Recent Case dealing with Equitable Distribution and Child Support in New York, County of Rockland

In a recent case decision promulgated by the Supreme Court, County of Rockland on June 2, 2021, dealt with whether a gift of inheritance to one spouse, which was made as a loan to the parties by that spouse’s parents, would constitute up to a separate property credit to the spouse who received the advance on their inheritance.  On these facts the Court stated that the gifted loan from her parents, which the parents had “forgiven”  was paid off by the parties during the marriage and hence lost its separate property characteristics when the property became comingled such that the equity in the property subject to equitable distribution was solely marital. C.R. v L.R Supreme Court, Rockland County June 2, 2021, 71 Misc. 3d 1229•2021 N.Y. Slip Op. 50527•146 N.Y.S.3d 466.  In the case of Renck v Renck , 131 AD3d at 1149  Court held that “[t]o overcome a presumption that commingled property is marital property, the party asserting that the property is separate must establish by clear and convincing evidence that the property originated solely as separate property and the joint account was created only as a matter of convenience, without the intention of creating a beneficial interest”.  In this instance, the court felt the Wife failed in her burden of proof to show  by clear and convincing evidence that the property originated solely as separate property.

Normally, has this loan not been paid off and forgiven by the wife’s parents the case law would support a separate property credit to the Wife if she used an advancement on her inheritance to acquire the property.  But here, it was a “loan” to both parties. The Court has tremendous discretion to characterize property as being marital or separate. 

Separate property is described as follows: Separate property is defined as “property acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse …”. DRL § 26(B)[1][d]). 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.” DRL § 236(B)[1][d](3)

As such, if you are using your inheritance as a down payment for the purchase of the marital residence be sure you do not take out a loan against the property that is used to pay off the mortgage because that payment on the loan may be construed as having stripped the inheritance of its separate property characteristics. Also, if your parents are gifting you your inheritance in advance, make sure the check is written out in your name only otherwise it might be considered a gift to the marriage subject to equitable distribution in the event of a divorce.  More importantly so not mix and mingle your separate or joint accounts by depositing that money into  those accounts used during the marriage. Keep that money in a separate bank account.

This case also briefly dealt with child support and the rules governing modification of same and the collection of child support arrears which accrued prior to the divorce action. Domestic Relations Law § 236(B)(9)(b)(2) stated that child support arrears cannot be reduced or annulled.

New York Domestic Relations Law §§ 236(B)(7)(d) and 236(B)(9)(b)(2) clearly states that either party may move to modify a child support award if there has been 1. a substantial change of circumstances; or 2.  three years have passed since the order was entered, last modified, or adjusted; or 3. there has been a change in a  party’s gross income by 15%  since the order was entered, last modified, or adjusted, provided that the reduction in income was not on purpose and the offending party has made good faith attempts to secure employment equal to his or her education, ability, and experience.  The law also states that  unless the parties in their agreement or divorce judgment expressly opts out of subparagraph (2) or (3) below in a validly executed agreement or stipulation, either party may petition the court to modify the underlying  support order upon a showing of those facts suggested in subsections “1.” “2.” or “3.” above.   The Family Court also follows suit in this regard. 

In all events, a petition to modify child support in New York may be filed upon a showing of a substantial change in circumstances especially where it is in the best interests of the child that the child support be adjusted.  However, it is up to the Court to determine whether it will grant such modification after a New York Family Court fact-finding hearing.

This decision is also interesting because it was written this year and sets forth this court’s understanding of equitable distribution and how it is to be  applied to each case. Under Equitable distribution law “a marriage is, among other things, an economic partnership to which both parties contribute as spouse, parent, wage earner, or homemaker.” O’Brien v O’Brien, 66 NY2d 576, 585 [1985].”

Under the case of Price v Price,  “The Equitable Distribution Law reflects an awareness that the economic success of the partnership depends not only upon the respective financial contributions of the partners, but also on a wide range of un-remunerated services to the joint enterprise, such as homemaking, raising children and providing for emotional and moral support necessary to sustain the other spouse in coping with the vicissitudes of life outside the home.” Price v Price , 69 NY2d 8, 15 [1986].

Equitable Distribution does not always mean equal distribution. If it is fair to divide the assets up differently the courts will do so if it is equitable. Each case is different, and each case is treated uniquely.  In the cases of Conner v Conner, 97 AD2d 88, 96 [2nd Dept 1983] the Court held that  “modern marriage should be viewed as a partnership of co-equals. Upon the dissolution of a marriage, there should be an equitable distribution of all family assets accumulated during the marriage and maintenance should rest on the economic basis of reasonable needs and the ability to pay. From this point of view, the contributions of each partner to the marriage should ordinarily be regarded as equal and there should be an equal division of family assets, unless such a division would be inequitable under the circumstances of the particular case.” Conner v Conner, supra at 96 (citing 11C Zett-Kaufman-Kraut, N.Y.Civ.Prac., Appendix B, at 8).

As such, the Court has substantial discretion to divide up the property in a fair way, even though most of the time the court will start out with the premise that it should be an equal distribution.  However, look at NY Dom. Rel. Law § 236. There you will see all the enumerated factors a court should and must consider in arriving at its decision as to equitable distribution.

“In determining equitable distribution , the trial court is directed to consider statutory factors, including the income and property of each party at the time of the marriage, and at the time of the commencement of the divorce action, the duration of the marriage, the age and health of the parties, any maintenance award, and the nontitled spouse’s direct or indirect contributions to the marriage, including services as a spouse, parent, wage earner and homemaker.” Loria v Loria , 46 AD3d 768, 770 [2nd Dept 2007] ; DRL § 236(B)[5](d).

While I hope you find this information useful, it was not intended as legal advice, and as such seek legal counsel if you are going through a divorce or child support or child custody matter.

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