Tuesday, May 2, 2006

Case Law Development: New Hampshire Supreme Court Addresses Rehabilitative Maintenance Preference, Extended Payments of Property Settlements and Division of Moral Obligations that are not Legal Debts

The New Hampshire Supreme Court reviewed a divorce action with a spectrum of economic issues worth noting.  The couple in the case had been married 13 years and had four children.  Husband owns a dental practice with his father.  Wife earned a law degree early in the marriage but, by agreement between the couple, she remained at home as homemaker and primary caretaker of the children. 

One issue related to the choice of rehabilitative rather than permanent maintenance. The trial court awarded wife $3000 a month alimony for three years, based on the amount of time required for her to prepare herself (in terms of mental health and education and job placement) to return to the job market.  Wife argued that she should have been awarded permanent alimony, given the couple's agreement that she stay home with the children, the fact that the children would still be school aged in three years, and her current depression and anxiety.  The Supreme Court affirmed the alimony order, noting that rehabilitative alimony is the preferred approach and should only be rejected where "a supported spouse suffers from ill health and is not capable of establishing an individual source of income, or where the supported spouse in a long-term marriage lacks the requi-site job skills to independently ap-proximate the standard of living established during the marriage."  Neither situation existed in these facts.  Moreover, the court noted, Wife could petition for extension of the alimony if at the end of three years she was still not in a position to meet her reasonable needs.

A second issue concerned the division of property.  The court divided the marital estate of $ 2.9 million and awarded 55 percent to Wife.  The trial court then ordered that Husband be permitted to pay her the outstanding share of the property settlement over a period of 23 years.  The Supreme Court found such an extended payment schedule to be an abuse of discretion.  The court did observe that case law from other jurisdictions supported extended payment schedules where there were substantial nonliquid marital assets and a lump-sum cash payment would create a serious financial hardship for the obligor. The court further commented that "We acknowledge the frustration and inconvenience that may occur when one former spouse must sell part of his or her assets to make the payments required by a divorce judgment. It is an inevitable result of virtually every property division, however, that a former spouse who is required to turn over assets to the other at the termination of the marriage has fewer assets after the division than before.... Accordingly, we hold that the trial court unsustainably exercised its discretion by allowing the respondent to pay a substantial portion of the petitioner's share of the marital estate over a twenty-three year period."

Finally the court held that the trial court had abused its discretion in ordering reimbursement to Husband's parents of contributions they made to certain marital property.  The court cited the general rule that courts may not divide mere "moral" obligations but only legal debts.  The court concluded that if Husband reimbursed his parents for their contributions, "he would be doing so gratuitously and not as a result of an enforceable legal obligation. Accordingly, the trial court unsustainably exercised its discretion in ordering such a reimbursement and reducing the marital estate by $ 275,000."

Harvey v. Harvey, 2006 N.H. LEXIS 49 (April 26, 2006)
Opinion on  the web (last visited May 1, 2006 bgf)

http://lawprofessors.typepad.com/family_law/2006/05/case_law_develo_4.html

Maintenance (alimony), Property Division | Permalink

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