The COVID-19 coronavirus pandemic has plunged our world into a once in a lifetime crisis–we have not seen anything like this in the United States since the Spanish Flu pandemic of 1918. Many aspects of our society have ground to a virtual halt, and our economy has been decimated. Restaurants, hotels, airlines, manufacturers, small businesses and large businesses alike, are shuttered and at risk of going out of business. Fear of the loss of employment and income is pervasive. How will this pandemic impact one particular family law issue, the issue of the payment of alimony? The divorced individual paying alimony asks, “How can I possibly be expected to pay now?”
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.
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.