I was asked recently by a financial advisor in New York, to review and comment on a chart he had put together which was designed to help newly-divorced people in get back on their feet.  The draft document I received covered mostly investment matters, but it got me thinking about all of the practical things people need to think about – and do – when they transition from being a married couple, to being single.  So, in no particular order of importance (in my view, they are all important, or will be at some point) here are some basic things which need to be attended to after a divorce.

Retirement Money Transfers:  Often, a settlement agreement or court decision will call for retirement money to be transferred between parties.  These transfers must be made between retirement accounts in order to avoid taxes and penalties.  Where the account in question is a simple IRA, or a Roth IRA, a call, and a copy of the order or agreement to the fund administrator is usually enough to have the transfer made.  For more complex plans, “qualified plans” as they are known, a Qualified Domestic Relations Order (more commonly known as a QDRO) is needed.  A QDRO is an order, prepared either by an attorney or a pension expert, and presented to the matrimonial judge for signature.  Once signed, the order is forwarded to the plan administrator, and the money is transferred tax free into a retirement account designated by the recipient. Read more ›

A new law in California which goes into effect on January 1, 2019 gives Courts the right to determine custody and care of a pet both pending a divorce and as part of a final determination. This is a move in the right direction given that so many couples consider pets part of the family. Despite this, in many States they are treated as property in divorce.

Both Pennsylvania and New Jersey consider pets as property. In New Jersey, if parties reach an agreement regarding the care and custody of their pet, the Court will enforce it. In Pennsylvania, pets are considered chattel, and the Courts will not enforce provisions of a settlement agreement of the parties regarding the custody of a pet.

The landmark case in New Jersey regarding pet custody is Houseman v. Dare, 405 N.J. Super. 538 (App.Div. 2009). In Houseman, the parties had a long-term relationship and had been engaged to be married. They purchased a dog together and were both registered as the owners. When the couple broke up and the girlfriend vacated the residence, she took the dog and its paraphernalia with her. The parties did not have a written agreement about the dog.

Nonetheless, the ex-girlfriend would bring the dog to ex-boyfriend’s residence for visits. At one point, the ex-girlfriend left the dog with her former boyfriend while she went on vacation. Upon her return, the ex-boyfriend refused to give the dog back to her. A lawsuit ensued.

The Court held that when litigants each demand custody of the family pet, and one party asserts the existence of an oral agreement on that subject, (such as bringing the dog over for visits) it is appropriate to conduct a hearing to determine which party had the greater attachment. This hearing is referred to as a “Houseman hearing.” Additionally, the Court held that pets have a “special ‘subjective value’ to their owners.” Because of that subjective value, the Court analogized pets to property such as “heirlooms, family treasures and works of art that induce a strong sentimental attachment.” Houseman at 543 (quoting Restatement (Second) of Contracts § 360 comment b).

The Houseman v. Dare decision set the following precedent in New Jersey:
1. Pets are still considered personal property, but they have a unique sentimental value that cannot be quantified with a price tag;
2. Pet ownership rulings are based in contract law, not the “best interest of the animal” (in other words, the Court would uphold a pet custody agreement in an Marital Settlement Agreement);
3. New Jersey Courts can issue shared possession orders for family pets.
4. A hearing may be held to determine which party had the greater attachment to the pet if there is an allegation of an oral agreement.

In the case of Mitchell v. Mitchell, 2010 N.J. Super. Unpub. LEXIS 188 (App.Div. 2010) the plaintiff claimed that defendant neglected the cat by not taking him for annual checkups with the veterinarian. The Court held that if a pet is being neglected and has suffered some harm, a litigant may be entitled to relief, such as assuming custody, even if the litigant had previously relinquished custody of the pet.

The seminal case in Pennsylvania regarding pet custody is Desanctis v. Pritchard, 803 A.2d 230 (2002). This case involved a couple who divorced in 2000. During their marriage, Wife purchased the dog (Barney). When the couple divorced, they drafted an agreement that stated that the dog was Wife’s property and that Husband would be entitled to visits. However, shortly thereafter, Wife moved away. Husband filed a complaint seeking shared custody of the dog. Ultimately, this case was heard before the Pennsylvania Supreme Court which held that the agreement was unenforceable as Pennsylvania law considers dogs to be personal property. The Pennsylvania Court said that the husband was seeking an arrangement that was analogous in law, to a visiting schedule for a table or a lamp. Because a pet is considered personal property, it will be lumped into the “equitable distribution” of all property. The Court held that any terms in the Property Settlement Agreement that provided for shared custody or visitation of personal property were void. This has come to be known as the “Barney Rule.”

With the recent change in California law related to pet custody, there will hopefully be nationwide recognition as to how pets are valued in most families. Time will tell if our local laws change as a result.