Divorce 101

Heart Breaks, Head Aches and the Art of Equitable Distribution

Posts Tagged New York

Paging Dr. O’Brien… Enhanced Earnings Claims

Nov 20

Posted by Charles Messina in Uncategorized, equitable distribution | No Comments

New York State is a funny place to get a divorce…  it is so generous!  In 1985, Dr. O’Brien divorced his wife.  Mrs. O’Brien, being the smarty pants that she was (or maybe that her attorney was the smarty pants)decided that she would seek a distribution of her husband’s newly acquired medical license in equitable distribution.  In English, she thought she should be paid for all the money the good doctor would make over the course of his working life by virtue of the fact that he got a medical license during the marriage.  Mrs. O’Brien’s theory was that she had contributed to him getting that license by cooking, cleaning, raising the kids, and generally enabling his studies and supporting him through medical school.  The New York Court of Appeals (our highest Court) bought it and agreed that a medical license is distributable in a divorce.  See O’Brien v. O’Brien.

Thee O’Brien case opened the door in new York State for enhanced earnings claims.  Basically, if one spouse earns a degree or professional license during the course of the marriage, the other spouse has a claim to some portion of the enhanced earnings capacity that flows from that degree or license.  Doctors, lawyers, nurses, licensed massage therapists BEWARE!

So what is an enhanced earnings capacity and how does this O’Brien claim work?  Well, the degree or license must first be valued by an expert.  That expert will project out from the U.S. Government mortality tables what the owner’s lifetime working expectancy is, what the projected earnings are over that lifetime, and what the projected earnings would be for a person who had a similar education prior to the marriage, but not the advanced license or degree.  The difference in the figures is the projected enhanced earnings, which is then reduced to present dollar value  (there’s a lot more to it, and it really does take an expert to value, but this simplified version will suffice for now).

OK, so the degree has been reduced to present value… now what?  The spouse is not entitled to 100% of that degree (in most cases) but probably something less than %50 of the present value.  Either the parties to the divorce settle on a percentage, or the Court will hold a trial on the matter, and determine the appropriate percentage after hearing about all the contributions of the spouses toward the degree and considering all relevant circumstances.  In the Fourth Department (Western New York, where I practice), the percentage is usually somewhere between 10-20%.  Downstate, in the New York City area (generally the Second Department) there have been some recent cases where 0-15% have been awarded.  The trend seems to be moving to awarding smaller percentages lately.

So we have a present dollar value, and we know what percentage of that the spouse is entitled to, how do we go about distributing it?  Generally, the parties will try to work out a settlement of some sort; perhaps credits against other assets, or a payment plan.  If the parties cannot work out a settlement, the full, lump sum of the enhanced earnings is due and payable immediately upon rendering of the divorce decree.  Harsh, I know.  Or a windfall, if you’re on the receiving side.  But the Courts recognize that people generally don’t have tens of thousands of dollars to just hand over, from earnings they will not realize for perhaps another 30 years!  The Court will often make the enhanced earnings award payable over a number of years (with interest).

I understand, conceptually, the logic in making enhanced earnings distributable in divorce.  I am not, however, a proponent of the concept.  Granted, some spouses do make major contributions to the education of the other, and they should realize the fruits of their labors.  But all too often, it seems that both parties are working people, one is often holding down one or even two jobs and going to school at the same time, and the majority of the effort put into that enhanced earning is due to the efforts of the degree owner.  Perhaps that is why the current trend is a decrease in the awards?  Only time will tell, but enhanced earnings is definitely an interesting and much debated topic in New York matrimonial law.

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“No-Fault” Divorce: The Holy Grail

Oct 13

Posted by Charles Messina in Grounds | 5 Comments

In New York State, one must have “Grounds” to obtain a divorce.

Grounds for divorce are set forth in our Domestic Relations Law Section 170  and include only:

  1. Cruel and Inhuman Treatment -  A “catch all” that is often abused and sometimes misused;
  2. Abandonment – for more than one year…  may also encompass “constructive abandonment”  a/k/a refusal of sexual relations;
  3. Confinement of Defendant to prison – self explanatory;
  4. Adultery – which is surprisingly difficult to prove since spouses are incompetent to testify against each other concerning this; or
  5. Parties have lived apart pursuant to a judgment of separation or separation agreement for at least one year-  sometimes referred to as a “conversion” divorce.

In order to obtain a divorce in New York, only one of the above grounds will do the trick, nothing else.  The party seeking the divorce must prove, to a jury if necessary, that he or she has sufficient grounds for divorce.  And the longer parties are married, the greater the proof necessary to demonstrate sufficient grounds.  Simply saying “We don’t get along any more and we both want a divorce” is insufficient.

To complicate matters, if there are no grounds for divorce, there can be no equitable distribution of property.  What does that mean in English?  It means that if Wife Wanda files for divorce against Husband Bob, and Bob has a great job, lots of income, and all the assets are in his name, and Wanda has little more than her dislike of Bob’s bottle collection as her grounds, Bob gets to have a trial and challenge her to prove her grounds.  But why would Bob want to do that, you might say?  Because if Bob defeats Wanda in a grounds trial, he will not be forced to give her any of the money he has hidden away in a Swiss bank account, or to give her the house owned in his name, or to provide her with the Mustag GTO that he just bought while leaving her with the ’82 Camry.  Bob can effectively hold Wanda over the economic barrel.  When this happens, Wanda is usually willing to give up what would normally be her fair share of the assets in exchange for Bob not challenging her grounds for divorce.  I tend to think of this as legalized blackmail, but perhaps that is being too harsh…

You may have noticed there is no “irreconcilable differences” in that list of grounds.  New York is, I believe, the only state in the union that does not have a “no-fault” divorce provision, such as irreconcilable differences.  There is an outdated mode of thought in New York that the State has a vested interest in the marriage relationship.  Personally, I feel that vested interests in marriage are strictly the business of the people involved in that marriage and the State has no business forcing two people who can’t stand each other to remain together.  I leave it to religion to make moral determinations, those ar enot for me.

There has been a push in the past decade to bring New York in line with the rest of the country and provide a no-fault ground for divorce, but a law has yet to pass.  There is currently a bill in the New York State Assembly which would add “irreconcilable differences” to the list of grounds for divorce.  I am all for it!  The time has come for New York to get in line with the rest of the country and give people a way out when the love is gone and there is no going back.

A grounds trial is a horrific beast to watch.  I’ve seen them, and they are not pretty.  The plaintiff parades a line of witnesses across the stand to say what a horrible creature the defendant is.  The defendant parades a line of witnesses across the stand to say what a wonderful person he or she is and explain away the allegations of the plaintiff.  In the process, both people are irrevocably scarred, any chance of dealing civilly with the other is burnt to ash, and the State has thus preserved the “sanctity” of marriage.

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