Family Court, Richmond County, New York.

In the Matter of a CUSTODY/Visitation Proceeding

CURTIS L.S., Petitioner,

Janice P.W., Respondent.

Aug. 2, 2006.

CATHERINE M. DiDOMENICO, J.

Petitioner Father, Curtis S., filed a Petition seeking permission to relocate from Brooklyn, New York to Chapel Hill, North Carolina with his six year old son, Curtis Allen S. ("Allen") (d.o.b.8/22/99).

On May 17, 2004, the Administration for Children's Services ("ACS") filed a Neglect Petition against the Respondent Mother, Ms. W., alleging, among other things, that she physically assaulted Allen's sibling, Antoinette, in the presence of Allen. Antoinette and Allen were remanded to the care of ACS. On April 26, 2004, Petitioner Father filed a Petition for Custody. On July 8, 2004, after a trial, a finding of neglect was entered against the Respondent Mother and Petitioner Father was granted custody of Allen. Visitation to the Respondent Mother was granted upon mutual agreement by the parties to be supervised by the maternal aunt, Ms. Joyce J.

An Order of Disposition was entered as to Antoinette on August 3, 2004. Antoinette was placed with ACS for a period of up to twelve months. Respondent was to observe the following conditions: cooperate with ACS and Agency services, referrals and supervision; complete alcohol rehabilitation; visit Antoinette regularly; maintain adequate housing; maintain an adequate source of income; plan for the return of the child; complete an anger management program; and comply with a one year Final Order of Protection on behalf of Antoinette. A Petition to Terminate the Parental Rights of Respondent Mother as to Antoinette on the grounds of permanent neglect is currently pending before this Court.

On July 28, 2005, Respondent Mother filed a Petition for Modification of an Order of Custody requesting that Petitioner Father be prevented from relocating with Allen to North Carolina. On August 1, 2005, the Hon. Ralph Porzio ordered that Allen not be relocated without prior court approval. On March 22, 2006, Respondent Mother filed a Petition for Modification of an Order of Visitation alleging that Ms. Joyce J. could no longer supervise visits. Respondent Mother requested that she be granted unsupervised visits, unrestricted daily contact, and visits every Monday and Friday from 3:30 pm until 5:30 pm at the Brooklyn Public Library.

Petitioner Father's relocation petition and Respondent Mother's visitation petition were the subject of a fact finding hearing held on July 10, 11, 19 and 20, 2006. At the fact finding hearing, Petitioner Father testified and also called Dr. Margit W., a licensed Family Court Services psychologist, as an expert witness. Dr. W.'s report was entered into evidence without objection (Petitioner's # 1). Respondent Mother testified on her own behalf. The Law Guardian called no witnesses.

After hearing the testimony of all three witnesses, and assessing their credibility, this Court credits the testimony of Petitioner Father and Dr.W. The Court does not credit at all the testimony of Respondent Mother.

Testimony at Fact Finding

Petitioner Father

Petitioner Father was awarded custody of Allen in July 2004. He testified that he is currently employed as a personal trainer earning approximately $20,000.00 to $30,000.00. Petitioner Father testified that he would like to relocate with Allen to Chapel Hill, North Carolina where he has an opportunity to be a Personal Trainer Director earning between $40,000.00 to $50,000.00. Petitioner Father's mother and aunt, whom he and Allen had lived with in New York and whom they intend to live with in Chapel Hill, have already relocated to Chapel Hill and are residing in a three bedroom apartment in a gated community. Petitioner Father and Allen would each have their own room in paternal grandmother's home. Petitioner Father researched the school system on the internet and communicated with the principal of the school Allen would be attending. He testified that he was impressed with the school's computer program and that the school is a five-minute walk from the home and a three minute walk from the job Petitioner Father hopes to secure. While Petitioner Father acknowledges that Allen is currently doing well in school and has no special needs, Petitioner Father believes he would be able to spend more time with Allen and would be able to offer Allen a better quality of life with the support of his extended family. Petitioner Father's mother and aunt are retired and would provide child care for Allen while Petitioner Father works.

Petitioner Father testified that since his mother and aunt relocated to North Carolina he is currently staying with friends while Allen lives with his maternal aunt, Ms. Joyce J. Petitioner Father sees Allen every day, taking him to and from school and karate.

Petitioner Father testified that the maternal aunt, Ms. Joyce J., supervised visits until October, 2005. From July 2004 to December 2004, Respondent Mother visited with Allen at Ms. J.'s home twice a week for approximately two hours. From January 2005 to August 2005, Respondent Mother visited only once. Respondent Mother sporadically calls to speak with Allen, and has never provided child support.

Dr. W.

Dr. W. testified that she interviewed both Petitioner Father and Respondent Mother and had a play interview with Allen. Dr. W. recommended that Petitioner Father be allowed to relocate with monthly visits with the Respondent Mother. Dr. W. did not recommend unsupervised visits with the Respondent Mother because of Respondent Mother's violent episodes with Antoinette. On this subject, Dr. W. noted that Respondent Mother seemed to feel that the physical force she used on Antoinette was in some way "justified." Tr. 7/1//06, p. 18, l. 21.

Dr. W.'s report concludes: "Mr. W. is a bright, articulate woman who may or may not have a substance abuse problem. What does seem clear, however, is that she has an impulse-control problem, particularly around managing her angry and needy feelings. While she has intellectual perspective on a number of issues, she seems to lack the necessary emotional perspective. Emotionally, she seemed to feel it reasonable that she strike her child back. Additionally, she has the stressors of multiple physical problems. She does appear to care about her children, at least at some level, but doesn't seem capable of handling the many vicissitudes of life, children and her feelings on a full-time basis. Sadly, she does not seem to think that psychotherapy is a useful option for her." Petitioner's # 1, page 7.

Respondent Mother

Respondent Mother testified that, in May of 2004, her children, Antoinette and Allen, were removed from her care after what she referred to as a "domestic dispute" with Antoinette. Antoinette was twelve years old at the time and the altercation left bruises on Antoinette's body. Respondent Mother was arrested and the children were removed. At that time Allen went to live with Petitioner Father. Visits between Respondent Mother and Allen were to be supervised by her aunt, Ms. J.

From May 2004 to September 2004, she visited with Allen twice a week at her aunt's home. Respondent Mother further had hip surgery on September 28, 2004 and was hospitalized for three and a half weeks. During that time, her uncle brought Allen to visit. She did not visit with Allen from October 2004 to January 2005. Her uncle brought Allen to visit in January 2005. She completed her physical recuperation in April 2005 and had a visit with Allen at that time. From January to April 2005, Respondent Mother testified that she attempted to call Petitioner Father everyday but only spoke with Allen sporadically. A visit occurred in June 2005, and then at the end of August 2005. Respondent Mother learned that Allen was relocating to North Carolina from Allen at the end of July 2005.

During cross-examination by the Law Guardian, Respondent Mother testified that she did not visit with Allen because of actions of Petitioner Father, the agency, and because she was not given adequate assistance after her hip surgery. Respondent Mother admits she did not file any petitions to enforce her right to see Allen until July 28, 2005, when she learned of Petitioner Father's intention to relocate Allen. Respondent Mother claimed that she did not realize she could enforce her rights in Court, however, this statement is belied by her frequent court appearances in connection with the Neglect and Termination of Parental Rights cases for Antoinette and the instant pro se Petitions actually filed by Respondent Mother.

Respondent Mother testified that she was granted unsupervised visits, however, they were suspended in October 2005 when she was arrested after another physical altercation between her and Antoinette during which she struck Antoinette with a metal stove grate. This incident, during which Antoinette sustained physical injuries, occurred after Respondent Mother completed mandated parenting and anger management courses and while Respondent Mother was enjoying one of only four unsupervised visits that had been permitted.

The Applicable Law

Where a custodial parent seeks permission to relocate a child, the request "must be considered on its own merits with due consideration of all the relevant facts and circumstances and with predominant emphasis being placed on what outcome is most likely to serve the best interests of the child." Tropea v. Tropea, 87 N.Y.2d 727 at 739 (1996). The issue is whether the parent requesting the relocation has established by a preponderance of the evidence that relocation would be in the child's best interest. Id. Factors to be considered in determining the appropriateness of relocation include, but are not limited to, "each parent's reasons for seeking or opposing the move, the quality of the relationships between the child and the custodial and noncustodial parents, the impact of the move on the quantity and quality of the child's future contact with the noncustodial parent, the degree to which the custodial parent's and child's life may be enhanced economically, emotionally and educationally by the move, and the feasibility of preserving the relationship between the noncustodial parent and the child through suitable visitation arrangements." Id. Where there are educational, emotional and economic benefits for the child, relocation should be granted. Aziz v. Aziz, 779 N.Y.2d 539 (2nd Dept.2004). Applying the established principles to this case, this Court does find that Petitioner Father has established, by a preponderance of the evidence, that relocation would be in Allen's best interests.

Findings of Fact & Conclusion of Law

This Court credits the testimony of Petitioner Father and Dr. W. Petitioner Father submits that the move to North Carolina will improve the quality of life for both himself and the child. Petitioner Father offers that he has greater opportunity for employment and extended family in North Carolina. Petitioner Father would be able to spend more time with the child and has a large support system there which is no longer present in New York. This Court credits Petitioner Father and finds that he has a good faith basis for relocating, namely to offer his son a better life surrounded by his aunt, grandmother and other relatives.

Petitioner Father clearly recognizes the importance of maintaining a relationship between Allen and Respondent Mother and his sister. See Miller v. Pipia, 297 A.D.2d 362 (2nd Dept.2002); Boyer v. Boyer, 281 A.D.2d 953 (4th Dept.2001). Petitioner Father offers a realistic and feasible alternative visitation schedule, specifically, he will bring Allen one weekend a month for visits with the Respondent Mother and separately, with Antoinette. This Court credits Petitioner Father's testimony in that he will continue to foster a relationship between Allen, his sister and Respondent Mother.

This Court further finds that Respondent Mother's visitation has been so inconsistent and sporadic that it is not clear that relocation would substantially interfere with her rights as a practical matter. See Ira S. v. Lauren S., 21 AD3d 288 (1st Dept.2005) (Family Court did not err in refusing to conduct hearing on issue of relocation where non-custodial parent had not made use of existing visitation rights). Respondent Mother refuses to assume any responsibility for allowing months to pass without seeing Allen or to even telephone to inquire how he was doing. Indeed, it was not until Respondent Mother discovered (through Allen) that Petitioner Father wanted to relocate that she took concrete steps to assert her rights. Further, this Court notes that Respondent Mother assumed no responsibility for the fact that custody of Allen was granted to Petitioner Father as the final disposition of a neglect case filed against her in which Allen was one of the subject children, nor that unsupervised visits were suspended when, during one of only four unsupervised visits, she physically assaulted the child Antoinette. This Court does not credit at all Respondent Mother's testimony that her acts of physical violence against Antoinette occurred as part of a "domestic dispute" in which she was compelled to "defend" herself against this then 12 year old child.

Finally, although the Respondent Mother is said to have completed court mandated anger management programs, to this day, she evidences little ability to control her frustration or her temper. During the fact-finding hearing, she became increasingly angry and hostile in response to questioning by counsel other than her own attorney to the degree that this Court offered to take a recess so that she might compose herself.

Accordingly, Petitioner Father's Petition to relocate to North Carolina is granted. Respondent Mother's Petitions to prevent the relocation, for unsupervised visits, and for violation of her visitation rights, are denied.

Disposition

As this Court does not believe sufficient information exists upon which an informed decision can be made with respect to what visitation is appropriate between Respondent Mother and Allen, this matter is adjourned for disposition. Respondent Mother is to undergo a psychiatric evaluation through ACS. The evaluation shall include a full psychiatric assessment of Respondent Mother and specifically identify what, if any, risk factors would exist should unsupervised visits with Allen be permitted.

Respondent Father is allowed to relocate with Allen to Chapel Hill, North Carolina and to register him in school in Chapel Hill forthwith. Pending disposition, Respondent Father shall produce Allen one weekend a month for a supervised visit with Respondent Mother for approximately four hours. Until such time as a mutually agreeable third party is available to supervise the visits, Petitioner Father shall supervise the visits in such public or other place as these parties may agree.

WHAT IS DISCOVERY?
By Ruth Miller

"Discovery" is what makes real-life practice of law different from television dramas. Nothing in the law happens suddenly, and very little happens by surprise. Your lawyer has the right to ask your spouse about everything related to the case. That means just about everything in the area of finances and issues related to custody of your children. Included in discovery are subpoenas, interrogatories, requests for production of documents, and depositions.

There are ways to keep costs down during discovery. Sometimes one of the spouses will monopolize the financial information of the parties and the other spouse will know little or nothing about their assets and liabilities. However, it is far more common that each spouse has substantial knowledge. Since a major portion of the lawyer's job is to collect and marshall information, your lawyer's time is best (and most economically) spent when you provide your lawyer with every bit of relevant information you can.

Informal discovery involves counsel exchanging information voluntarily or upon request. This method is far less expensive than formal discovery. Your lawyer will simply prepare a list of documents that are important, and ask the other lawyer for them. Be prepared to have your spouse's lawyer ask you for a multitude of documents also. Be sure to cooperate in this request. It will save you money.

Formal discovery involves interrogatories and requests for production of documents. Interrogatories are an inexpensive method of gaining information and narrowing issues. Either of you may send the other formal written questions which must be answered under oath within 30 days of their service. If interrogatories are served upon you and you don't respond, your spouse can obtain a court order to force you to respond. This is expensive and a foolish waste of money, so make sure you and your lawyer answer the questions completely.

Another method in the formal process of discovery involves requests for production of documents. Either of you can ask the other to produce any and all documents having anything to do with the dissolution (or divorce) and its related matters. That is, anything to do with support, community (or marital) property, separate property, the children, or any other matter that can be decided by the Court. This is not a great deal different from the informal method, but like interrogatories, if there is no response, it can lead to court orders, sanctions, possible jail time and a big waste of money.

The most common type of discovery is called a "deposition" whereby your lawyer talks to your spouse. A deposition is a duplication of a court proceeding without a judge. Your lawyer may ask questions of your spouse (and your spouse's lawyer can ask you questions) in a setting in which the questions and answers are recorded by a certified shorthand reporter and later bound into a permanent volume.

Depositions have several functions. First, they narrow the issues so that your lawyer can find out exactly your spouse's position on various matters. For example, if you and your spouse agree that your grandmother's furniture is your separate property, that issue can be eliminated. If not, and you are trying to preserve that furniture as your separate property, your lawyer must ask your spouse the basis of his/her opinion: If there are any receipts to prove the furniture is community (or marital), when he/she first saw the furniture, if the two of you ever had any conversations concerning the status of the furniture, and many other questions. By eliminating issues in this way you are "narrowing the issues" which saves money!

Second, depositions tend to "freeze" testimony from deposition to trial. That is - if a party testifies one way at a deposition, and another way at a trial, it is unlikely that the judge will believe anything the person says. So each spouse is "stuck" with his/her deposition testimony.

Third, a deposition is very useful in helping the lawyer determine how effective your spouse is likely to be in court. And, finally, if the assets, liabilities and income are very complex, a deposition is essential to educate the lawyers.

You have the right to be present at your spouse's deposition and should plan to do so, unless your lawyer advises you that it would be counterproductive. If your spouse won't answer the question, your lawyer will ask the court reporter to "certify" the question, and then ask the judge to order him/her to answer. If the judge makes that order and if he/she still refuses to answer, there are many remedies. A fine or jail sentence is possible, but what is most effective is to "strike the pleadings" of the other spouse. Then he/she has no rights before the court.

If your spouse is lying, it is clearly to your advantage if you can prove it. In fact, if you can prove that only part of his/her testimony is not truthful, you are probably going to be the prevailing party on contested issues/ Many people lie and cheat in the world, but they are generally unsuccessful in getting the court system to help them. Judges are quite experienced in judging a person's credibility and know when witnesses are lying. The foundation of our legal system assumes that people tell the truth when they come to court, so judges react very negatively to witnesses who lie.

The deposition process is an ordeal, but the following instructions, commonly provided by attorneys to their clients, can lessen the stress:

1. Tell the truth. You must, you are under oath. However, do not depreciate yourself. For example, if you genuinely believe you are unable to work long hours of overtime, then the answer "Yes" to the question, "You really are able to work overtime, aren't you?" would not be the truth.

2. Don't guess. If you don't know the answer or if you can't remember. Say so! Nobody is going to think you are stupid if you can't remember something. Most of us can remember only life milestones, not day-to-day trivia. The deposition "freezes" your testimony, so a wrong guess can be disastrous.

3. Answer only the question: don't run on at the mouth. A deposition is very expensive! Extra words create extra expense. If you can answer a question with ten words, do not use one hundred. However, you are not limited to a "yes" or "no" answer.

4. Don't volunteer information. You are not obligated to do so, and if you do, it could be damaging to your case. Just wait for the question, answer the question, and then wait for another question.

5. Don't try to convince the other side of the merits of your case. You won't be able to do it, and you will find yourself caught in a web. Besides, it really doesn't matter whether the other side likes you or not. You can never help yourself at a deposition, only hurt yourself. So just answer the questions.

6. Can my mother/friend/therapist be present? The law in this area is not clear. However, most lawyers will allow other persons to be present if the request is reasonable and if there is enough space in the room. This is especially true with your own deposition as opposed to your spouse's deposition.

Supreme Court, Appellate Division, Third Department, New York.

Gwen CHERNOFF, Respondent,

v.

Michael S. CHERNOFF, Appellant.

July 13, 2006

Before: MERCURE, J.P., CARPINELLO, MUGGLIN, ROSE and KANE, JJ.

MUGGLIN, J.

Appeal from a judgment of the Supreme Court (Peckham, J.), entered November 30, 2005 in Delaware County, ordering, inter alia, equitable distribution of the parties' marital property, upon a decision of the court.

In this action for divorce, issues of counsel fees, fault and custody of the child were settled by stipulation. As to the remaining issues, Supreme Court denied spousal maintenance to plaintiff, awarded child support to plaintiff and decided issues of equitable distribution. Defendant appeals, claiming that Supreme Court miscalculated his child support obligation and that, with respect to equitable distribution, Supreme Court erred both by classifying and distributing some of his separate property as marital property and by refusing to properly credit him for his separate property contributions to the acquisition of marital assets.

First, as to the issue of child support, we agree that Supreme Court miscalculated it, but not because, as defendant asserts, his income was miscalculated. Supreme Court determined defendant's income for child support purposes to be $86,304, but in consideration of the standard of living of the child during the marriage and because defendant's income will "be considerably reduced by the equitable distribution award," it limited child support to 17% of the first $80,000 of defendant's income. By doing so, Supreme Court ignored the statutory three-step process of (1) determining combined parental income, (2) multiplying the first $80,000 by 17% and allocating the result between the parents according to their respective shares of the total income, and (3) determining the amount of child support payable on the combined parental income above $80,000 by applying the statutory factors (see Matter of Cassano v. Cassano, 85 N.Y.2d 649, 653 [1995]; see also Domestic Relations Law § 240[1-b] ).

Here, the parties were both self-employed as real estate salespeople and, without regard to whether any portion of their self-employment deductions should be added back to income (see Domestic Relations Law § 240[1-b][b][5] [vi][B] ), their tax return otherwise reveals that they had combined parental income for child support purposes of at least $118,508. The statute requires the trial court to determine the amount of support on the combined income above $80,000 (see Domestic Relations Law § 240[1-b][c][3] ) by application of the subparagraph (f) factors "and/or the child support percentage." As the record is incomplete as to these factors and Supreme Court erroneously limited the child support calculation to the first $80,000 of defendant's income, intelligent appellate review of this issue is not possible and we must remit for recalculation of child support. Remittal is further required because we find it necessary to reverse some of Supreme Court's equitable distribution determinations which it found would reduce defendant's future income.

Insofar as defendant's separate property claims are concerned, the following facts are not disputed: defendant entered this 19-year marriage owning, among other things, his residence on Long Island, three rental properties (Lazy Cow, Long Beach and a parking lot) and stocks inherited from his mother; the stocks and the Lazy Cow property are still titled in defendant's name (Supreme Court awarded them to defendant as his separate property); defendant sold the parking lot approximately six to eight years prior to the divorce action and received $150,000, which he invested in four mortgages in his own name (Wegman-$18,000; Cheryl-$30,000; McCarthy-$95,000, and Chaplick-$80,000); the Long Beach building was sold shortly after the divorce action was commenced and defendant received $200,000 which netted him a $160,000 increase over his 1979 $40,000 investment in this property; and, finally, defendant has deposited income received from these assets in four bank accounts, in his name alone, from which accounts he has frequently withdrawn funds that were then commingled with plaintiff's funds in a bank account from which the parties paid their expenses. Supreme Court held that because the income from these assets had been commingled and because plaintiff had contributed services as a wife and homemaker and defendant produced no paper trail for the $73,000 sum by which the mortgages exceeded the $150,000 sale price of the parking lot, these increases in value ($73,000 and $160,000) represented marital property and awarded plaintiff 50% of the four mortgages and 50% of the four bank accounts (total to plaintiff-$119,025.34). We find this award to be erroneous for three reasons.

First, property acquired before marriage remains separate (see Domestic Relations Law § 236[B][1][d][1] ) and property acquired in exchange for said property, even if the exchange occurs during marriage, is separate property (see Domestic Relations Law § 236[B][1][d][3] ). To be sure, commingling the corpus with marital funds transmutes the separate property into marital property for purposes of equitable distribution (see Judson v. Judson, 255 A.D.2d 656, 657 [1998] ), but commingling only a portion of the income produced by the corpus does not transmute the corpus which has never been commingled.

Second, the lack of a paper trail concerning the source of the funds invested in the four mortgages is not, alone, fatal to defendant's claim (see Zanger v. Zanger, 1 AD3d 865, 867 [2003] ). Moreover, unlike the plaintiff in Cassara v. Cassara (1 AD3d 817, 819 [2003] ), defendant, here, documented his claim that the proceeds from the sale of the parking lot were invested in the mortgages in his own name alone. Moreover, it is telling that the evidence shows no source other than defendant's separate property for these investments and plaintiff acknowledged this property to be defendant's separate property.

Third, "[w]hen a nontitled spouse's claim to appreciation in the other spouse's separate property is predicated solely on the nontitled spouse's indirect contributions, some nexus between the titled spouse's active efforts and the appreciation in the separate asset is required" (Hartog v. Hartog, 85 N.Y.2d 36, 46 [1995] ). Here, there is not a scintilla of evidence that the increase in value of defendant's property was due to any effort on his part or to anything other than passive market forces. Plaintiff, as the nontitled spouse, bore the burden of proof on this issue (see Golub v. Ganz, 22 AD3d 919, 922-923 [2005] ).

Lastly, there are two main items of marital property, the marital residence and an apartment house that the parties owned through their corporation (Wachern Corporation). The marital residence was acquired by the parties, as tenants in common, prior to the marriage. Each contributed separate funds to the purchase and defendant contributed additional separate funds to pay off the purchase money mortgage (a total of $46,000). In addition, defendant contributed $25,000 of separate funds to the purchase of the apartment house. Supreme Court found that defendant made a gift of these funds to plaintiff and denied him a separate property credit. We disagree and find that the record supports defendant receiving a credit in those amounts in the equitable distribution of these assets (see Judson v. Judson, supra at 657).

ORDERED that the judgment is modified, on the law, without costs, by reversing so much thereof as (1) awarded child support, (2) denied separate property credits to defendant of $46,000 against the marital residence and $25,000 against the apartment house, and (3) awarded plaintiff a $119,025.34 share in defendant's mortgages and the related bank accounts; matter remitted to the Supreme Court for recomputation of child support and equitable distribution not inconsistent with this Court's decision; and, as so modified, affirmed.

MERCURE, J.P., CARPINELLO, ROSE and KANE, JJ., concur.

Matter of Shondel J. v Mark D.
2006 NYSlipOp 05238
July 6, 2006
Rosenblatt, J.
Court of Appeals
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, September 06, 2006

[*1] In the Matter of Shondel J., Respondent,
v
Mark D., Appellant.

Argued May 11, 2006; decided July 6, 2006

Matter of Shondel J. v Mark D., 18 AD3d 551, affirmed.

OPINION OF THE COURT
Rosenblatt, J.

In this child support proceeding, we hold that a man who has mistakenly represented himself as a child's father may be estopped from denying paternity, and made to pay child support, when the child justifiably relied on the man's representation of paternity, to the [*2]child's detriment. We reach this conclusion based on the best interests of the child as set forth by the Legislature.

I.
In January 1996, Shondel J. gave birth to a daughter in Guyana, where she then resided, and in a birth registration document named Mark D. as the father. Shondel and Mark had dated the previous spring in Guyana and had sexual intercourse.

Although Mark was in New York when the child was born, he provided financial support for the child and returned to Guyana later in the year to see her. In a sworn statement, notarized by the Guyana Consul-General in New York in January 1996, Mark declared that he was "convinced" that he was the child's father and accepted "all paternal responsibilities including child support." In 1998 he signed a Guyana registry, stating that he was her father and authorizing the change of her last name to his. Mark named the child the primary beneficiary on his life insurance policy, identifying her as his daughter. He also sent Shondel money monthly for the child's support from her birth until June 1999 and then less regularly through the summer of 2000.

In August 2000, Shondel commenced a Family Court Act article 5 proceeding alleging that Mark is the father and seeking orders of filiation and support. Initially, Mark did not contest paternity. On the contrary, in September 2000, when the child was 4½ years old, Mark commenced a Family Court Act article 6 proceeding, seeking visitation. In his petition, he stated that he was the child's father, and that he loved her and wished to "spend quality time with her on a regularly scheduled basis."

In October 2000, however, when appearing before a Family Court hearing examiner to answer Shondel's petition, Mark requested DNA testing. The hearing examiner ordered genetic marker tests, which revealed that Mark is not the child's biological father. The hearing examiner then dismissed Shondel's paternity petition, and Mark abandoned his petition for visitation, having severed his relationship with the child. Shondel objected to the hearing examiner's order, expressing doubts about the laboratory tests and stating that she would be able to show that Mark had always recognized the child as his. Realizing that the hearing examiner had exceeded her authority in dismissing Shondel's petition, Family Court sustained her objection and appointed a law guardian for the child.

In October 2001, the Law Guardian reported that Mark had acted as the father of the child, who in turn considered him her father. Family Court set the matter down for a trial on equitable estoppel and ordered another set of tests. A blood genetic marker test confirmed that Mark is not the child's biological father. [*3]

At the estoppel trial, Family Court heard widely diverging testimony from Shondel and Mark. According to Shondel's testimony, Mark spent time with her and the child when they traveled to the United States in 1996 and 1997, seeing them "every day" for about six weeks in the summer of 1997 in New York; continued to visit the child and take her out after his relationship with Shondel soured in 1998; bought the child toys, clothes and other gifts; took the child to meet his parents; told his family that she was his daughter; regularly spoke with the child by telephone; referred to himself as "daddy" when talking with the child; and visited the child "almost every other day" in August 1999 and "almost every other day" between the time Shondel and the child moved to New York in January 2000 and the commencement of this litigation.

Mark denied all of this, asserting that he had seen the child only four times since her birth; that he had not acknowledged the child as his; that he had not introduced the child to his family or friends as his child; that he had not sent the child birthday or Christmas gifts; and that he had never visited her. Mark testified that he twice asked Shondel to submit to a blood test to determine whether he was the father of her child. Shondel insisted that he did not.

Family Court believed Shondel "entirely" and found Mark's testimony incredible. It ruled that Mark "held himself out as [the] child's father, and behaved in every way as if he was the father, albeit a father who didn't reside for a good part of the child's life, in the same country." These affirmed findings of Family Court have support in the record and are binding on this Court.

Family Court entered an order of filiation and awarded child support retroactive to the date Shondel commenced the Family Court proceeding. The Appellate Division affirmed, concluding that "Family Court properly determined that it was in the best interests of the subject child to equitably estop [Mark] from denying paternity" (6 AD3d 437 [2004]).[FN1] We agree, based on our precedents, the affirmed findings of fact and the legislative recognition of paternity by estoppel.

II.
The purpose of equitable estoppel is to preclude a person from asserting a right after having led another to form the reasonable belief that the right would not be asserted, and loss or prejudice to the other would result if the right were asserted. The law imposes the doctrine as a matter of fairness. Its purpose is to prevent someone from enforcing rights that would work injustice on the person against whom enforcement is sought and who, while justifiably relying on the opposing party's actions, has been misled into a detrimental change of [*4]position (see generally Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175, 184 [1982]).

New York courts have long applied the doctrine of estoppel in paternity and support proceedings. Our reason has been and continues to be the best interests of the child (Jean Maby H. v Joseph H., 246 AD2d 282, 285 [2d Dept 1998]; see generally Matter of L. Pamela P. v Frank S., 59 NY2d 1, 5 [1983]).

Although it originated in case law, paternity by estoppel is now secured by statute in New York (see Family Ct Act § 418 [a]; § 532 [a]). For that reason, and contrary to Mark's assertions, it is not for us to decide whether the doctrine has a rightful place in New York law. Clearly it does, in the absence of legislative repeal or a determination of unconstitutionality. Mark argues for the first time in this appeal that sections 418 (a) and 532 (a) are unconstitutional and deprive him of due process. As this claim was not raised in the courts below, we do not entertain it.

Equitable estoppel is gender neutral. In Matter of Sharon GG. v Duane HH. (63 NY2d 859 [1984], affg 95 AD2d 466 [3d Dept 1983]), we affirmed an order of the Appellate Division dismissing a paternity petition in which a mother sought to compel her husband to submit to a blood test as a means of challenging his paternity. We agreed with the Appellate Division that the mother should be estopped. As that Court pointed out, the mother expressed no question about her child's paternity until some 2½ years after the child's birth. She had held the child out as her husband's, accepted his support for the child while she and her husband lived together and after they separated, and permitted her husband and child to form strong ties together.

Estoppel may also preclude a man who claims to be a child's biological father from asserting his paternity when he acquiesced in the establishment of a strong parent-child bond between the child and another man. The rationale is that the child would be harmed by a determination that someone else is the biological father. For example, in Purificati v Paricos (154 AD2d 360 [2d Dept 1989]), a boy's biological father who did not seek to establish his paternity until more than three years after the child's birth, and who acquiesced as a relationship flourished between the boy and his mother's former husband, was estopped from claiming paternity. The courts "impose equitable estoppel to protect the status interests of a child in an already recognized and operative parent-child relationship" (Matter of Baby Boy C., 84 NY2d 91, 102 n [1994]).

Finally, the Appellate Division has repeatedly concluded that a man who has held himself out to be the father of a child, so that a parent-child relationship developed between the [*5]two, may be estopped from denying paternity.[FN2] Where a child justifiably relies on the representations of a man that he is her father with the result that she will be harmed by the man's denial of paternity, the man may be estopped from asserting that denial.[FN3]

III.
Mark represented that he was the father of the child, and she justifiably relied on this representation, changing her position by forming a bond with him, to her ultimate detriment. He is therefore estopped from denying paternity.

Mark expressly represented that he was the father of Shondel's child in the notarized sworn statement and in the Guyana registry in which he gave the child his name, as well as in the visitation petition filed with Family Court. Further, Mark held himself out as the child's father, and behaved in every way as if he was the father. Mark and the child had a close relationship, in which he referred to himself as her "daddy," and which involved regular telephone conversations, frequent visits when she and Mark were in the same city, and contact with his parents. Moreover, Mark named the child as the primary beneficiary on his life insurance policy and sent money monthly for the child's support until June 1999 and then less regularly through the summer of 2000.

The record also establishes that the child justifiably relied on Mark's representations, accepting and treating him as her father. The Law Guardian's October 2001 oral report to Family Court on her interview with the child (conducted when she was 5½ years old) concluded that she

"considers Mark [D.] to be her father. She enjoys spending time with him, she knew his name, she described what he looks like, different things about his appearance, she talked about some of the things they did together, she enjoyed the visits a lot, he brought her presents in the past, he took her out without the mother sometimes, [*6]there's a picture album with pictures of [Mark] in it and she wanted me to express that she misses him and she wants to know when he's going to come back to see her."
In the best interests of the child, Family Court properly applied estoppel, to impose support obligations on Mark, after he left the child with the detrimental effects of a relationship in which she was misled into believing that he was her father. A mother who had perfect foresight and knew that her child's relationship with a father figure would be severed when the child was 4½ might well choose never to inform him of her child's birth.

IV.
Mark attacks the statutory basis for the application of paternity by estoppel. In 1990, the Legislature amended Family Court Act § 418 (a), which governs the procedures related to scientific testing of biological paternity in support proceedings, so as to read, in pertinent part:

"The court, on its own motion or motion of any party, when paternity is contested, shall order the mother, the child and the alleged father to submit to one or more genetic marker or DNA marker tests . . . to aid in the determination of whether the alleged father is or is not the father of the child. No such test shall be ordered, however, upon a written finding by the court that it is not in the best interests of the child on the basis of res judicata, equitable estoppel or the presumption of legitimacy of a child born to a married woman." (Family Ct Act § 418 [a] [emphasis supplied]; see L 1990, ch 818, § 12.)
Arguing that the statute is self-contradictory, Mark asserts that the law mandates scientific testing of biological paternity in support proceedings and then in the next sentence makes such tests discretionary. We view the statute differently.

By providing a limited "best interests of the child" exception to mandatory biological tests of disputed paternity, the statute requires Family Court to justify its refusal to order biological tests when paternity is in issue. Before the amendment, Family Court was authorized, but not required, to order biological tests, and the court did not have to justify its refusal to do so. Now, in a support proceeding in which paternity is disputed, Family Court must explain why it denies a motion for biological paternity testing. The court may deny testing based on "res judicata, equitable estoppel or the presumption of legitimacy of a child born to a married woman," if denial is in the best interests of the child.

It is true that a child in a support proceeding has an interest in finding out the identity of her biological father. But in many instances a child also has an interest--no less powerful--in maintaining her relationship with the man who led her to believe that he is her [*7]father. The 1990 amendment to Family Court Act § 418 (a) appropriately balances these interests in accordance with the primary purpose of the Family Court Act--to protect and promote the best interests of children.

The procedure contemplated by section 418 (a) is that Family Court should consider paternity by estoppel before it decides whether to test for biological paternity. Here, the process was inverted early in the proceeding. Instead of referring the matter to a Family Court judge, the hearing examiner ordered genetic marker tests of paternity when the parties appeared in October 2000. As a result, the child's biological paternity had been addressed before Family Court conducted its trial on the issue of estoppel. Nevertheless, even though the tests had been conducted, Family Court was authorized to decide the estoppel issue.

V.
In allowing a court to declare paternity irrespective of biological fatherhood, the Legislature made a deliberate policy choice that speaks directly to the case before us. The potential damage to a child's psyche caused by suddenly ending established parental support need only be stated to be appreciated. Cutting off that support, whether emotional or financial, may leave the child in a worse position than if that support had never been given. Situations vary, and the question whether extinguishing the relationship and its attendant obligations will disserve the child is one for Family Court based on the facts in each case. Here, Family Court found it to be in the best interests of the child that Mark be declared her father and the Appellate Division properly affirmed.

Asserting that the equities are with Mark, our dissenting colleagues argue that we do not acknowledge the fraud or misrepresentation exception to the doctrine of equitable estoppel. This argument is misplaced for three reasons. To begin with, the child is the party in whose favor estoppel is being applied and there can be no claim here that she was guilty of fraud or misrepresentation. Secondly, to the extent that it matters, we note that there is no evidence of fraud or willful misrepresentation even on Shondel's part. It is not likely that she would have initiated paternity proceedings, with the predictable prospect of biological testing, if she expected tests to rule him out as the father. There is every reason to believe that she thought Mark was the biological father and that the tests would confirm her belief. Finally, the issue does not involve the equities between the two adults; the case turns exclusively on the best interests of the child.

We appreciate the dissenters' concern over applying estoppel to a case in which, as between Mark and Shondel, it was she who misrepresented Mark to be the father (even though she may have earnestly believed he was). The dissenters' position, however, appears not to recognize that fatherhood by estoppel does not contemplate a contest between two adults to [*8]see who is the more innocent. The child is entirely innocent and by statute the party whose interests are paramount.

To the child, Mark represented himself as her father. The Legislature did not create an exception for men who take on the role of fatherhood based on the mother's misrepresentation. That would eviscerate the statute and, with it, the child's best interests. Under the enactment, the mother's motivation and honesty are irrelevant; the only issue for the court is how the interests of the child are best served.

Here, Family Court found, and the Appellate Division affirmed, that Mark represented himself to be the father and that the child's best interests would be served by a declaration of fatherhood. Under our decisional law, and contrary to the dissenters' suggestion, equitable estoppel does not require that Mark, to be estopped, necessarily knew that his representation was false. A party who, like Mark, does not realize that his representation was factually inaccurate may yet be estopped from denying that representation when someone else--here the child--justifiably relied on it to her detriment (see Romano v Metropolitan Life Ins. Co., 271 NY 288, 293-294 [1936]; Triple Cities Constr. Co. v Maryland Cas. Co., 4 NY2d 443, 448 [1958]).

The dissenters cite Simcuski v Saeli (44 NY2d 442 [1978]), which holds that a defendant may be estopped to plead the statute of limitations after having wrongfully induced the plaintiff to refrain from filing a timely suit. Simcuski prevents defendants from profiting from their misconduct. It does not bear on estoppel as between a man and the child with whom he has formed a father-daughter relationship.

Our dissenting colleagues point out that Mark has renounced fatherhood and now has no relationship with the child. This state of affairs, however, does not preclude the application of estoppel. If it did, a man could defeat the statute simply by severing all ties with the child.

Given the statute recognizing paternity by estoppel, a man who harbors doubts about his biological paternity of a child has a choice to make. He may either put the doubts aside and initiate a parental relationship with the child, or insist on a scientific test of paternity before initiating a parental relationship. A possible result of the first option is paternity by estoppel; the other course creates the risk of damage to the relationship with the woman. It is not an easy choice, but at times, the law intersects with the province of personal relationships and some strain is inevitable. This should not be allowed to distract the Family Court from its principal purpose in paternity and support proceedings--to serve the best interests of the child.

Accordingly, the order of the Appellate Division should be affirmed, without costs.

G.B. Smith, J. (dissenting). The issue in this case is whether an individual nonspouse who was falsely told he was the biological father of a child and who DNA tests show could not be the biological father can be equitably estopped from denying paternity. A man or woman is and should be responsible for the financial support of his or her own offspring. In some instances, this responsibility may be placed upon a nonbiological parent. The facts in this case do not justify such a result. Because the "best interests of the child" require more than financial support, and equitable estoppel should be applicable only to someone who engages in false conduct, I dissent.

In 1995, while on a trip to Georgetown, Guyana, respondent Mark D. met and engaged in sexual intercourse with the petitioner, Shondel J. Following his return to the United States, Shondel J. told respondent she was pregnant and he began financially supporting petitioner. In 1996, respondent signed documents submitted to the Guyanese Consul that declared him to be the father of the child. He claims that he did this in order for petitioner to travel to the United States and submit to a paternity test. Between 1996 and 2000, when petitioner moved to New York, Mark D. saw the child multiple times during two visits to Guyana and a visit to Chicago. In 1997, he named the child as a beneficiary on his life insurance policy.

In 2000, Shondel J. commenced a Family Court proceeding in New York to declare Mark D. the child's father and to obtain an order of support. Family Court ordered DNA tests at Mark D.'s request and the DNA saliva swab test excluded paternity. In 2001, Family Court dismissed Shondel J.'s petition and she filed objections to the order of dismissal, alleging that the DNA test was erroneous. In November 2001, the results of a new blood test showed respondent was not the biological father. On August 8, 2002, in Family Court, Kings County, respondent was declared the child's father on the verified petition originally filed by petitioner. The court stated:

"The essence of the paternity trial was really one of equitable estoppel, should [Mark D.] be estopped from denying paternity. . . . I do find the Petitioner to have been entirely credible, and with all due respect, except in one regard, [Mark D.] entirely incredible.
"I do believe that he had doubts, however, he didn't act on them in the appropriate fashion, and as a result he held himself out as this child's father, and behaved in every way as if he was the father, albeit a father who didn't reside for a good part of the child's life, in the same country.
"However, it's clear to me that these families were involved with each other, involved with this child, that his parents and probably other friends and relatives and church members were [*9]aware of this relationship, were aware of this child . . . .
"I would assume that for the best--and hope that for the best interests of the child, that he could pick up where he left off, and accept this child wholeheartedly into his life, because the child certainly wants that, and really, what's paramount here is what the child needs."
On April 5, 2004, the Appellate Division, Second Department affirmed the Family Court's order of filiation. On May 9, 2005, the Second Department dismissed respondent's appeal from a Family Court order of retroactive child support, and affirmed an order of support against him.

The question here is not, as the majority suggests, whether equitable estoppel "has a rightful place in New York law" (majority op at 326) or in paternity proceedings. The statute makes clear that it does. The question is whether the elements of estoppel are present in this case. Equitable estoppel is a "defensive doctrine preventing one party from taking unfair advantage of another when, through false language or conduct, the person to be estopped had induced another person to act in a certain way, with the result that the other person has been injured in some way" (Black's Law Dictionary 571 [7th ed 1999]; see also Simcuski v Saeli, 44 NY2d 442, 449 [1978] [stating defendant may be equitably estopped "where plaintiff was induced by fraud, misrepresentations or deception to refrain from filing a timely action" and plaintiff demonstrates reasonable reliance on defendant's misrepresentations]). Once a party makes a prima facie showing of facts sufficient to support equitable estoppel in the paternity context, the opponent of equitable estoppel must demonstrate why estoppel should not be applied in the best interests of the child (see Matter of Sharon GG. v Duane HH., 95 AD2d 466 [3d Dept 1983], affd 63 NY2d 859 [1984]).

According to Family Court Act § 532 (a), which is substantially similar in language to Family Court Act § 418 (a):

"The court shall advise the parties of their right to one or more genetic marker tests or DNA tests and, on the court's own motion or the motion of any party, shall order the mother, her child and the alleged father to submit to one or more genetic marker or DNA tests of a type generally acknowledged as reliable by an accreditation body designated by the secretary of the federal department of health and human services and performed by a laboratory approved by such an accreditation body and by the commissioner of health or by a duly qualified physician to aid in the determination of whether the alleged father is or is not the father of the child. No such test shall be ordered, however, upon a written finding by the court that it is not in the best interests of the child on the basis of res [*10]judicata, equitable estoppel, or the presumption of legitimacy of a child born to a married woman. The record or report of the results of any such genetic marker or DNA test ordered pursuant to this section or pursuant to section one hundred eleven-k of the social services law shall be received in evidence by the court pursuant to subdivision (e) of rule forty-five hundred eighteen of the civil practice law and rules where no timely objection in writing has been made thereto and that if such timely objections are not made, they shall be deemed waived and shall not be heard by the court. If the record or report of the results of any such genetic marker or DNA test or tests indicate at least a ninety-five percent probability of paternity, the admission of such record or report shall create a rebuttable presumption of paternity, and shall establish, if unrebutted, the paternity of and liability for the support of a child pursuant to this article and article four of this act" (emphasis added).[FN1]
The majority posits that once Shondel J. claimed Mark D. was the father and made a showing (visits, support, sworn statements), it was respondent's burden to show equitable estoppel should not be applied since it would not be in the best interests of the child. The facts are not sufficient to support equitable estoppel. While Mark D. financially supported the child and made time to visit her, he has not (in the language of Black's Law Dictionary) "tak[e]n unfair advantage" or been guilty of "false language or conduct"; he has not (in the language of our decision in Simcuski) committed any "fraud, misrepresentations or deception." Thus an essential element of equitable estoppel does not exist.

The record is clear that Shondel J. misrepresented the paternity of the child for years and Mark D. relied on this information in good faith. There is no evidence that Mark D. gained any advantage from holding himself out as the child's father. Thus the majority's decision applies estoppel against a completely innocent litigant who gained no benefit from the conduct on which the estoppel is based--a holding without precedent, in the research undertaken here, in this Court's decisions. Mark D. is being required to support this child through payments of $12,858 in arrearage (as of October 2003) and $78 per week, in lieu of providing that support to his own children and his wife.

Moreover, this is a poor case for abandoning the traditional elements of estoppel. The balance of equities is in Mark D.'s favor. Contrary to the majority's view (majority op at 330), [*11]there is strong evidence of "fraud or willful misrepresentation" by Shondel J. She not only told Mark D. that the child was his, she swore in Family Court that she had sexual relations with no other man during the relevant time period--testimony proven by DNA tests to be false. Perhaps more important, this is not a case where a child lived for years with, and was brought up by, a man she had always thought was her father (cf. Matter of Diana E. v Angel M., 20 AD3d 370 [2005]). At the time of the paternity proceeding, the child had lived most of her life in a different country from Mark D., and their relationship was primarily on the telephone. This is a case in which this Court should remember "the rightful reluctance of courts in a society valuing freedom of association to impose a personal relationship upon an unwilling party," a consideration that applies with special force to "the power of the State to force a parent-child relationship" (Matter of Baby Boy C., 84 NY2d 91, 101, 102 [1994]).

The majority's ruling allows disestablishment of paternity if a presumed father acts promptly but does not allow for an exception for those who have acted in reliance on a misrepresentation or a fraud. The balance of equities should rarely favor continuing such misrepresentation or fraud. To hold as the majority does would reward a presumed father who takes no role in a child's life until a DNA test makes it official or a mother who obtains paternal obligations through fraud. As the Massachusetts Supreme Judicial Court wrote in A.R. v C.R.:

"We would proceed with caution, as other courts have, in imposing a duty of support on a person who has not adopted a child, is not the child's natural parent, but has undertaken voluntarily to support the child and to act as a parent. In most instances, such conduct should be encouraged as a matter of public policy. The obligation to support a child primarily rests with the natural parents, and one who undertakes that task without any duty to do so generally should not be punished if he or she should abandon it. On the other hand, a husband who for years acts as a father to a child born to the wife, supports that child, and holds himself out as the father to the child and to the world, may be obliged to continue to support the child when he, for the first time, renounces his apparent paternity in an attempt to avoid court-imposed support obligations. It may be relevant, in deciding whether reliance was detrimental, to know whether there once was an opportunity to pursue the natural father that is now lost" (411 Mass 570, 575, 583 NE2d 840, 843-844 [1992] [citations omitted and emphasis added]).
With this decision, this Court supports a public policy that says a man should [*12]never take on a parental role unless he wants to be unconditionally responsible for the child's financial support.

Finally, it is not in the best interests of the child in this matter that the order of filiation and order of support be affirmed. The Law Guardian concedes that Mark D.'s contributions to this child's life will only be financial. He has had no contact with the child since March 2000. Unlike Matter of Sharon GG., where an estranged husband fought to keep his parental rights, in this matter we have a man fighting to divorce his financial interests from petitioner and her child. While it was in the best interests of the child in Sharon GG. to maintain a relationship with an estranged husband who had filled the role of father in every way, it should not be said here that it is in the best interests of a child to have an order of filiation declare respondent to be her father, a man, who in addition to having no biological tie, has no interest in continuing a relationship with her or her mother.[FN2]

Accordingly, I dissent.

Chief Judge Kaye and Judges Ciparick, Graffeo and Read concur with Judge Rosenblatt; Judge G.B. Smith dissents in a separate opinion in which Judge R.S. Smith concurs.

Order affirmed, without costs.

Footnotes

Footnote 1: This Appellate Division order is brought up for review here by Mark's appeal of a later Appellate Division order dismissing his objections to the child support order (18 AD3d 551 [2005]).

Footnote 2: Mancinelli v Mancinelli, 203 AD2d 634 (3d Dept 1994); Matter of Commissioner of Social Servs. of Tompkins County v Gregory B., 211 AD2d 956 (3d Dept 1995); Brian B. v Dionne B., 267 AD2d 188 (2d Dept 1999); Matter of Jennifer W. v Steven X., 268 AD2d 800 (3d Dept 2000); Ocasio v Ocasio, 276 AD2d 680 (2d Dept 2000); Matter of Sarah S. v James T., 299 AD2d 785 (3d Dept 2002); Matter of Diana E. v Angel M., 20 AD3d 370 (1st Dept 2005).

Footnote 3: As one court put it, "[t]he law is not so insensitive as to countenance the breach of an obligation in so vital and deep a relation, undertaken, partially fulfilled, and suddenly sundered." (Clevenger v Clevenger, 189 Cal App 2d 658, 674, 11 Cal Rptr 707, 716 [Ct App 1961]; accord Pietros v Pietros, 638 A2d 545, 548 [RI 1994].)

Footnote 1: It is arguable that because DNA and other tests were ordered prior to any decision on equitable estoppel, the said doctrine should not apply here at all.

Footnote 2: Respondent argues that his constitutional rights are being violated since he is being deprived of his property in violation of the due process clauses of the federal and state constitutions. We do not address this argument because of the view taken with respect to equitable estoppel.

not focus so much on the short run. A woman should be worried about what will happen if the marriage falls apart after fifteen or twenty years. In the short run, if you marry a rich guy and it does not work out, you may not be entitled to much money. A pre nup would not hurt you. However, if you are married for a long time, did not save any money and a divorce occured after fifteen years your life could be devastated. You just have to sit in the matrimonial parts in New York and see woman in tears. Never waiver pension rights or income generated during the marriage unless their is a provision for you to recieve a substantial maintenance payment if the marriage falls apart. It is my belief that pre nupts are important in certain circumstances, but not all. You should always consult a qualified divorce lawyer in New York before you sign anything.

65.2.16 - - - Pagliaro

Pagliaro v. Pagliaro, 31 A.D.3d 728, --- N.Y.S.2d --- (Second Dept. 2006)(2006 WL 2065028)(2006 N.Y. Slip Op. 05929)(July 25, 2006):

Supreme Court, Appellate Division, Second Department, New York.

Susan PAGLIARO, appellant,

v.

Robert H. PAGLIARO, respondent.

July 25, 2006.

ANITA R. FLORIO, J.P., GABRIEL M. KRAUSMAN, WILLIAM F. MASTRO, and MARK C. DILLON, JJ.

In a matrimonial action in which the parties were divorced by judgment dated April 30, 2003, the plaintiff appeals, by permission, as limited by her brief, from so much of a Qualified Domestic Relations Order of the Supreme Court, Orange County (Owen, J.), dated February 22, 2005, as failed to distribute to the plaintiff a portion of the defendant's Variable Supplements Fund benefits and cost of living adjustments.

ORDERED that the Qualified Domestic Relations Order is modified, on the law, by deleting the second sentence of the fourth decretal paragraph thereof, and substituting therefor the following: "The term 'retirement allowance' means the total amount payable to the participant by the New York City Police Pension Fund, including any Variable Supplements Fund benefits and cost of living adjustments; and it is further"; as so modified, the Qualified Domestic Relations Order is affirmed insofar as appealed from, with costs to the appellant.

The parties were divorced in April 2003. The judgment of divorce incorporated the terms and conditions of an amended separation agreement dated January 15, 2003 (hereinafter the Agreement). The Agreement provided, inter alia, that the plaintiff would share in the pension benefits of the defendant, a New York City Police Officer. The judgment of divorce directed, among other things, the settlement of a Qualified Domestic Relations Order (hereinafter QDRO).

On February 22, 2005, the Supreme Court signed a QDRO which had been drafted by the defendant's attorney. The QDRO, as signed, excluded any Variable Supplement Fund (hereinafter VSF) benefits from the definition of "retirement allowance" and was silent as to cost of living adjustments (hereinafter COLAs). The plaintiff argues that the Supreme Court erred in excluding from the QDRO the defendant's VSF benefits and COLAs payable in relation to his pension. The defendant concedes that the plaintiff is entitled to an equitable share of pension-related COLAs. We agree with the plaintiff that she is also entitled to an equitable share of VSF benefits.

Pensions represent a form of deferred compensation paid after retirement in lieu of the receipt of greater compensation during the period of employment (see Majauskas v. Majauskas, 61 N.Y.2d 481, 491-492). Pension rights earned during a marriage, prior to a separation agreement or matrimonial action, are marital property subject to equitable distribution (id. at 490-491). While certain assets created after the divorce do not constitute marital property, enhanced retirement income is marital property subject to equitable distribution, since a non-employee spouse is entitled to share in the pension of the employee spouse as it is ultimately determined (see Olivo v. Olivo, 82 N.Y.2d 202, 209-210). As VSF benefits and COLAs are merely supplements and enhancements to already existing pension benefits, the non-employee spouse is entitled to an equitable share (see DeLuca v. DeLuca, 97 N.Y.2d 139; Johnson v. Johnson, 297 A.D.2d 279; Flores v. Flores, 22 AD3d 372; Ross v. Ross, 16 AD3d 713, 714).

We reject the defendant's argument that the plaintiff is not entitled to a share of the defendant's VSF because the Agreement did not specifically provide for such payments. The defendant incorrectly relies upon cases which have held that parties must explicitly provide for an allocation of pre-retirement death benefits in a settlement/separation agreement in order for the non-employee spouse to receive an equitable share of those benefits (see Kazel v. Kazel, 3 NY3d 331, 334-335). Death benefits, unlike pension enhancements, are separate interests, independent of retirement benefits (id. at 334). Thus, in order for a non-employee spouse to be entitled to a share of the other spouse's death benefits, the parties must make specific provision for such entitlement in their marital agreement (id.). It was not necessary for the Agreement to specifically provide for the plaintiff to receive an equitable share of the VSF benefits and COLAs, because they were merely supplements to the existing pension asset (see Olivo v. Olivo, supra at 210). Accordingly, the QDRO signed by the Supreme Court should have conformed with the Olivo principles to ensure that the plaintiff realized her right to share in the pension benefits as they are ultimately determined (see Silver v. Silver, 278 A.D.2d 478, 479).

Supreme Court, Appellate Division, Second Department, New York.

Lynda G. KESSLER, respondent,

v.

John A. KESSLER, appellant.

July 11, 2006

Banks Shapiro Gettinger & Waldinger, LLP, Mount Kisco, N.Y. (Mona D. Shapiro of counsel), for appellant.

Kramer Kozek, LLP, White Plains, N.Y. (Barry Abbott of counsel), for respondent.

HOWARD MILLER, J.P., DAVID S. RITTER, GLORIA GOLDSTEIN, and MARK C. DILLON, JJ.

RITTER, J.

On June 4, 1996, four days before their marriage, the parties executed a prenuptial agreement making limited provision for the wife during the marriage and leaving her with little or nothing should the parties divorce. In March 2002 the wife commenced this action, inter alia, for a divorce and ancillary relief. The wife sought, among other things, rescission or reformation of the prenuptial agreement. Further, she alleged, the agreement was breached by the husband. The husband sought, inter alia, a determination that the prenuptial agreement was valid and enforceable, and entry of a judgment as to economic issues in accordance with the same. The parties agreed that the Supreme Court should determine the enforceability of the prenuptial agreement first. Thus, in October 2003, after the issue of custody of the parties' two children was settled on the eve of trial, the Supreme Court held a hearing concerning the validity and enforceability of the prenuptial agreement. The court also considered whether the attorney's fee provision of the agreement should be held unenforceable as against public policy. The Supreme Court rejected the wife's arguments that the agreement was void because she entered it under duress or that it was unconscionable as a whole. Further, the court found that the wife failed to prove that the husband breached the agreement by failing to pay his share of the joint household account. However, the court held that the portion of the agreement waiving the right to seek an award of an attorney's fee was unconscionable and unenforceable in light of the strong public policy embodied in Domestic Relations Law § 237(a). Because the wife has not appealed, the only issue presented is the enforceability of the waiver of her right to seek an award of an attorney's fee. We affirm the Supreme Court's determination that the wife's waiver of her right to seek an award of an attorney's fee is unenforceable.

Paragraph 2 of the parties' prenuptial agreement defined the separate property of each party. Schedules appended to the agreement list each parties' assets. The wife's assets were valued at $135,596. The husband's assets were valued at almost $4,000,000, and consisted of bank and brokerage accounts, real property (including the marital home), and stock in his closely-held company, Indoor Courts of America (hereinafter ICA). The values assigned must be accepted as reported because each party waived the right to any further disclosure concerning the other's assets. Separate property was expansively defined to include all proceeds from the sale, exchange, or other disposition of separate property; any replacement property acquired from the proceeds of the same; and all property purchased during the marriage with one party's sole and separate funds and owned either by that party alone or by that party and another party who is not a spouse.

Paragraph 5 of the agreement established what was to occur in the event the marriage was terminated other than by death (i.e., by divorce). Under paragraph 5, each party retained his or her separate property as defined in Paragraph 2 in the same manner and to the same extent as if the marriage had not taken place. Only property accumulated during the course of the marriage, excluding the separate property as defined, was available for division between the parties. If there were no children, the husband was entitled to immediate exclusive possession of the marital home. If, as is the case, children were born of the marriage and were still minors at the time of the divorce, the agreement provided that the matter of occupancy of the marital home was to be determined by the court. Paragraph 5 also contained the language at issue on this appeal: the blanket declaration that "each party shall have no right or claim against the other for support, alimony, attorney fees or costs."

In the event of death, Paragraph 4 provided that each party was entitled to dispose of his or her separate property by will. Should the husband predecease the wife, he agreed to bequeath her the sum of $100,000 in lieu of other bequests. During the course of the marriage, Paragraph 6 provided for a joint household account into which each party was to make regular and equal payments in an unspecified amount. The parties agreed to use this account to pay, inter alia, "normal maintenance, repairs and upkeep" on the marital home.

Preliminarily, we note, it is not disputed that the prenuptial agreement does not address the issue of child custody or child support for the parties' two minor children. Indeed, at the beginning of the hearing, the parties expressly stipulated that the word "support" as used in Paragraph 5, was not intended and should not to be interpreted to mean child support. Consequently, an award of an attorney's fee relating to child custody and child support issues is not controlled by the prenuptial agreement, but rather by Domestic Relations Law § 237 (see Alvares-Correa v. Alvares-Correa, 285 A.D.2d 123). The waiver of the right to seek an award of an attorney's fee contained in Paragraph 5 of the agreement is limited to the subject matter addressed by that paragraph, namely, issues of equitable distribution. The significance and potential complexity of the issues remaining concerning the same is made manifest by the record. At the hearing, counsel for the wife expressly noted that, regardless of whether or not the prenuptial agreement was upheld, there were issues concerning "what property is in the agreement and what property is not." Further, he noted, there was property acquired since the agreement, and "there's money that goes in and there's money that goes out." We note that the parties' joint tax return for 2001, which, in the main, concerns the husband's assets, spans 78 pages of the record. In sum, the enforcement of the waiver of an attorney's fee contained in Paragraph 5 could have a significant impact on the litigation.

The enforceability of a provision of a prenuptial agreement waiving the right to seek an award of an attorney's fee presents a clash of two competing public policies-that in favor of resolving marital issues by agreement and that in favor of assuring that matrimonial matters are determined by parties operating on a level playing field.

In general, New York has a "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" (Matter of Greiff, 92 N.Y.2d 341, 344; see Bloomfield v. Bloomfield, 97 N.Y.2d 188). However, this right is not and has never been without limitation. For example, parties may not enter into a contract in violation of the Federal or State constitution, a statute, an ordinance, or a regulation, and contracts may be set aside or held void as unconscionable or in violation of public policy (see e.g. Public Serv. Mut. Ins. Co. v. Goldfarb, 53 N.Y.2d 392; Sternaman v. Metropolitan Life Ins. Co., 170 N.Y. 13; Ross v. Clyde Beatty-Cole Bros. Circus, 26 AD3d 321; Christ Gatzonis Elec. Contr. v. New York City School Constr. Auth., 297 A.D.2d 272).

The right to enter into a contractual arrangement as to matrimonial matters is expressly authorized by Domestic Relations Law § 236(B)(3), which provides: "An agreement by the parties, made before or during the marriage, shall be valid and enforceable in a matrimonial action if such agreement is in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded." This provision "authorizes spouses or prospective spouses to contract out of the elaborate statutory system and provide for matters such as inheritance, distribution or division of property, spousal support, and child custody and care in the event that the marriage ends" (Matisoff v. Dobi, 90 N.Y.2d 127, 132; see Christian v. Christian, 42 N.Y.2d 63; Matter of Davis, 20 N.Y.2d 70; Paruch v. Paruch, 140 A.D.2d 418, 420). However, the State is deeply concerned with marriage and takes a supervisory role in matrimonial proceedings. In a related context, the Court of Appeals stated, "courts have thrown their cloak of protection about separation agreements and made it their business, when confronted, to see to it that they are arrived at fairly and equitably, in a manner so as to be free from the taint of fraud and duress, and to set aside or refuse to enforce those born of and subsisting in inequity" (Christian v. Christian, supra at 72). Indeed, in numerous contexts, agreements addressing matrimonial issues have been subjected to limitations and scrutiny beyond that afforded contracts in general. For example, an agreement concerning the amount and duration of spousal maintenance must be fair and reasonable at the time it is made, and not unconscionable at the time of entry of final judgment in the divorce action (see Domestic Relations Law § 236[B][3]; Deckoff v. Deckoff, 284 A.D.2d 426). Further, no spouse may relieve the other of the requirement of support to the extent that the spouse may become a public charge (see Bloomfield v. Bloomfield, supra ). An agreement as to child support must set forth the amount of child support that would be owed under the relevant guidelines and, if the amount agreed to deviates from the same, an explanation why (see Domestic Relations Law § 240[1-b][h] ). Moreover, even if the agreement complies with the statutory requirements, the courts "retain discretion with respect to child support" (Domestic Relations Law § 240[1-b][h]; see Matter of Gravlin v. Ruppert, 98 N.Y.2d 1, 5; Pecora v. Cerillo, 207 A.D.2d 215, 217). Similarly, a prenuptial agreement as to child custody is not binding on the court (see Friederwitzer v. Friederwitzer, 55 N.Y.2d 89; Fanelli v. Fanelli, 215 A.D.2d 718). Nor is an agreement concerning the physical location of a child subject to a joint or shared custody arrangement (see Tropea v. Tropea, 87 N.Y.2d 727). In short, the statutory scheme may trump an agreement if there is an inconsistency.

The Domestic Relations Law does not expressly address the right to enter into an agreement concerning an attorney's fee in a matrimonial action. However, Domestic Relations Law § 237(a) authorizes the court to "direct either spouse ... to pay such sum or sums of money directly to the attorney of the other spouse to enable that spouse to carry on or defend the action or proceeding as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties" (see DeCabrera v. Carrera-Rosette, 70 N.Y.2d 879). This represents a statutory exception to the general rule that an attorney's fee is an incident of litigation to be borne by the respective parties (see Matter of A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 5). Further, it is more than a mere permissive legislative grant of authority to award an attorney's fee.

"[Domestic Relations Law § 237], which has deep statutory roots, is designed to redress the economic disparity between the monied spouse and the non-monied spouse. Recognizing that the financial strength of matrimonial litigants is often unequal-working most typically against the wife-the Legislature invested Trial Judges with the discretion to make the more affluent spouse pay for legal expenses of the needier one. The courts are to see to it that the matrimonial scales of justice are not unbalanced by the weight of the wealthier litigant's wallet."

(O'Shea v. O'Shea, 93 N.Y.2d 187, 190). Thus, Domestic Relations Law § 237 embodies a public policy determination by the Legislature that matrimonial matters are best resolved by parties operating on a level playing field (cf. DelDuca v. DelDuca, 304 A.D.2d 610).

However, not every agreement waiving the right to seek an award of an attorney's fee should be set aside. Rather, careful and individualized scrutiny is called for. The determination as to whether or not a provision waiving the right to seek an award of an attorney's fee is enforceable must be made on a case-by-case basis after weighing the competing public policy interests in light of all relevant facts and circumstances both at the time the agreement was entered and at the time it is to be enforced. If, upon such an inquiry, the court determines that enforcement of the provision would preclude the non-monied spouse from carrying on or defending a matrimonial action or proceeding as justice requires, the provision may be held unenforceable. Also relevant to such a determination is the conduct of the parties over the course of the matrimonial action. Such a determination is frequently best made at the conclusion of the action. However, because an attorney's fee is authorized when needed to carry on or defend an action, it may be necessary to make such a determination at an earlier point in the litigation. Here, although the Supreme Court contemplated the need for an interim award of an attorney's fee, apparently, an award was not made, leaving the issue to be determined at trial. Thus, the issue of the amount, if any, of such an award is not before this court on appeal. However, to the extent that such an award would otherwise be subject to the waiver contained in the prenuptial agreement, the Supreme Court, after careful and individualized scrutiny of the need for the same, may award the wife an attorney's fee as justice requires to enable her to carry on or defend issues of equitable distribution.

There is a great disparity between the relative financial positions of the parties in this action both at the time the prenuptial agreement was executed and at the time this action was commenced. The net value of the wife's separate property as set forth in the schedule appended to the prenuptial agreement was $135,596, while the net value of the husband's separate property was almost $4,000,000. Further, as also noted, the husband's wealth was, in the main, held in financial accounts, real property, and stock. This gives particular significance to the provision of the prenuptial agreement which includes among separate property all proceeds from the sale, exchange, or other disposition of separate property, and any replacement property acquired from the proceeds of the same. Indeed, such a provision, in conjunction with the provision precluding the award of spousal maintenance, regardless of the length of the marriage, meant that the prenuptial agreement provided the wife with little more than a limited right to occupy the marital home (which remained the husband's separate property) during the course of the marriage. Further, although less developed on the record, the disparity between the parties' relative financial positions has increased. The wife's 2002 statement of net worth shows total assets of $160,034 and a net worth of $135,234; essentially the same as when she entered the marriage. The husband's 2002 statement of net worth shows his total assets have grown to $5,626,224.15. Further, although the husband claims a negative net worth of $1,376,138.53, this figure appears open to challenge. For example, $3,700,000 of claimed debt is for contingent liabilities on the husband's personal guarantees of the corporate debt of his company, ICA. In his 2002 net worth statement, the husband values ICA at $416,650. However, in the list of property appended to the prenuptial agreement, the husband valued his stock in ICA at the sum of over $2,000,000. Further, in his 2002 net worth statement, the husband appears to significantly undervalue the marital home at $700,000. The home, which is very large and sits on four acres of property in Westchester County, was purchased in 1991 (more than 10 years earlier) for $420,000, and has since been improved with, inter alia, a pool and a tennis court. In short, there remains a great disparity between the relative financial wealth of the parties.

Despite this great disparity, the prenuptial agreement reflects no consideration given to the specific facts and circumstances of the parties as they relate to an award of an attorney's fee. Rather, although the wife came into the marriage with minimal assets compared to the husband, and the prenuptial agreement helped assure that this imbalance remained, the agreement provides for a blanket waiver of the right to seek an award of an attorney's fee (among other things), regardless of the length of the marriage or what occurred therein. Thus, the agreement does not provide for any consideration to be given at the time of the matrimonial action to the various issues relevant to an award of an attorney's fee, including, inter alia, the quantity and complexity of the issues to be litigated, and the relative means of the parties to do so. Indeed, here, by the time of the hearing, both parties had already incurred substantial attorney's fees. The husband testified that he had paid the sum of $75,000 in attorney's fees and owed the sum of approximately $75,000 more. The wife testified that she incurred the sum of approximately $165,000 in attorney and related expert fees. Moreover, although it cannot be determined on the record presented how much of this amount was incurred on matters related to child support and child custody, which, as discussed, is not controlled by the prenuptial agreement, and/or how much was incurred by the wife pursuant to her unsuccessful effort to rescind or reform the prenuptial agreement, which is not compensable pursuant to Domestic Relations Law § 237 (see Schapiro v. Schapiro, 204 A.D.2d 87, 88; Lamborn v. Lamborn, 56 A.D.2d 623; see also Anonymous v. Anonymous, 258 A.D.2d 547), the amounts alone are telling and suggest that, in the absence of at least a determination as to whether an award of an attorney's fee is warranted pursuant to Domestic Relations Law § 237 as they concern matters arising under Paragraph 5 of the agreement, the matrimonial scales will be skewed in favor of the husband's heavier wallet. The wealthier spouse should not be permitted, by the same agreement, to both opt out of the statutory scheme concerning an award of an attorney's fee and prevent an effective assessment of how important an award of an attorney's fee may be. Moreover, whether or not either party here has improperly prolonged the litigation, or created needless litigation, etc., should also be considered by the court in determining the amount, if any, of an award of an attorney's fee to the wife.

In sum, on the record presented, weighing the competing public policy interests in light of all of the relevant facts and circumstances as developed on the record, the Supreme Court did not err in determining that the provision of the parties' prenuptial agreement waiving the right to seek an award of an attorney's fee was unenforceable. Thus, we affirm the order insofar as appealed from.

ORDERED that the order is affirmed insofar as appealed from, on the law, with costs.

MILLER, J.P., GOLDSTEIN and DILLON, JJ., concur.

If the mother has legitimate concerns, like physical violence. or if the father has a drug problem, etc. The Courts can direct the father into the appropriate programs. However, all fathers will get some type of visitation with their children, and as long as the father stays with the recommendations of the Court, he will eventually have his children on a regular basis. Just becaseu a mother makes complaints does not mean that the Courts are going to listen.

It is a rare case where one spouse will recieve nothing out of the property acquired during the marriage in New York. There are a number of factors which govern how Judges should decide in New York about the divsion of marital property. The first question every Judge asks me is have the parties lived together for most of the marriage and are their any children. If you have lived with your spouse for most of your marriage and their has been some sort of economic partnership, generally Judges want to resolve the case by splitting the assets in half. Judge because you think your husband or wife is good for nothing, does not mean that a Judge will think the same way. If your husband or wife is trulely worthless, i.e. he abuses your, uses drugs, refuses to work, etc... Judges will generally give that person less than half.

In my opinion forcing parties to admit or be found at fault is time consuming and costly, and generates bitterness during the divorce process. In New York, couples who agree to a divorce have two options. They can sign a separation agreement and live apart for a year, at which time a divorce becomes final. Or, if they want to sever ties more quickly, they can cite one of four grounds under which a divorce can be granted in New York -- adultery, cruelty, abandonment for a year or more, or imprisonment for three years or more. Not surprisingly, many couples who want to end their relationship quickly agree to lie about one of these grounds in order to obtain a divorce. Thus, they end their marriage on a mutual note of perjury. Judges through the State of New York regualy tell litigants to agree on a ground for divorce. The most common agreement is constructive abandonment.

It is ridiculous that during the course of a contested litigation in New York over issues of custody, visitation and equitable distribution that Lawyers and Judges have to pursuade the parties to swear to grounds that they are not comportable with. Unfortunately, this is the system we have in New York

Following are brief summaries of these seven mistakes. Each of these areas can be quite complex, so we strongly recommend that you consult a professional prior to making a financial decision that may affect the rest of your life.

This list is not exhaustive, and depending on the complexity of your case, there may be many more areas that require thorough analysis.

Mistake #1: Not Knowing the Liquidity of Assets

Liquidity refers to the ability to access the cash value of an asset. For example, a bank savings account is highly liquid, because you can simply withdraw funds from an ATM when you need them. An antique automobile, however, is nearly illiquid because it is very difficult to quickly sell this asset to access the actual cash value.

Often in a divorce settlement, one party will receive mostly illiquid assets, including the home, while the other party receives liquid assets such as retirement plans, brokerage accounts etc.

What is the potential problem with this type of settlement?

On the surface, this scenario may appear to be equitable assuming that the home and other assets are of approximately the same value. However, the challenge lies in cash flow. How will the party that keeps the home pay the bills if his or her major asset is illiquid?

One can borrow against the equity of the home, but that's costly (closing costs, interest etc.) and it takes time to close the loan. In worst-case scenarios, the home must be sold, a smaller home is purchased and the remaining equity is utilized for living expenses.

If your proposed financial settlement has very little liquidity, be sure that you will have enough cash flow throughout the years to handle your living expenses. If not, you may have to consider selling the home, other assets or significantly decrease your expenses in order to meet your budgetary needs.

Mistake #2: Failure to Consider the Impact of Taxes

The effect of your settlement on various taxes can be very costly if not addressed thoroughly. Capital gains, income tax, and alimony are just a few of the areas that may be impacted.

Capital gains taxes need to be analyzed when property is being divided. Capital gains refer to the fair market value of an asset minus its cost. For example, if you paid $5 for a share of stock and it is now worth $25, you have a capital gain of $20. This applies to other assets such as real estate (including your home), mutual fund accounts and just about any investment that has appreciated in value.

Be very careful that the property you are receiving in a settlement does not have large capital gains as compared with your ex-spouse's property. Don't be fooled if your spouse offers you property of equal value but conveniently forgets to inform you of the tax liability.

As an example, you may be offered an investment account worth $150,000, but the cost basis is only $50,000. That means there is a gain of $100,000 that you must pay at minimum long-term capital gains tax (15% in 2004). There could possibly be short-term gains as well, which are taxed at your own marginal tax rate (as high as 35% in 2004).

In the case of your personal residence, the federal government eased the tax burden in 1997 by allowing a $250,000 capital gain exclusion per spouse if you've lived in your home for at least 2 of the past 5 years. If the home is to be sold and there is a considerable gain in value (over $250,000), you should consider selling before the divorce to take advantage of the full $500,000 exemption.

If you had sold a home prior to 1997 and rolled over the capital gain to the existing home, the old rules will apply to determine the cost basis of the current home. This will increase your gain and possibly further the need to sell while still married.

Income taxes are effected primarily by alimony payments and filing status. Alimony received is taxable as ordinary income, so a $50,000 payment received is actually worth $35,000 after taxes, assuming a 30% marginal state and federal tax bracket.

On the other hand, the payer of alimony receives a tax deduction, so the same $50,000 payment actually costs the taxpayer $35,000 assuming the same tax bracket.

Filing status is an important decision after the divorce. If you were still married on 12/31 of the tax year, you have the option of filing a joint return. If you can peacefully deal with your spouse after the divorce, you should consider this option as it could save considerable tax for both parties.

If you were divorced after 12/31 and you qualify, filing as head of household versus single can also save considerable tax dollars. Your best course of action is to consult with a tax professional regarding these options.

Mistake #3: Not Understanding the Rules of Retirement Accounts

Retirement accounts are a tax related issue, but their complexity merits a separate category. If a large portion of your settlement consists of retirement assets, you need to be aware of the many tax ramifications and potential penalties involved.

Normally, distributions from a retirement plan prior to age 591/2 are considered "early distributions" and are subject to a 10% penalty tax as well as ordinary income tax. An exception to this rule, however, is a transfer to an ex-spouse as part of a divorce settlement. A Qualified Domestic Relations Order (QDRO) is used to affect this transfer. Income taxes still apply, so any assets you receive from a "qualified plan", such as a 401(k), will be subject to a mandatory 20% tax withholding. For example, if you are awarded a $100,000 distribution from an ex-spouses 401(k) you will actually receive only $80,000.

To avoid this mandatory withholding, the transfer must be made directly to another retirement account, such as your own IRA. Once the assets are in your retirement account, you are now subject to the early distribution rules. If you need some of the assets to live on, or pay bills, make sure you take them out prior to transferring them to an IRA to avoid the 10% penalty.

To simplify, let's look at an actual example of how this transfer works:

Barbara and Stanley are both age 55 and going through a divorce. Stanley has $560,000 in his 401(k) that will be divided by a QDRO, transferring $280,000 to Barbara.

She could transfer the money directly to her IRA and pay no taxes until she starts withdrawing funds after age 591/2, at which time she would pay ordinary income tax on the amount withdrawn. But Barbara needs $80,000 for a down payment on a new house. So she holds back $100,000 before transferring the remaining amount to her IRA. 20% is withheld for taxes, leaving her with $80,000 to spend without