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 AAML NJ Blog


  • 5 Apr 2021 10:30 AM | AAML NJ Admin

    By Sharon L. Klein, Wilmington Trust, N.A. 

    Are your female clients equipped with the knowledge and resources to manage divorce settlement funds? Wilmington Trust’s paper, Women & Investing: A Stronger Grip on Their Financial Futures, points to the fact that, while women are innately talented when it comes to making investing decisions, many still face unique challenges, which can be overcome by aligning with the right advisor.

    Link to article: Women-Investors.pdf (wilmingtontrust.com)

    For more information, reach out to Sharon Klein, Head of National Divorce Advisory Practice at (P) 212-415-0531 or sklein@wilmingtontrust.com.

  • 23 Mar 2021 2:30 PM | AAML NJ Admin

    By Andrea Valencia, Manager, Advisory ServicesWithum

    Have you ever thought about what type of data your phone is collecting? Anything you do online leaves a digital footprint. As technology moves more to the Internet of Things (IoT) and Mobile devices, digital forensics helps us bridge the gap between what you think you know about your day-to-day and what is actually being collected.

    Stayed tuned for our in depth presentation on digital forensics on March 25!  https://aamlnj.org/event-4176828


  • 22 Mar 2021 12:30 PM | AAML NJ Admin

    By Amanda S. Trigg, Cohn Lifland Pearlman Herrmann & Knopf LLP

    As your family starts to recover from the financial impact of the COVID-19 pandemic and financial crisis of 2020-21, you and your attorney will have many questions about your personal and business finances.  In New Jersey, all courts require financial disclosures on a form called the “Family Part Case Information Statement.”  If you prepared the "CIS" before March 2020, and if your life has changed in the past year, it is time to update that CIS.

    In 2021, a CIS includes information not previously seen, including the various benefits of the 2021 Families First Coronavirus Response Act (FFCRA) and other benefits that arose in 2020.  PPP loans, stimulus checks, mortgage forbearance or any other new financial issue that you encountered during the pandemic will need to be addressed. 

    Everyone filing for divorce in New Jersey uses the same form for financial disclosure, to ensure that each party has the same information. It also helps Judges, mediators, and arbitrators to assess the parties' situation, including what assets and liabilities might be divided, how much each party earns, and how much everyone spends.  We provide our clients with an electronic data input form, to be filled in, saved as a "Word" document, and emailed back to us.  We then import the data into the software approved by the New Jersey Courts for final formatting and review by you.    

    You will need to disclose your income, a budget of your joint lifestyle expenses, a budget of your current lifestyle expenses including the expenses for the house, transportation, and personal costs, and a summary of the value of all assets and current debts, to show your total financial circumstances.  Your Case Information Statement must be as accurate as possible because you are required to certify that the contents of the form are true. It helps establish your lifestyle which is an important component of alimony/spousal support if any is appropriately considered. The monthly expenses must be reviewed and should be based on actual expenditures such as those shown from checkbook registers, bank statements, or credit card statements from the past 24 months. The asset values should be taken, if possible, from actual appraisals or account statements. If the values are estimates, it should be noted that they are estimates.  It is also very important that you attach copies of relevant documents as required by the Case Information Statement, including your most recent tax returns with W-2 forms, 1099s, and current income information.

    To make this as easy as possible, find as many of the following documents as you can: 

    • 2019 income tax returns
    • 2020 and 2021 year to date bank statements and credit card statements
    • 2020 investment or retirement account statements
    • Current mortgage statement, showing the balance due, interest rate, monthly payment, escrow for taxes, and insurance.
    • Vehicles – lease or loan agreements or recent/ current statements.
    • Your credit report and your social security earnings history from ssa.gov.

    Preparing the CIS takes time and careful attention to detail.  It must be updated when it is out of date, especially after any type of big financial change such as you may have experienced due to COVID-19 or the recent economic upheaval.   We understand the importance of your CIS and that your finances may include much more than we can address on this standardized form.  Talk to your lawyer about adding footnotes, comments, and attachments so that you use this opportunity to explain your situation to the Court and your spouse as clearly as possible.  The experienced family law attorneys in the AAML can help you, answer your questions, and provide additional assistance with making this full financial disclosure, for everyone’s benefit in protecting your family’s finances. 

    *Updated blog, originally posted on www.njlawfirm.com on August 5, 2020. 


  • 9 Mar 2021 12:30 PM | AAML NJ Admin

    By Stefanie Jedra, CPA and Amy Sara Cores, Esq.

    Before the Tax Cuts and Jobs Act (“TCJA”), which was enacted on December 22, 2017, alimony was deductible for federal and state tax purposes. With the deductibility of alimony came the dreaded discussion of alimony recapture, which could cause alimony to be taxable if payments were frontloaded. The Internal Revenue Code (“I.R.C.”) outlined the calculation to determine whether alimony payments had been frontloaded in I.R.C. § 71(f).

    For divorces finalized after December 31, 2018, alimony is no longer deductible for federal tax purposes and in most states. It seems as though alimony recapture is something that we have not had to think about when drafting inter-spousal agreements for the last few years. While alimony is deductible for state tax purposes in six states (namely, Arkansas, California, Massachusetts, New Jersey, New York, and Pennsylvania), the state tax laws in these jurisdictions do not mention alimony recapture or any similar disincentive to front-load alimony payments. So why are we talking about it now, is alimony recapture even a thing anymore? It is.

    I.R.C. § 71(f) outlines the calculation to determine whether there has been front-loading of alimony payments leading to alimony recapture. The calculation involves 2 years post separation. As we all know, there was a rush to finalize divorces in 2018 in order for clients to be grandfathered-in and maintain the deductibility of alimony going forward. We are now in the 2020 tax season and alimony recapture may really be a thing right now. For that reason, a brief refresher is appropriate.

    For divorces finalized in 2018:

    In the first-year post-separation (or 2019) alimony was taxable to the extent that payments received in the first-year post-separation exceeded $15,000 plus the average of:

    • alimony or separate maintenance payments paid by the payor spouse during the 2nd post-separation year, reduced by the excess payments for the 2nd post-separation year, and
    • the alimony or separate maintenance payments paid by the payor spouse during the 3rd post-separation year. I.R.C.  § 71(f)(3)

    In the second-year post-separation (or 2020) alimony was taxable to the extent that payments received in the second-year post-separation exceeded $15,000 plus:

    • the amount of the alimony or separate maintenance payments paid by the payor spouse during the 3rd post-separation year. I.R.C.  § 71(f)(4)

    Unless alimony becomes tax deductible again, and the repeal of I.R.C. § 71 is revoked, this may be the last time that alimony recapture is a pertinent issue for many of our clients.

    Amy Sara Cores, Esq. is a Fellow of the International Academy of Family Lawyers, Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney, a Fellow of the American Academy of Matrimonial Lawyers, and a National Board of Trial Advocacy Board Certified Family Law Trial Advocate. She is the owner of Cores & Associates, LLC a boutique family law firm in Freehold, New Jersey where she handles a variety of complex and high conflict family law cases.

    Stefanie Jedra, CPA is a business valuation and forensic accounting expert who specializes in valuation of privately held businesses, complex asset tracing, cash flow and lifestyle analyses, and analyses related to equitable distribution.


  • 22 Feb 2021 2:30 PM | AAML NJ Admin

    By Tom Fulton, CPA, Cowan, Gunteski & Co., P.A.Litigation & Valuation Services Group732.676.4117tfulton@cgteam.com

    We are almost a year into the coronavirus pandemic, and have heard and seen the impact upon the country, the state, and the community. On a national level the US economy contracted 3.5% on an annual basis in 2020, the largest contraction for any full year since the demobilization from World War II in 1946. However, there was a precipitous contraction in the second quarter followed by a partial rebound in the second half of 2020. According to statistics by the International Monetary Fund1, the proportion of people out of work in the US hit an end of year total of 8.9% although it was in double digits during the year.

    Yelp’s Local Economic Impact Report (September 2020)2 provides the Covid-19 pandemic hit restaurants and retail businesses the worst. We all have had some experience with this. Nationally, as of August 31, 2020 the restaurant industry witnessed 32,109 closures with 19,590 of those closures likely to be permanent. Breakfast/brunch restaurants, burger joints, and Mexican restaurants were among the types that reported the highest business closures. Additionally, the pandemic has affected gift shops, men’s clothing, and women’s clothing boutiques the second hardest after the restaurant industry. 

    When a new client calls, and he or she is the owner (or the spouse of an owner) in one of these hard hit small business sectors, should you instantly assume it’s all doom and gloom? The statistics, the news, and other media sources seem to indicate it is. However, this is when you and your forensic accountant need to understand the facts and circumstances of that business, its operations, and the capital and monthly cash flow requirements. This can be even more critical if you are representing the non-business owning spouse.

    Some restaurants have maintained their cash flow with take-out services and those that can adapt have survived and even flourished.  Living in a New Jersey beach town all my life, I have seen different businesses handle this crisis in their own way.  Some popular summer bars and restaurants chose to close, even all summer. Some stayed open and put up tents in their parking lot and effectively brought the restaurant and social scene outside.

    As many are aware, if you live at the Jersey Shore, the beach towns have an annual influx of recently graduated twenty-something year-olds, and in some areas this year was no exception. These twenty-something year-olds stayed the whole summer, worked remotely, often didn’t go back to their parent’s home during the week, and went out to eat, drink, and socialize every day during the summer rental season.  Many of the bar/pubs and restaurants that had an outdoor space had a great year. Additionally, many people had more disposable money because they didn’t have commuting costs and other costs associated with the pandemic. Is your new client in one of these situations or the spouse of your client? A site visit and an in-depth knowledge of what actions were taken during the crisis to gain specific knowledge is more important than ever.    

    Like many large retailers, small retailers mostly struggled in 2020, but some business sectors were minimally affected by the coronavirus pandemic. Firms of lawyers, accountants, architects, and other professionals may not have had the dramatic negative financial impact.  Accounting firms may have picked up a lot of new business with the PPP loan process including the initial applications and the subsequent applications for debt forgiveness.  Your client may have had a significant increase or decrease in cash flow. 

    Auto related businesses and the construction trades both had under 10 out of 1,000 businesses close up for the six month period ended August 31, 2020. Professionals (lawyers, architects, and accountants) had an estimated 2.0 closings per 1,000 businesses. That’s not bad. By contrast restaurant and small retailers had as high as 55 out of 1,000 closures nationally. Keep in mind these statistics were only through August. A December 2020 poll by the “New Jersey Restaurant & Hospitality Association”3 found that more than a third of restaurants polled felt they may close in the next six months.

    Conversely, real estate professionals at the Jersey Shore have been very busy. By way of example, in Monmouth County, New Jersey new home sale closings were up 13.3% in 2020 over 2019. While simultaneously, the closing time decreased by 13.1% and the median price increased 17.1%.  People were moving out of New York city and North Jersey and were looking for homes with space and yards in some areas and willing to sink some money in them. Other counties experienced similar statistics including Morris, Ocean, and Somerset. Some counties were negatively impacted.  If you have a client or the spouse of a client who owns a real estate agency, law office, title search company, or is in one of the construction trades, you need to know the unique circumstances of the area that they are located. And certainly, your retained expert better know the uniqueness. 

    Understanding the specifics of your client’s or the spouse of your client’s business has always been important.  Much of the impact from the coronavirus pandemic may have led to a significant change in your client’s ability to meet alimony and child support obligations as well as in the value of their businesses.  That said, there have been unique opportunities for success and prosperity and your client may have encountered one of those opportunity areas. Just don’t assume everything and everybody’s business was negatively impacted.  As always, It’s a case by case basis and fact sensitive.

    1. Jones, L., Palumbo, D., & Brown, D. (2021, January 24). Coronavirus: How the pandemic has changed the world economy. BBC News. https://www.bbc.com/news/business-51706225

    2. Bialik, C., & Gole, D. (2020, September). Yelp: Local Economic Impact Report. Yelp Economic Average. https://www.yelpeconomicaverage.com/business-closures-update-sep-2020

    3. Nearly 40% of New Jersey Restaurants May Close Within 6 Months: Poll. (2020, December 9). NBC New York. https://www.nbcnewyork.com/on-air/as-seen-on/nearly-40-of-new-jersey-restaurants-may-close-within-6-months-poll/2769293/


  • 3 Feb 2021 5:33 PM | AAML NJ Admin

    By Sharon Klein of Wilmington Trust

    When a marriage ends and a spouse is a trust beneficiary, are the trust assets accessible or off limits in a divorce? Wilmington Trust’s Sharon Klein, president, Eastern U.S. Region and Elena Karabatos, partner at Schlissel Ostrow Karabatos, PLLC in New York met with Dan Couvrette, CEO of Family Lawyer Magazine, to examine what types of trusts, trust provisions, trust history and trust administration make trusts more vulnerable to attack in divorce; how to potentially change even irrevocable trusts; and ways to ameliorate surprising tax consequences that might otherwise distort results.

    Link to the interview:

    https://cdnapisec.kaltura.com/html5/html5lib/v2.82.2/mwEmbedFrame.php/p/1971712/uiconf_id/39341551/entry_id/1_tjw5uwix?wid=_1971712&iframeembed=true&playerId=kaltura_player_1581352506&entry_id=1_tjw5uwix


  • 24 Nov 2020 2:37 PM | AAML NJ Admin

    By Daniel Roche and Stefanie Jedra, Marcum LLP

    The Holiday Season is almost upon us, and it really makes us wonder where this year went.  Did you order your holiday gifts yet?  I ordered a Peloton in September and it just got here today – 8 weeks later.  So if gifts are ordered today, they’ll arrive on…January 15?  Just in time for … the Symposium?

    On a serious note, over the past few months, we’ve been lucky enough to host many virtual “social hours” with law firms in our professional network.  Beyond enjoying social interactions during these isolating times, the focus has been to share insights about how we saw COVID-19 impacting matrimonial engagements – specifically, the impacts on business valuation, settlement offers, mediations, maintenance/support modifications, alimony calculations, and the additional discovery nuances/hurdles we’ve been experiencing since mid-March. It has been profound to see how these conversations have changed over the weeks and months as we have moved through this pandemic. 

    We enjoyed the exchange of interesting insights and experiences.  What began as a small series of one-off social hours became a great knowledge-sharing platform for all of us. 

    We must acknowledge that COVID-19 has affected every business and individual differently. For this reason, care must be taken and diligence exercised to understand the distinct impact of the pandemic on each of our clients personally and the privately held businesses that they have worked so hard to build. As much as we all wish the pandemic were already over, unfortunately it is not. It continues to impact our clients, their businesses and how attorneys and forensic accountants operate in the litigation landscape.

    The most important takeaway is that the facts, circumstances, and story are more important than ever. Ask questions. Listen. Don’t forget that no single fact or circumstance exists in a vacuum – and the facts and circumstances as a whole dovetail into a cohesive story of what each client and/or business owners has individually experienced.

    It has been profound to think about how all of our practices have been affected by this terrible pandemic. As a profession, we’ve worked together to educate one another and help our collective clients move their matters forward despite these unprecedented circumstances. Let’s remember how far we’ve come and the successes we’ve had through this process.

    We sincerely thank all of you who welcomed us to discuss these important topics, and we look forward to continuing our conversations as we move to a hopeful end of this pandemic and beyond. 

    Wishing you and your families a Safe and Happy Thanksgiving.

    Hope to see you all in person soon!

    Dan & Stef


  • 3 Nov 2020 9:00 AM | AAML NJ Admin

    By Sharon L. Klein, Wilmington Trust 

    In this video interview by Family Law Magazine, Sharon L. Klein, president of Family Wealth in the Eastern U.S. for Wilmington Trust & Lee Rosenberg, New York Fellow, American Academy of Matrimonial Lawyers, reveal their top tips & traps for leveraging life insurance in premarital planning and settlement agreements.

     https://familylawyermagazine.com/articles/life-insurance-premarital-planning/

     


  • 15 Oct 2020 10:30 AM | AAML NJ Admin

    By Carolyn N. Daly Esq. 

    Do you have a “Sexting” Partner?  If so, the Appellate Division says you could be in a “Dating Relationship” under the NJ Prevention of Domestic Violence Act

    Want to obtain a restraining order in New Jersey?  The appellate division made that a little easier with a published decision in C.C. v. J.A.H., released on May 4th.

    First, a little background: you cannot simply obtain a restraining order in New Jersey against a stranger.  Restraining orders, in a non-criminal case, are issued under the Prevention of Domestic Violence Act, and, in order to obtain one, you must be a “victim of domestic violence.”  Pursuant to New Jersey Statute 2C:25-19d, a “Victim of domestic violence’ is defined as:

    “…a person protected under this act and shall include any person who is 18 years of age or older, or who is an emancipated minor and who has been subjected to domestic violence by a spouse, former spouse, or any other person who is a present household member or was at any time a household member.  “Victim of domestic violence” also includes any person, regardless of age, who has been subjected to domestic violence by a person with whom the victim has a child in common, or with whom the victim anticipates having a child in common, if one of the parties is pregnant.  “Victim of domestic violence” also includes any person who has been subjected to domestic violence by a person with whom the victim has had a dating relationship.

    It is the context of a dating relationship that the court had to address in C.C.  Did the relationship in this case constitute a dating relationship?

    Testimony by C.C. revealed that the parties met in 2018 at a fitness center.  Plaintiff, a 22 year-old gym manager, engaged in frequent conversations with the Defendant, who was 42 and a member at the gym.  The conversations became more intimate, and in September, the two began to text each other.  The messages included a number of “sexts,” or sexually explicit messages.  Although the two discussed meeting up, they never did.  In November, Plaintiff advised she just wanted to be friends.  At that point, Defendant became aggressive and threatening and started harassing Plaintiff.  Plaintiff then sought a domestic violence temporary restraining order and was granted one. 

    At the hearing to obtain a Final Restraining Order (FRO), Defendant argued that the parties were not in a dating relationship and Plaintiff therefore could not obtain a restraining order under New Jersey law.  The judge disagreed, and, after conducting a hearing, granted Plaintiff an FRO.  Defendant appealed.

    The appellate court ultimately agreed with the trial judge that the relationship in this case constituted a dating relationship.  The court reasoned that despite never engaging in a sexual relationship or, indeed, going on a single in-person “date,” the sexually explicit conversations between the parties turned their relationship into that of the dating variety.  In fact, the court held this was more of a dating relationship than two individuals who had actually been on a date (albeit only a single one).  The difference between the two, the court noted, was that the parties in this case had known each other for several months and engaged in profoundly intimate conversations.

    This decision is particularly interesting in light of present circumstances, during the COVID-19 pandemic.  As relationships take place online, rather than in person, victims should take note that even if there is not a single in person date, a lengthy on-line intimate relationship can still be considered a “dating relationship,” provided it advances far enough, and they are thus, protected by New Jersey law from acts of domestic violence.

    If you need an attorney, or have any questions about the issues raised in this article, we encourage you to reach out to Daly & Associates at (973) 292-9222.  We are here for you during this difficult time.


  • 6 Oct 2020 10:00 AM | AAML NJ Admin

    Daniel R. Roche, CPA/ABV, ASA and Stefanie A. Jedra, CPA

    During our presentation “The Future of Discovery and Data Analytics in Divorce” we shared how our team at Marcum has utilized artificial intelligence (“AI”) and machine learning to extract data and significantly reduce the time spent on data entry. We also discussed how we seek to continually improve the depth and quality of our analysis using data analytics.

    There were some questions regarding Marcum’s processes related to data extraction, the review / analysis of the extracted data and how conclusions derived using extracted data would be perceived in the court room. These questions lead to a discussion about whether other companies and/or accounting firms were utilizing similar technology. This blog post seeks to address these questions and provide some additional background on the reach of AI in the accounting, finance, and legal communities.

    The Data Extraction Process

    In forensic accounting engagements, data is generally required to be entered into a useable electronic format – preferably Microsoft Excel.  From there, the data is analyzed and conclusions presented in a summary format to educate the trier of fact about the conclusions reached. 

    Historically, this data was manually entered by administrative assistants / paraprofessionals and, depending on the amount of data, the process could take weeks or months to complete.  Not only was the work tedious and time consuming, but these administrative assistants / paraprofessionals often had other competing tasks to accomplish.  Utilizing computer processes and AI to extract data allows us to get the needed information into a useable format quicker and more accurately than the manual processes historically utilized.  This technology also allows the administrative assistants / paraprofessionals to be more focused on their other job responsibilities.

    Regardless of the data entry method (human vs. computer) Marcum’s Quality Control procedures with respect to vetting the underlying data and review of the analyses completed remain unchanged. With the ability to extract larger volumes of data, we have been able to more thoroughly understand the universe of information affecting our conclusions, while reducing the cost to our clients. This has enabled us to provide conclusions that are more informed and meticulously supported.

    AI in the Courtroom

    There appear to be many court cases involving the extraction of data; however, these cases involve the extraction of data from cellphones using software that requires specialized or technical knowledge to get the data in a format useable / presentable in the court room. Accurately and reliably extracting the data from a cell phone requires technical knowledge based on training and experience that a lay person does not possess. It is not possible for a lay person to verify the resulting extracted data, which has caused questions about the reliability of the data under the rules of evidence.

    Unlike the extraction of data from cellphones, it would be possible for a lay person to verify each line of data extracted from any bank statement, general ledger, or other document. As demonstrated during our presentation, a column populated with the bates numbers, pages numbers, or another identifier is included within the extracted data and enables a lay person to easily source the information back to the source document.

    AI in the Accounting, Finance and Legal Communities

    Artificial Intelligence is not new in the accounting, finance, and legal communities; however the use of AI has become further reaching over the last few years. In June 2016, JP Morgan launched “COiN” which stands for Contract Intelligence. Using image recognition software the program reviews commercial loan agreements, which the bank indicated once took lawyers 360,000 hours of work each year! In JP Morgan’s 2016 annual report, the bank highlights the success of this program by noting the capabilities have “far-reaching implications considering that approximately 80% of loan serving errors today are due to contract interpretation errors.”

    Even more impressive, in JP Morgan’s 2019 annual report, the bank indicated that they have “used technology and machine learning to reduce fraud losses in the credit card business by 50%”. In the same report, the bank stated that they plan to continue to “evaluate emerging technologies and reshape [their] approach to data to bring the power of artificial intelligence and machine learning to all [their] businesses”.

    It was great seeing everyone at our presentation.  Please reach out to us if you have any questions on this topic.

     

    Sources: 

    https://www.supremecourt.gov/DocketPDF/18/18-8600/92968/20190322193407473_McLeod%20CERT%20Final1.pdf

    https://www.bloomberg.com/news/articles/2017-02-28/jpmorgan-marshals-an-army-of-developers-to-automate-high-finance

    https://www.jpmorganchase.com/corporate/investor-relations/document/2016-annualreport.pdf

    https://www.jpmorganchase.com/corporate/investor-relations/document/annualreport-2019.pdf

    Ibid. 



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