New Jersey Divorce Chronicles, Part 8: Who Gets the House?
Subject No. 1: Sharon
In Part 6 of our ongoing case study, we saw that after Sharon took a hardline stance on child custody, Robert ended up with a temporary order for primary physical custody. In Part 7, we saw how Jason’s more conciliatory approach with Melissa not only resulted in a parenting time plan that was closer to what he wanted; it also avoided the expense of a hearing. Is Sharon going to continue her aggressive tactics for the rest of her case, or is she beginning to see that a change in approach might be in order?
After the child custody hearing, Sharon’s attorney, Ms. Shark, tells her that spending so many nights at her sister’s house damaged her custody claim. Sharon then tells Robert that until they work out permanent separate living arrangements, unless she is traveling for work, she will be staying at home. Robert asks if she would be willing to continue staying with her sister every other weekend if he also stays with a friend on the alternate weekends. “That way,” he reasons, “the kids can get used to the alternate weekend schedule before either of us moves out permanently.” Sharon agrees that this sounds like a good idea. “I want you to know,” Robert continues, “that in spite of the temporary custody order, I am still happy to share parenting time more equally, but I think that first you would need to have a more predictable schedule at work.”
After she and Robert talk, Sharon begins to think that she may have taken an unnecessarily aggressive position on custody at the outset. Robert has actually been spending more time with the children than she has and the kids seem to be doing well. She hasn’t seen any drinking behavior from Robert in months. She thanks him for being so cooperative and tells him that she will talk to her boss and see if she can work something out so that she will be traveling less often.
Meanwhile, Sharon and Robert’s case has been sent to the Matrimonial Early Settlement Panel (MESP) for review. This is a panel made up of experienced family law volunteer attorneys. After reviewing the parties’ Case Information Statements and other information, the MESP listens to arguments from each spouse’s attorney and then makes recommendations for settlement of all of the economic issues in the case. In Sharon and Robert’s case, the recommendations address property division, alimony, and child support.
In this installment we’ll look at the panel’s recommendations regarding property division, and the next time we look in on Robert and Sharon we’ll see what the panel suggests about alimony and child support.
As noted in Part 1 of our series, the current market value of Sharon and Robert’s home is approximately $350,000 and the mortgage principal is approximately $250,000. They began with $120,000 in joint cash and investments, but will have somewhat less after payment of their attorney’s fees. Sharon has a 401k with a current value of $100,000. Robert has an IRA worth $20,000. They have $2,000 currently outstanding on a credit card. The couple owns two vehicles, a sedan usually driven by Sharon, with a current value of approximately $15,000, and a pick-up truck driven by Robert with a value of $12,000. Neither spouse is making any separate property claims.
Both attorneys argue to the panel that their clients should keep possession of the home. Sharon’s attorney also argues that Sharon should receive a greater percentage of the marital assets, because she has always worked more hours and has made greater financial contributions to the household, while Robert has maintained sporadic employment and has spent money recklessly. Robert’s attorney argues that Robert has contributed equally to the household through his greater participation in maintaining the home as well as in parenting the children, and that even though Sharon considers Robert’s spending to have been “reckless,” a look at their credit card statements will actually show that Sharon spends a lot more money on personal items than Robert does.
The MESP recommends that Robert and Sharon share equally in the value of their marital property, with the following specific recommendations:
– All cash, liquid investments, and credit card debt should be divided equally.
– Because Robert currently has an award for temporary custody, it would make the most sense overall for him to keep possession of the house. The equity in the home is approximately $100,000 and the parties should each receive half of that value. Robert can use his share of the couple’s liquid assets to buy out Sharon’s half. Alternatively, he can attempt to refinance the home and obtain additional cash for the buyout that way.
– Robert should keep the truck and Sharon should keep the sedan. Robert will have a $1,500 credit due to the difference in value between the two vehicles.
– Other personal items of value should be divided by agreement. If there is a large discrepancy in the monetary value of personal items going to one party as opposed to items going to the other, the one receiving the greater value should provide compensatory payment to the other.
– Sharon’s 401k should be divided by QDRO, with Sharon receiving $60,000 and Robert receiving $40,000. Robert will keep his IRA intact, to balance the value of the retirement assets, leaving each of them with $60,000.
Sharon tells Ms. Shark that she is appalled at the recommendation that Robert keep the house. “First of all,” she explains, “he has already told me that he is going to agree to a more equal parenting plan. Second of all, the mortgage payments on that house are almost $1,200 per month. He can’t afford that on what he makes!”
“Well,” Ms. Shark responds, “”Maybe not, but let’s wait and see what the panel has to say about child support and alimony. Remember that these are just recommendations. We can always reject them and move on to a trial.”
How else can asset division be handled in divorce? In our next installment, we’ll see how Jason and Melissa handle their property division as part of the mediation process. Then we’ll come back to Sharon and Robert and see what the MESP recommends for child support and alimony in their case.
Do you have concerns about child custody, asset division, or the findings of the Matrimonial Early Settlement Panel? We can help. To discuss your divorce issues, please contact us for an initial attorney consultation.