Equitable Distribution and Inheritance

Daphne Speck-Bartynski v. Robert Bartynski - A Discussion

[Unpublished Decision of the Appellate Division - Decided September 25, 2009]

The facts in brief: After twenty-two years of marriage and raising two adult children, the parties divorced on July 23, 2008. At the time of the divorce, the husband earned $115,000 per year and the wife was a full-time homemaker.

The parties entered into a settlement agreement, providing for permanent alimony in the amount of slightly more than $30,000 per year. The parties also agreed to the majority of equitable distribution, including valuations on property, custody, parenting time, and child support. Only one issue with regard to equitable distribution remained.

In 1998, the husband received an inheritance, the majority of which was commingled with marital funds. It was used to purchase investment accounts and the parties' summer home. After the complaint for divorce was filed, the wife used a portion of the funds to purchase her post-marital home, an "advance" on equitable distribution according to the settlement agreement. In addition, a portion was lent to the wife's brother, some deposited in a bank account, and $120,000 was used by the wife to pay down the mortgage on the marital home.

The payment of the mortgage spurred the husband to curtail the wife's access to the funds by requiring two signatures on all large withdrawals. He sought to preserve the funds for the parties' children and grandchildren.

The issue before the trial court was the percentage of property allocated to each of the parties. Following a hearing, the court ruled that the fair market value of the summer home, the money used to pay off the marital home mortgage, and the balance of the loan owed by the wife's brother were to be divided equally.

The other assets purchased with the inheritance funds, the two investment accounts, the bank account, and the fair market value of the wife's post-marital home, would be divided with 2/3 going to the husband and 1/3 going to the wife. It is from this portion of the court's decision that the wife appealed.

The issues: Should the assets purchased with the commingled inheritance funds have been divided equally?

The court's holding: The Appellate Division affirmed the trial court's decision.

The general rule is that an inheritance is not subject to equitable distribution. Had the husband kept these funds separate from marital funds, they would have been his alone at the time of divorce. However, because the funds were commingled with marital monies, they do become subject to equitable distribution. That said, the trial court is permitted to allocate some weighted amount of distribution, as it did here.

The trial court has broad discretion regarding the division of marital assets, and its determination cannot be touched by an appellate court as long as the trial court could have reasonably reached its result from the evidence presented. The appellate courts cannot disturb the division just because it is unequal, unless a legal or factual mistake has been made. It is the moving party, in this case the wife, who bears the burden of proving an abuse of discretion.

In this case, the trial judge considered all of the necessary statutory elements with regard to equitable distribution, as well as the evidence, and could have reasonably placed significance on the husband's much larger contribution to marital assets through inheritance, as well as his intention to limit the wife's use of those assets as demonstrated by the change to the signature requirement. There was nothing permitting the Appellate Division to interfere.

The end result: The distribution of assets remained as the trial judge had directed.

What does all of this mean to you? While an inheritance belongs solely to the heir for purposes of equitable distribution, if funds are commingled, they can be distributed between the parties. However, the non-heir party cannot necessarily expect that he or she will receive a full 50% of a commingled inheritance.

Equitable Distribution and Child Support

Nancy M. Hreha-Coloccia v. Leonard Coloccia - A Discussion

[Unpublished Decision of the Appellate Division - Decided September 2, 2009]

The facts in brief: After twenty years of marriage, the parties were divorced on March 3, 2008. Two daughters were born of the marriage, aged 18 and 20 as of the date of the Appellate Division's opinion.

Before the parties were married, the husband owned a house in Clifton, that he bought while the parties were dating. He put down a deposit of $60,000 to $80,000, with no financial contribution from the wife. The parties lived in that house from their marriage in October of 1987, until 1999, when they sold the house to purchase a home for $206,000 in Branchville, NJ.

Shortly after the parties were married, the wife discovered that the husband owed $10,000 to the IRS. She paid part of this debt from settlement proceeds from a car accident. Later, in 2003, the husband failed to report a withdrawal from his IRA on his tax returns, causing another tax liability, which was then paid from joint funds. In 2005 and 2006, the wife filed separate income tax returns; the husband did not file tax returns.

At some point during the marriage, a TV satellite company damaged the roof of the marital home, resulting in a $3,800 settlement to the parties. When the husband's support obligation had not yet commenced, the wife used $200 of those funds to make other repairs to the house and the balance to pay the mortgage, taxes, and shelter expenses for herself and the parties' daughters in September of 2005.

From August 2007 to February 2008, the older daughter lived with the husband.

After trial, the judge required both parties to file joint state and federal income tax returns for the years 2005 - 2007. In addition, he set the husband's child support arrears at $3,793.67, but gave the husband credit of $910 for the months when the older daughter resided with him, $1,800 for his 50% interest in the settlement with the TV satellite company, and $1,000 for the husband's 50% interest in two joint bank accounts, reducing the amount of arrears to $83.67.

The issues: Was the judge's ruling with respect to equitable distribution of the marital home, awarding her 45% of the equity, plain error? Did the judge improperly reduce the child support arrears due from the husband pursuant to a pendente lite order? Could the court compel the parties to file joint tax returns for 2007 and amended joint tax returns for 2005 and 2006, or was this plain error?

The court's holding: Affirmed in part and reversed in part.

The judge's ruling with regard to the equitable distribution of the marital home should not be disturbed. The standard of plain error requires that the trial judge's decision remain undisturbed if there is sufficient credible evidence on the record to support it. Property allocation, specifically, is reviewed under an abuse of discretion standard, requiring a finding that the decision was made without rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.

Here, because the husband used substantial premarital assets to purchase the Clifton home, and the proceeds from the sale of the Clifton home were used to purchase the Branchville home, although it was nine years before the parties were divorced, it was reasonable for the trial court to award her a smaller portion of the equity in the home than the husband, where she made no financial contribution to the purchase of the Clifton home.

The judge partially improperly reduced the husband's obligation for child support arrears. Because the New Jersey statutes prohibit the retroactive modification of child support obligations, the $910 credit for the period of time the parties' older daughter lived with the father was impermissible. The other two credits were permissible as payments from the husband's assets toward his child support obligation.

It was plain error for the court to order the filing of joint tax returns, in light of the husband's history of underestimating his income to the IRS, and the fact that the wife had already filed tax returns for those years, it would be unfair to force the wife to risk exposure to another tax liability because of the husband's failure to file and pay.

The end result: The wife received 45% of the equity in the marital home as equitable distribution of that asset. The husband's child support arrears obligation was adjusted to $993.67. The wife was permitted to file her own separate 2007 tax return and to refrain from filing amended joint tax returns for 2005 and 2006.

What does all of this mean to you? If you contribute the entirety, or possibly even large majority, of the funds to purchase the marital home, it is likely that you can and will receive a partial credit for those funds during equitable distribution.

If you are obligated to pay child support, but the custody arrangement alters and your child or children reside, even temporarily, primarily with you, you should file an application in court to amend the child support order. Should you wait, the child support obligation cannot be amended retroactively, and you will still be obligated to pay the full amount of support despite the change in residence.

Although the court will often order parties to file joint tax returns to maximize their potential refund or minimize their potential tax liability, the court will not force you to risk a greater liability due to the wrongdoing of your spouse, if proof exists.