A recent article in the Huffington Post bore the tag line: “The Role Grandparents Play in Divorce.” Coincidentally, within days, there appeared a decision by the Appellate Division, First Department (2013 NY Slip Op 00023), affirming Justice Deborah Kaplan’s recent decision in Nederlander v. Nederlander, NY County Clerk’s Index No. 350510/2007. Nederlander provides unintentional insight into the judiciary’s view of the role that families should not be playing in the divorces of their children, particularly where the impact of the family’s manipulative behavior has far-reaching, potentially devastating financial and lifestyle effects on grandchildren and the soon-to-be former daughter-in-law or son-in-law.
The husband and defendant in this case is a scion of the storied Nederlander family, theatrical producers and theatre owners throughout the United States. The Appellate Division cited a record that included tales of “loans” to the husband from his father totaling over $6.5 million in 2010, some three years into the divorce action; the lack of the husband’s repayment of those loans; and, “substantial and ongoing financial aid provided to defendant by his father [as] either a gift, imputable as income…or a benefit provided to defendant by his father’s company, also imputable as income….” Based upon these factual findings, the court reasoned that the husband had the financial wherewithal to be required by the court to pay off (or refinance) one-half of the outstanding mortgage balances on the marital residence, where the mortgages had matured during the course of the still uncompleted divorce proceedings.
Reading between the lines, it should be clear that both Justice Kaplan and the Appellate Division were not about to allow the family residence to be lost merely because the husband claimed individual inability to meet these mortgage payments when significant resources had been “borrowed” by him over the course of the litigation—i.e., his alleged debt had increased by $2.5 million following his deposition, even though he claimed to be earning only $700 per week (or $36,400 per year). Implicit in such a decision is the concept that the courts are not going to accept the belief that a family’s largesse can be turned off like a spigot merely because a divorce is now pending between its heir and his or her spouse; that the courts are going to analyze how much money was spent to maintain a lifestyle, not just what is reported on a tax return or other document.
Nederlander is just the most recent example of a continuously growing body of case law involving families of fame and/or fortune. In 1998, the same Appellate Division addressed similar claims of destitution in Wildenstein v. Wildenstein, 251 A.D.2d 189; 1998 N.Y. App. Div. LEXIS 7393. At the time of the litigation, that case drew scandalous and salacious attention from the New York City tabloid newspapers. The husband was employed by the historic, century old Wildenstein Gallery. The appellate court upheld the trial court’s imputation of income based on a history of monies “funneled to defendant through various companies purportedly owned by his father.” This led the court to go on to say, “Defendant’s evident lack of candor with respect to the sources and nature of his actual income and perquisites justified an adverse inference against him with respect to his financial condition…Moreover, [the wife's] showing with respect to the extraordinarily lavish marital lifestyle provided a basis for the court to conclude that the husband’s actual income and financial resources were substantially greater than he reported….”
Imputation of Income
The concept of “imputation of income” has a strong and sound statutory basis. Domestic Relations Law (DRL) Section 240(1-b), which provides for awards of child support in family law cases, provides that the computation of income available for the payment of child support may be computed by the court to include “an amount imputed as income based upon the parent’s former resources or income, if the court determines that a parent has reduced resources or income in order to reduce or avoid the parent’s obligation for child support.” DRL Section 240 (1-b)(b)(5)(v). That same section also includes “money, goods and services provided by relatives and friends.” DRL Section 240 (1-b)(b)(5)(iv)(D). Thus, the Legislature clearly sought to ensure that children would not suffer merely because their parents were divorcing and one side or the other sought to exert leverage by the withdrawal of a preexisting pattern of financial assistance.
Similarly, gifts and inheritances, even though “non-recurring” may also be subject to allocation by the court to the payment of child support. DRL Section 240 (1-b)(e)(4). Lastly, the temporary maintenance guidelines set out in DRL Section 236B(5-a) look to the child support standards for the definition of income, thereby adopting the same imputations and inclusions that are found in DRL Section 240 (1-b). See, also, Fabrikant v. Fabrikant, 65 A.D.3d 585 (1st Dept. 2009); Rostropovich v. Guerrand-Hermes, 18 A.D.3d 211 (1st Dept. 2005); Isaacs v. Isaacs, 246 A.D.2d 428 (1st Dept. 1998); G.R.P. v. L.B.P., 36 Misc.3d 1217A (Sup. Ct. Monroe County 2012).
All of this leads back to the concept that the courts, in applying the clear intent of the Legislature, and in doing justice and equity, are not going to allow the non-monied spouse or the vulnerable minor children of the marriage to be disenfranchised by the withdrawal of funding that finds its root in the generosity of the older generation of the monied side of the family. The scenarios from the monied side detailing threats of loss of the marital/family home, the non-payment of parochial or private school tuitions or college educations, the loss of psychotherapy or health care expenditures, the cessation of school related and other extracurricular activities, etc., more and more fall on the deaf ears of a court, which essentially says to the spouse descended from money: “Your family subsidized this lifestyle before this divorce; there is no reason for them to cease doing so; and, if they do or if they have done so, the court is nevertheless going to direct you to continue to provide this lifestyle to your non-monied spouse and children. And, by implication, if you don’t support your family there are consequences that will be paid, be it by contempt of court, sanctions, unequal division of assets in favor of the non-monied spouse, etc.”
The Wise Route
Lawyers advising grandparents on what to do or not do when their children are in the midst of a divorce, are wise to say “don’t change anything.” The cutting off of financial assistance to provide one of the parents with leverage or to punish the other parent only inflicts pain on those who are most vulnerable to change, the grandchildren. Doing so can only foster ill will, alienation and isolation.
In addition, the attorney should counsel the grandparent, as the Huffington Post suggested, “Children need, want and value the safety and reassurance of their grandparents’ love. Be there for them and you can be an asset in their adjustment to life’s many challenges for a long time to come.” “How Grandparents Can Help Grandchildren Adjust to the Challenges of Divorce,” by Rosalind Sedacca, Huffington Post, Jan. 10, 2013.
Alton L. Abramowitz, a senior partner at Mayerson Abramowitz & Kahn, is national president of the American Academy of Matrimonial Lawyers.