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Wednesday, October 8, 2014

Rizzo v. Rizzo - New York City Divorce and Divisions of Annuities, Pensions and Debts

Errors in the divisions of annuities, pensions and debts in a Brooklyn divorce can have costly implications for the party slighted. A person could lose out on decades of support to which they were entitled, or be strapped with substantial payments to which they did not agree, if a divorce attorney does not thoroughly review each of these elements prior to reaching a settlement agreement.

Even still, sometimes the family courts make mistakes. That was apparently the case in Rizzo v. Rizzo, weighed on appeal by the Supreme Court of the State of New York Appellate Division, Second Judicial Department. Here, defendant ex-wife appealed the divorce settlement reached in 2012 by the Supreme Court in Duchess County, which ruled after a non-jury trial that plaintiff was entitled to 100 percent of an annuity and pension as separate property, and also assigned her responsibility for debts she says was solely her former husband's.

New York strives for equitable division of marital property and assets, meaning the split will not be equal, but it should be fair. One of the first determination that has to be made is whether property or assets should be considered "marital" or separate."

Our Brooklyn divorce attorneys know that generally, marital property includes everything you earned or acquired during the marriage, while separate property is that which belongs to only one spouse, usually because it was owned prior to the marriage, was received by a gift to one spouse or was acquired solely by one spouse during the marriage not for the benefit of the other.

In this case, the appellate court found a modification was in order, as the lower court improperly deemed the annuity and pension the separate property of plaintiff husband, though it did hold debts accrued by plaintiff for surgery during the marriage should be shared by both parties. Plus, the lion's share of the annuity would still go to the plaintiff, as it was obtained following a personal injury action in which he was severely injured and rendered unable to work.

According to court records, the pair had been married for several years when, in 2001, husband suffered an on-the-job accident on a construction site, for which they sued the general contractor. Both husband and wife were a party to that action, named as plaintiffs, with wife holding a specific claim for loss of consortium. The case was settled prior to trial, granting a lump-sum payment plus monthly sums of $3,200 for 30 years, to be deposited into an annuity. However, there was never an indication of which portion of that settlement was for wife's loss of consortium.

When the couple divorced, the lower court held this was separate property of the husband. The appellate court reversed, awarding wife 10 percent of this fund. Plaintiff still received most of this fund because he is permanently disabled, unable to earn an income now or in the future, whereas the defendant was employed and has a future income-earning capacity. However, the court did reserve the right of defendant to collect the remaining amount of annuity in its entirety in the event of her former husband's death.

With regard to the pension, the appellate court found this too should have been considered marital property. But the court declined to determine how much should go to defendant, and remanded the case to the lower court for a determination on this point.

On the issue of shared debt, the appellate court affirmed the lower court's finding that both shared responsibility for medical bills that accrued due to husband's need for surgery during the marriage.

Given the complex nature of asset division, it's imperative that individuals seek experienced legal counsel before agreeing to a divorce settlement.

If you are contemplating a divorce in New York City, call our offices at (718) 864-2011.

Additional Resources:

Rizzo v. Rizzo, Sept. 24, 2014, Supreme Court of the State of New York Appellate Division, Second Judicial Department

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