Traditionally, an engagement starts with a diamond ring – a high-end asset. If the marriage never takes place, by law, the ring reverts to the giver. If the marriage takes place, the engagement ring belongs to the recipient, even if the marital disintegration starts immediately. 

Any other gift given during the time of engagement doesn’t have the concept of necessary reversion like the ring.

By law, wedding gifts are marital. That means, presumptively, they’re split equitably in New York. When we say “equitable,” we don’t necessarily mean 50/50; different assets are often split in different allocations – but wedding gifts do tend to be split 50/50 if the parties are choosing to treat it as a marital asset.

As wedding gifts are typically bestowed to both parties in their newfound celebration, gifts from third parties expressly given to both parties during the marriage are also marital. Here, the express intent of the giver matters. If, for example, the wife’s father or best friend gives her a gift during the marriage, that would be her separate property, but if the father or best friend gives that same gift and says, “Here is for the two of you to enjoy,” the gift would be marital property. 

I have seen situations where parents will put real property in their married child’s exclusive name and gift it. The act of placing the real property in one party’s name is sufficient to demonstrate their intention to gift it to their child as separate property. Conversely, I have seen instances where parents placed real property in both parties’ names (their child and his/her spouse). In these instances, their child cannot meet the burden of proof that the gift was meant exclusively for them at the time of a divorce. They must share that real property with their soon-to-be ex as marital property. 

Inheritances are a form of a third-party gift given at a loved one’s demise. These gifts are separate property. So long as the inheriting party keeps it separate, the law honors this as separate property. Even if some commingling of it has occurred, if the inheriting party can trace it to the inheritance, they often get recoupment.

It is only natural that spouses buy things for each other, and these interspousal gifts are marital property under the law. Think of a husband who buys his wife a necklace for her birthday and a wife who buys her husband a one-of-a-kind watch for their anniversary. Those are both interspousal gifts. Their allocation, upon a divorce, is subject to equitable distribution.

Prenuptial and Postnuptial Agreements can elect to opt out of this, and designate all such gifts as separate property. The prenup/postnup can address whose separate property it is. 

Different people designate the gifts as separate or marital property based on their individual values and sensibilities. It is common for clients to say that interspousal gifts will be the recipient’s separate property, but you have people who also want to set a dollar limit, for example, they may feel that all gifts under $4,000 will be the recipients but anything over $4,000 will revert to the giver. 

Some feel that when a marriage is on the heels of divorce, and one party may have even engaged a divorce attorney, the party trying to salvage the marriage will try re-courting their spouse and lavishing them with expensive gifts to reignite endearment. Their sense of justice tells them that if a divorce happens, that expensive inter-spousal gift should revert to them if they used separate property to buy it, because their spouse was already planning on divorcing them and that last ditch effort should not cause them a greater loss. 

These sorts of nuanced permutations are common. Another example of a permutation would be that all wedding gifts will be one of the party’s separate property, because that party paid for most of the wedding. 

Helping clients feel a sense of security through prenuptial and postnuptial agreements is one of my favorite parts of practicing Matrimonial Law. 

If you would like to learn more about how your gifts and assets are classified in a divorce or to draft a prenuptial or postnuptial agreement tailored to your specific priorities, contact me to schedule a consultation.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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In order to help their family thrive, many grandparents financially support their adult children and grandchildren. For example, let’s think about a couple that lives in Manhattan with an income of $350,000 – $400,000 a year. In many places, that would be a decent amount of money. If someone’s living on the Upper West Side, Upper East Side, or SoHo, it’s not nearly enough. In these situations, grandparents often give their children very large sums of money on a routine basis as well as make direct payments towards expenses like the grandchildren’s private school tuition and high-end camp experiences. 

I wrote an article called “Good Samaritan Divorce,” which talks about how the Good Samaritan often gets “punished” in some way. For your convenience, you can read the article here.

What does this have to do with matrimonial law? There are standards and statutes in matrimonial law, and grandparents’ consistent and unwavering financial support can affect the support payments. The general support standards are set forth in “The Child Support Standards Act” and “The Notice of Guideline Maintenance” – advisory guideline statutes for child support and spousal support (aka maintenance and alimony). 

The golden rule is maintaining the standard of living.

At the outset of a divorce case, both sides are required to accurately complete, legally acknowledge, and file with the courts a comprehensive document called a Statement of Net Worth, which sets forth the standard of living. 

The standard of living analysis is the most critical and guiding factor in negotiating support and arriving at a final agreed upon amount. The system wants children’s material lives to remain intact. The system wants the lower income earning spouse to have a window of time when they are getting support from their higher earner ex to give them a cushion and bridge towards being more self-supporting. 

I’ve had many cases where grandparents steadily gave money to their children’s family throughout the marriage to subsidize housing, car payments, parking, vacations, and tuition – like a weekly or monthly allowance, but for adults.

If the couple divorces, the idea of imputation comes into play.

Imputation: The assignment of a value to something by inference from the value of the products or processes to which it contributes.

Let’s say it was the husband’s father that helped support the family, the wife is going to want to come after that additional money, even though it doesn’t show in the husband’s W-2 or tax returns – that’s the inference.

Some grandparents feel like imputation codifies an agreement that would have happened anyway. Other grandparents react differently and chafe at the idea of being required to do anything. They also don’t want to be passengers on the roller coaster of their child’s divorce. 

In many instances, grandparents enter into promissory notes with their child for some or all of the funds they give – thereby making their child their debtor. They are trying to ensure that the monies are legally recorded as debts and not gifts or supplemental income. This is done to shield both the grandparent and their child in the event of a divorce. Both the grandparent and child should, however, consult with a qualified attorney when navigating this strategy. 

Understanding imputations and standard of living analyses takes a skilled matrimonial attorney – and the more experience they have, the better. Contact me at The Law & Mediation Office of Cheryl Stein to schedule a consultation.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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If divorcing in a chaotic wild west style is on one end of the spectrum and divorcing like you’re having a congenial kumbaya and séance is on the other end of the spectrum, “Nesting” is the kumbaya séance. 

Nesting is a custody arrangement in which each parent is in the marital residence with the children, exclusive of the other parent, during his or her designated parenting time. 

During your parenting time, you’re with the children in the marital residence and the other parent goes to another residence – typically a “crash pad” apartment – close to the marital residence that both parents share in alternating fashion during their “off parenting” time. You then go to that other shared apartment when your ex comes back to the marital residence during his or her designated parenting time. 

By alternating which parent is in the marital residence, the children stay put in the marital residence “nest” they are accustomed to rather than going back and forth between both parent’s homes. 

While many nesting situations are 50/50 parenting time splits, it is fluid, and certainly not all are. Some have other parenting time splits, where one parent is clearly the primary “on parent.” 

Parents who choose nesting tend to be very concerned with the impact their separation will have on their children in what is typically demonstrated in self-sacrificial ways. It’s like they are trying to follow a code of rules towards executing as neat and seamless a separation and divorce as humanly possible, even if it will make them more uncomfortable. 

For example, the shared crash pad is typically a bare bones impersonal space where they are careful not to leave personal belongings that their ex could find, because while sharing it, they are divorcing for a reason after all, and want a semblance of privacy from their ex. Further, they are alternating to shield their children from having to do so, because moving physical spaces often is inherently an uprooted way of living. 

Nesting requires a high level of collaboration and cooperation between the parents. 

Litigating parties or parties whose only language and discourse is that of hostility are not candidates for a nesting arrangement. I have yet to have a case where one of my litigating clients was nesting. I would be curious if such a case exists and how it was pulled off.

Nesting is very attractive in the beginning to many couples who come to me for mediation and collaborative divorce before they have a firm footing and understanding of what their post-divorce family will look like. 

They want to nest as a transitional bridge for a one to two-year period to “safely” get the family to the other side – the post-divorce splintered family still trying to salvage whatever wholeness they can project to and for the kids.

It is often an idealistic aspiration. As the parties nest for several months and the separation terms come into clearer focus, the initial enthusiasm for nesting typically starts to fizzle, and most couples end up doing it for a shorter duration than they initially thought they would.

It is a testament that separation and divorce is a process and for those who have a good enough relationship with their ex to have the luxury to keep an open mind and try things, it can be a fluid process, where both parties mutually decide which avenues “fit” them individually and the kids, as they are going through it.

To learn more about nesting and whether it is the right decision for you, contact us at The Law & Mediation Offices of Cheryl Stein.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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I don’t relish being a party pooper, but I always remind clients, “It’s not over ‘til the fat lady sings!” 

What does this mean in the context of divorce? It means that, if you have unemancipated children, you will likely be revisiting parts of your divorce agreement time and again as they grow older and unanticipated events occur, one of you wants to relocate, one of you loses a job and needs to modify child support and for a plethora of other reasons. Many divorced parents end up going back to court until their children are emancipated — and possibly afterwards if there are child support arrears. 

Sometimes, the divorce agreement is just the beginning of the legal battles. Unfortunately, this can be true even for prescient, well thought out and meticulously drafted agreements, but obviously in the latter instances, there is less exposure, so having a really solid tight-knit initial agreement in place, which leaves room for less loopholes, is key, albeit not bulletproof.  

Maintenance and spousal support are modifiable. Even if someone waives spousal support in their agreement, there is case law in which — 10 years after the agreement — one party was going to be a ward of the state and sued for maintenance. The judge ruled that maintenance had to be paid, which sounds perturbing and off-base, but the court will first look at the ex-spouse rather than let the other person be a ward of the state. Even if you try to waive support, or negotiate a certain amount, that is all modifiable. Notably, maintenance is harder to modify than child support, which has a much lower bar for modification, and includes the classic 3 bases: passage of 3 years; 15% increase or decrease in either party’s income; and a substantial change in circumstances. 

The permissibility of modification for custody holds true as well. You can have one party awarded custody because the other party was a total disaster at the time of divorce. The parent unfit at the time of the divorce can always come back later and say, “I rehabilitated myself. I need to be the joint custodial parent now” and proceed to demonstrate substantial changes in circumstances since the initial agreement and judgment of divorce were signed off on to prove their point and elevate their custodial standing.   

These requests to change custody agreements and modify child support and maintenance are very common and the post-judgment part in court is more backed up than the parts that handle the initial divorces. 

The same occurs with challenges and attempts to overturn prenuptial and postnuptial agreements. People often state that their prenup or postnup was signed under duress or coercion, or perhaps they didn’t have an attorney look at it and didn’t understand what they were signing. It is critical that attorneys who represent clients in these agreements strategize and have the necessary foresight to prevent such an eventual catastrophe to their client. 

Life circumstances change. People change their minds. Whatever reasons that they come up with, valid or invalid, people often want to get out of deals — and there’s nothing unusual about that.

To learn more about your specific circumstances, please contact us at cheryl@cherylsteinesq.com.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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Studies show that addicts don’t necessarily get better — instead it’s about containing or channeling the addiction. Oftentimes, for a multitude of reasons, the partners of addicts are willing to cut the other party some slack because they don’t want to throw in the towel on the marriage. Sometimes, a post-nuptial agreement is done instead of a separation or divorce, sometimes nothing is done.

When thinking of addiction, most people conjure images of alcohol, drugs, and smoking, but there are so many other forms of addiction that can have deleterious effects on relationships and marriage, like sex addiction, gambling, video games and screen time, and engaging in dangerous and high-risk sports and behavior to test one’s edge and get their adrenaline pumping towards making them feel more alive, or on the flip side, to numb themselves from feeling anything.

I have a case in which a woman was married to someone who is a sex addict. He spent the down payment for a new house on his addiction. Because they have three young children, the wife took a wait-and-see attitude. For his part, the husband went to a rehab facility and found 12-step meetings to attend afterward. Unfortunately, as time went on, it became clear that his addiction was a factor once more. While it did not affect his career, he was not able to juggle his addiction and his marriage. I represented the wife in the divorce getting her 75% of the parties’ assets in an equitable distribution relief package to compensate her for the money the husband dissipated on prostitutes, escorts, and his porn addiction.

Another common situation I’ve come across is when there is a combination of addiction and rather acute mental illness, such as bipolar disorder. This is especially relevant when there are changes to medication used to treat mental health issues, or the person simply stops taking their prescribed medications. These situations can change overnight, and often cause people to want an immediate divorce in order to protect the children, in addition to protecting assets, and their own mental health and sense of safety.

Gambling addiction is also widespread. A client’s husband recently revealed to her that he has $150,000 in gambling debt and a co-debt with someone else for over $50,000. She is obviously very concerned about her assets, which primarily consist of the marital home. One option for this couple would be a post-nuptial agreement, putting everything in the non-addict spouse’s name.

Within more religious and tight-knit communities, I’ve seen many miserably unhappily married people choose to stay married to an addict solely because they fear stigma. Often, they have children and are afraid that others will think the addiction is inherited. If people live in a community where addiction is a highly stigmatized black marker, they don’t want people to know, so they choose to “stick it out” in their marriage — a very loveless marriage for the sake of maintaining a facade.

Feel free to contact me if any of this resonates and you or your spouse struggle with an addiction.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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I had a case where the husband had been put in jail because he had been stealing money from a fund that he was responsible for. Over the course of many years, he began taking money to subsidize his lifestyle with his wife. His wife made a good living, and he wanted to present that he was contributing towards the marriage as well. In truth, the wife didn’t know that much about the husband’s job, and she didn’t ask. He was a consultant, and they filed their taxes separately. 

The fund that the husband was responsible for eventually discovered his embezzlement. He ended up doing a stint in jail, and the wife stayed with him throughout this ordeal. The wife was not prosecuted or implicated in any way. This marriage did eventually disintegrate into divorce – the seed being planted with the husband’s criminal activity — but it took many years. 

In another instance where the husband was found guilty of embezzlement, the couple owned many joint assets together. They wanted to get a divorce in order to protect the wife’s share of the assets and transfer all the assets into her exclusive name, thereby protecting them. 

Sometimes, people trigger an investigation into their (ex-)spouse. For example, a wife may know that her husband used fuzzy math on his tax returns. They may stay married, and benefit from the questionable returns while they’re married. It’s only after the divorce — or during a very, very contentious divorce — that they will call the IRS. That is not only personally distasteful to me, it is also illogical to facilitate the imprisoning of your ex-spouse because then they cannot work and make support payments. Further, the children are deprived of a parent and have to deal with the emotional turmoil and stigma of an imprisoned parent.   

Finally, there are extreme scenarios of finding out your spouse committed a crime and got away with it. For example, finding out your spouse has affiliations with a supremacist or hate group, a terrorist organization, has stolen hundreds of thousands of dollars and gone undiscovered, and in the most extreme scenario, has committed rape or murder in their past and never got caught. These are not just scenarios that play out in mystery novels; while not run of the mill, these events happen and need to be handled delicately. 

There are ways to build up some armor and distinguish yourself from your law-breaking spouse. Post-nuptial agreements can address all kinds of different issues. If the marriage is in a more advanced stage of deterioration, you can pursue a separation agreement or divorce. Contact me at cheryl@cherylsteinesq.com to learn more.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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I’ve had many cases over the years in which my client is the party that is married and has gotten another woman pregnant, but these cases can come in any permutation: 

•Two unmarried people who have a child together;

•A wife whose husband got another woman pregnant; 

•A wife who’s pregnant with another man’s child; 

•Religious divorces in the absence of corresponding civil divorces — and the myriad legal issues that can come about as a result of children born into these situations.  

I often have cases involving workplace romances or affairs, either open or clandestine relationships. Sometimes, the involved colleagues will refer to each other as their “work” husband and wife. A work husband and wife may be having an emotional affair while at work together, developing their own internal language, kibitzing with each other, making each other feel sexy and desirable, and providing each other with something that neither is getting from their marriage, while also providing a support system, stress release and distraction from work. It is very common. In one case, the work husband was a traditional husband with four children, when the emotional affair at work turned physical. The woman (“work wife”), who was single, ended up getting pregnant and sought an unrealistic child support arrangement, given that he had four other children to support, she was a high-income earner, and not necessarily the most sympathetic character. She wanted support from this colleague as if this was his only child, and as if he had an obligation to support the child at a highfalutin lifestyle, including tuition towards elite private schools and the promise of paid ivy league education in the future, completely ignoring the statutory caps and reality of his total obligations. He had the stronger case in taming and constraining any support obligations towards this colleague and their out of wedlock child. Whatever romance once existed faded into the background when their dissonance surrounding support surfaced. 

The law on these issues is not a fait accompli per se. It rests on the discretion of the judges. In this case, the court took the totality of the father’s circumstances into account and how much of his income had to go to his nuclear family before calculating the support for his out of wedlock child. 

Another issue that arises with out of wedlock children stems from what’s called Marital Presumption of Paternity. This means that a husband is presumed to be the legal parent, because he is married to the woman who had a child, and, therefore, he is obligated to support the child by default. This is true even if the husband is not the biological father. A husband can, technically, be on the hook for child support for an out of wedlock child, fathered by another man, if the child is born during the marriage. The courts in King County (Brooklyn) deal with this quite often. In the Jewish community, there are cases in which people first get divorced at their local religious institutions and proceed to get remarried to someone else religiously while they are still civilly married to their first spouse. A child born to a woman fathered by her second husband during this window of time between obtaining a religious and civil divorce is, technically, by law, considered the first husband’s child, so the court has to have a proceeding to properly establish the child’s paternity so that the first husband is not on the hook for child support. 

Many are also getting married much later nowadays. It is common to live together for many years, have children together, and only then get married. There are sage practices to put in place in accordance with the law and public policy to protect those in this situation. People are advised to seek counsel for any of the issues raised in this article. Contact me to learn more.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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People going through divorce may get reduced to their own worst, most childlike state. They may project a lot of what’s happening to them onto the children. They may use the children as tools, using the kids as an excuse to justify what they want. 

Here’s a case in point. A mother wanted primary custody of the children. The arrangement she was asking for would actually deprive the father of a lot of parenting time. She claimed he was “out to lunch” when watching the kids, like they could set the house on fire and he would still be sitting there buried in his work.

This mother could have chosen to serve the summons when the kids were not at home. She could have kept it private, but she didn’t think it through, so she served her husband with divorce papers at breakfast in front of their children.

Astonished and angry, he started to engage the children, saying, “Look, Mommy’s trying to make me a homeless bum and kick me out. Who would you want to live with?” It became a round table breakfast discussion. These kids should never have been in that position! 

The wife had been considering divorce for at least a year. The husband didn’t want a divorce. He got served totally out of left field and was in a state of shock. It got quite intense and he became a little bit physically violent — when he had never been before. 

Later the wife kept using the incident as an example, “Isn’t he inappropriate that he was engaging the children and got violently angry?” She had completely lost sight of her own behavior, forgotten that she caused the entire horrible situation with her ill-considered timing. 

People in crisis forget and engage with their children as if they’re adults. They’re so wrapped up in their pain they can’t see that they are acting in immature and inappropriate ways.  

In another case, the husband was doing drugs, getting violent, drinking, coming home and, leaving again. The wife was in a lot of pain but kept saying she wanted to stay because of their child. In truth, she was just afraid. It would certainly be better for the child not to have such a volatile home life. The mother was projecting her emotions onto her child because she felt no sense of control in her life. Children are adaptable; the real issue was her feeling needlessly guilty about saying, “I don’t want this for myself.” 

Another danger is that sometimes when a person loses intimacy with their spouse, they may lean too heavily on their children for emotional support. They may start sleeping in the same bed as their child to avoid feeling alone. They may vent to their children because they don’t want to tell other people about the breakup. It starts to become not what a child and parent relationship should be. 

When a parent is trying to use the child to alleviate all of their feelings of emptiness and loneliness at the end of a marriage, it forces a child into a very difficult predicament. They will be profoundly confused, grow up too fast, or both. 

How Can These Destructive Behaviors Be Corrected? 

First, I have to make my clients see how they are behaving. I stop them in their tracks, while they’re telling me the story, to help the client be self-reflective and perceive their own behavior in order to modify it. 

My clients are flawed just as much as their spouses are flawed. I help them detach from their own issues and concentrate on getting the children through the transition. It often helps to have a child in neutral therapy with their very own counselor who can actively help guide the parents about their behavior. 

When divorcing parents can’t work together for their benefit, children get lost in the shuffle. In these families, the parents really need ways of breaking impasses and processing toxic emotions so they and their children can heal and move forward.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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In part because clients aren’t always telling you the full stack and sharing all their skeletons, I would not tell a client that I could get them relief such as sole custody, 100% rights to a business formed during the marriage, a guarantee that the statutory cap will apply for maintenance and child support when the income exceeds the cap, or the ability to relocate with their children — all of which are big-ticket, multi-dimensional items of relief.

In sharing the personal details of their lives, clients are often vulnerable — opening themselves up to outsider’s judgment and/or disapproval of how they are managing their lives. Attorneys need to know the larger context and help the client see it too.

During a recent client intake, the client revealed that she wanted to not have to pay her husband a penny, even though she earned more than him, to get primary residential custody, and to carte blanche be able to relocate with the children domestically. The latter one, being the one she desired most was the biggest wild card in her case, carrying the greatest improbability.

Her argument that she could offer them a better life elsewhere (perhaps questionable in it of itself in light of them already having the garden, backyard, family nearby, good schools, and residing in a good neighborhood in New York) was overshadowed by the overarching question — Can you offer the children a better life elsewhere than the life of having a father regularly present in their lives who they’ve seen daily to date and have a good relationship with?

Another case presented a high performing husband and father who worked long hours in finance. He wanted custody of his children stating his wife was an alcoholic and good for nothing. When we dug deeper, we learned that he, in fact, drank more than she did, but in light of his high performance at work, he considered himself a highly functional drinker and avoided using the term alcoholic altogether to describe himself. It appeared his wife had unraveled some several years back after she was let go from a prestigious job and never managed to regain her footing after that, but his contempt for her undermined who she was now, which was a functional enough mother, perhaps sloppy at times, but still quite present and active.

A case in point on the support end was a father making over $600,000 for the 5 years preceding the divorce who was adamant that he would only pay the statutory caps for maintenance and support, stating that they were modest spenders and quite frugal. There was some truth to this, except that they lived in New York City, and that alone meant that their modest living would require payments above the caps to sustain the accustomed lifestyle.

There is also the controlling personality type who called the shots during the marriage with the other spouse going along. These clients often think they will be able to navigate the divorce in a way to continue to get their spouse to go along with them, except that their spouse, self-aware enough of their namby-pamby quality, typically hires an overly aggressive attorney to compensate, who pushes back at every turn.

We all get these laundry lists of desired reliefs. As a service provider, we work for the client and are their cheerleaders, but realistic ones, that don’t overpromise and underdeliver; this is a key element of being supportive and effective for the client.

Being a cogent advocate and mouthpiece for the client and helping them to see the full breadth of their situation’s appearance to an outsider when all the relevant factors are weighed are not mutually exclusive; they are part of the same overarching role.

Please contact The Law & Mediation Offices of Cheryl Stein with any related questions.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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As a mediator/litigator, I am in favor of mediation-arbitration clauses for certain clients and this genre of clients fit the bill.

Because they have money and assets, these clients may be the ones responsible for their spouse’s attorneys’ fees during a divorce (under Domestic Relations Law Sections 237 and 238) and they may also be subjected to the rather taxing plight of having to pay numerous expert’s hefty retainer fees to assess their many assets.

Conversely, when clients come in wanting me to be their review attorney for an agreement that has been drafted and prepared by their significant other, they are typically the party with less, who may benefit more from having the court-litigation card to pull out and not cornering themselves into a mandatory resolution through mediation and/or arbitration. On the one hand, I’d be woe to call it the litigation trump card; but essentially, that’s what it is.

Because they have less, they often end up being more dependent on their partner and may need additional oversight, so you want to ensure that their agreement will not bar them from seeking judicial intervention should it be necessary.

What exactly is arbitration and will it offer the first category of clients the protection they seek?

Mediation is a completely voluntary process and non-binding, whereas arbitration is binding. This means that if arbitration is written into the agreement, both parties must participate and submit to the arbitrator. Agreements that contain arbitration clauses usually state that the parties will first try to resolve their case through mediation, and if that is unsuccessful then they will submit to arbitration. Best practice is to include a mechanism for selecting a mutually agreed upon arbitrator so the parties are not left in a situation where they have to attend arbitration and cannot agree on an arbitrator.

Unlike litigation, arbitration decisions are not published. Because it is a more private process, many of the arbitrators are retired judges, and the arbitration meetings take place in comfortable offices, as opposed to courtrooms with court officers and a more authoritative, bureaucratic, and austere milieu. The arbitrator’s decision is also not the final step in the process.

The arbitrator’s decision is also not the final step in the process. Each arbitration decision needs to be signed off on by a judge and formalized by the court. As parens patriae (legal protector of citizens unable to protect themselves, such as unemancipated children), the court also has the ultimate decision-making authority with regards to custody and visitation issues.

There are notable differences between the courts.

The first department (New York County, namely Manhattan, is in the first department), will uphold an arbitrator’s decision, including custody and visitation issues — being that they believe that because a judge ultimately signs off on it, the parens patriae principle is actualized.

The second department (Kings County, namely Brooklyn, is in the second department) will not necessarily uphold an arbitrator’s decision with regards to custody and visitation issues.

New York and Kings counties are my backyard, so I’ve highlighted them to point out the differences between the court’s viewpoints regarding arbitration. These discrepancies carry over into other counties and judicial departments as well, which is why it’s important for clients to have realistic expectations regarding the enforceability of an arbitrator’s decision, particularly if they are planning to include an arbitration clause in their agreements.

While a prenuptial agreement cannot address parenting issues, such as custody and child support, it can state that the parties agree to submit to arbitration to resolve all issues in their divorce. Based on the above discrepancies between the judicial departments, if the parties have a prenuptial agreement with such an arbitration clause and they have children and live in New York County at the time of a divorce, this would mean the arbitrator can determine the custody and parenting issues, it would be binding, and the court just rubber stamps the arbitrator’s decision. However, if the parties live in Kings County at the time of the divorce, they cannot be assured the judge will uphold the arbitrator’s decision on parenting issues.

The relief and clarity for those who want to include an arbitration clause in their agreements is that while they cannot guarantee it will render the arbitrator’s parenting-related decisions enforceable, the courts across the board uphold the arbitrators’ financial-related decisions, including equitable distribution, maintenance/spousal support, and child support.

I recently had a case where opposing counsel initially objected to including an arbitration clause, which was important to my client, because she did not know the law and whether it was enforceable.

Knowledge is power and when I sent opposing counsel the law indicating the degrees and nuances of its enforceability, she acquiesced on the point and my client was relieved knowing that the financial matters, which are most important to him will be resolved through arbitration and not litigation, which he fiercely opposes. He also felt assured knowing that if they reside in New York County with their children at the time of a divorce, even the arbitrator’s custody-related decision will be upheld.

Educate both clients and opposing counsel, when warranted, of all the potential issues and limitations that could come up when they want to include mediation-arbitration clauses or straight up arbitration clauses in their agreements.

Feel free to contact me if you are considering an arbitration clause in your agreement.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

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