As an attorney, I frequently handle divorce cases in which one (or both) spouses claim that certain property should be considered to be theirs alone. In turn, they feel the other spouse should have no claim on this property whatsoever. A common issue is the division of real estate. For example, if I own real property in my sole name before my marriage, my spouse would not have a claim to it upon our divorcing here in New Jersey (with some exceptions). However, if the real estate was purchased during the marriage using “marital funds,” then the divorce lawyer for my “ex” would have a successful argument that the property is now “in the pot” even if the property is in my name alone. These issues are extremely fact sensitive, as a judge of the Family Part, Superior Court of New Jersey, must look for many things such as the intent of the parties, credibility and other questions in order to make their final decision. A case decided last week Terry v. Terry, illustrates the significance appellate courts give to trial court fact-finding as well as a legal analysis of what property is exempt in a New Jersey divorce and what is not.
Cassandra and Richard Terry were married in 1989. During the course of their marriage the couple had four children. At the time of the divorce three of the children were twenty, nineteen, and eighteen, and attending college. The fourth child was seventeen and in high school. Their divorce trial lasted six days, the final day being February, 21 2012. The Family Part entered a final judgment of divorce on June 8, 2012, effectively terminating their marriage.
The central issue during trial was whether a rental property, held only in Richard’s name, was subject to equitable distribution. Equitable distribution is the distribution of property and debt obligations used by courts in most states when dividing marital property during divorce proceedings. Equitable distribution does not actually mean equal division, instead it means fair division. Instead of a strict fifty-fifty split in which each spouse receives exactly one-half of the property acquired during the marriage, the doctrine of equitable distribution is used to look at the future financial situation of each spouse after the termination of the marriage. While equitable distribution is a flexible system, it is difficult to predict the actual outcome of distribution, because some of the factors that courts take into consideration when dividing property during equitable distribution are subjective. The ultimate goal of equitable distribution is to divide the marital property in a fair and just way.
Richard and Cassandra met in 1987. Richard bought the property in question on June 1988 and moved in that December. The parties got married in June 1989 and lived together at the property until 1993, when they bought and moved into their marital home, located across the street from Cassandra’s parents.
Cassandra argued that Richard bought the rental property with the intention of it being a marital home. According to Cassandra, Richard was looking to relocate to a neighborhood where her parents had lived. Cassandra’s father had encouraged Richard to buy a home rather than rent, and allowed him to live with them until he could find a suitable house. Cassandra’s father had been with Richard at the closing and even helped him with home repairs. Richard moved in once the repairs were done and the house was suitable for habitation. When he moved in on December 1988 the parties were already planning their wedding. The only reason Cassandra didn’t move in until the wedding is because her parents did not want them living alone, out of wedlock.
Cassandra’s father, Herbert Smith, Sr., testified and affirmed her testimony. He stated that Richard was proposing marriage shortly after the couple had started dating in 1987, before he had purchased the rental property.
On the contrary, Richard testified that he was interested in buying property in the area well before he considered marrying Cassandra. He knew the family from church and they let him stay at their home because he was looking for property in that area. By 1987 he considered Cassandra’s family as his own. According to Richard’s timeline of events he then purchased the rental property, moved in, and later became engaged and ultimately married to Cassandra. Richard denied that he ever promised to marry Cassandra while he lived with her parents. According to him he was not even engaged to Cassandra when he purchased the property. Richard claimed his only interest in buying the house was to live in Willingboro, and it had nothing to do with his relationship with Cassandra. In fact, at the time Richard purchased the house Cassandra was not even exclusively dating him. She was also seeing a man named Wendell. The decision to get married happened later on. Also, while Richard acknowledged that Cassandra’s parents helped to renovate the house, he was sure to note that their contribution was minimal. All the major purchases and decorations were made by Richard.
The trial judge recorded his decision on June 8, 2012. Even though the court stated that both parties’ testimony was credible, Cassandra and her parents were found to be more credible. The court believed that the rental property was purchased in anticipation of marriage and therefore found the rental property to be a marital asset. Moreover, the court went on to state that it was highly unlikely that Cassandra and her parents would put in that much time working on the property unless Richard was going to marry Cassandra.
Additionally, the court awarded Cassandra possession of their prior marital home. This decision was based on the fact that both parties were awarded joint legal custody of their children, but Cassandra was designated as the primary parent of residence. Consideration was given to the house’s proximity to the children’s grandparents. Two children stated their desire to stay with their mother and near their grandparents. Richard was ordered to move out of the house within thirty days. The judge did allow Richard the opportunity to file a motion for sale in the future once the children were independent and mature.
In regards to the rental property, the court ordered it be appraised. Also, Richard was allowed an opportunity to buy out Cassandra’s interest in the property, and if he chose not to, the house would be sold with the proceeds to be divided equally.
On August 8, 2012 Richard filed a motion for reconsideration. He challenged the courts calculation of equitable distribution from the properties’ sale. Richard also requested that the first final judgment of divorce be amended to subject the distribution to the applicable capital gains tax. Furthermore, Richard argued that the court failed to consider the tax consequences of the equitable distribution of his stock, and that the court should not have awarded counsel fees as part of the final judgment.
Oral arguments where held on October 5, 2012 and ten days later the court issued a letter order accompanied by a second amended final judgment of divorce. Despite Richard’s motion the order still required him to pay Cassandra’s counsel fees.
Richard filed another motion for reconsideration. He again stressed the need for Cassandra to pay capital gains tax if he purchased her interest in the property. He also raised the need to dismiss the award of counsel fees. On April 17, 2014, the original judge entered a letter order stating each party is to pay fifty percent of the capital gains tax. The court also vacated Richard’s obligation to pay counsel fees.
Refusing to give up, Richard filed an appeal on June 2, 2014. In the appellate brief, Richard argued the rental property should not have been subject to equitable distribution, and that the sale of the marital home should not be delayed.
The Appellate Division’s review of a court’s distribution of marital assets is limited to determining whether it abused its broad discretion and authority. An award of equitable distribution must be affirmed as long as the trial court could reasonably have reached its conclusion from the evidence, and the award is not inaccurate by either legal or factual mistake.
The issue in Terry was whether the rental property was pre-marital, and thus not subject to equitable distribution. According to case precedent, any property owned at the time of marriage will not qualify for distribution. However case precedent, such as Weiss v. Weiss, also states that if a party buys property with the intent to be married, that property will be subject to equitable distribution.
The Appellate Division reviewed the record and concluded the trial court’s decision was supported by substantial evidence. Due to the Family Part’s special expertise, appellate courts favor fact-finding in family cases. Appellate courts also trust the trial court’s credibility determinations and feel for the case because the trial judge has an opportunity to see and hear witnesses. The court found Cassandra’s father’s testimony to be especially credible and drew from it the logical inference that Cassandra and her parents would not have helped renovate the rental property had the couple not planned on getting married and intended to purchase the rental property as their first family home. The trial court’s decision to delay the sale of the marital home was also found to be valid. A delayed sale is a proper exercise of a court’s power. Furthermore, the delay was to protect the best interest of the parties and their dependent children. The court’s decision was based on what the children wanted and the proximity of the home to the grandparents who played an influential role in their upbringing and care. The trial court’s decision was confirmed.
If you or a loved one is facing a divorce, please never hesitate to contact my office today.