Morris, Downing & Sherred family lawyer Dina Mikulka presented on May 19, 2021 at the New Jersey State Bar Association Annual Convention, giving an hour-long program entitled “How to Tackle Thorny Financial Issues Dissolving Non-Married Relationships.”
Panel speaker Dina Mikulka discussed the controversy doctrine as it applies in family court matters, partition of real property in non-divorce cases, how social security disability impacts child support, calculating child support in unique situations such as grandparent custody cases, separate maintenance for a spouse in a non-divorce case and college contribution applications for never married people.
The discussion outline follows:
Fact Pattern #1
John comes to you for a consultation.
John and Jane are both 50 years old and have been together as a couple for 15 years. During the first year of their relationship, they purchased a home together. They are both obligated for the mortgage and both are on the deed, which is titled to both as _______.
During their relationship, John and Jane purchased a business together, which they both worked. The business was purchased by the parties from Jane’s great uncle for $200,000.00. When Jane’s uncle owned the business, it was a dive bar known as “the dump” which was in disrepair and sold an occasional six pack of beer. John and Jane cleaned up the business and now run it as a sports bar/ brew pub and high-end liquor store. John runs the bar and Jane runs the store. It has grown significantly under their ownership. The business is an LLC with each party owing 50%. The real estate on which the bar sits is owned by the LLC. The liquor store portion has grown significantly as the typical “package goods” expanded to wine and other spirits. After a few other liquor stores in the area closed, business at the store picked up significantly. John and Jane have made an average of $300,000.00 from the business for each of the last three years, with income deposited into a shared bank account. Jane accuses John of skimming money from the bar and depressing the “cash” income of the business.
John and Jane have been arguing and agree that they need to stop living together as soon as possible. The police have been called to the house twice in the past two months because of loud arguments, but neither has filed charges or sought a TRO. Each party describes the other as the aggressor. Each party is concerned about the other recording their arguments and being removed from the home and the business. John and Jane do not argue as much at work because the store is fairly separate from the bar and there is relatively little interaction.
- What recourse do the parties have if one party refuses to sell or permit a buyout of the home?
- John and Jane cannot agree on a division of the equity in the home, regardless of whether it is sold or bought out. John provided the $100,000.00 down payment for the jointly owned home, which was purchased 14 years ago for $500,000.00. Now that the parties are breaking up, he wants 100% of his down payment back plus interest. Jane says that she will never agree that John gets is down payment back after all these years. The house is worth $750,000.00 and the mortgage balance is $250,000.00.
John wants to know what his legal rights are and whether recovering his down payment is likely.
- Tensions are high. John and Jane are both desperate to get out of the home and to have that issue addressed immediately.
John wants to know if the resolution of the business can wait until the house is addressed.
- In what court should the complaint regarding the division of the equity be addressed?
John has told you that he prefers not to be heard in family court. He did not want to get married because he did not want to divide everything he worked so hard to acquire.
John is opposed to Jane getting half and tells you he did the physical labor to improve the building. He wants to recover that labor
- Must division of the business and the house be addressed at the same time?
John wants to address the house and the business at different times. The immediate stress of needing to get away from Jane has John feeling desperate to deal with the house first.
- John and Jane disagree as to the value of the bar liquor store. There are accusations by Jane that John is skimming cash from the bar and keeping it from her. Jane wants to continue to work the business together. John wants Jane to relinquish her ownership of the business so that John can continue to run the business without Jane. Because of the disagreements over the business, neither John nor Jane feel ready to force the issue and would rather address the house first.
What advice do you give John?
Fact Pattern #2
Frank has come in for a consult.
Frank is 53 and Mary is 42. Frank and Mary have been together for 22 years. They have been separated for about 2 months and have been following a 50/50 parenting time schedule. Frank paid Mary’s first month’s rent and security deposit. They never married but they lived together for much of the last 22 years. There is no written promise of support. Frank never wanted to get married and made his position clear to Mary. Mary knew Frank was reluctant to marry after his first divorce, but she says he did promise to get married at some points in their relationship, but never followed through. Mary was a bartender at a bar located across the street from Frank’s father’s plumbing business when she met Frank. Mary was a fulltime college student and finished her college degree after she moved in with Frank, with Frank paying the last semester of her college tuition at Montclair State. Mary stopped working after their first child was born. Frank claims he wanted Mary to work, Mary says Frank wanted her to stay home with the children. Frank views Mary as financially irresponsible and is concerned that she will use the children’s funds to unreasonably enhance her lifestyle.
Frank was married with two children when he met Mary. Mary and Frank had 4 children together. Frank’s divorce was highly contested, in large part, due to his relationship with Mary. Frank had limited time with his older children for the first few years post-divorce due to the high level of acrimony.
Mary and Frank’s children are 15, 13, 11 and 8 years old. Frank’s two older children are 18 and 20. Both older children are emancipated.
After his divorce, Frank purchased a home where he and Mary resided. Mary never contributed funds toward the down payment or mortgage. Only Frank is listed as the owner on the deed and is the sole obligor on the mortgage.
Frank eventually took over the family plumbing business and remains self-employed.
In addition, when Frank’s parents passed away they left Frank 6 multifamily, income-generating and mortgage-free apartment buildings. Frank wishes to transfer ownership of each building to his children. Frank is concerned with the implications of transferring these assets to the 4 minor children he has with Mary and wants your advice on the best way to structure the transfer of these assets to the children to ensure that Mary will not be able to access or control the assets. Frank does not have a will and has not yet engaged in estate planning. Frank’s intent is for the children to use the buildings as a nest egg to start their post college lives, whether they continue to own the building or sell the building would be up to each child when that child comes of age. It is not Frank’s intent that the buildings be used to finance college.
- Frank wants to know the best way to structure a transfer of ownership of the real estate to his minor children. His goals are to ensure the property is used for the benefit of the children and not used by Mary to fund her lifestyle.
- Frank is concerned with Mary’s demands for a very significant life insurance policy to ensure she and the children continue the lifestyle the children enjoyed while living with Frank. What level of life insurance is reasonable and is this available relief in an FD matter?
- Mary contends that the Guidelines child support approach is unfair in this case and that there should be a significant upward deviation. Is there any validity to this claim?
- Mary has demanded sufficient child support to enable her to rent a comparable home near Frank’s home to enable her to continue 50/50 parenting. The rent and carrying costs for such a home far exceeds guidelines child support and Frank has complained that it seems like alimony. What advise would you give Frank? What is his exposure for child support?
- Frank is reluctant to provide financial disclosure beyond is personal and business tax returns. Mary’s attorney has asked to hire a joint forensic accountant at Frank’s expense to determine Frank’s true income. Frank is resistant to providing the broad discovery requested by Mary’s attorney. What advice would you give him?