law and Divorce

New York’s Chief Judge, Judith Kay has turned 70 which is the mandatory retirement age. Last month, she gave her farewell speech, as reported in the New York Times.During her tenure, she has campaigned for massive reorganization of New York’s fractured court system. Various proposals such as merging Family Court with Supreme Court, abolishing the Surrogate’s Court, and raising the number of Supreme Court Justices were part of her noble agenda. Unfortunately, her plans for greatly simplifying our unnecessarily complex court system fell victim to various opposing forces, and only incremental changes were made.

However, last summer she helped launch a new court, the foreclosure court, as reported in this Wall Street Journal article.

Judge Kaye has also been leading the push for higher judicial pay.

Judge Kaye was appointed to Chief Judge in 1993, following the Sol Wachtler scandle.

Graev v. Graev is one of those cases where once standard language is turned on its head by the courts, creating a sea of uncertainty it what was assumed to be a fairly straightforward provision of most divorce agreements.

In order to understand Graev, some background is necessary.

Spousal maintenance may be set either by the court or by agreement. Domestic Relations Law Section 248 gives the default conditions on which maintenance may be terminated. DRL 248 provides as follows:

§ 248. Modification of judgment or order in action for divorce or annulment. Where an action for divorce or for annulment or for a declaration of the nullity of a void marriage is brought by a husband or wife, and a final judgment of divorce or a final judgment annulling the marriage or declaring its nullity has been rendered, the court, by order upon the application of the husband on notice, and on proof of the marriage of the wife after such final judgment, must modify such final judgment and any orders made with respect thereto by annulling the provisions of such final judgment or orders, or of both, directing payments of money for the support of the wife. The court in its discretion upon application of the husband on notice, upon proof that the wife is habitually living with another man and holding herself out as his wife, although not married to such man, may modify such final judgment and any orders made with respect thereto by annulling the provisions of such final judgment or orders or of both, directing payment of money for the support of such wife.

The bold text is added.

Thus, if a wife who is receiving maintenance lives with her boyfriend, there shall be no termination of maintenance unless is “holding herself out as his wife.”

Ignoring the gender wording of this statute, which is a holdover from a bygone era, parties are free to stipulate to a different set of conditions under which maintenance will be terminated. One of the most common agreed upon conditions is to provide that maintenance will terminate when the wife cohabitates with an unrelated male or adult. The intent here of course, was to provide for a termination event when the former wife does not marry her live in significant other.

With this background in place, Graev v. Graev can be understood.

The facts in Graev are simple. When the Graevs divorced, their settlement agreement provided that Mrs. Graev’s maintenance would terminate upon her “cohabitation of the Wife with an unrelated adult for a period of sixty (60) substantially consecutive days.” The agreement was silent, as are most agreements, as to the definition of “cohabitation.”

Following the divorce, Mrs. Graev lived with an unrelated adult male, and Mr. Graev stopped paying maintenance. Mrs. Graev filed a motion to enforce the agreement, and Mr. Graev filed a cross motion to terminate his maintenance.

Following a hearing, the Supreme Court found in favor of Mrs. Graevs, holding that “an essential element of cohabitation is a shared residence with shared household expenses” and that Mrs. Graev did not function as an economic unit with her new boyfriend.

Mr. Graev appealed, and the Appellate Division affirmed in favor of Mrs. Graevs, holding the word “cohabitation” meant more than a romantic relationship, and required a sharing of finances or an economic relationship. In affirming, the Appellate Division found that Mrs. Graev and her boyfriend living together for sixty days in 2004, and were romantically involved in 2003 did not constitute “cohabitation.”

Mr. Graev appealed to the Court of Appeals, which reversed, holding the term “cohabitation” does not have a plain meaning, and that extrinsic evidence of the parties’ intent was necessary to determine what they meant in their stipulation of settlement. Therefore, the reversal required the case to be sent back to the Supreme Court for a hearing to determine what the parties meant by cohabitation.

In closing, Footnote 4 of the main opinion notes that

The wisest rule, of course, is for parties in the future to make their intention clear by more careful drafting.

The result now will be a new section in divorce agreements which define the term cohabitation in greater detail.

Continued from Part 1

The next step in distributing marital property under DRL 236 B(5) is to identify all property held by both spouses, both marital and separate. Parties are required to complete a sworn statement of net worth. The statement of net worth has a duel purpose; it allows honest parties to fully disclose all assets held. It also locks each party into what they claim is owned. Should undisclosed assets later be discovered, penalties can range from slight to severe, depending on the nature of the asset and why it was not disclosed.

The most common assets include the following:

• Cash
• Checking and Savings Accounts
• Brokerage Accounts
• Stocks
• Bonds
• Retirement Accounts
• Pensions (vested and non vested)
• Real Estate
• Contingent Interests
• Loans due to the party
• Automobiles
• Jewelry
• Business interest

In addition to these obvious tangible assets, there is an additional asset which is unique to New York divorces; a professional license is considered an asset in addition to a professional practice. See O’Brien v. O’Brien. This “asset” is arrived at by calculating the estimated future earning capacity of the person with the license and subtracting the earning capacity had they not obtained the license. The difference is then reduced to a present dollar amount. How that is calculated will be discussed in a later part in this series.

Since the 1985 holding of O’Brien, the concept of converting future earning potential into a marital asset has been greatly expanded.

The fairness of O’Brien has been questioned quite extensively, and I am among those who think it is an absurd ruling except in very limited circumstances. Thus far, efforts to have the State Legislature overturn O’Brien have failed.

Community Property contrasted with Equitable Distribution

There are two main concepts to marital property, community property and equitable distribution.

Community Property

There are nine community property states - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Under the doctrine of community property, each spouse has a vested interest in all marital property regardless of title. Marital property remains jointly held until the marriage is terminated by divorce, or upon death of either party. This interest can be asserted during the marriage, after a marriage, in conjunction with a divorce or annulment, or as a claim against an estate.

Contrary to common belief, community property does not mean that the marital property is divided 50-50. States are free to determine how marital property is disposed of in a divorce. Texas will divide community property on an equitable basis, while California presumes that all community property will be divided equally.

Equitable Distribution

Most states, including as New York, use equitable distribution to divide marital property. Under equitable distribution, there is no enforceable right or vested interest in marital property outside of an action to dissolve the marriage. That means that absent a divorce or an annulment, the court is powerless to distribute any marital asset. If a divorce is denied due to a lack of grounds, there can be no equitable distribution. Likewise, there can be no equitable distribution under an action for a judicial separation (DRL 200) since the status of the marriage is not changed.

New York courts will be constrained by this concept when dealing with equitable distribution. For example, in Meier v. Meier, the trial court granted the divorce and divided the marital property. However, on appeal, the Appellate Division reversed the granting of the divorce. Therefore, the marital property was not subject to equitable distribution. The court held

Equitable distribution of the parties’ marital property, unlike maintenance, custody and child support, is only available in actions where the marital relationship is terminated by divorce, dissolution, annulment or the declaration of the nullity of a void marriage, or in a proceeding to obtain a distribution of marital property following a foreign divorce judgment (Domestic Relations Law § 236 [B] [5] [a]; [6] [a]; § 240 [1].

In Adamo v Adamo, the Appellate Division denied a request to sell marital property in a pendente lite motion, as absent some alteration of the marital relationship, the court lacks the authority to direct the sale of any marital asset.

What does this mean in a New York divorce? New York is the only state which does not have true no fault divorce. Contesting grounds can do more than “preserve a marriage,” it can divest the court of the authority to equitably distribute the marital property. Therefore, in conjunction with equitable distribution, grounds can be a significant tactical consideration in a divorce.

The effect of a divorce or annulment has been greatly expanded under an amendment to EPTL 5-1.4.Prior to the amendment, the dissolution of a marriage would only affect a disposition left in a will. Assets left in trust for the former spouse (”Totten Trusts”), life insurance where the spouse was a beneficiary, or even a power of attorney were not affected by a divorce. It was necessary for a former spouse to amend each of these instruments individually. The failure to do so would leave the former spouse as the beneficiary.

Under the new EPTL 5-1.4, a divorce or annulment automatically revokes these dispositions. Thus, if a spouse who forgets to amend his or her will following a divorce, the former spouse will no longer benefit from this oversight. Of course, it is still recommended to update a will after a divorce and to remove a spouses name off of any jointly held asset. But the new EPTL 5-1.4 will help protect individuals who forget to take these steps.

The difference between a divorce and an annulment seems pretty straightforward; a divorce terminates a marriage as of the date of the judgment of divorce, while an annulment treats the marriage as if it never occurred. However, when an annulment is granted, the court may still distribute the marital property under Domestic Relations Law 236B(5), children born during an annulled marriage are presumed to be legitimate, counsel fees may be awarded under DRL 237, and spousal maintenance under DRL 236(B)(6) may be granted.

The latter is exactly what happened in LeMieux v. LeMieux. In LeMieux, the plaintiff husband commenced an action to annul the marriage based on fraud, and won at trial. The Supreme Court then awarded the defendant wife maintenance at $300 per week until the age of 66, death, remarriage, or cohabitation. The plaintiff husband appealed.

The Appellate Division affirmed the Supreme Court’s award of maintenance, finding the court had the authority to make such an award under DRL 236(B)(2), which provides:

2. Matrimonial actions.
Except as provided in subdivision five of this part, the provisions of this part shall be applicable to actions for an annulment or dissolution of a marriage, for a divorce, for a separation, for a declaration of the nullity of a void marriage, for a declaration of the validity or nullity of a foreign judgment of divorce, for a declaration of the validity or nullity of a marriage, and to proceedings to obtain maintenance or a distribution of marital property following a foreign judgment of divorce, commenced on and after the effective date of this part. Any application which seeks a modification of a judgment, order or decree made in an action commenced prior to the effective date of this part shall be heard and determined in accordance with the provisions of part A of this section.

The lesson here is that no rights are lost or gained by filing an annulment as opposed to an action for a divorce.

A friend sent me this link to an article in the Orlando Sentinel. A judge in Florida took a very creative approach to a divorcing couple who apparently were bickered over everything.

A feuding couple couldn’t agree how to divide their belongings. So Evans gave the wife the rifles, hunting dog, boat and truck. He gave the husband the armoire, china, quilt collection and silverware.

The rest of the article contains some very practical anecdotes, it’s a good read.