Small Business Divorce Results in Imputed Income

In this divorce matter involving a small business, Avraham Arbely appealed the decision of the judge as to imputation of income to Arbely, thereby increasing his alimony payment, bias by trial judges and other matters. Lea Brandspiegel-Arbely and Avraham Arbely were married in 1989, 2 children were born of the marriage and a final judgement of divorce was entered in 2013 with economic issues reserved for trial which began in November 2013. During the trial of Brandspiegel-Arbely v. Arbely, the plaintiff’s expert, Martin Abo, a certified public accountant (CPA) provided testimony indicating that the defendant’s proofs with regard to income from his business were designed to frustrate the CPA’s efforts at ascertaining the defendant’s actual income and that the defendant apparently underreported a significant amount of cash sales to the IRS. Arbely, who chose to represent himself rather than hire an attorney, challenged the figures and methods of Abo but provided no countervailing evidence. Following trial, the judge found Abo to be credible and further found that Arbely sold the business after the divorce complaint was filed in order to divest himself of his “cash cow” prior to equitable distribution and drew a negative inference against Arbely for refusing to provide Abo with adequate information and found Arbely to be less than credible when testifying. Plaintiff was awarded alimony of $23,000 per year for 14 years based on defendant’s imputed income of $95,000 per year. Plaintiff was also awarded the marital residence, and investment and business properties. The NJ Appellate Division looked to Stenken v. Stenken, 183 N.J. 290 (2005) with regard to the established principle that alimony is designed to assist the supported spouse in enjoying a standard of living after the marriage which is reasonably comparable to that enjoyed during the marriage. Additionally, the Appellate judges looked to Tannen v. Tannen, 416 N.J. Super. 248 (App. Div. 2010) which reaffirmed the long held principle providing for imputation of income in the process of establishing an alimony award. Elrom v. Elrom, 439 N.J. Super. 424 (App. Div. 2015) was used by the Appellate Division in support of the premise that imputation of income is discretionary wherein the trial court must consider the party’s actual earning capacity. Finding no basis to disturb the trial judge’s findings with regard to expert credibility, the N.J. Appellate Division upheld the decision of the court below with regard to alimony, imputed income and all other issues. If you are considering filing for divorce and own a business, or portion thereof, you are facing considerations outside the scope of a typical divorce. Depending upon their own ownership interest in the business, your spouse may fight to obtain increased alimony or funds by disputing the net worth of your business, annual profits and your personal income. Not only can the valuations be tedious and expensive but the results of the court’s findings can have permanent and financially devastating consequences. It is critical that you obtain an experienced divorce attorney familiar with small business divorces. For more information about small business divorce, alimony, child custody, equitable distribution and other family law matters visit DarlingFirm.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

In Child Custody Matters, Custody Neutral Assessments Have Limited Admissibility

In a child custody matter, a report issued in a Custody Neutral Assessment (C.N.A.) was not admissible as substantive evidence but was admissible for the limited purpose of the impressions of the assessor and statements and conduct of the parties during the assessment. Manuel Serrano and Gregoria Urbano were divorcing after a marriage of only 2 years and the issue of custody of their child was contested. They could not afford a forensic psychologist to perform a comprehensive evaluation and render a report as to custody but did participate in a C.N.A. with a clinical social worker. The C.N.A. included meetings with each party individually and a report of the evaluator’s impressions and observations during the process. Thereafter, the matter proceeded to trial. In the trial of Serrano v. Urbano, the judge held that: (1) A C.N.A. is not, and therefore cannot be substituted for, a forensic custody evaluation; (2) Unless a forensic evaluation is undertaken, an expert opinion cannot be rendered as to the issue of custody from a forensic psychological standpoint; (3) The testimony and report of the evaluator may have limited admissibility for the purpose of determining the best interests of the child; and (4) The evaluator may offer testimony with regard to statements or actions of the parties during the assessment and the evaluator’s impressions thereof as long as said information is relevant. If you are contemplating divorce and child custody or parenting time is likely to be an issue, it is critical that you consult with an experienced family law attorney in order to learn your rights and the likely outcome of your matter before making any decisions. Child custody determinations can be painstaking for the parties and the court and are not easily modified without consent of both parties or a considerable change in circumstances that is obvious to the court. For more information about custody, parenting time, divorce, alimony or other family law matters visit DarlingFirm.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.