Decisions of Interest

Disability Insurance Funds Are Separate Property

Disability insurance funds are separate property, not assets subject to equitable distribution, the Supreme Court, New York County has held. Bernstein v. Bernstein, N.Y.L.J. 4/8/03 (Sup. Ct., N.Y. Cty.) (Falanga, J.).

In a divorce action, the court was asked to determine, as an apparent issue of first impression, whether the proceeds of plaintiff wife's disability insurance policy constituted marital assets subject to equitable distribution or were her separate property.

Noting that the parties' divorce action was brought in December 2000 and that plaintiff received the proceeds in January 2001, the court determined that a portion of the disability proceeds represented a replacement or substitute for wages that plaintiff would have earned during the marriage.

However, the court, deeming itself to be constrained by Domestic Relations Law '' 236(b)(1)(d)(2) and precedential decisions that had established that Social Security disability payments and veterans' disability payments are separate property not subject to equitable distribution, held that the disability insurance proceeds income substitutes measured by lost earnings paid to plaintiff constituted her separate property.

Credit Against Retroactive Child Support Arrears

Over the objection of the Commissioner of Social Services, a father who had made support payments directly to his child's mother — payments that she failed to advise social services of — was allowed a credit against retroactive child support arrears for those past payments. Matter of Kirchner v. J.L., N.Y.L.J. 4/7/03 (Kiedaisch, J.).

Petitioner, Commissioner of Social Services, objected to the decision and order of the hearing examiner with respect to the computation of retroactive arrears. Respondent father, under the prior support order, which was in effect at the time this upward modification petition was filed, was ordered to pay $28 per month child support for the parties' child. The hearing examiner determined that, based on the father's current income, under the formula guidelines of the Child Support Standards Act (CSSA), the correct amount of child support was $71 per week. In ordering support of $71 per week, the Hearing Examiner fixed the retroactive arrears of the father in the amount of $899.

The hearing examiner allowed the father a credit of $450 against retroactive arrears for money he had directly given to the mother for support during the relevant period. Petitioner alleged that no such credit is appropriate under the circumstances, as the father made the payments to the mother with the knowledge that she and the child were receiving public assistance. The mother had never advised the Department of Social Services income eligibility worker that she had received this money. Petitioner alleged this was “clearly a violation which might have resulted in termination of her then public assistance benefits.”

Initially, the court noted that petitioner could cite no legal authority, statutory or otherwise, to authorize the remedy proposed.

In dismissing the objections, the court stated, “Presumably, the Hearing Examiner determined it was appropriate to fashion an order under the CSSA guidelines reflective of the father's ability to pay support, including giving him the usual credit against his new retroactive support obligation rather than charging the father with the mother's failure to report the monies he gave her. Such type of determination must be made on a case-by-case basis. The court is not persuaded that the record demonstrates that in this particular case the Hearing Examiner abused his discretion in allowing the father the usual credit for past payments of support made by him.”

Modification Denied Due to Voluntary Job Loss

A motion for downward modification of child support obligation was denied where plaintiff consented to the stipulation of settlement setting out the amount of support and where he had voluntarily left his employment, thus creating his own financial hardship. Murtagh v. Murtagh, N.Y.L.J. 4/4/03 (Sup. Ct., IA Part 52) (Gavrin, J.).

Plaintiff father moved for downward modification of his child support obligation. He argued that he was unaware that a Jan. 15, 2002 stipulation of settlement was the basis for the parties' April 8, 2002 divorce judgment and that the child support award did not conform to Child Support Standards Act (CSSA) guidelines based on his income.

The court, citing Goldberg v. Empire State Mut. Life Ins. Co., 5 A.D.2d 230, and Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 N.Y. 435, held that plaintiff had voluntarily consented to the stipulation, which was contractually binding. Finding that plaintiff had voluntarily left his employment, the court, citing Kay v. Kay, 37 N.Y.2d 632, observed that a party who creates his own economic adversity is not entitled to a downward modification of support.

Disability Insurance Funds Are Separate Property

Disability insurance funds are separate property, not assets subject to equitable distribution, the Supreme Court, New York County has held. Bernstein v. Bernstein, N.Y.L.J. 4/8/03 (Sup. Ct., N.Y. Cty.) (Falanga, J.).

In a divorce action, the court was asked to determine, as an apparent issue of first impression, whether the proceeds of plaintiff wife's disability insurance policy constituted marital assets subject to equitable distribution or were her separate property.

Noting that the parties' divorce action was brought in December 2000 and that plaintiff received the proceeds in January 2001, the court determined that a portion of the disability proceeds represented a replacement or substitute for wages that plaintiff would have earned during the marriage.

However, the court, deeming itself to be constrained by Domestic Relations Law '' 236(b)(1)(d)(2) and precedential decisions that had established that Social Security disability payments and veterans' disability payments are separate property not subject to equitable distribution, held that the disability insurance proceeds income substitutes measured by lost earnings paid to plaintiff constituted her separate property.

Credit Against Retroactive Child Support Arrears

Over the objection of the Commissioner of Social Services, a father who had made support payments directly to his child's mother — payments that she failed to advise social services of — was allowed a credit against retroactive child support arrears for those past payments. Matter of Kirchner v. J.L., N.Y.L.J. 4/7/03 (Kiedaisch, J.).

Petitioner, Commissioner of Social Services, objected to the decision and order of the hearing examiner with respect to the computation of retroactive arrears. Respondent father, under the prior support order, which was in effect at the time this upward modification petition was filed, was ordered to pay $28 per month child support for the parties' child. The hearing examiner determined that, based on the father's current income, under the formula guidelines of the Child Support Standards Act (CSSA), the correct amount of child support was $71 per week. In ordering support of $71 per week, the Hearing Examiner fixed the retroactive arrears of the father in the amount of $899.

The hearing examiner allowed the father a credit of $450 against retroactive arrears for money he had directly given to the mother for support during the relevant period. Petitioner alleged that no such credit is appropriate under the circumstances, as the father made the payments to the mother with the knowledge that she and the child were receiving public assistance. The mother had never advised the Department of Social Services income eligibility worker that she had received this money. Petitioner alleged this was “clearly a violation which might have resulted in termination of her then public assistance benefits.”

Initially, the court noted that petitioner could cite no legal authority, statutory or otherwise, to authorize the remedy proposed.

In dismissing the objections, the court stated, “Presumably, the Hearing Examiner determined it was appropriate to fashion an order under the CSSA guidelines reflective of the father's ability to pay support, including giving him the usual credit against his new retroactive support obligation rather than charging the father with the mother's failure to report the monies he gave her. Such type of determination must be made on a case-by-case basis. The court is not persuaded that the record demonstrates that in this particular case the Hearing Examiner abused his discretion in allowing the father the usual credit for past payments of support made by him.”

Modification Denied Due to Voluntary Job Loss

A motion for downward modification of child support obligation was denied where plaintiff consented to the stipulation of settlement setting out the amount of support and where he had voluntarily left his employment, thus creating his own financial hardship. Murtagh v. Murtagh, N.Y.L.J. 4/4/03 (Sup. Ct., IA Part 52) (Gavrin, J.).

Plaintiff father moved for downward modification of his child support obligation. He argued that he was unaware that a Jan. 15, 2002 stipulation of settlement was the basis for the parties' April 8, 2002 divorce judgment and that the child support award did not conform to Child Support Standards Act (CSSA) guidelines based on his income.

The court, citing Goldberg v. Empire State Mut. Life Ins. Co. , 5 A.D.2d 230, and Yonkers Fur Dressing Co. v. Royal Ins. Co. , 247 N.Y. 435, held that plaintiff had voluntarily consented to the stipulation, which was contractually binding. Finding that plaintiff had voluntarily left his employment, the court, citing Kay v. Kay , 37 N.Y.2d 632, observed that a party who creates his own economic adversity is not entitled to a downward modification of support.