Taking Age Gaps into Consideration

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Love is one of those things that finds you, you don’t necessarily find it. There are some people who are attracted to someone quite a bit older or younger than themselves. It’s both rare and not so rare. We all know these types of relationships have been around since the beginning of time. These relationships are often very happy, loving, and fulfill something in both partners. And no, it’s none of our business — unless you are contemplating a prenuptial agreement.

It’s very common, in so-called May-December relationships, for the wife to have the option of taking time off from work to raise the children during their formative years — a move that, in the event of a divorce, could necessitate spousal support.

I just worked with a woman in this position. During the prenuptial agreement negotiations, her then-fiancé wanted her to waive spousal support despite the realities of the situation – their current income disparity. 

Even though his earnings are much more than hers, she had the foresight to see that he would probably retire much sooner than she would. She could easily imagine an eventual role reversal in which she would be paying him. 

She needed to have the security of knowing that — if they wound up divorcing at a much later time — her financial security would not turn to shambles. At the same time, she did not want to be on the hook to support him through a life stage that is known for its extreme expenses. 

We came up with creative solutions to address her concerns and protect her in the short and long term for all eventualities.

The case above provides a relatively common example of how people plan for large age gaps in their marriages. Other, more complicated issues arise if the older spouse has been married before.

Let’s say, a woman is marrying someone 25 years older than her. I want to make sure that this man has a life insurance policy specifically designated to her and their joint children as opposed to his dependents from his previous marriages. Additionally, estate-planning documents need to be examined and rewritten to reflect the new marriage and its offsprings. Not to mention healthcare proxies and living wills. That’s why it’s often important to include a trusts and estates attorney in your strategy. 

Of course, anything you can do with a prenup, you can also do with a postnup.

Contact me to learn more: https://cherylsteinesq.com/contact.

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

Are You an Indian Giver: Understanding Gifts During Marriage

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One of the hallmarks of courtship is gift giving. Like love itself, bestowing presents goes back to the beginning of time. If you look beyond our culture and century, cultures around the world have regarded gift giving as a prominent facet of marriage since ancient times. These offerings are often expensive, luxury items and jewels. Somehow, even needy and middle-of-the-road individuals often come up with the money for this. It’s important to understand how gifts are classified under the Domestic Relations Law that informs matrimonial law and during a divorce. See, DRL Section 236B: https://codes.findlaw.com/ny/domestic-relations-law/dom-sect-236

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

Required Reading for Involved Grandparents

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Recommended reading: “Well Into Adulthood and Still Getting Money From Their Parents” Wall Street Journal, January 26th, 2024.

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

Victimhood Has Currency

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Most people spin conflict so that they are the victor or the victim. Here’s why it’s important to keep that instinct in check.

The legal community focuses heavily on the topic of domestic violence with continuing legal education seminars and pro bono clinics. There is even a specialized court called the IDV court (integrated domestic violence), where the family law cases that have alleged elements of domestic violence are adjudicated.

Abuse comes in many forms – emotional, physical, sexual, and financial. Courts take abuse into consideration and use it as a factor in equitable distribution and spousal support, often increasing the amount of money an abused party will get. So, there is monetary compensation for it.

There is a case J.N v. T.N., in which the abuse was found to be so grave, the court awarded the abused party 85% of the marital assets. The case can be found here: https://law.justia.com/cases/new-york/other-courts/2022/2022-ny-slip-op-22310.html. See also, DRL Section 236(B)(5)(d)(14), which can be found here: https://www.nysenate.gov/legislation/laws/DOM/236.

Abuse is also an obvious factor in custody determinations, as logically, children should have measured and protected engagements with an abusive parent. Trouble comes, however, when one party exaggerates or fabricates allegations of abuse to gain monetary and custodial advantages. The irony being that such a party abuses the abuse claim as a punitive and self-enriching weapon.

For example, conjure the not uncommon case of a wife calling the police on her husband, purely as a child custody tactic. In doing so, she thinks she can get the upper hand by forcing the creation of a police record for her husband – all without thinking of the implications. The wife here is so blinded by her personal ambition of gaining full custody that she fails to see the bigger picture – that her husband would get fired if there was any hint of an abuse allegation in his private life. Whether or not the allegation was true, the allegation’s mere existence was a glaring indelible black mark against him. What she thought would help her in her custody case turned out to be a very silly move for the financials. Since her ex is now unemployed and virtually unemployable at the level of income he was making at a top bank, she is limited in the support she can get. Moreover, because the court felt her call to the police was disingenuous, she ended up being penalized on the custody front.

Everything done in divorce has a cost-benefit analysis. As highlighted above, when vindictive parties are too myopic in their strategy, they end up losing on multiple fronts.

One of the consequences of the victimhood claim is that it often keeps very unhappily married couples married.

I have seen many situations where a theme of the marriage is – “You are the reason for all my unhappiness and misery, and if we get divorced, I will make your life a living hell.”

The party being blamed chooses to stay in the marriage because they view this as a real threat. Despite their misery, it is a misery they know and have lived with for years, which to them, beats the unknown behemoth of misery their spouse vows to ascend on them if the parties divorce.

I often get postnuptial agreement inquiries from this category of married couples.

To learn more about how genuine and fabricated abuse allegations can impact marriage and divorce, contact 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

Protecting Your Business Partners from Your Marital Fallout

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Most people are prepared to undergo intense scrutiny and background checks when entering into a business partnership or for consideration to high-level corporate and finance positions. 

It’s a common occurrence meant to unearth skeletons and expose red flags in your life. 

The business partners or corporation want to know how your problems may become their problems if you are onboarded and welcomed into their fold. 

Your prospective or current marriage may be one of the things they look at with discomfiting interest. 

There is ostensibly a good reason for this personal invasion of privacy. Divorce has the potential to shine a spotlight on your business interests and investments in what’s called “Discovery.”

Discovery is a mutual exchange of financial documentation during divorce. It includes all income, assets/investments, and debts. It is an exhaustive and time-consuming process meant to ensure that all cards are on the table and there is full transparency relating to the divorcing parties’ individual and collective finances. The intended endgame is a fair and equitable financial settlement agreement. 

The inevitable consequence is the required production of documentation relating to business interests and investments. This makes prospective business partners queasy as they typically don’t want confidential documentation relating to their business exposed in your divorce. 

To give you some examples, one of my divorcing clients had 3 business partners. It was a very successful hands-on business and all 4 of them were actively involved on a day-to-day basis. Typically, I meet with my clients alone and we loop in their accountant and other professionals when needed. In this instance, all 4 business partners insisted on being at all meetings relating to the business, its valuation, forensic accounting, and documentation that would be produced. My client’s wife was seeking a marital portion of the business (of which my client was a quarter owner). She was also trying to understand its income structure and claimed there had been downward manipulation of income in anticipation of divorce – a fallacious assertion, which we needed to refute. 

Another example is a frantic phone call I received from a new client. He was in Europe for a corporate meeting with his business partners. His wife called him during the meeting to tell him she was seeking an immediate divorce. His business partners overheard and became so concerned as to how they would be affected that they told him to call me immediately on speaker phone and explain to them the process of discovery, equitable distribution, and allocation of business interests under NY divorce law. 

Fortunately, there are preventative measures to cut such problems off at the pass, including prenuptial and postnuptial agreements. 

For prospective or current business owners a very popular prenuptial or postnuptial clause is making a business separate property, and moreover, barring discovery of the business. 

This clause is one I am strongly in favor of when I represent the business owner and one that I am strongly against when I represent the non-business owner. However, everything can be made possible for the right price. If it is used as a barter for something worthwhile I can get for my client, it is open for discussion. 

Negotiating any prenup or postnup involves a lot of listening and diplomacy because we are trying to foster a marriage and engender love, endearment, and a sense of fairness between the parties. It needs to work for both parties, not just one. 

However, prenups and postnups are also instruments where strong advocacy for one’s client is needed to ensure the client is protected.  

We need to walk a fine line and be careful how we tread and define terms. If we are too inflexible with our own client’s interests in complete disregard of the other party’s interests, it can backfire. 

For more information on prenuptial and postnuptial agreements and walking the fine line of negotiating your ideal terms, contact 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

Title Doesn’t Matter

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In marriage, title doesn’t matter. Titles to houses, cars, accounts and businesses can all get overridden by the statute and court system in a divorce.  

I often do consultations where people say things like, “I’m married, but we keep everything separate.” They operate under the assumption that, because each party has assets in their own name, it’s separate property under the law. They think that the default in a marriage tips to individual title, and that the only things that are jointly owned are whatever has been purchased jointly and/or is held in joint names – unfortunately for them, this is a gross misconception. 

Everything purchased during the marriage is presumptively marital property, regardless of title. The burden of proof is on the person who wants to prove otherwise. 

For example, someone might purchase a property in their separate name during marriage. However, title in their sole name doesn’t matter. The overriding presumption is that everything purchased after the date of marriage is marital property. 

Inheritance is, by definition, separate property. That said, if someone uses their inheritance money to purchase a property that they put in their separate name — and then they use money earned during the marriage to pay towards the equity and the principal on the mortgage — then that person has commingled and made a portion of that house marital property. 

Businesses are handled a bit differently. When it comes to businesses, the titled spouse does get a leg up, and the non-titled spouse is typically entitled to smaller percentages than other aspects of equitable distribution, such as accounts, that weigh in favor of 50/50 splits. Non-titled spouses typically get approximately 5% – 33% of the value of the business interest, and where they fall on the spectrum and whether the court would go outside of this most common range is based on the direct and indirect contributions each spouse has made to the business. Let’s say a husband has a contracting business in his exclusive name, as appears on the corporate and business documents, his wife is presumptively entitled to a portion of the business, even though she is a non-titled spouse. 

Prenuptial and postnuptial agreements offer a means to explicitly delineate personal separate property from joint marital property. Their flexibility allows us to go above and beyond what the law provides and create unique solutions that make sense for the situation. 

To learn more and appropriately protect your rights and interests, contact us.

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