In the `divorce culture’ 10 years is not short-term

Corporate Wife

Valuation of Husband’s Business

Women’s Rights Litigation Clinic

Barry Szaferman

Length of Marriage Question

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This story by Phyllis Maguire was published in U.S. 1 Newspaper on

December 16, 1998. All rights reserved.

Alimony’s New Standard

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In the `divorce culture’ 10 years is not short-term

It’s a difficult job, but someone has to do it and

do it well. In spite of our seemingly endless supply of lawyer jokes,

and in spite of the emergence of attorneys as expert commentators

and television personalities, those lawyers who specialize in family

law — who sort out those problems that tear families apart —

usually work hard and with little or no publicity to help their

clients

through this difficult transition.

"The issues with the children are the most difficult, there is

no question about that," says Barry D. Szaferman (pronounced

Shaferman),

managing partner of Szaferman, Lakind, Blumstein, Watter & Blader,

P. C., a firm with 18 attorneys at the Quakerbridge Executive Center

in Lawrenceville. "When parents start drawing the children into

the battle, that’s the most troubling thing an attorney has to

face."

Family law, contends firm associate Jennifer Weisberg Millner, puts

lawyers in a very unique relationship with their clients. "It’s

not as if you are contracting with them to make widgets," she

says. "This is their very personal life, and difficult issues

come up."

But one divorce case argued by Szaferman and Millner last spring in

the state Appellate Division was exceptional. Hughes vs. Hughes

attracted

statewide attention, and the appeals court decision is being viewed

as a landmark decision by legal experts. At issue: What constitutes

a short-term marriage when the courts decide the level and duration

of alimony support that one spouse must pay another.

In Hughes vs. Hughes the Szaferman attorneys successfully won the

reversal of several Burlington County family court rulings against

their client, Marianne Hughes. The appellate court rejected most of

the lower court’s findings, remanding the case back to Burlington

County to be reconsidered. While a final settlement will take place

sometime in the new year, new interim alimony and child support

payment

figures are expected to be set soon. This will undoubtedly send more

waves from last spring’s appellate decision rippling through New

Jersey

family law.

In 1983 when she was 28, Marianne S. Riedel married Daniel J. Hughes.

She was a voice student and part-time waitress who had dropped out

of college. He was a real estate broker for Century 21, earning

$230,000

a year. For several months after their marriage, Marianne also worked

as a real estate agent. But she quit in 1984 when their daughter was

born, devoting herself to raising their child and keeping their home.

According to the public record associated with this case, there were

some lean and troubled times in the mid-1980s: Daniel Hughes was

hospitalized

for treatment of alcohol abuse. Later the slump in the real estate

market meant a sharp — though temporary — financial decline.

In 1987, Hughes left his job at Century 21 to form, with two partners,

Metro Commercial Real Estate Inc., a combination of corporations that

act as an agent for shopping center acquisitions and development.

Hughes initially owned only 50 percent of the company — and earned

only $50,000 his first year — but Metro prospered. By 1994 Hughes,

who had bought out his partners in 1990 to become the company’s sole

shareholder, enjoyed an adjusted annual gross income of $248,000.

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Corporate Wife

Marianne Hughes, in the meantime, neither finished her education nor

worked outside her home, though she did take on a role of corporate

wife, sending gifts to her husband’s business associates and

entertaining

his clients. His income provided the family with an enviable

lifestyle,

with the 11-room house with the inground pool in Moorestown, the

Mercedes

and the Audi, the full rack of violin, gymnastics, and horseback

riding

lessons for their daughter. There were sailing trips to Nantucket

and Newport, vacations to Disney World and the Caribbean, as well

as lavish shopping and nonstop restaurant tabs, but there was also

trouble in paradise. In 1993, just a few months after their 10th

anniversary,

Hughes filed for divorce.

The year the Hugheses separated was the same year Barbara Dafoe

Whitehead’s

"Atlantic Monthly" essay — which she later expanded into

book form — identified America as "the divorce culture."

Thoughtfully taking up the mantle of divorce backlash after Dan

Quayle’s

diatribe against Murphy Brown and single motherhood, Whitehead

declared

the country’s 30-year experiment with divorce a disaster, one that

had left a rash of indulgent adults and traumatized children in its

wake.

The statistics are grim indeed: in 1960, the divorce rate in the

United

States stood at less than 1 percent, while by 1988, the odds of a

new marriage ending in divorce had reached 43 percent. According to

the Commerce Department’s Census Bureau, the number of divorced people

in the country more than quadrupled between 1970 and 1996 — years

in which states universally adopted no-fault divorce laws, deadbeat

dads became a national epidemic, and feminists who had championed

liberal divorce codes raised the alarm over the emerging

"feminization"

of post-divorce poverty.

Back in Burlington County, the Hughes’s was one of roughly 29,000

divorces granted in New Jersey in 1996, and one of an annual crop

of 1,150,000 American divorces. Before their final settlement, they

had decided custody issues concerning their daughter through mediation

and had agreed, in an effort to save money, to employ only one

accountant

to assess the value of Hughes’s business for purposes of equitable

distribution. That accountant’s report was only one of several things

that went wrong in divorce court for Marianne Hughes.

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Valuation of Husband’s Business

The accountant valued Hughes’s business at $115,000 — even though

Hughes himself, in 1992, had apparently claimed Metro was worth

$600,000.

Despite Marianne’s contention that the business had been seriously

undervalued, the fact that she had no expert testimony of her own

with which to counter the accountant allowed the valuation to stand.

Also affecting the settlement was the fact that two limited

partnerships

in which Hughes had a financial stake were not included for equitable

distribution.

The judge concluded that, out of Marianne’s financial share, she was

responsible for 35 percent of their $115,432 outstanding debt,

although

a good portion of that was business-related, and $45,000 in back taxes

(or 50 percent of their total tax obligation). Her interest in their

11-room home, which at the time was in foreclosure and listed for

sale at $399,000, was transferred to her ex-husband, who became liable

for all late fees, back interest, and legal and foreclosure fees,

but who also gained complete equity with all tax benefits. The result

was that, after being married for 10 years to a man who consistently

earned almost a quarter of a million dollars a year from his own

business,

there was little in accumulated assets, and Marianne’s share was very

little.

The "pendente lite" (or pending litigation) child support

payments of $1,000 per month that had been set in 1995 became

permanent.

Even though Hughes’s weekly income was over two and one-half times

the maximum amount given in the child support guidelines, the judge

supplemented the baseline amount by only $18.55 a week, apparently

satisfied with Hughes’s testimony that he would continue paying for

amenities for his daughter, like summer camp, outside of his child

support payments. And claiming that 10 years constituted a short-term

marriage, the judge ordered what the appellate court, in its decision

two years later, would call a "brief and minimal amount of

alimony":

rehabilitative alimony only — $3,000 a month for 18 months and

then $2,000 a month for another 30 months.

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Women’s Rights Litigation Clinic

It was surprisingly one-sided, as divorce settlements go.

"Feminists

have said all along that you have to be aware of the intertwining

of marriage and the marketplace and acknowledge the work women do

that they are not paid for," says Nadine Taub, professor of law

and director of the Women’s Rights Litigation Clinic at Rutgers

University

School of Law in Newark. "But New Jersey has been fairly crude

and cruel about recognizing those issues before." To prepare

herself

for a career as a music teacher, a career she will enter in her

mid-40s

at an entry level salary, Marianne Hughes enrolled in classes at

Westminster

Conservatory, part of Rider University. To make ends meet, she moved

with her daughter back into a home with her ailing mother in

Moorestown.

And to appeal her divorce settlement, she hired Barry Szaferman.

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Barry Szaferman

Now 49, Szaferman attended Fairleigh Dickinson

University

and graduated from Rutgers Law School in Camden in 1973, working for

the state attorney general’s office until 1977. That’s when, with

partners Arnold C. Lakind and Jeffrey P. Blumstein, he established

the firm in Lawrenceville. "When I first started my practice,

I did whatever came through the door — real estate closings and

simple business matters," Szaferman recalls. "I didn’t have

many sophisticated clients at first, but as time went on, I was able

to attract fairly complicated business." Eventually representing

several significant developers and maintaining a career in commercial

finance and litigation, Szaferman was sought out by Marianne Hughes.

"She was looking for an attorney outside of Burlington County

who understood valuation and income issues," Szaferman says,

pointing

out that those issues are crucial in divorces involving people who

are self employed. "You’re not dealing with a state employee with

a W-2 where you know what he makes," he continues. "For an

individual with a business, you have to find out what the business

is worth, is he taking a fair salary out of it, what perks are there,

and whether the business enhanced his lifestyle."

Joining him in preparing the appeal was associate Jennifer Weisberg

Millner, 33, a graduate of Lawrence High School, Skidmore College,

and, in 1990, Seton Hall Law School. Clerking for the family division

of Mercer County Superior Court before joining Szaferman’s firm almost

eight years ago, Millner does family law exclusively.

"Occasionally there are clients who specifically want a male

attorney,

so they choose not to retain me," Millner says. "But I think

women are uniquely qualified to do family law, particularly in the

’90s with the stresses involving children and work." Lawyers who

specialize in family law, says Millner, need patience and an

understanding

of family life — and the ability to focus their clients.

"Small

issues can become very important to them, so you have to make them

see the overall picture."

In a 61-page brief filed in appellate court on Marianne Hughes’s

behalf

in July, 1997, the lawyers argued that the lower court’s decision

"contained numerous errors" that rendered it "incorrect

both factually and in its interpretation of the relevant statutes

and case law." The court’s failure to include Hughes’s limited

partnerships in the financial evaluation of his worth, the brief

contended,

resulted in an inaccurate distribution. The assignment of such hefty

chunks of the former couple’s debt and taxes to Marianne had been

unreasonable, given the enormous disparity in their actual earnings

and earning potential.

Child support was inadequate, considering the husband’s income and

the family’s former lifestyle, and the need for permanent alimony

— not just temporary and rehabilitative — needed to be

addressed.

Handing down its decision on April 29, 1998, the appellate court

agreed.

Characterizing many of the lower court’s findings as

"incorrect,"

"inadequate," or "simply unsupported," the appellate

court reversed most of the earlier ruling. Much of the reasoning

behind

the appellate decisions will have far-reaching consequences. One such

decision was the court’s rejection of a reduced child support payment

as the result of Hughes’s willingness to pay directly for amenities

for their daughter. "We see a significant problem in plaintiff

[Hughes] paying directly for these enhancements, with defendant unable

to do so in the event that plaintiff halts payments," the

appellate

judges wrote. "The fact that defendant might be incidentally

benefited

by the better housing, food, vacations or other attributes of the

child’s lifestyle [through higher child support payments] is of no

moment."

In fact, the state’s child support guidelines, Millner explains, were

designed to avoid just such a circumstance. "The appellate court

made it clear that, unlike the lower court, it won’t foster a

situation

where the father is buying the child $100 sneakers, while the mom

doesn’t have the money to pay the rent," she said. "The

guidelines

were designed to eliminate questions about what are appropriate

expenditures,

and the appellate court insisted that the custodial parent is entitled

to money that is income-driven, rather than expense-driven."

The appellate court also soundly defended the precedent, already

established

through case law, that "self-support does not mean returning the

supported party to the reduced premarital standard of living"

and that "[b]are survival is not the proper standard" for

determining alimony, but that the economic reality of the marriage

is. "Plaintiff’s obligation to continue to support defendant is

an incident of the commitment he made when he married her," states

the appellate summary. "On remand, the trial judge should

reconsider

this issue with a view that defendant is to receive permanent alimony,

but perhaps at some reduced rate to reflect a marriage of this medium

length."

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Length of Marriage Question

It was in addressing that "medium length" of the Hughes’

marriage

with its consequent financial ramifications that the appellate court

made its most significant findings. "[W]e take issue with a

10-year

marriage being considered a short-term marriage," the appellate

judges wrote, disagreeing with their lower court colleague. "By

today’s standards, it is not." With the length of the marriage

as critical a factor in determining alimony as the couple’s income,

the intermediate-length marriage has always been, says Szaferman,

a gray area.

"Matrimonial lawyers have felt that with a marriage that lasted

less than 12 years, it was very, very difficult to successfully argue

that your client was entitled to permanent alimony," he says.

"We’d usually compromise, getting perhaps a higher percentage

of the house or a slightly lengthier period of rehabilitative

alimony."

But after this appellate decision, lawyers and judges can no longer

describe a 10-year marriage as short — one in which the issue

of permanent alimony should be automatically overruled.

In providing guidance for how much permanent alimony the lower court

should consider granting, the appellate judges crafted this language:

"because the marriage was of an intermediate length, defendant

need not be supported to the standards of the very summit of the

parties’

lifestyle, but defendant also is not to be cast adrift after four

years of rehabilitative alimony."

The appellate court further ruled that it was an error for

rehabilitative

alimony to be granted in lieu of, rather than in addition to,

permanent

alimony — and that the amount of rehabilitative alimony set by

the lower court was "not commensurate with plaintiff’s ability

to pay, the parties’ former style of living, and defendant’s

needs."

According to Millner, the court reached a good middle ground. "It

recognized that since the Hughes’s wasn’t such a long marriage, the

court didn’t tie somebody down to providing the complete standard

of living they’d previously enjoyed," she said. "But at the

same time it was not going to allow him to simply walk away. Instead,

it holds him responsible to maintaining her at a reasonable

level."

The appellate court’s decision was not, Szaferman cautions, any signal

of judicial conservatism or prejudice that marriages should be made

more permanent. But it did strongly reinforce the reality of a

continuing

financial relationship, even after a marriage has ended. "The

court really looks at marriage as an enterprise and while one party

may want that enterprise to end, the other party still has to be able

to derive some benefits from it," says Szaferman, who has been

married since 1983 — definitely not a short-term union under the

decision in Hughes vs. Hughes.

"There are two thing going on in terms of this ruling," says

Taub of Rutgers University School of Law. "One is the notion of

partnership continuing after divorce. The other is the recognition

that this woman is now in the position of starting out as a

poorly-paid

music teacher. She’s older and her chances of being successful are

diminished, so she’s being compensated for sacrificing 10 years to

a marriage that’s ended." The court’s decisions, Taub says,

recognizes

the realities of economics and of women’s ability to get a job.

Millner, who had two sons with her husband, John Millner of Millner

Kitchens in Lawrenceville, agrees that the appellate court’s

decision

acknowledges how much earning capacity a woman (or, in rare incidents,

a house husband) loses for every year she spends out of work.

"Someone

in Marianne Hughes’s position cannot be expected to thrive in the

workforce," Millner says. "And as I think the court correctly

noted, even after she gets her training, Marianne Hughes will not

be able to support herself at the level she had in her marriage."

Szaferman, Millner, and Taub all stress that divorce settlements,

like the marriages they bring an end to, are fact-sensitive to

specific

situations. In particular, Taub points out that relatively few

divorces

involve such large amounts of money and such a disparity in income.

But Szaferman notes that the robust economy over the past decade has

raised the standard of living of many families, and Millner questions

whether such disparities in income are really that unusual.

"If you’d asked me two years ago, I would have said you’d see

fewer cases like Hughes because so many families have two working

parents," Millner says. "But I recently read that some working

women are now going back to stay home with their kids, so we may see

more cases like this one."


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