Eliminating the Risks of Separation for the "Un-Divorced"

Posted by Daniel Clement on August 03, 2010

Pamela Paul, in her New York Times article, The Un-Divorced, discusses the trend of couples separating, but not divorcing.   The primary reasons that parties remain married, but separated are the practical and financial, not familial. The effect of endless separations on the children rarely seems a priority.

Perhaps the principle reason couples remain legally wed is to maintain or continue health care coverage.    When a couple divorces, the ex-spouse is no longer to eligible to be covered through the other’s medical coverage.   The former spouse either may maintain the existing policy under COBRA or purchase a policy on his/her own. 

 As pointed out:

 If one person has an existing condition, obtaining affordable health care coverage is often difficulty or impossible. The recession, with its real estate lows and health care expense highs, adds incentives to separate indefinitely.

A second reason to separate instead of  divorce is to obtain lock-in social security benefits.

According to federal law, an ex qualifies for a share of a spouse’s Social Security payment if the marriage lasts a decade. In the case of more amicable divorces, financial advisers and lawyers may urge a couple who have been married eight years to wait until the dependent spouse qualifies.

However, a separation without an agreement memorializing the parties understanding of their rights and liabilities leaves the parties at risk.  

Property acquired or debts incurred by the other are technically marital and subject to equitable distribution.  

Absent a maintenance waiver, if one spouse becomes disabled, unemployed or unemployable, the other may become responsible for paying spousal maintenance.

Finally, if you pre-decease your spouse, your spouse can make a claim against your estate; by virtue of marriage, your spouse has a right of election which prevents you from disinheriting hi/her.    The right of election could be waived in a separation agreement. 

By entering into a separation agreement, you could get all of the benefits of a separation and limit your exposure to risk.

What Makes an Agreement Between Spouses Unconscionable

Posted by Daniel Clement on January 20, 2009

Just because an agreement between spouses splits assets in an unequal or one-sided basis does not render the agreement unconscionable.

It has long to the policy of courts to hold parties to the terms of their agreements. An agreement between spouses, which is fair on its face, will be enforced even if one party received less than one half of the value of the marital assets unless there is proof of fraud, duress, overreaching, or unconscionability.

In the recently decided case of Shultz v. Shultz, the Appellate Division detailed what makes an agreement unconscionable:

An unconscionable bargain is one which no person in his or her senses and not under delusion would make on the one hand, and no honest and fair person would accept on the other, the inequality being so strong and manifest as to shock the conscience and confound the judgment of any person of common sense.  However, an agreement is not unconscionable "merely because, in retrospect, some of its provisions were improvident or one-sided" and simply alleging an unequal division of assets is not sufficient to establish unconscionability.

The reason for this strict standard is obvious-no agreement would be free from attack if it could, in retrospect, be reviewed for fairness

In Shultz, the Court cited two factors why it found the claims of unconscionability to be lacking. First, the defendant was represented by independent counsel during negotiations involving the parties' post nuptial agreement. Secondly, the agreement recited that the defendant entered into it "freely, voluntarily and with full knowledge of its consequences.


 

Health Insurance: A Consideration in Divorce

Posted by Daniel Clement on August 14, 2008

The New York Times ran a front page story detailing how the availability of medical insurance has become a major consideration in the decision to divorce or to wed.

In a poll conducted this spring by the Kaiser Family Foundation, a health policy research group, 7 percent of adults said someone in their household had married in the past year to gain access to insurance. The foundation cautions that the number should not be taken literally, but rather as an intriguing indicator that some Americans “are making major life decisions on the basis of health care concerns.”

The issue of medical coverage has long been a consideration in divorce. In fact, many couples, after negotiating their settlement agreements, delay seeking an immediate divorce and, instead, opt to divorce on the basis of their living separate and apart for a year pursuant to a written separation agreement. The one year separation allows a party who would otherwise be without access to medical insurance to remain eligible for medical coverage on the basis of the marriage. Some couples put off the divorce for even more than a year for this very reason.

Amplifying this consideration, New York requires parties to acknowledge that they are aware that they will no longer be allowed to receive health coverage under their former spouse's health insurance plan once the divorce is granted.

Following the divorce the parties may be eligible to continue medical coverage under COBRA (which can be prohibitively expensive) or purchase insurance on their own
 

 

Domestic Partnerships and the Continuation of Maintenance

Posted by Daniel Clement on August 01, 2007
Postings in two divorce and family law blogs highlight a growing conflict between the states on how to deal with a parties continuing obligation to pay alimony or maintenance, as it called in New York, if the former spouse enters into a domestic partnership.

To frame the issue, what happens if you are obligated to pay maintenance to your ex, but your ex rather than  re-marrying, enters into a domestic partnership? A number of states have enacted civil union or domestic partnership statutes which grant same sex couples some, but not all, of the rights and privileges of marriage. Maintenance or alimony typically terminates when the receiving spouse remarries.

The New Jersey Law Blog provides an excellent survey of the issue, contrasting a case from Virginia, which held as a result of the domestic partnership alimony should terminate, and one from Oregon, which held that the support obligation should continue.

The Florida Divorce Blog reports on a California decision in which the court ruled that a domestic partnership “is mere cohabitation and not a marriage.” Therefore, the alimony payments were ordered to continue.

To avoid uncertainty and litigation, this issue must be addressed in a settlement agreement at the time of divorce. If it is the parties’ intention that maintenance should terminate in the event of a cohabitation (same sex or opposite sex), the entry into marriage or a domestic partnership or civil union, the settlement agreement should make special provision. The failure to address t his issue exposes the parties to an unknown and presently unpredictable future determination.