How Are College Contribution Percentages Calculated After My New Jersey Divorce Is Over?
Throughout my career as a divorce attorney in my hometown of East Brunswick, New Jersey, I have prepared many Property Settlement Agreements that include language regarding contribution towards college expenses for the children of the marriage. Expert divorce lawyers will usually include language that says each parent’s responsibility is based upon their “ability to pay” pursuant to the paramount case on this issue, Newburgh. Therefore, if the parents cannot agree, a judge of the Superior Court of New Jersey should hold a plenary hearing (or trial) which will allow the court to analyze all factors under the law when rendering a fair and equitable decision. Furthermore, without a plenary hearing a judge does not have an opportunity to make the necessary findings of fact needed to support conclusions of law.
In Gilmore v. Salem, Kimberley Gilmore appealed a post-judgment order dated August 29, 2014 that required her daughter to contribute $ 5,000 a year towards her college costs, and further split the remaining college costs equally between the parents. The New Jersey Appellate Division reversed the order because the Superior Court of New Jersey, Family Part of Ocean County failed to hold a plenary hearing, even though there were numerous issues that needed to be addressed by a hearing. As such, the judge failed to make the required findings of fact about the parent’s incomes to support her conclusions.
Kimberly Gilmore and Raja Salem got married in 1993. During their marriage they had three children together. A judge entered a final judgment of divorce in 2011. In 2012, the judge amended the final judgement judgment of divorce, nunc pro tunc, to the date of the final judgment of divorce in 2011, that incorporated a detailed and thorough property settlement agreement. Nunc pro tunc is a Latin phrase in common legal use in the English language. It literally means “now for then.” In general, a nunc pro tunc court ruling applies retroactively, to correct an earlier ruling. It is used to express that a thing is done at one time which should have been performed at another time. Permission from the court must first be obtained to do things nunc pro tunc, and this is granted to uphold justice and fairness. The purpose of nunc pro tunc is to correct errors or omissions to achieve the results intended by the court at the earlier time.
Paragraph forty-three of the property settlement agreement required that each parent had an obligation to contribute towards their children’s college education cost, and in determining the ratio of each parent’s obligation, take into consideration, the respective assets and income of each parent and the child at the time that child is getting ready to enroll in college. Paragraph forty-three also stated that Raja had opened three Vanguard accounts for the children. A Vanguard account is a type of mutual fund investment account. Both Raja and Kimberly agreed that each child could use up to $ 3,000 a year from the Vanguard accounts to pay for personal expenses incurred at college, like: car insurance, gas, books, and computers. The property settlement agreement further stipulated that no other withdrawals, room and board, college tuition or fees would be paid from these Vanguard accounts.
In Paragraph forty-three of the property settlement agreement, the parents also acknowledged the existence of 529 Plans for the benefit of all three children. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as qualified tuition plans, are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code. Each 529 plan had $ 14,000 in them as of March 11, 2011. The property settlement agreement required that all college expenses would first be paid from the money in the 529 College Savings Plans, before Raja or Kimberly would have an obligation to pay and college expenses. Then the remaining college costs would be paid by the parents in proportion to each of their respective incomes. The income amount would take into account alimony payments and receipts.
Kimberly filed a motion in June 2014 to compel Raja to abide by the terms of the property settlement agreement. The motion judge heard oral argument, gave an oral opinion, and issued an order that required the daughter to contribute $ 5,000 towards her college costs, and required the parents to split the remaining college costs. The judge entered this order without first holding a plenary hearing to interpret the provisions of the property settlement agreement and each parent’s obligation under it. A plenary hearing is held either before or after a trial. Plenary hearings are usually held when a judgment on a motion would be impossible without the benefit of witness testimony.
Kimberly appealed the order and argued that the judge incorrectly modified the property settlement agreement and required her to equally share in the remaining college costs without first finding a requisite change of circumstance. She further argued that the judge failed to make findings of fact to support her conclusions of law.
The New Jersey Appellate Division stated that New Jersey Courts support the idea of resolving marital issues through property settlement agreements, because they are entered into voluntarily and they promote stability after the divorce is finalized. Opposed to what most people think, property settlement agreements are not entirely governed by contract law. Property settlement agreements are enforced in equity and fairness, and are considered in both the legal and public policy context. Still, the parties’ intent at the time of signing should also be considered. A Family Part court has the authority to modify or change a property settlement agreement when circumstances have changed to the point where enforcing the property settlement as is would be inequitable.
In Gilmore v. Salem, even though the parties had mutually agreed to a property settlement agreement, the judge still failed to interpret the provisions of the property settlement agreement. Therefore, the judge failed to correctly apportion the college costs between the parents. The New Jersey Appellate Division found that the provisions of the property settlement agreement were not clear. The very first sentence of paragraph forty-three provided that at the time “each child is preparing to enroll in college, the respective income and assets of the parties and the child” would be considered. Conversely, the last sentence of paragraph forty-three provided that school fees and tuition “shall be paid in proportion to the parties’ income which shall include alimony payment/receipt at the time each child matriculates.” Here, paragraph forty-three’s first sentence suggests a broader determination than just income alone, however, the last sentence of paragraph forty-three makes income the only variable to consider. The motion judge did not take this discrepancy into account. The New Jersey Appellate Division held that on remand the judge would have to consider if the property settlement agreement only contemplated income alone, or if the consideration should be given to each parent’s broader finances.
The judge also refused to conduct a plenary hearing. She stated that a plenary hearing would “be a mess.” As an alternative, the judge ordered that both parents be equally responsible for all the remaining college costs. Moreover, the judge required that the daughter contribute $ 5,000 a year towards her college costs. She did this so the daughter felt like she had a financial part in her education. Even though the judge recognized numerous issues that a plenary hearing would have addressed, she still failed to conduct a hearing. The New Jersey Appellate Division found that a plenary hearing would have given her an opportunity to make the necessary findings about the parents’ incomes the she needed to support her conclusions of law. The appellate panel stated that their review was hindered because of the undeveloped record.
Therefore, the New Jersey Appellate Division reversed the order, and advised the trial court to hold a plenary hearing. In the new trial, the judge should consider if the property settlement agreement intended both the incomes and assets of the parents to be considered, or merely just their incomes.
My office is here to help if you find yourself having a dispute about payment for college with you “ex” regarding your child.