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Articles Posted in High Net Worth Divorce

skoloff wolfe best law firms 2021Skoloff & Wolfe, P.C., today announced that the firm is ranked in the 2021 Edition of U.S. News – Best Lawyers “Best Law Firms” in the practice area of Family Law. Founded more than 50 years ago, Skoloff & Wolfe attorneys are leaders in the fields of family and matrimonial law, real estate property tax appeals, and business litigation.

Recognition by Best Lawyers “Best Law Firms” is based entirely on peer review. The organization’s methodology is designed to capture, as accurately as possible, the consensus opinion of leading lawyers about the professional abilities of colleagues and firms within the same geographical area and legal practice area.

The nomination process employs a sophisticated, conscientious, rational, and transparent survey process designed to elicit meaningful and substantive evaluations of the quality of legal services, in the belief that the quality of a peer review survey is directly related to the quality of the voters.

Couple Discussing Retirement Assets for Divorce — Skoloff Wolfe lawyers attorneys
Retirement funds are often among the most valuable assets a divorcing couple owns, although before retirement they are often not given a whole lot of thought. How they are treated is one of the most important considerations to be dealt with in a divorce case, and in order to do that, the rules of the road need to be understood by both attorney and client. How such funds are distributed may be one of the most consequential decisions to be made in the divorce process, and there is a lot to know.

Understand the Different Types of Retirement Accounts that are Considered in a Divorce

In order to know what to do with retirement assets, it is important to first understand what it is that you, or your spouse, own. Basically, there are two styles of retirement plan: the defined benefit plan, which guarantees the owner an income stream in a predetermined amount each month, starting from a fixed age through the end of the pensioner’s life; and the defined contribution plan, which has a fixed value at any given point in time, just like a bank or brokerage account. Defined contribution plans are usually in one of two forms: the 401(k) account, which is funded by withholdings from an employee’s paycheck and contributions from his or her employer; and the Individual Retirement Account (“IRA”), which is either funded with a worker’s savings, “rolled over” from a 401(k) with a prior employer, or both. There may be multiple accounts if the person has had multiple employers. A person going through a divorce needs to be certain to know how many accounts they and their spouse have, and what kinds of accounts they are.

A couple who owns a family business together going through a divorce
A family business is typically a closely held corporation—a business which is not publicly traded and for which there is no open market. Where the interest was purchased during the marriage, its value will be subject to division in the divorce. The major question which presents itself, however, is how will the value be determined.

Determining Fair Value of a Business During a Divorce

Brown v. Brown, 348 N.J. Super. 466 (App. Div. 2002) determined that the governing standard of value to be applied is “fair value,” and not “fair market value.” Fair market value is the amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts. Fair market value takes into consideration a discount for lack of marketability or liquidity which is a discount based on the inability to sell an ownership interest in a business. Fair market value also takes into consideration a minority interest discount which is a reduction in value due to the lack of control which can be exercised by an owner with only a minority interest.

By: Jonathan W. Wolfe

Previously published in American Journal of Family Law, Spring 2010, Volume 24.

Attorneys representing parties in divorce frequently are faced with the difficult challenge of discovering and proving the existence of hidden income or assets. Although most prevalent in the context of private business owners, spouses from all career paths are capable of engaging in divorce planning designed to minimize their income and avoid parting with their assets in divorce.

By: Jonathan W. Wolfe

This article was previously published in New Jersey Law Journal, Vol. 212 – No 12.

There are many legitimate reasons for a business to retain earnings. However, for a spouse in a divorce — or contemplating divorce — leaving money in the business may be viewed as a tool to shield income to avoid support. For shareholders of an S corporation, even though earnings have not been distributed, they will appear as “phantom income” on the owner’s personal tax returns. Given how frequently these issues arise in our practice, there is surprisingly little New Jersey precedent addressing the treatment of retained earnings in the context of divorce.

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