NJSBA Family Law Section

Client is married to a cop. He is pro se and currently out on disability. Husband wants her to get a divorce from bed and board. I do not know if his health plan will cover her, even though she and he would technically still be married. Anybody know? Also, would PFRS honor his PFRS pension division if there is no absolute divorce? Would the township honor a division of his tax-deferred savings plan without an absolute divorce? This is new on me. I have heard that some plans are carving out a provision in the health plans to avoid spouses being covered in event of a divorce from bed and board. FYI, he is with Livingston P.D., although he is threatening to retire. Robert E. Goldstein, Esq. Drescher & Cheslow, P.A. 610 Bridge Plaza Drive Manalapan, NJ 07726 (732) 972-1600 Fax (732) 972-0038 E-mail: [email protected] Visit my personal website: www.mydivorcelawyernj.com Member, Middlesex County Bar Association, Monmouth Bar Association, New Jersey Association for Justice and New Jersey State Bar Association IRS Circular 230 Notice: To ensure compliance with certain regulations promulgated by the U.S. Internal Revenue Service, we inform you that any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein, unless expressly stated otherwise. This E-Mail message and any documents accompanying this E-Mail transmission contain information from the law firm of Drescher & Cheslow, P.A. which is "Privileged and confidential attorney-client communication and/or work product of counsel." If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution and/or the taking of or refraining from taking of any action in reliance on the contents of this E-Mail information is strictly prohibited and may result in legal action being instituted against you. Please reply to the sender advising of the error in transmission and delete the message and any accompanying documents from your system immediately. Thank you ------------------------------------------- Robert Goldstein Esq. Manalapan NJ (732)972-1600 -------------------------------------------

HYPOTHETICAL :

The parties have a catastrophic medical claim, after their B&B "divorce." Say $100K per year. They submit the claim. The carrier investigates the claim because of its high amount. They take the position that this "divorce" was a sham intended to cheat/defraud the carrier. They decline coverage. Litigation ensues. Maybe the family wins, maybe they lose, but the carrier can certainly better afford to front the litigation costs [2 or 3 years with appeals, etc.].
 
Plus, to anticipate the worst, the carrier takes the position the  lawyers actively encouraged/aided/abetted the fraud, and therefore, should be sanctioned and/or liable as joint tortfeasors, accessories, etc.
 
Finally, it doesn't take a big stretch to change the objecting party to the State of NJ, in the context of pension/retirement benefits [see news squib below]. 

charlie
 
Austin American-StatesmanContinental Says Pilots Cashed in Pensions with Sham Divorces

By David Koenig

ASSOCIATED PRESS

HOUSTON - Continental Airlines Inc. is suing nine pilots who it says got sham divorces so their ex-spouses could collect their retirement benefits while they kept flying. The airline said the pilots concealed the divorces from children and friends, then remarried their spouses after getting the money. The company said it paid out between $10 million and $11 million in suspicious pension distributions, including sums paid to other pilots who weren't named in the lawsuit. Eight of the pilots have been fired or have quit, while one was rehired after he promised to pay back the retirement money, the airline said - although he too was named as a defendant after failing to repay. The spouses were also named as defendants. The airline and the committee that runs its plots' retirement plan filed the lawsuit Wednesday in federal District Court in Houston. Continental asked the court to order the pilots to return the money and to declare that the company was not violating anti-discrimination laws in firing the pilots. Continental charged that the pilots - seven men and two women -'tried to take advantage of a loophole in a major federal pension law that in cases of divorce allows payment of benefits before the worker retires. The pilots divorced and then usually assigned all their benefits to their ex-spouses, who then got state courts to order lump-sum payouts, the airline charged. "The divorces ... were subterfuges or sham transactions" because the couples had no intention of breaking up but divorced only to collect pension benefits without the pilots retiring, the airline said.

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Charles Abut Esq.
Hackensack NJ
(201)342-0404

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Original Message:
Sent: 02-27-2013 20:48
From: Robert Goldstein
Subject: Divorce from bed and board issues


Client is married to a cop. He is pro se and currently out on disability.

Husband wants her to get a divorce from bed and board. I do not know if his health plan will cover her, even though she and he would technically still be married. Anybody know?

Also, would PFRS honor his PFRS pension division if there is no absolute divorce? Would the township honor a division of his tax-deferred savings plan without an absolute divorce?

This is new on me. I have heard that some plans are carving out a provision in the health plans to avoid spouses being covered in event of a divorce from bed and board. FYI, he is with Livingston P.D., although he is threatening to retire.

Robert E. Goldstein, Esq.
Drescher & Cheslow, P.A.
610 Bridge Plaza Drive
Manalapan, NJ 07726
(732) 972-1600
Fax (732) 972-0038
E-mail: [email protected]

Visit my personal website: www.mydivorcelawyernj.com


Member, Middlesex County Bar Association, Monmouth Bar Association, New Jersey Association for Justice and New Jersey State Bar Association



IRS Circular 230 Notice: To ensure compliance with certain regulations promulgated by the U.S. Internal Revenue Service, we inform you that any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein, unless expressly stated otherwise.
This E-Mail message and any documents accompanying this E-Mail transmission contain information from the law firm of Drescher & Cheslow, P.A. which is "Privileged and confidential attorney-client communication and/or work product of counsel." If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution and/or the taking of or refraining from taking of any action in reliance on the contents of this E-Mail information is strictly prohibited and may result in legal action being instituted against you. Please reply to the sender advising of the error in transmission and delete the message and any accompanying documents from your system immediately. Thank you






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Robert Goldstein Esq.
Manalapan NJ
(732)972-1600

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Brian J. Aloia, Esq.
THE LAW OFFICE OF BRIAN J. ALOIA LLC
2 Broad Street, Suite 407
Bloomfield, New Jersey 07003
[email protected]
Tele: 973-337-6626
Fax: 973-337-6535


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Original Message:
Sent: 02-27-2013 20:48
From: Robert Goldstein
Subject: Divorce from bed and board issues


Client is married to a cop. He is pro se and currently out on disability.

Husband wants her to get a divorce from bed and board. I do not know if his health plan will cover her, even though she and he would technically still be married. Anybody know?

Also, would PFRS honor his PFRS pension division if there is no absolute divorce? Would the township honor a division of his tax-deferred savings plan without an absolute divorce?

This is new on me. I have heard that some plans are carving out a provision in the health plans to avoid spouses being covered in event of a divorce from bed and board. FYI, he is with Livingston P.D., although he is threatening to retire.

Robert E. Goldstein, Esq.
Drescher & Cheslow, P.A.
610 Bridge Plaza Drive
Manalapan, NJ 07726
(732) 972-1600
Fax (732) 972-0038
E-mail: [email protected]

Visit my personal website: www.mydivorcelawyernj.com


Member, Middlesex County Bar Association, Monmouth Bar Association, New Jersey Association for Justice and New Jersey State Bar Association



IRS Circular 230 Notice: To ensure compliance with certain regulations promulgated by the U.S. Internal Revenue Service, we inform you that any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein, unless expressly stated otherwise.
This E-Mail message and any documents accompanying this E-Mail transmission contain information from the law firm of Drescher & Cheslow, P.A. which is "Privileged and confidential attorney-client communication and/or work product of counsel." If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution and/or the taking of or refraining from taking of any action in reliance on the contents of this E-Mail information is strictly prohibited and may result in legal action being instituted against you. Please reply to the sender advising of the error in transmission and delete the message and any accompanying documents from your system immediately. Thank you






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Robert Goldstein Esq.
Manalapan NJ
(732)972-1600

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Rob et al --

<<  Client is married to a cop. He is pro se and currently out on disability.  Husband wants her to get a divorce from bed and board. I do not know if his health plan will cover her, even though she and he would technically still be married. Anybody know?>>

This was just discussed a few posts ago:  http://community.njsba.com/njsba/viewdiscussions/viewthread?GroupId=1291&MID=6433 .  Short answer:  A divorce from Bed & Board is a "legal separation" thus precluding coverage under PERS and PFRS.  A judgment of separate maintenance is specifically NOT considered a "legal separation", thus permitting the continuation of coverage.  (Note also that a B&B requires the filing of separate tax returns, a judgment of separate maintenance mandate either joint filing or "married filing separately.").

<< Also, would PFRS honor his PFRS pension division if there is no absolute divorce? Would the township honor a division of his tax-deferred savings plan without an absolute divorce?  >>

ERISA (and QDRO's / DRO's) do NOT require that the parties be divorced or legally separated.  Yes, they would have to honor it.

<<  This is new on me. I have heard that some plans are carving out a provision in the health plans to avoid spouses being covered in event of a divorce from bed and board.>>
Many plans (including the State plan) preclude coverage when a legal separation is in place.  While NJ obviously doesn't have "legal separation" as a status one specifically applies for in a complaint, the case law is 100% solid that a B&B is a legal separation, a judgment of separate maintenance is not.  Read the Cappadonno case and the cases it cites (in other discussion linked above).


Charles et al ---

I think there's a world of difference between people who file for a B&B divorce and people who "divorce" while still holding themselves out as man and wife, continue to live together and jointly benefit from running a pension scam and have no intention of doing otherwise.  The latter is fraud.  People who file for a B&B or separate maintenance are not committing fraud; they're availing themselves of a beneficial legal status.  If it was fraudulent in some way, why would the legislature not repealed the statute? 

Note that in the airline case, an entitlement (to a lump sum payout of a portion of a pension) was created where none existed.  In a B&B divorce, all people are doing is maintaining some rights connected to their marital relationship while defining other rights.  You're not the first I've heard to express this thought, but when one thinks it through further, I see absolutely no basis for it.

Insurance companies are required to abide by their contracts and there's every reason to believe they would end up paying punitive damages and attorneys' fees if they refused to do so.

NEW HYPOTHETICAL :

After a divorce, a party with no medical insurance incurs a $100K medical bill and loses all their assets to pay it off.  They then learn that they could have obtained a B&B divorce or judgment of separate maintenance and maintained coverage, but their attorneys never advised them of the option.

Put your carrier on notice, because they've got a solid malpractice suit.

Remember that in Brill ("the" summary judgment case), the issue (simplified) was a failure to notify someone of insurance coverage they could have obtained.  It's not just "not fraudulent" to pursue a B&B (or separate maintenance judgment), I believe it's malpractice not to inform the parties of the existence of this status.




(Note that I think a lot of these medical insurance issues may go away or become less relevant with Obamacare kicking in over the next couple years.  Someone with more time on their hands than I have should write an article on the effect of Obamacare on medical insurance in Family Part actions).



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David Perry Davis, Esq.
112 West Franklin Avenue
Pennington, NJ 08534
Voice: 609-737-2222
Fax: 609-737-3222
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David: I have contrary information from Ronni Davis, Esq. re: the PFRS pension. She had a b& B divorced client who received the pension and then when the participant died without obtaining an absolute divorce, she told me that her client received the husband's death benefits also. You do know that a PFRS plan is not controlled by ERISA and thus there is no QDRO, per se, for that type of pla, but the Division of Pensions will honor a division of the pension pursuant to a divorce judgment until death of the plan member. Anyway, I have placed an inquiry with the Division of Pensions to get an answer. Thanks. ------------------------------------------- Robert Goldstein Esq. Manalapan NJ (732)972-1600 -------------------------------------------
Original Message: Sent: 03-03-2013 16:15 From: David Perry Davis Subject: Divorce from bed and board issues Rob et al -- << Client is married to a cop. He is pro se and currently out on disability. Husband wants her to get a divorce from bed and board. I do not know if his health plan will cover her, even though she and he would technically still be married. Anybody know?>> This was just discussed a few posts ago: http://community.njsba.com/njsba/viewdiscussions/viewthread?GroupId=1291&MID=6433 <http: community.njsba.com/njsba/viewdiscussions/viewthread?groupid="1291&MID=6433"> . Short answer: A divorce from Bed & Board is a "legal separation" thus precluding coverage under PERS and PFRS. A judgment of separate maintenance is specifically NOT considered a "legal separation", thus permitting the continuation of coverage. (Note also that a B&B requires the filing of separate tax returns, a judgment of separate maintenance mandate either joint filing or "married filing separately."). << Also, would PFRS honor his PFRS pension division if there is no absolute divorce? Would the township honor a division of his tax-deferred savings plan without an absolute divorce? >> ERISA (and QDRO's / DRO's) do NOT require that the parties be divorced or legally separated. Yes, they would have to honor it. << This is new on me. I have heard that some plans are carving out a provision in the health plans to avoid spouses being covered in event of a divorce from bed and board.>> Many plans (including the State plan) preclude coverage when a legal separation is in place. While NJ obviously doesn't have "legal separation" as a status one specifically applies for in a complaint, the case law is 100% solid that a B&B is a legal separation, a judgment of separate maintenance is not. Read the Cappadonno case and the cases it cites (in other discussion linked above). Charles et al --- I think there's a world of difference between people who file for a B&B divorce and people who "divorce" while still holding themselves out as man and wife, continue to live together and jointly benefit from running a pension scam and have no intention of doing otherwise. The latter is fraud. People who file for a B&B or separate maintenance are not committing fraud; they're availing themselves of a beneficial legal status. If it was fraudulent in some way, why would the legislature not repealed the statute? Note that in the airline case, an entitlement (to a lump sum payout of a portion of a pension) was created where none existed. In a B&B divorce, all people are doing is maintaining some rights connected to their marital relationship while defining other rights. You're not the first I've heard to express this thought, but when one thinks it through further, I see absolutely no basis for it. Insurance companies are required to abide by their contracts and there's every reason to believe they would end up paying punitive damages and attorneys' fees if they refused to do so. NEW HYPOTHETICAL : After a divorce, a party with no medical insurance incurs a $100K medical bill and loses all their assets to pay it off. They then learn that they could have obtained a B&B divorce or judgment of separate maintenance and maintained coverage, but their attorneys never advised them of the option. Put your carrier on notice, because they've got a solid malpractice suit. Remember that in Brill ("the" summary judgment case), the issue (simplified) was a failure to notify someone of insurance coverage they could have obtained. It's not just "not fraudulent" to pursue a B&B (or separate maintenance judgment), I believe it's malpractice not to inform the parties of the existence of this status. (Note that I think a lot of these medical insurance issues may go away or become less relevant with Obamacare kicking in over the next couple years. Someone with more time on their hands than I have should write an article on the effect of Obamacare on medical insurance in Family Part actions). ------------------------------------------- David Perry Davis, Esq. 112 West Franklin Avenue Pennington, NJ 08534 Voice: 609-737-2222 Fax: 609-737-3222 ------------------------------------------- </http:>

Robert -

I hope you share the results of your inquiry to the Division of Pensions & Benefits when they respond.

As pointed out in the prior thread, the language on their "fact sheets" is outright contradictory on several points - sometimes referring to "legal separation" and other times only to a "former spouse." 

Someone at the State needs to go through the fact sheets (and the statute) and really work out when health benefits, window's benefits (etc) can and can't continue.  Upon divorce?  Separation?  B&B divorce?  Judgment of Separate Maintenance?  As Charles Abut mentioned a few posts ago, the question is probably going to end up in litigation at some point if it isn't clearly (and consistently) addressed.


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- Dave

David Perry Davis, Esq.
112 West Franklin Avenue
Pennington, NJ 08534
Voice: 609-737-2222
Fax: 609-737-3222
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Original Message:
Sent: 03-03-2013 16:32
From: Robert Goldstein
Subject: Divorce from bed and board issues

David:

I have contrary information from Ronni Davis, Esq. re: the PFRS pension. She had a b& B divorced client who received the pension and then when the participant died without obtaining an absolute divorce, she told me that her client received the husband's death benefits also.

You do know that a PFRS plan is not controlled by ERISA and thus there is no QDRO, per se, for that type of pla, but the Division of Pensions will honor a division of the pension pursuant to a divorce judgment until death of the plan member. Anyway, I have placed an inquiry with the Division of Pensions to get an answer.

Thanks.

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Robert Goldstein Esq.
Manalapan NJ
(732)972-1600

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In my past dealings with PFRS, teir representative informed me that - at the time - the plan was over-funded. They were particularly interested in recommending and approving a fair outcome.

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Curtis Romanowski Esq.
Senior Attorney - Proprietor
Brielle NJ
(732)603-8585

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Original Message:
Sent: 03-03-2013 16:32
From: Robert Goldstein
Subject: Divorce from bed and board issues

David:

I have contrary information from Ronni Davis, Esq. re: the PFRS pension. She had a b& B divorced client who received the pension and then when the participant died without obtaining an absolute divorce, she told me that her client received the husband's death benefits also.

You do know that a PFRS plan is not controlled by ERISA and thus there is no QDRO, per se, for that type of pla, but the Division of Pensions will honor a division of the pension pursuant to a divorce judgment until death of the plan member. Anyway, I have placed an inquiry with the Division of Pensions to get an answer.

Thanks.

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Robert Goldstein Esq.
Manalapan NJ
(732)972-1600

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