Marital Assets

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The filing of a divorce summons commences the action and terminates the marital economic partnership. As noted by the Court of Appeals in Mesholam v. Mesholam, 11 N.Y.3d 24, 27, 862 N.Y.S.2d 453 (2008), that partnership is to be considered dissolved when a divorce action is commenced.

Retroactive to the first request for support, often contained in the divorce summons, itself, the trial court has the power to order both spousal and child support. It can also determine the parties’ relative responsibilities for marital residence carrying charges and other expenses.

In light of the trial court’s power to determine the parties’ rights and obligations for the period the divorce action is pending, what should be done if a party’s uses marital assets to pay living expenses accruing after the divorce action is commenced.

In its June 30, 2016 decision in Carvalho v. Carvalho, the Appellate Division, Third Department, held that marital assets may be used while a divorce action is pending to pay for legitimate household and living expenses without needing to later offset the division of those assets. Moreover, the burden is on the non-spending party to prove that the marital assets were not used for such “legitimate” purposes.…

Continue Reading Charging a Party for Spending Marital Assets During the Divorce Action

Mid-trial in a “high-end” matrimonial, it was held that the “monied” husband would not be required to continue to pay his wife’s continuing fees. Rather, in his October 10, 2013 decision in Sykes v. Sykes, Manhattan Supreme Court Justice Matthew F. Cooper held that such fees would be paid from $2 million in marital assets; each side to use half of the sum to pay his or her own outstanding and prospective counsel and expert fees, subject to reallocation after trial.

From the divorce action’s commencement in December, 2010, until February, 2013, just before the trial, Mr. Sykes had paid close to $1 million in counsel fees for himself and, voluntarily, for his wife. Then, in March 2013, the wife’s attorneys billed the husband $238,196 for their services rendered that month. He paid that bill in full. In April 2013, during which the first eight days of trial took place, the wife’s attorneys billed the husband $355,329 for their services. In addition, the husband was billed $74,853 for the wife’s experts’ services. Mr. Sykes, then decided he could no longer foot the litigation costs for both sides. He declined to pay the April 2013 bills or any subsequent bills incurred by the wife for her attorneys’ or experts’ services absent further order of the court.

Instead, Mr. Sykes, moved for an order authorizing him to release $2 million from marital funds and evenly share that amount with his wife so that each party could pay his or her own interim litigation expenses. He argued that not only had his income and personal funds significantly declined over the last two years, but that permitting the wife to proceed without “skin in the game” (a phrase attributed to Warren Buffett), enabled her to push forward with the litigation without any concern for its cost or any eye towards settlement.

Ms. Sykes opposed the release of the money for the payment of counsel and expert fees. She maintained that she had “skin in the game” by virtue of having to travel from France to make periodic court appearances; she was every bit as motivated as the husband to reach a fair resolution of the case. Moreover, Ms. Sykes argued that because she had no income other than the husband’s $75,000 monthly interim maintenance and child support support payments, she must be considered the nonmonied spouse. Thus, she was entitled under statutory and case law to have her husband pay her interim legal fees. Moreover, she claimed the law was clear: interim counsel fees must come from her husband’s income and separate funds rather than marital funds so as not to deplete her assets.…

Continue Reading Wife Given “Skin In The Game” By Having To Pay Her Own Interim Counsel Fees Using Marital Assets