Great, I'm Divorced, Now What?

Draft a new will. You'd be surprised how many divorced individuals don't and, without realizing it, leave all of their worldly possessions to their former spouse. When we discuss estate planning with our clients, we explain that the most precious assets are their children. If minor children are involved, discuss the issue of guardianship with your attorney, especially if the noncustodial parent has moved out-of-state or has a new family. A codicil or affidavit to the new will also should be prepared so that any family court, needing to decide on future guardianship, is aided in its decision with the reasoning behind your appointment of the third party as the guardian of any child(ren) over the other biological parent.

Insurance

When it comes to insurance, a lot of people suffer from "ostrich syndrome," which is burying your head in the sand and hoping it will go away. It won't, so be diligent. There is a variety of different types of insurance, many beneficial and some mandatory. Obviously, you need health insurance. Even if you get coverage under COBRA through your former spouse, it will run out. While you may not need to do something immediately, recognize your short-term and long-term needs. You also should have homeowner's or renter's insurance and auto insurance. Every policy needs to be reviewed for appropriate coverage.

Two other types of insurance that should be explored are long-term care and life. For those with minor children, life insurance, while not mandatory, may be necessary. You must determine your insurance need, which is a combination of the amount needed to preserve the lifestyle for your children, including college costs, for as long as deemed appropriate and other amounts, such as weddings and funeral costs. It may be a morbid thought, but it is inevitable. For example, if your children are already in college, your insurance need would be smaller.

For existing policies, be sure to update your beneficiaries. If your existing policies name your ex-spouse as the beneficiary and you do nothing, the law in New Jersey and New York is that the insurance company will ignore the primary beneficiary and pay out the proceeds to the contingent beneficiaries. If no contingent beneficiaries are named, payment will be made to the estate. If the intent is to have your ex-spouse as the beneficiary, you must sign new beneficiary designation forms after the date of divorce. By doing so, the positive action of naming the beneficiary will be allowed, whereas doing nothing is a negative action and the beneficiary designation will be ignored. Also, it may be advisable to form a trust to own and be the beneficiary of the policy.

It is strongly encouraged to consider all options and to discuss those options with your professionals. As the cost of health care for seniors has spiraled upward, long-term care insurance has increasingly become more important. It is another way to preserve your assets. If you choose to purchase this sort of coverage, be sure to consult with an insurance advisor, who truly understands all of the nuances. Cohabitation

New Jersey's alimony statute defines cohabitation as "involve[ing] a mutually supportive, intimate personal relationship in which a couple has undertaken duties and privileges that are commonly associated with marriage or civil union but does not necessarily maintain a single common household." N.J.S.A. 2A:34-23(n). Further, when evaluating whether cohabitation is occurring, the court shall consider the following seven factors:

1. Intertwined finances such as joint bank accounts and other joint holdings or liabilities;
2. Sharing or joint responsibility for living expenses;
3. Recognition of the relationship in couple's social and family circle;
4. Living together, the frequency of contact, the duration of the relationship, and other indicia of a mutually supportive intimate personal relationship;
5. Sharing household chores;
6. Whether the recipient of alimony has received an enforceable promise of support from another person within the meaning of subsection h. of R.S. 25:1-5;
7. All other relevant evidence.

There are two important points a person should know regarding the amendment to New Jersey's alimony statute, which took place in September of 2014, especially if they are entering into a divorce agreement to receive or pay alimony. The first important part of the amendment is that "[a]limony may be suspended or terminated if the payee cohabits with another person." N.J.S.A. 2A:34-23(n). There seems to be no second step in the amended statute.

Prior to the amendment, the court would review the economic needs of a supported spouse upon a finding of cohabitation. The burden, once placed on a spouse challenging an alimony obligation, would create a two-step process and costly litigation. Upon a finding of cohabitation, the court would then move to the second step, shifting the burden to the dependent spouse, "to show that there is no actual economic benefit to the spouse or the cohabitant." See Ozolins v. Ozolins, 308 N.J. Super. 243, 245 (App. Div. 1998), and Gayet v. Gayet, 92 N.J. 149 (1983). The extent to which this amendment will affect cases and preclude further litigation must be further parsed out by New Jersey courts in case law.

However, the amended statute allows for a court to make a ruling without any further costly litigation based on the plain language of the statute. Furthermore, the amendment opens the door to the possibility of a court finding cohabitation without finding that the parties live together on a full-time basis, but based on only a part-time living arrangement. The New Jersey legislature outlines this in the amendment, stating that "[i]n evaluating whether cohabitation is occurring and whether alimony should be suspended or terminated, the court shall also consider the length of the relationship," and a "court may not find an absence of cohabitation solely on grounds that the couple does not live together on a full-time basis." N.J.S.A. 2A-34-23(n). Therefore, the new language of the amended statute is set to act as a deterrent for those trying to scam payors by not moving in with their significant others and delaying the inevitable termination of the support obligation based on their marriage-like relationship with their significant other.

— Originally published in the New Jersey Law Journal. Check out the original here.

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