July 14, 2011
MARK S. RUDERMAN, PLAINTIFF-RESPONDENT,
LOIS RUDERMAN, DEFENDANT-APPELLANT.
MARK S. RUDERMAN, PLAINTIFF-APPELLANT,
LOIS RUDERMAN, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division-Family Part, Somerset County, Docket No. FM-18-458-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: December 8, 2010
Before Judges Cuff, Fisher and Sapp-Peterson.
In these appeals calendared back-to-back,*fn1 we review challenges by defendant to certain terms of a judgment of divorce (JOD) entered following a trial and by plaintiff to a post-judgment order denying his request for reimbursement of various expenses. We affirm the post-judgment order, affirm in part and reverse in part the JOD, and remand for further proceedings consistent with this opinion.
Mark S. Ruderman, plaintiff, and Lois Ruderman, defendant, married on August 22, 1982, and separated on July 26, 2006. Plaintiff filed a complaint for divorce on November 20, 2006. The trial proceeded over five days between March 31, 2008, and July 16, 2008. On October 6, 2008, the trial judge issued a letter opinion, and entered a JOD on November 8, 2008.
The JOD ordered plaintiff to pay $80,000 annually to defendant in alimony, effective October 6, 2008. In arriving at this figure, the trial judge found that defendant required $120,000 annually to maintain the marital lifestyle. He imputed $40,000 annually in earned income to defendant. Plaintiff is also obligated to pay child support of $1000 monthly for the youngest of the two unemancipated children.
Defendant retained the marital home valued at $1,640,000 and plaintiff received a credit of 50% of its value. The house is not encumbered by a mortgage. Defendant is responsible for all costs associated with the house. Plaintiff must also credit defendant with 50% of the value of a townhouse valued at $373,000 purchased by him following the parties' separation. The judge divided a money market fund valued at $878,976 equally. Defendant retained two ING annuities but plaintiff received a 50% credit of their value. Defendant also retained her account at Peapack-Gladstone Bank and another annuity, but plaintiff received a 50% credit of their values. The judge also valued defendant's interest in plaintiff's law firm at $200,000 and ordered plaintiff to pay defendant that sum.
Plaintiff received credit against the equitable distribution award for $75,000 advanced to defendant prior to entry of judgment. Plaintiff received a $3,516 credit for an annuity invaded by defendant and also ordered plaintiff to contribute $80,000 to defendant for her counsel fees. The judge set off the counsel fee obligation against the equitable distribution advance and annuity credit, thereby requiring plaintiff to pay $1,484 to defendant for counsel fees.
The judge directed the remaining marital property, including two investment properties, to be sold. The proceeds and any taxes due on the sale of these properties were to be shared equally. Finally, each party retained their respective reward miles. The judge also found that an account valued at $425,000 was exempt from equitable distribution, because plaintiff inherited the account from his father.
Defendant filed a motion for reconsideration in which she challenged the alimony and child support awards. Among other issues, she requested the trial judge to reconsider his ruling regarding use and control of the children's trust accounts, and equitable distribution credits to plaintiff. Defendant also requested the trial judge to compel plaintiff to pay past due expenses, pay new expenses as part of his pendente lite obligation, and immediately distribute her portion of a mutual fund account. She also asked the trial judge to address issues left undecided in his initial opinion. Plaintiff responded with a cross-motion for an award of counsel fees and costs incurred to respond to the motion.
In a written opinion, the trial judge denied defendant's motion in most respects and awarded plaintiff counsel fees in the amount of $2,700. The judge did, however, vacate a $50,000 credit to plaintiff because it constituted double-counting but denied relief on all other issues raised by defendant.
On appeal, defendant argues that the methodology employed by the trial judge led to an inadequate and inappropriate alimony award. Defendant urges that the trial judge erred in calculating the marital standard of living, should not have imputed $40,000 in earned income to her, should have awarded rehabilitative alimony, and failed to consider the tax consequences of the alimony award. Defendant also contends that the trial judge awarded an insufficient amount of child support for the youngest unemancipated child, should have awarded child support to the child attending college, and should have required plaintiff to pay college expenses from current income or other parental assets, rather than from the children's accounts. Defendant also argues that plaintiff should have been required to maintain life insurance to secure his alimony and child support obligations, and the equitable distribution award is inappropriate in certain instances and contrary to applicable law.
In his appeal, plaintiff urges that the court should have reimbursed him or credited him for the pendente lite expenses paid by him to defendant for October 2008. He also argues that the trial judge should have adjusted the equitable distribution award to reflect passive losses in certain marital assets. Finally, plaintiff argues that the trial judge should have reimbursed or credited him with $14,000 from the exempt account distributed to defendant.
Plaintiff is an attorney and the managing partner of a law firm known as Ruderman & Glickman, P.C. Plaintiff and defendant were fifty-three years of age at the time of trial. Defendant holds a bachelor's degree from Rutgers University and a master's degree form Adelphi University in speech pathology. She worked as a speech pathologist prior to the birth of the parties' oldest child in 1985. She has been a stay-at-home mother since that time. Defendant maintained her national license as a speech therapist but allowed her state license to lapse.
The record demonstrates that the parties enjoyed a comfortable upper-middle class lifestyle throughout their marriage. Plaintiff was the sole source of financial support throughout most of the marriage. Although plaintiff earned as much as $740,000 in the year preceding the filing of the complaint, the parties stipulated to $560,000 annual income from plaintiff's law practice. The parties also stipulated that the value of the firm for equitable distribution purposes was between $527,000 and $581,000 and that defendant's share was $200,000.
All of the family's expenses, except the maid, were paid by credit cards, checks, or automatic payments from bank accounts. After the separation, plaintiff continued to pay the family's shelter expenses and transportation expenses and all of defendant's credit card bills. Plaintiff testified that the marital standard of living was $12,500 monthly; defendant contended the marital standard of living required $19,383 monthly. The judge found that defendant's needs required $10,000 monthly and imputed $40,000 in earned annual income to her.
Defendant argues that the trial judge underestimated her expenses and over-estimated her ability to earn income. The result of these errors is an inadequate alimony award. She also contends that the judge compounded the error by failing to account for tax consequences of the alimony award.
This argument is in part a direct assault on the findings of fact of the trial judge sitting without a jury. The scope of review by an appellate court of findings of fact is limited. Cesare v. Cesare, 154 N.J. 394, 411 (1998); Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).
Deference is particularly appropriate when the evidence at trial is largely testimonial because the trial judge had the opportunity to hear, see, and observe the witnesses. Cesare, supra, 154 N.J. at 412. Therefore, this court will not disturb the factual findings of any trial judge "unless [it is] convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Rova Farms, supra, 65 N.J. at 484 (internal quotations omitted).
Moreover, "matrimonial courts possess special expertise in the field of domestic relations," which includes divorce, alimony and child support actions. Cesare, supra, 154 N.J. at 412. Thus, we afford great deference to a Family Part judge's discretionary decisions and factual findings. Id. at 413; Donnelly v. Donnelly, 405 N.J. Super. 117, 127 (App. Div. 2009). A trial court's interpretation of the law, however, is entitled to no special deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
A motion for reconsideration is vested in the sound discretion of the court and should be granted only when the trial judge concludes the initial decision was based on a palpably incorrect or irrational basis, or the judge did not consider or failed to appreciate the significance of probative and competent evidence. Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996); D'Atria v. D'Atria, 242 N.J. Super. 392, 401-02 (Ch. Div. 1990). We, therefore, employ an abuse of discretion standard when we review an order denying reconsideration. Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 462 (App. Div.), certif. denied, 174 N.J. 544 (2002).
"[T]he goal of a proper alimony award is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed" during the marriage. Crews v. Crews, 164 N.J. 11, 16 (2000). In general, when the support of an economically dependent spouse is at issue, we consider the needs of the dependent spouse, that spouse's ability to contribute to the identified needs, and the supporting spouse's ability to fund those net needs. Id. at 24; Lepis v. Lepis, 83 N.J. 139, 152 (1980). The needs of the supported spouse envision support in accordance with the marital lifestyle. Crews, supra, 164 N.J. at 24; Lepis, supra, 83 N.J. at 150. In addition, a judge is guided by the factors outlined in N.J.S.A. 2A:34-23b.
Defendant argues that the judge ignored some clearly documented expenses, including service contracts for maintenance of equipment in the marital home, car payments, school lunches and lessons for the youngest child, and charitable contributions to her synagogue. She argues that these omissions contributed to an understatement of the marital lifestyle and an inadequate alimony award.
The trial judge made detailed findings of fact regarding shelter, transportation and personal expenses. As to these expenses, the judge explained the basis of the marital lifestyle and needs, finding as follows:
The testimony and the documentary evidence . . . established the family lifestyle during coverture to be $10,000 to $15,000 per month. That conclusion is based on credit card and bank statements in evidence . . . , as well as hand-written statements prepared by Defendant concerning what the actual expenses really are . . . . This evidence establishes the family lifestyle.
The judge settled on the lower end of the range by according greater credibility to documented expenses reflected in the credit card statements and bank statements than to defendant's testimony. In doing so, he noted that defendant did not produce copies of service contracts and defendant testified she made lunch for the youngest child everyday. In addition, defendant did not provide any evidence of expenses incurred by her for sports or hobbies. The judge also determined that the dues at the synagogue were $2,200 annually, rather $1,438 monthly as stated by defendant.
The judge elaborated on the basis for his findings in his decision on defendant's motion for reconsideration. He said:
The Court, because of defendant's lack of credibility, only credited documentary evidence. The Court did not award defendant school lunch money because she stated she made [the youngest daughter's] lunch everyday. The court found Defendant did not use the baseball or Nets tickets. . . .
The one service contract documented by Defendant was no longer required because Plaintiff had recently repaired the heating and air conditioning systems, thus there were no documented contracts.
Having reviewed the testimonial and documentary evidence in its entirety, we discern no basis to disturb the finding concerning marital lifestyle and defendant's annual expenses to continue to live in the style to which she had become accustomed. As noted by the trial judge, the parties' longstanding practice to pay virtually every expense by credit card, debit transactions or personal checks provided an extraordinarily complete record of the marital expenses. The documentation allowed the trial judge to establish the marital lifestyle, defendant's financial needs, and the alimony award with notable confidence.
Even if we affirm the judge's findings regarding marital lifestyle and the amount of money that must be expended for defendant to continue that lifestyle, defendant urges that the trial judge erred by imputing income to her. She challenges his finding that she is voluntarily unemployed and argues the judge overlooked her age and years out of the workforce. We disagree.
A judge may impute income to a party for both alimony and child support if the party is voluntarily unemployed without just cause. Caplan v. Caplan, 182 N.J. 250, 268 (2005). The decision to impute income is a discretionary matter, wherein the judge must endeavor to determine not only ability to earn income but also the availability of employment. Storey v. Storey, 373 N.J. Super. 464, 474 (App. Div. 2004). We review a decision to impute income in accordance with the abuse of discretion standard. Overbay v. Overbay, 376 N.J. Super. 99, 106-07 (App. Div. 2005).
The threshold issue is whether the unemployed party has just cause to remain without employment. Caplan, supra, 182 N.J. at 268. This inquiry is fact-specific; however, income will be imputed to a spouse who once enjoyed substantial income from a position requiring expertise but declines to seek other employment following cessation of that employment. Caplan, supra, 182 N.J. at 267. Income may also be imputed to a mother of young children following consideration of her earning capacity, child care alternatives and part-time employment opportunities. Bencivenga v. Bencivenga, 254 N.J. Super. 328, 331-32 (App. Div. 1992). By contrast, imputation of income may not be appropriate if the spouse loses employment, immediately seeks new employment, and ultimately accepts a job for less money after receiving and rejecting offers paying even less income. Dorfman v. Dorfman, 315 N.J. Super. 511, 516-17 (App. Div. 1998).
Here, the judge did not err by imputing income to defendant. She is a well-educated woman in good health. The only child living in her home was a junior in high school at the time of the divorce. Defendant was fifty-three years of age. She holds degrees and her national license in a field for which there remains a need. At the time of trial, nine years remained before she could first draw Social Security benefits. Significantly, the trial judge has not ordered defendant to obtain employment and has not ordered her to obtain employment as a speech therapist. He did, however, reject defendant's position that the parties did not contemplate that she would never return to work. Moreover, the judge found that defendant had not returned to work because she simply did not want to do that. The record clearly demonstrates, however, that defendant is capable of earning some income. Accordingly, we hold that the record fully supports the imputation of income to her.
Once a judge determines that it is appropriate to impute income to a party, the judge must determine an appropriate amount of income to impute. Caplan, supra, 112 N.J. at 270. The imputed income should be the amount the spouse is capable of earning not the actual amount of that spouse's income. Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999). Data on prevailing wages from sources about which we can take judicial notice, such as the New Jersey Department of Labor, are considered competent evidence to support an imputed income amount. Storey, supra, 373 N.J. Super. at 475.
Having established the factual predicate for imputation of income, the judge considered the amount of income that defendant could reasonably earn. Contrary to defendant's contention, the judge did not ignore the time and amount of money required to regain her State certification as a speech pathologist. The judge ascertained the market rate at that time for speech pathologists, $69,240, and then discounted the sum defendant could be expected to earn by almost $30,000. We discern no basis to disturb either the decision to impute income to defendant or the amount imputed to her.
We also affirm the decision of the trial judge to deny defendant's request for rehabilitative alimony. The judge found that defendant had the capacity to contribute to her support without further financial support to allow her to achieve additional income.
Rehabilitative alimony is a limited duration award that permits a former spouse to complete the preparation necessary to become economically self-sufficient. Cox v. Cox, 335 N.J. Super. 465, 474-75 (App. Div. 2000). The purpose of the award is to enhance the earning capacity of the supported spouse. Id. at 475. Rehabilitative alimony may be awarded as a supplement to permanent alimony. N.J.S.A. 2A:34-23b. See Hughes v. Hughes, 311 N.J. Super. 15, 31 (App. Div. 1998) (explaining that a grant of rehabilitative alimony does not mean that permanent alimony may not be awarded). Unlike permanent alimony, however, rehabilitative alimony ceases when the supported spouse achieves a position of self-support. Cox, supra, 335 N.J. Super. at 475.
Several factors inform the decision to award rehabilitative alimony. These factors include "the ability of a dependent spouse to engage in gainful employment, combined with the length of the marriage, the age of the parties, and the spouse's ability to regain a place in the workplace." Cox, supra, 335 N.J. Super. at 475 (internal citations omitted). The party seeking rehabilitative alimony bears the burden of proof that such an award is appropriate. Finelli v. Finelli, 263 N.J. Super. 403, 466 (Ch. Div. 1992). The court must ensure the evidence presented could form the basis of the alimony award. Ibid.
The decision to award rehabilitative alimony depends on some of the same factors as a decision to impute income. The similarity is limited, however, because the decision to impute income only considers first, whether an unemployed spouse is voluntarily unemployed; then, whether the spouse may be gainfully employed and the amount the supported spouse may reasonably earn. The analysis does not include whether the spouse chooses to work or not. Rehabilitative alimony, however, is intended to allow an unemployed or underemployed spouse to gain education and training to pursue a specific job or enter a specific profession. Cox, supra, 335 N.J. Super. at 475. Here, defendant does not want to return to work. Moreover, assuming she intended to return to her former field, she never tendered a plan that provided any information about cost and time required to re-enter her former profession. In fact, defendant tendered no plan at all. Her reliance on Hughes is, therefore, misplaced.
We agree, however, with defendant's contention that the trial judge failed to consider the tax consequences of the permanent alimony award. This omission requires us to remand this issue for further consideration by the trial judge.
As noted, the trial judge found that defendant established that her personal expenses required $120,000 annually. He imputed $40,000 to her to contribute to her support and ordered plaintiff to pay $80,000 annually to defendant in permanent alimony. In calculating the permanent alimony sum, the judge considered unearned income that defendant would receive from property received through equitable distribution. In his decision in response to defendant's motion for reconsideration, the judge conceded he made no allowance for income taxes payable by defendant on the alimony received from plaintiff. The judge explained his reasoning as follows:
[Lois] was found to need amounts rounded up to $120,000 per year to maintain the marital lifestyle. This court awarded $80,000 in alimony and imputed $40,000 in income. The Court declined to impute interest on Defendant's $1,700,000.00 in equity in her home prior to its sale, but imputed 3% rate of income to the approximately $1,000,000 in cash [Lois] received from equitable distribution. Thus, [Lois] receives a further $30,000 in income above her need to maintain the marital lifestyle. As such, the tax burden for the $80,000 in alimony properly belongs with her. Though this reduces her income, that is the inherent nature of taxes.
The problem with this reasoning is that it fails to recognize that the amount needed to support defendant in the marital lifestyle is net of taxes. In addition, the reasoning adopted by the judge does not account for the taxes owed on any investment income received by defendant. The effect of this reasoning leaves defendant with less income than the judge found she required to maintain the marital lifestyle.
While the decision to award alimony and to determine an appropriate alimony amount invoke the discretion of the judge, that discretion is not without guiding principles and factors. Steneken v. Steneken, 367 N.J. Super. 427, 434 (App. Div. 2004), aff'd in part, modified in part, 183 N.J. 290 (2005). Here, N.J.S.A. 2A:34-23b(12) expressly requires the trial judge to consider the tax consequences of an alimony award. He did not do so in this case. We, therefore, remand for reconsideration of the amount of alimony payable to defendant taking into account the state and federal income taxes payable by her not only on the alimony but also any earned income and unearned income from assets received through equitable distribution.
Defendant also argues that the judge erred because he did not require plaintiff to obtain and maintain life insurance to secure his alimony and child support obligations. Plaintiff argues the issue is moot because he has life insurance and has agreed to maintain the insurance.
In Jacobitti v. Jacobitti, 135 N.J. 571, 577-79 (1994), the Court discussed a 1988 amendment to N.J.S.A. 2A:34-25 that allows a judge to order a party to provide reasonable security for the observance of orders to pay alimony. The Court recognized that a judge may order a supporting spouse to maintain life insurance for the benefit of the dependent spouse. Id. at 578.
We are not persuaded that plaintiff's agreement to maintain life insurance for the benefit of his former spouse and unemancipated children renders the issue moot. Circumstances change and obligations freely undertaken can become burdensome. Although the child support obligation is limited by the advancing age of the parties' children, the alimony award is substantial in amount and term. These factors suggest to us that the issue is not moot.
An order to obtain life insurance to secure a support obligation depends on the circumstances of each case. Meerwarth v. Meerwarth, 71 N.J. 541, 544 (1976). Here, both parties acknowledged that the amount of insurance plaintiff would be required to maintain had not been resolved by the parties. In his initial decision, the judge did not address the issue. In his decision on defendant's motion for reconsideration, the judge did not expressly address the issue. In light of the amount and potential duration of this substantial alimony award, the trial judge must expressly address this issue. We, therefore, remand for consideration of whether plaintiff's support obligation should be secured, and if so, the amount of insurance he should be required to maintain.
The trial judge ordered plaintiff to pay defendant $230 each week as child support for the parties' youngest child. He explained that he utilized the child support guidelines and also added a sum to that figure because the parties' income exceeded the child support guidelines. Specifically, the judge determined that the guidelines directed that the weekly child support for the youngest daughter was $453. To that sum, he added 14.6% to yield a gross amount of $519 each week. The judge found that plaintiff should pay only $230 each week from current income and the balance from the youngest daughter's trust account. Moreover, plaintiff would pay all educational expenses and all expenses of daily living from the girls' UGMA*fn2 and UTMA*fn3 accounts. The judge awarded no child support payments to the daughter enrolled in college because she lived at home infrequently and all of her expenses are paid from trust accounts established for that purpose.
Defendant argues that the trial judge abused his discretion in fashioning the child support award. First, she asserts that he did not properly calculate child support in this "above-guidelines" case. Second, she contends that the judge should have awarded child support for the child in college. Finally, defendant asserts that the judge erroneously permitted plaintiff to fund his child support obligation from the children's trust funds rather than his current income. We address these contentions in turn.
Rule 5:6A requires judges to fix child support in accordance with the guidelines adopted by the Court. See R. 5:6A, Appendix IX. A judge may disregard the guidelines in certain situations, one of which is annual income in excess of $187,200. R. 5:6A, Appendix IX-F; Caplan, supra, 182 N.J. at 265-66. When the annual family income exceeds $187,200, the judge applies the guidelines up to the ceiling and then supplements the award utilizing the factors set forth in N.J.S.A. 2A:34-23a. R. 5:6A, Appendix IX-F; Caplan, supra,, 182 N.J. at 265-66. In addition, if the child is over twelve years of age, the child support guidelines suggest adding 14.6% to this figure. Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2434, 2446-47 (2011). "This combined approach should result in a fair award of child support that is in the best interest of the child." Caplan, supra,, 182 N.J. at 266.
Here, we do not quarrel with the $453 weekly base amount of child support. It is entirely consistent with the established child support guidelines. Nor do we quarrel with the 14.6% added to that amount. This enhancement is derived from Appendix IX-A of the guidelines. Appendix IX-A at 2447. We also do not take issue with the allocation of 80% of the responsibility for payment to plaintiff.
The trial judge, however, did not complete the analysis required when family income exceeds $187,200 annually. Once the judge calculates the base amount pursuant to Appendix IX and provides the enhancement due to age, the judge must then determine the appropriate amount of child support pursuant to the factors identified by statute. N.J.S.A. 2A:34-23a. That is, the judge "supplement[s] the guidelines-based award with a discretionary amount based on the remaining family income (i.e. income in excess of [$187,200]) and the factors specified in N.J.S.A. 2A:34-23." Caplan, supra,, 182 N.J. at 266 (internal quotations omitted). Those factors are: needs of the child; standard of living and economic circumstances of the family; all sources of income and assets of each parent; earning ability of each parent; need and capacity of child for education; age and health of the child and each parent; income, assets, and earning ability of the child; responsibility of parents for court- ordered support of others; reasonable debts and liabilities of each parent and each child; and any other relevant factor identified by the judge. Ibid. . Then, the judge must allocate the responsibility for payment of the child support award between the parents. Id. at. at 266-68.
The dominant factor is the reasonable needs of the child. Strahan v. Strahan, 402 N.J. Super. 298, 307 (App. Div. 2008); see also Isaacson v. Isaacson, 348 N.J. Super. 560, 581 (App. Div.), certif. denied,. denied, 174 N.J. 364 (2002). The needs of a child in a high-income family may be different than the needs of a child in a moderate-income family. Strahan, supra,, 402 N.J. Super. at 307. On the other hand, care must be taken to craft an award that does not concentrate solely on income but also reflects the established lifestyle, which in turn, often reflects parental values. Id. at. at 307-08; Isaacson, supra,, 348 N.J. Super. at 582.
Here, finding that plaintiff will pay all education costs and all expenses of daily living, the judge reduced plaintiff's weekly obligation payable to defendant from $415.20 to $230. In doing so, he expressly permitted plaintiff to draw $1000 each month from the trust funds established for the youngest child. In response to defendant's motion for reconsideration, the judge explained his reasoning:
The Court determined that $519 per week, or $26,988 per year is due in support. Of this $12,000 per year is paid from the trust account (at a rate of $1,000 per month). Thus, the parties must pay $14,988 from their personal funds. Of this, Plaintiff is responsible for 80% or $11,990.40. This works out to a payment of $999.20 per month or (as the Court rounded) $1,000, or $230 weekly.
In addition, the only explanation for limiting child support to the minimum amount, i.e., the guidelines amount for one child from a family earning $187,200 annually, is the "three ponies rule" referenced in Isaacson. The judge said:
This Court parenthetically has not considered that a child support award above this [$12,000] per year], would violate the so called "Three Pony Rule" referred to in Isaacson, [supra, 348 N.J. Super. at 583], "[t]hat is, no child, no matter how wealthy the parents, needs to be provided more than three ponies." . . . More to the point of this case, who can say how many monthly nail care or hair sessions are equivalent to three ponies? However, Plaintiff's child support obligation of $1,000 per month, combined with the UGMA/UTMA 529 accounts that fully fund the children's college and personal costs, allow the parties' unemancipated child[ren] to fully share in their parents' good fortune and enjoy the same lifestyle to which they were used during the marriage. (internal citations omitted).
The defects of this approach are that the trial judge avoided the requisite analysis of the needs of the unemancipated child still in high school and residing with defendant, assumed that plaintiff would continue to pay all expenses of daily living, and that the trust funds are available for the purpose of paying daily expenses of the child still living at home.
We agree with the trial judge that high parental income is not a blank check or synonymous with indulgence. Common experience informs us that some high income families indulge their children, others endeavor to inculcate financial restraint. It is incumbent on the judge to determine not only the needs of the supported child, but also the family values regarding financial matters and to reflect these findings in a reasonable child support award.
Here, the trial judge allocated 80% of the responsibility for payment of the child support obligation to plaintiff but permitted him to withdraw from the youngest daughter's trust accounts the amount over $1000 each month. The judge cited the family's practice to draw on the accounts of the daughter enrolled in college to pay the costs of her education, auto and personal expenses during the course of the matrimonial litigation and the family practice when the emancipated oldest daughter was enrolled in college. Past family practice for the daughters enrolled in college is not applicable to a child still in high school. Moreover, particularly for the child still in high school, the practice is contrary to law.
The UGMA and the UTMA allow a person to make gifts to a minor without establishing a trust. A transfer made under these acts "is irrevocable, and the custodial property is indefeasibly vested in the minor." N.J.S.A. 45:38A-24. See also Roberts v. Roberts, 388 N.J. Super. 442, 448-49 (Ch. Div. 2006). Although § 27(b) of the UGMA and § 32 of the UTMA suggest that the custodian has unfettered discretion to draw on these funds for the support of the minor, courts have held that "a custodian of an UGMA account may not use funds in the account to pay or reimburse h[im]self either for expenditures which he makes for [his] own benefit or for expenditures which he is legally obligated to make from [his] own funds for the benefit of the minor . . . ." Cohen v. Cohen, 258 N.J. Super. 24, 29 (App. Div.), certif. denied, 130 N.J. 596 (1992). In Cohen, the court held that the mother should not have used the UGMA account to reimburse herself for her daughter's living expenses, including clothes, food, shoes, dry cleaning bills, medical insurance and doctors' bills. Id. at 31. On the other hand, the mother could reimburse herself for services provided to her daughter, such as school and camp. Id. at 31-32.
The judge should not have permitted plaintiff to discharge his child support obligation by drawing on the youngest daughter's UGMA and UTMA accounts. This is a basic obligation that is to be paid from his current income. Similarly, the 529 account*fn4 is available for qualified education expenses only. We, therefore, remand for reconsideration of the amount of child support payable by the parties for the benefit of the parties' youngest daughter. This reconsideration must reflect the amount due from date of entry of the JOD, when the youngest daughter was in high school to the current time. We assume the youngest child is now in college. We remind the trial judge that enrollment in college does not obviate the need for an award of child support. College enrollment simply means that the guidelines do not apply. Pressler & Verniero, supra, Appendix IX-A to R. 5:6A at 2447.
Similarly, the judge shall also consider the appropriate award of child support for the middle daughter who was enrolled in college during the matrimonial litigation for whom the judge awarded no child support. In his decision to omit a child support award for this daughter, the judge found that this daughter attended a college that used a trimester calendar. This calendar does not obviate the need for child support, if the unemancipated child still spends identifiable blocks of time with one or both parents. The amount of child support depends on several factors, including the extent of the college-age student's expenses and the sources for payment of those expenses. The inquiry may also include the culture of the institution at which the student is enrolled and whether non-school terms are spent at home or traveling or work in other places. Moreover, the trial judge must recognize that some costs, such as housing and utilities, in the residence to which the student returns remain in place even though an unemancipated child is enrolled in school and living away from home.
Having addressed the several issues associated with the award of alimony and child support, we now address the issues presented by defendant regarding equitable distribution. Defendant argues that the trial judge erred by awarding plaintiff an interest in her post-complaint assets while permitting plaintiff to retain the entirety of his post-complaint assets. She also argues that the judge should have equitably distributed pre-tax non-liquid assets, should not have considered pendente lite support as an advance on equitable distribution, should not have allowed plaintiff to retain $60,000 for hypothetical taxes to be incurred when marital assets were sold, and failed to equitably distribute airline rewards points.
Equitable distribution is governed by N.J.S.A. 2A:34-23h. It "'is responsive to the concept that marriage is a shared enterprise, a joint undertaking, that in many ways is akin to a partnership.'" Steneken v. Steneken, 183 N.J. 290, 299 (2005) (quoting Rothman v. Rothman, 65 N.J. 219, 229 (1974)). N.J.S.A. 2A:34-23.1 enumerates sixteen factors that a court must consider in making an equitable distribution of marital property. Those factors include:
a. The duration of the marriage or civil union;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage or civil union by each party;
d. The standard of living established during the marriage or civil union;
e. Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage or civil union;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;
o. The extent to which a party deferred achieving their career goals; and
p. Any other factors which the court may deem relevant. [N.J.S.A. 2A:34-23.1.]
The process of equitably distributing marital property is not a mechanical exercise; it must identify and weigh the various relevant factors. Wadlow v. Wadlow, 200 N.J. Super. 372, 377-78 (App. Div. 1985). This court reviews an equitable distribution award crafted by a trial judge pursuant to an abuse of discretion standard. Lasala v. Lasala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001). This court will uphold an equitable distribution award "as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." Ibid.
Here, the judge identified, valued and distributed the marital assets as follows:
Plaintiff-Mark Defendant-Lois Marital Home $1,640,000 Townhouse $373,000
Vanguard Fund $489,488 $389,488 ING Annuities $750,088 Royal Alliance $1,615,438/425,000
Fidelity IRA $43,828
Keogh Trust $102,263
UBS IRA $9,422 Peapack-Gladstone $145,000 Valic Annuity $40,000 TOTAL $2,633,439 $2,964,576
We find no merit to defendant's contentions that the judge erred in awarding her the marital home and three pre-tax, non-liquid funds. There is no suggestion that defendant requires access to these accounts for her support or to fund equitable distribution. The judge awarded $80,000 annual alimony to her, and the former marital home was not burdened by a mortgage.
We also decline to disturb the reservation of $60,000 to fund the payment of taxes due on the sale of two commercial properties owned by plaintiff. The parties agreed prior to trial that these properties were to be sold, and each party would pay half the taxes due on sale. This reserved sum was designed to address that event. To be sure, the time of sale was unknown at the time of trial and decision, but the fact that taxes would be due when the properties sold was known and the trial judge prudently created a reserve to address a known future liability. We assume that both parties would share equally in any balance in this reserved sum after all taxes are paid.
Defendant's other argument that the judge failed to equitably distribute airline rewards miles is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Defendant questions inclusion of the Peapack-Gladstone account as marital property and subject to equitable distribution. After plaintiff filed the divorce complaint, he remitted $75,000 to Lois in three equal installments on July 2006, August 2006, and October 2006. Defendant states she deposited this sum in the Peapack-Gladstone account. Plaintiff took $100,000 at the same time and deposited this sum into a Vanguard account. Plaintiff obtained these funds from the liquidation of the parties' Chelsea Senior Living investment. Defendant argues these funds were in the nature of pendente lite support and not distribution of marital assets. As such, she contends the judge should not have awarded plaintiff a credit of one-half of the $75,000 in the allocation of marital property.
The record demonstrates that the parties and the court recognized that the treatment of how these three payments was an issue to be resolved by the judge, and at least at one point during the cross-examination of plaintiff, the judge suggested that he might consider these payments as pendente lite support. Obviously, he altered his initial inclination. We are satisfied that the record supports the finding that the payments should be considered an advance on equitable distribution.
At the time these payments were made by plaintiff, defendant had few expenses because plaintiff continued to pay all of the family expenses, including the credit cards used by defendant. Defendant argued that she used the $75,000 to pay personal expenses that she could not charge, such as the maid. This arrangement continued until plaintiff's car was vandalized and his credit cards were stolen. At that time the parties agreed that he would continue to pay the roof and automobile expenses for the family, as well as $6,000 each month to plaintiff for her personal expenses.
Measured against this record, we discern no basis to disturb the judge's finding that the sums advanced from June to October 2006 should be considered an advance on equitable distribution. Indeed, the breadth of the expenses assumed by plaintiff, the additional cash payment to defendant for personal expenses, and the scant personal expenses identified by defendant not paid by plaintiff leaves little doubt of the purpose of these funds. The judge also found that some of the funds in the Peapack-Gladstone account were derived from support paid to defendant by plaintiff. Notably, the judge required only $75,000 in this account to be treated as an advance to equitable distribution.
Finally, we address plaintiff's appeal. He contends that the trial judge should have reimbursed him or given him a credit for pendente lite expenses paid in October 2008. He also argues that the trial judge should have adjusted the equitable distribution scheme to reflect depreciation of his investment accounts that occurred between trial and decision. He also contends that the trial judge should have reimbursed him for $14,000 received from his father's life insurance policy. The threshold issue is whether plaintiff should have filed a cross-appeal rather than a notice of appeal.
The trial judge issued his opinion following trial on October 6, 2008. The judgment for alimony, child support, equitable distribution, and counsel fees was entered on November 8, 2008. Prior to entry of the judgment, defendant filed a motion for reconsideration of various issues on October 30, 2008. Plaintiff filed a cross-motion on December 8, 2008. In this cross-motion, plaintiff sought denial of defendant's motion for reconsideration, counsel fees and costs. The judge issued his opinion on these motions on December 23, 2008; the judge entered the order memorializing his opinion on January 12, 2009. That same day, defendant filed a notice of appeal from the November 8, 2008 and January 12, 2009 orders.*fn5
Plaintiff filed a cross-motion on April 9, 2009, in response to a motion filed by defendant on March 18, 2009. In his cross-motion, plaintiff also sought reimbursement for expenses paid for defendant following entry of judgment, adjustment for passive losses he suffered after trial, and recovery of $14,000 erroneously considered in the equitable distribution award. He cited Rule 4:50-1 as the procedural ground for this motion seeking affirmative relief.
A judge other than the trial judge held that the applications for relief from equitable distribution awards are not subject to modification due to changed circumstances, and the belated recognition that non-marital funds had been included in the equitable distribution award cannot be considered newly discovered information. The motion judge also held that these issues should have been the subject of a notice of cross-appeal or notice of appeal from the November 2008 judgment. Accordingly, plaintiff's motion was denied.
Plaintiff filed a notice of appeal from this May 1, 2009 order on June 15, 2009. He contends his appeal is timely because he appeals only the denial of his April 2009 cross-motion. Defendant argues that plaintiff's notice of appeal is an attempt to avoid the consequences of failing to file a timely motion for reconsideration of the November 2008 judgment or a timely appeal from the November 2008 judgment or a cross-appeal from the January 2009 order denying her motion for reconsideration.
As an appeal from the May 1, 2009 order denying his Rule 4:50-1 motion, plaintiff's notice of appeal is timely. We agree, however, that each issue presented in that motion was not amenable to correction by a Rule 4:50-1 motion. Each issue should have been the subject of a timely motion for reconsideration of the November 8, 2008 judgment or a timely appeal or cross-appeal. We affirm substantially for the reasons expressed by the motion judge in her statement of reasons that accompanies the May 1, 2009 order.
In summary, we remand for reconsideration of the alimony award due to the failure to consider the tax consequences of the award, reconsideration of the child support award, and the source of payment by plaintiff of the award. The judge shall also enter an order regarding plaintiff's obligation to secure his alimony obligation.
Affirmed in part; reversed and remanded in part for further proceedings consistent with this opinion. We do not retain jurisdiction.