New York Divorce Lawyers Explain Family and Matrimonial Law

Splitting the House – When The House is Bought Before Marriage

The biggest question in divorce, after children, involves the house. Who gets the house and how is it divided? First, as I stated elsewhere on this site, the name on the deed is irrelevant to the question of who gets the house. If the house was acquired during marriage, with marital funds, it is a marital asset. If the house was acquired before marriage, it is a separate asset. But, the lines can blur.

Judicial Hearing Officer (these are retired judges) Stanley Gartenstein recently faced one such situation. He published his decision on March 27, 2009 in the Law Journal, in Li v. Li. Husband acquired the house before the marriage. Clearly, then the house was separate property. However, during the course of the marriage, he executed a new deed conveying a half interest to the wife. The question JHO Gartenstein was tasked in determining was the wife’s interest and value in the house. First, he found that the conveyance converted the separate property into marital property. Next, he found that the husband was entitled to “a dollar for dollar credit for his separate property contributions.” Since the property was $375,000 at the date of conveyance and worth $500, 000 on the date of trial, the husband was provided with $375,000 of credit, leaving $125,000 as marital property.

The next question is want happens when the house is not conveyed to the other spouse. Let’s assume the house was bought for $80,000. Over the course of the marriage, the house increases in value to $160,000. Is the increase separate or marital property?

The big case on this point is Price v. Price 68 NY2d 8 (1986). The Court Of Appeals held that increased value of separate property can be marital property:

The Equitable Distribution Law broadly defines the term marital property, very narrowly defines “separate” property (see, Domestic Relations Law § 236 [B] [1] [d]; Majauskas v Majauskas, 61 NY2d 481, 489) and seeks to achieve the fairest result for both parties upon dissolution of the marriage (see, O’Brien v O’Brien, 66 NY2d 576, 584-585). In the seminal case of O’Brien v O’Brien (id.), this Court held that a medical license acquired during the marriage was marital property under Domestic Relations Law § 236 (B) (1) (c) subject to equitable distribution under section 236 (B) (5). In Price v Price (69 NY2d 8)), we held that where separate property appreciated during the marriage, in part due to the efforts and contributions of the nontitled spouse, the amount of the appreciation was marital property subject to equitable distribution. It follows that where the nontitled spouse has contributed to the appreciation of the titled spouse’s interest in a partnership, even though the spouse was already a partner at the time of the marriage, the appreciation constitutes marital property subject to equitable distribution.”

While this case would seem to say that any increase value would be marital property, the court later took a stricter view. The court said that if the appreciate value is not marital if it was the result of “pure market forces.” Burns v. Burns 84 N.Y.2d 369, 374 (N.Y. 1994).

With respect to the condominium, defendant contends that Supreme Court abused its discretion in not equitably distributing the appreciated value as marital property. We do not agree. The condominium, having been purchased by plaintiff prior to the marriage, was clearly separate property (see Domestic Relations Law § 236 [B] [1] [d] [1]) and, therefore, any increase in value remains separate property “except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236 [B] [1] [d] [3]; see Hartog v Hartog, 85 NY2d 36, 45-46, 647 N.E.2d 749, 623 N.Y.S.2d 537 [1995]; Price v Price, 69 NY2d 8, 15, 503 N.E.2d 684, 511 N.Y.S.2d 219 [1986]). Defendant, as the nontitled spouse claiming such interest, bore the burden of establishing that the increased value was due in part to his efforts as opposed to market forces or other unrelated factors (see Golub v Ganz, 22 AD3d 919, 922-923, 802 N.Y.S.2d 526 [2005]; Lawson v Lawson, 288 AD2d 795, 796, 732 N.Y.S.2d 753 [2001]; Burgio v Burgio, 278 AD2d 767, 769, 717 N.Y.S.2d 769 [2000]).

Turning to the proof, defendant testified regarding the general maintenance that the parties performed at the condominium, which included painting, caulking, arranging for carpet installation and replacement of appliances, and also his dealings with the Boston Housing Authority in regard to tenant matters. We have also considered that it is undisputed that no renovations or structural changes to the condominium were made during the course of the marriage. Notably, plaintiff’s testimony established that property values have increased dramatically as a result of revitalization of the neighborhood due in large part to the recent construction of luxury condominiums across the street from the condominium. Under all the circumstances, we cannot say that Supreme Court abused its discretion in finding that the increase in value resulted from market forces.

The Appellate Division, Third Department addressed the issue of renovations, and improvements to the property in Bonanno v. Bonanno, 2008 NY Slip Op 10084, 2 (N.Y. App. Div. 3d Dep’t 2008)

Under the Domestic Relations Law, there are two categories of property: marital property and separate property. Upon divorce, marital property is subject to equitable distribution and separate property is not (Domestic Relations Law § 236[B][1][c],[d]). The statute defines marital property broadly as “all property acquired by either or both spouses during the marriage” (Domestic Relations Law § 236[B][1][c]). The income of both spouses throughout the marriage is considered part of the marital estate and is utilized to calculate an equitable distributive award (Domestic Relations Law § 236[B][5][d][1]). By contrast, separate property, which is not subject to equitable distribution, is explicitly defined as property excepted from the marital estate. It is “property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse” (Domestic Relations Law § 236[B][1][d][1]). Separate property also includes “property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236[B][1][d][3]). The concept of separate property is interpreted narrowly (see Hartog v Hartog, 85 NY2d 36, 48, 647 N.E.2d 749, 623 N.Y.S.2d 537 [1995]), and there is a presumption that property is marital until one of the parties proves otherwise (LeRoy v LeRoy, 274 AD2d 362, 712 N.Y.S.2d 33 [2000]).

The court took testimony from a number of witnesses and considered the valuations of the parties’ experts. It then made a detailed itemization of the parties’ property and a detailed distributive award. The court properly considered the factors set forth in Domestic Relations Law § 236(B)(5)(d), including the parties’ respective contributions to the family economic enterprise (see Price, 69 NY2d at 14-15; O’Brien v O’Brien, 66 NY2d 576, 587, 489 N.E.2d 712, 498 N.Y.S.2d 743 [1985]).

The court determined that on the date of marriage, the value of the Claverack main house and land was $ 556,000 and the tenant house was worth $ 357,000. The husband was properly credited these amounts as separate property. The court then determined that on the date of trial the main house and property were worth $ 1,985,000 and the tenant house $ 516,000. These values were based upon the court’s acceptance of the wife’s expert’s appraisals. This was proper given the record evidence that the wife’s expert was far more experienced in making the type of appraisals necessary here. Further, the wife’s expert’s report was full and accurate, while husband’s expert’s report was replete with errors and omissions (see Cash-Scher v Scher, 299 AD2d 193, 193, 748 N.Y.S.2d 868 [2002]; Charland v Charland, 267 AD2d 698, 700-701, 700 N.Y.S.2d 254 [1999]).

The court appropriately held that extensive renovations accounted for the vast increase in value and that all improvements were 100% marital. Evidence in the record reveals that the Claverack property, as renovated, bears little resemblance to the former modest country house possessed by the husband when he entered into the marriage. Virtually all of the structures on the land, and the property itself, have been transformed. In awarding the wife half of the property’s appreciated value, the court considered both the wife’s work implementing the renovations as well as the fact that the improvements were paid for with marital funds (see Price, 69 NY2d at 11 [where separate property appreciates "due in part" to efforts of non-titled spouse as parent and homemaker, amount of appreciation is marital property subject to equitable distribution]). The Court of Appeals in Price held that where the non-monied spouse contributes to the appreciation of the separate property of his or her spouse (through either direct efforts, or by taking care of domestic responsibilities while renovation is in process), he or she is entitled to an equitable share of the value of the appreciation.

The Domestic Relations Law considers spouses as participants in a family economic enterprise. Here, both spouses spent a large amount of time and money refurbishing the country house in Claverack. The wife spent many weekends and vacations with her husband and son in Claverack, and she contributed to the renovation of the property.

However, the court’s award to the wife of 50% of the appreciation of the Claverack property was disproportionate (see Ritz v Ritz, 21 AD3d 267, 799 N.Y.S.2d 501 [2005]). Market forces over the approximately 11 years of marriage accounted for some of the property’s increased value. The wife was not entitled to a credit for any portion of this “passive” appreciation. Thus, a 75%/25% division of the appreciation of Claverack is a more equitable apportionment in the circumstances.

The rule appears that if the appreciation was purely from market forces, then the appreciation is separate property. If the appreciation was the result of some investment, money and/or sweat, then it might be marital.

College Tuition

Here’s a quick one: There is no legal obligation to pay college tuition.

This simple statement often upsets one set of parents and makes another set happy. However, under the Child Support Standards Act, there is no requirement that a parent pay college tuition.

The only way to secure tuition is to place the obligation into the divorce agreement. Many times we use what is called the “SUNY CAP.” The SUNY cap is an obligation to pay tuition up to the level of a specified SUNY school. Being based on Long Island, I base it on SUNY Stony Brook, which is about$5,000 a year. Some agreements use the clause “the parents will contribute to college education.” This clause can lead to further disputes down the road. For example, what if the child is accepted to NYU, which is about $37,000 a year? Must Dad shell out $18,500 per year? Good drafting can save future trouble. If you cannot agree on a SUNY Cap, it is perhaps wise to have some other limiting factor.

Child Support -When Each Parent Has a Child

A question which tends to come up is: how does child support work when each parent has one of the children?

Logic would dictate that neither parent pays child support to the other. However, that is not always the case. What actually happens is that the child support responsibility is calculated on both sides, and then we see if the numbers balance.

Let’s look at a couple of examples to see how this actually works.

Example #1: 2 Children. Mom and Dad each take one, and both parents earn $50,000 a year. The child support obligation is not 25 percent, but 17 % for each parent to each child. So, Dad’s obligation to Mom is $8,500 and Mom’s obligation to Dad is $8,500. The numbers balance. No money chances hands.

Exampe #2: 2 Children. Mom and Dad each take one, but Dad makes $75,000 and Mom makes $50,000. Dad’s obligation is $12,750 to Mom and Mom’s is $8,750 to Dad. Dad should pay $4,000 back to Mom. Now, Dad’s lawyer can try to claim that since Dad has custody of one child, he should get a credit. There is support for that position. But, I’ve seen courts not give credit as well.

Frequently, in agreements where the children are split, the parties agree that no money should change hands. However, the court will not accept such an agreement unless the numbers balance. I had a case where Dad was getting two children and Mom was getting one. Mom made more money than Dad. In order to arrange a “no-pay” deal, we worked out a series of “add-ons”. Basically, we said that Mom is paying additional out-of-pocket costs relating to child care, and that should result in no money changing hands.

There was a recent Family Court decision where this issue came up. In a decision published on March 30, 2009 in the Law Journal, Family Court Judge Hanuszcak, Onondaga County, denied a Father’s request for support. Mother originally had both boys. Custody of the youngest was changed to the Father. Mother made $164,000 a year, and due to the economic downturn, Father was only making $32,000 down from $95,000. The court denied his motion to compute child support for an amount below $32,000. The court further denied his motion for child support from the mother.  The monthly child support on $165,000 should have been $2323.23 a month. With Father’s child support obligation of $453.33, the offset would have been $1869.90. However, the court stated that because the Mother (1) purchased a car for the child; (2) paid for the gas; (3) paid for the auto insurance (4) paid for the child’s cell phone; and (5) provided medical coverage, the Father was not entitled to child support.

The Child’s Lawyer – The Role of the Law Guardian

The role of the child’s lawyer, also known as the law guardian is very confusing, not only to parents, but the judges, lawyers and even to the law guardians. Recently, the role has been somewhat clarified by the passage of a new code of conduct for New York lawyers.

Under New York law, the judges in Supreme Court and Family Court can appoint a lawyer for children in child custody cases, or cases involving the safety of the child. The law guardian or lawyer for the children (the terms are interchangable, however, “lawyer for the child” is now preferred), is, quite simply the children’s lawyer. Where each parent has a lawyer to represent them, the court insures that the child also has a lawyer. This reason is that children’s interest may be different from that of one or both of the parents.

The classic example is the custody fight. Both parents want custody, and therefore it is clear that their interests are opposite. The next question is what is the interest of the child? Is it better for the child to be with the mother or the father? This is where the lawyer for the child steps in. S/he represents the child’s interest. No longer is it a two sided conflict, but a three sided one.

Lawyers for the child are also involved in orders of protection, neglect proceedings and matters involving foster care. In all instants, the lawyer for the child acts for the child’s interests.

The confusion about the law guardian’s role is whether she acts on behalf of the child or upon her belief as the best interests of the child. For example, what should the law guardian do if the child wants to live with the father, but the law guardian thinks that the mother is the best parent? Should she work to get custody for the father or the mother?

Should the law guardian blindly follow the dictates of the child client, regardless of age? If an abused 8 year old wants to return to the abuser, does the law guardian fight to enforce her client’s wishes, or fight to protect the child from an unwise decision?

The rule of thumb is that child up until age 12 have not real say in the matter. Child from 12 to 14 are listened to, and child 15 and over get their way. This is not written in any law or embodied in any judicial decision, but my perceptions of the situation.

But, as there is no law on the point, there is confusion on how the law guardian act. Hopefully, this will be answered on April 1, 2009, when the new rules of Attorney Professional Responsibility take effect. The rule which applies to this situation is 1.14 which says:

Client with diminished capacity

   (a) When a client’s capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a conventional relationship with the client.
 
(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client’s own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.
 
(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client’s interests.

Under the new rule the law guardian can act contrary to the wishes of the child, if it appears that the child’s decision is harmful. So, of the child wants to live with the father, the law guardian can advocate to the court that the child should live with the mother.

Parental Alienation

Parental alienation is a big and important area of child custody cases. While many non-custodial many believe that parental alienation is occuring the question is what can be done about. Under the New York Domestic Relations Law, parental alienation can result in the reduction of child support, but more importantly it can result in the change of custody.

The New York Appellate courts have come to realize that parental alienation is harmful to the child, and therefore could warrant a change of custody. The First Department, in Osbourne v. Regina S., 55 AD3d 465 found that “the mother’s negative attitude and hostility toward the father, as evidenced by her maligning of the father in the child’s presence, the filing of unsubstantiated reports of abuse and neglect against him, and encouraging the child to lie to support her false claims, failed to demonstrate a willingness or ability on her part to facilitate and encourage a close and optimum relationship between the child and his father.” As a result the court changed custody from the mother to the father.

The key to the decision is the understanding that parental alienation is not in the best interests of the child. In the case of Zeis v. Slater, 57 AD3d 793, the Second Department specifically stated that parental alienation is not in the child’s best interests. The court agreed with the Family Court that the mother should lose custody. The court found that the “mother deliberately interfered with the father’s visitation rights, and moreover, denigrated the father in the child’s presence. This conduct is so inconsistent with the child’s best interests that it per se raises a strong probability that the mother is unfit to act as a custodial parent.”

In fact, the courts are so concerned with parental alienation that not only may a custodial parent lose custody, but may also lose unsupervised visitation. In Stewart v. Stewart, 56 AD3d 1218, the court found that as a result of the parental alienation, that supervised visitation was in the child’s best interest.

The point for the custodial parent is to avoid at all costs saying anything that is derogatory about the non-custodial parent to the children. The point for the non-custodial parent is that you can fight back against parental alienation.

Privacy and Computers In a Divorce

There was a recent decision reported in the New York Law Journal, August 8, 2008 that shows how computers, used unwisely, can damage your position in a divorce. Justice Evans, in New York county, ruled that information found by the wife on the husband’s computer could be used in the trial.

The lap top computer, found in the trunk of the family car, contained “hundreds and hundreds of pages of really salacious conversations” between the husband and his girlfriend.

The court found that since the lap top did not have any passwords and the files were not encrypted, it was similar to an open file cabinet. Therefore, the husband had no claim to privacy in his computer files.

The lesson is clear for both parties in a divorce. First, don’t hide information on a computer. Second, if you really want to leave damning information on your computer, such as emails, instant messages, your internet browsing history or financial information, use a password to access the computer, and encrypt your files.

The Common Law Marriage Trap and 50 Cent

Hip hop star 50 Cent recently was the victim of a judicial drive-by shooting. 50 Cent has been engaged in a high profile family court action in Suffolk County, New York with his former live-in girlfriend and mother of his child.

He began a proceeding to evict her from their Dix Hills home. She then started an action in New York Supreme Court to stop the eviction. Her claim, removing all the legalese, was that they had a common law marriage.

Her attorney is a clever fellow and never actually uses the word “common law marriage” and neither did the judge, but the reality of what the judge did is clear. And if I were a betting man, I would be betting that the appellate court is going to reverse her.

Starting from the beginning, New York has abolished common law marriage. If you are not legally married, you cannot receive the protections afforded to a spouse. If a husband buys a house, the wife is automatically a co-owner regardless of whose name is on the deed. However, if a boyfriend buys a house, unless the girlfriend’s name is on the deed, she has no right to the property.

Turning to 50 Cent’s case, he bought the house in Dix Hills. The girlfriend’s name is not on the deed and she did not contribute money toward the purchase. She should have been out of luck.

But her lawyer devised a clever legal argument and swayed the court with a story of her dutiful sacrifices for 50 Cent. So, the judge accepted the attorney’s novel theories and ordered that the girlfriend can remain in the house.

The girlfriend, Shaniqua Tompkins, argued that she had a contract with 50 Cent, wherein he agreed to take care of her and to share equally in his successes. In return, Tompkins agreed to keep his home and perform other home making services for him.

The court noted that, under New York law, an oral contract that cannot be completed in a year is void. For example, an oral contract to employ someone for six months is valid. On the other hand, an oral contract to employ a particular person as long as he is alive cannot be completed in a year and is void.

After noting this law, the court then ignores it.

The court next notes the law that ”cohabitation without marriage does not give to the property and financial rights which normally attend marital relations…”

The court then noted that an agreement which is not for ”marital” type services is enforceable. However, the rule envisioned a boyfriend having the girlfriend work in his business. Turning the rule on its head, the court found that Tompkins’ housekeeping was not a ‘marital’ function but unconnected to the romantic relationship. Therefore, the judge found a contract between 50 Cent and Tompkins.

What the court did was implicitly find a common law marriage. A promise to provide support in exchange for keeping house cannot be viewed by any stretch of the imagination as anything but a ‘marital relationship.’

Next the court went on to establish a constructive trust. A constructive trust is used when someone in a legal position of trust, known as a fiduciary, causes a person to improperly transfer property. For example, X owns a piece of
property. Y, his attorney, convinces X to transfer the property to him at no cost, but on a promise that the transfer will benefit X. Once Y gets the title, he turns X out of the property. Here the court admitted that Tompkins never owned the property and never paid any money toward it. Instead, the court found that she had transferred her effort in housekeeping and therefore the court found that a constructive trust could exist for the Dix Hills house.

Again, this type of reasoning violates the law against common law marriages. If a paramour can claim an ownership interest in a house by living it in, the common law marriage can be recognized.

Whether 50 Cent will appeal it or not is up to him. I believe that this decision, by seeking a back door to resurrect common law marriages, should be reversed.

Adultery Myths And New York Divorce Law

In order to get a divorce in New York, you must prove marital fault. New York recognizes adultery as one ground to obtain a divorce. However, adultery, as a basis for divorce in New York is misunderstood. In this post, I will try to dispel some of the myths surrounding adultery.

Not a week goes by without someone asking me one of the following questions: (1) If my spouse cheated on me, do I get the house? (2) If my spouse cheated on me, do I get the kids? (3) I don’t have to pay maintenance if my spouse cheated on me, right? and (4) If my spouse cheated on me, can I have him/her arrested?

The law regarding adultery has changed with the times. A hundred years ago, the answer to the above questions would have been an unqualified “YES”. But, divorce laws in New York have changed to reflected the looser morality we inherited from the 1960s.

While we use the term “marital fault” in New York law, it has a very narrow application. It only refers to whether you can get a divorce, not what happens in the divorce. Getting a divorce is easy, the court dissolves the marriage. The hard part is resolving the issues of property and children. These issues are generally unaffected by allegations or proof of adultery.

Let’s first look at property. Under the equitable distribution law, the court is not interested in who destroyed the marriage. The court instead is looking at the length of the marriage, and the property acquired during the marriage. Generally speaking, the court will divide the property in half, regardless of who was at fault. Adultery, by itself will not adjust the scale.

But, what if the cheating spouse spent money on the paramour? That is different. Assume the cheating spouse bought the paramour jewelry. The money used was presumably marital money. That money was wasted and must be returned to the marital pot for distribution. In one case I had, the husband broke an investment plan and deposited it in the girlfriend’s bank account. The judge attached the account and brought the money back.

Child custody and visitation are more problematic because of the emotions involved. The paramour is seen as the cause of the termination of the marriage. So, it is not uncommon to for the innocent spouse to demand custody on a “morals” issue. Or the innocent spouse will demand that the children not be exposed to the evil paramour.

Until the sexual revolution of the 1960s, adultery was evidence of poor morals, and could be used to secure child custody. Now, that is simply not the case. Adultery is no longer the controlling factor in custody. Adultery can come into play if the paramour is an “inappropriate” person, such as a convicted felon or a sex offender. Adultery can also come into play if it is part of a pattern of an unstable lifestyle. For example, going out every night, leaving the children unattended, and then coming home in the early hours, coupled with adultery could be used as evidence of an unstable lifestyle.

The area of greatest conflict involves the presence of the paramour around the children. If the custodial parent is the cheater, the innocent spouse generally cannot understand why he/she can co-habitat around the children. The argument is that the environment is “morally unsafe.” “How can I teach my child what is right, when he sees a negative moral example everyday?” As I stated above, the courts don’t get into assessing morality. If the child has a separate bedroom, many judges will not issue any order prohibiting the paramour from being in the presence of the children.

However, I have had some circumstances where the court has ordered that visitation shall not occur in the presence of the paramour. Generally, this occurs in particularly nasty breakups, and the law guardian and/or the forensic psychologist believe that it is not in the interests of the children to be in the presence of the paramour. There is no hard and fast rule, but will depend on a case by case basis.

Maintenance is generally unaffected by adultery. This may seem like a harsh rule. “She/he cheats on me and I have to pay?” The problem comes from the statutory basis for maintenance. The purpose is to rehabilitate the non-working or underworking spouse into the work force. The societal goal is to create a self-sufficient person who will not be a public charge. So, the issue of adultery generally does not play into an award of maintenance.

Finally, no one goes to jail for adultery anymore. Only the military prosecutes for adultery.

Not your Mother’s SBP

I’ve never been a big fan of the Suvivor’s Benefit Plan (SBP). As you may know, military retired pay ends on the dead of the retiree. Unlike a 401K or IRA, there is no bank account with money in it. Once the retiree dies, the payments from DFAS cease. The spouse or former spouse, gets nothing on the retiree’s death, unless there is SBP.

The SBP is a program created by Congress to provide an annuity for the surviving spouse (and/or children). The program also provides automatic coverage for any servicemember who dies in the line of duty. It is available to all members of the military to include the Coast Guard, the National Health Service and the National Oceanic and Atmospheric Administration. And yes, it covers us second class citizens in the Reserves.

Under the Former Spouses Protection Act, the coverage is automatic. In other words, the spouse has to actively refuse coverage. This provision was placed in the law to protect a spouse who after twenty years of marriage gets dumped by the servicemember upon retirement. A servicemember can opt out. But, the spouse must sign a waiver. This election must be made prior to the first day the member become eligible to receive the retired pay.

A reservist must make an election within 90 days of receiving the 20 year letter: (1) decline to make an election until age 60; (2) elect coverage to begin on the servicemember’s death or upon the date the servicemember would have been eligible to receive the retired pay, whichever is later; or (3) elect coverage to commence upon the servicemember’s death, regardless of the member’s age when death occurs. However, if the election is not made, then the servicemember is automatically enrolled in (3). A reserve servicemember who elects to forgo the SBP in the 90 day period can change his/her mind when he/she is eligible to receive retired pay.

A former spouse can receive SBP. A judge in a divorce can award SBP. The election to the former spouse must be made within one year of the judgment of divorce. Only one spouse or ex-spouse can receive SBP. This is no splitting or allocating. If ex-spouse is getting the SBP, the new spouse is locked out.

SBP used to have a “social security” offset. A spouse would receive 55% of the retiree’s pay until the spouse turned 62. Then the SBP payments would be reduced to 35% of the retired pay. In 2007, the rule changed, as of April 1, 2008 all spouses will received 55% regardless of their age. The social security offset is now gone. From April 1, 2007 to March 31, 2008, spouses over the age of 62 got 50% of the pay. On April 1, 2008, that went up to 55%.

This new law goes a long way to fixing some of the problems inherent with the program.

Equitable Distribution of Post Office Pensions Under New York Divorce Law

As I have pointed out else where, under New York divorce law, pensions earned during marriage are subject to equitable distribution. However, since there are a variety of different pensions available from the multitude of employers, the rules are not always consistent.

For example, military disability pay is not subject to equitable distribution.

The Post Office pensions also presents unique challenges and issues. Since the pension comes from the federal government is it needlessly complicated, as least for the divorce lawyer.

One important issue was recently addressed by Nassau County Divorce Judge, Anthony Falanga. Justice Falanga is one of the brighter and more pragmatic judges deciding divorce cases in New York. He spent over 30 years as a divorce lawyer himself, and understands the issues and concerns of the litigants.

In the case of Grimmer v. Grimmer , published in the New York Law Journal on March 21, 2008, on page 31, Justice Falanga addressed the issue of whether all or just part of a Post Office pension is subject to equitable distribution under New York divorce law. He found that as an employee of the Post Office, the husband, was not eligible to contribute to or receive social security. Instead, a part of his Post Office pension would be a replacement for social security. Social Security is not subject to equitable distribution.

Citing the case of Wallach v. Wallach 37 AD3d 707, Justice Falanga observed that under the Federal Civil Service Retirement System (FERS) a court was directed to “deduct from the value of the retirement benefit the portion thereof that substitutes for social security.”

Based upon the Wallach decision, Justice Falanga found that the entire Post Office pension is not subject to equitable distribution. The portion of the pension that substitutes for social security must be removed. Assume the husband is getting $1500 a month in the pension. He worked 30 years, and was married for the entire 30 years. The court orders that the pension be divided in half. Further assume that the social security substitution is 30 percent. So, only $1000 of the $1500 is pension, while the remaining is counted as social security. The wife would get $500 a month (one half of $1000) not $750 a month (one half of $1500).

An important caveat for the holder of the pension is to make sure that your lawyer knows and understands this fact. Typically, in divorce actions, we divorce lawyers hire a pension appraisal service to provide the value of the pension. Make sure that the pension appraisal takes into account the social security replacement.