“Callahan” Constructive Trust, Asset Distribution and Child Support Obligations Attorneys

While many divorces are relatively straightforward with couples negotiating for a fair and mutually beneficial outcome

Unlike other states, alimony and spousal support in New Jersey are determined without any set guidelines, leaving both parties room for both negotiation and possible contention. Although most spouses will want to ensure that their post-divorce financial needs are met, the other party will often seek to limit their financial obligations in an attempt to do the same thing. When children are involved, as soon to be co-parents consider their financial obligations like child support, and dividing co-mingled marital assets, they must also determine marital and individual debt.

While many divorces are relatively straightforward with couples negotiating for a fair and mutually beneficial outcome, most will involve a financial discovery period. During this period it’s quite common for individuals going through divorce, separation, legal relationship dissolution, same-sex divorce, or dissolution of a civil union to attempt to hide their assets through any number of methods.

Collecting, preparing, and exchanging full financial disclosures is a significant part of the divorce process. Intentional omissions of debts and assets when preparing the preliminary financial documents can lead to devastating results for each party.

At Jacobs Berger, LLC we understand just how important financial stability is to you and your children. By listening closely to all of your needs and concerns, and keeping you highly informed and involved throughout the legal process, we believe we can work together to achieve the results you need in your unique legal situation.

Feel free to contact us online to schedule an appointment at our Morristown office or give us a call at (973) 710-4366 today for a strategic planning session.

What is a Callahan or Constructive Trust?

Although not an actual trust in the traditional definition or sense, the New Jersey Family Court court considers a Callahan Trust or constructive trust as a device to prevent unjust enrichment or fraud by one party, at the expense of another and provides an equitable outcome for all parties. While the imposition of a constructive trust is not common, there are often specific factual circumstances that may necessitate it. With no trustee and although their creation is not a reflection of bad intent of either party, the constructive trust orders the person who would otherwise be unjustly enriched to transfer the property to the intended party. For individuals involved in a cohabitation marital-type relationship, this provides an alternative means to seeking financial compensation should their relationship end other than through a palimony agreement.

For married persons, the equitable distribution and/or the use of a constructive trust can help resolve a post-judgment dispute over deferred compensation or retirement assets paid to one spouse after the divorce.

Can a Callahan Trust For Non-Vested Compensation or Restricted Stock Units (RSU) Ensure Fairer Division of Marital Assets?

In some circumstances, where the assets like restricted stock units (RSU’s) remains non-vested, the employee spouse can buyout the non-titled spouse from their share by valuing the asset using the current market value and deducting the applicable taxes or by holding the asset in a Callahan Trust or constructive trust for the other party. By doing this, one can reduce some risk and the perception of any unfairness due to the potential loss and speculative value of the assets. The party to whom the assets or RSUs were issued will need to cash in the assets and the “Callahan Trust” will dictate exactly when to distribute, how to pay the taxes, and how to divide the net proceeds.

Acting in the Best Interests of the Child: A Solution to the Problem of Characterizing Stock Options as Income

In a child support determination case involving stock options, the court often imposes a constructive trust on the stock options, dividing the options between the parties based on the percentages in the child support formula. This method is often a better solution as it addresses the problems of fairness and efficiency, and most importantly, it fulfills the goal of ensuring the best interests of the child. A constructive trust that holds the stock options granted to the child, and is operated to the benefit of the child by the non-custodial parent, can be seen as the best solution to this problem.

A court-imposed constructive trust could also be beneficial, as in D.M.H. v. H.G.H. NO. A-4267-17T2 (App. Div., June 12, 2020), when due to unemployment and serious gamblings debts a parent failed to contribute toward their support obligation, and a portion of the father’s share of marital assets was put in a constructive trust to secure future payment of child support and other financial obligations.

Contact Our Morristown Child Support and Constructive Trust Attorneys Today

At the law office of Jacobs Berger, LLC our attorneys have extensive experience handling family law and divorce issues of all kinds for clients in towns across New Jersey and Morris County, including Madison, Randolph, Denville, Hanover, Florham Park, Morris Township, and Morristown.

Whether you are an unmarried individual ending a marital-style relationship, considering a divorce, or currently going through a divorce, the unique approach of our law firm can help you to resolve many of the legal, financial, and familial issues you may face during such times in a constructive, negotiation-focused manner. We believe this kind of approach will leave you and your family in a much healthier place financially and emotionally than a more litigation-focused approach would. That being said, if negotiation is not yielding the kind of results you need and deserve, we are always prepared to aggressively defend your rights and interests in a court of law, and ensure that any settlements you reach are fair to you, and properly account for you and your family’s unique needs and concerns.

To speak with our legal team today in a strategic planning session regarding a palimony or cohabitation agreement, a potential constructive trust matter, a divorce, or any other kind of family law concern, please contact us online, or through our Morristown, NJ office at (973) 710-4366.