Last week, I blogged about the new statute that closed the block hole that existed when a party who held most or all of the assets died during while a divorce was pending. Specifically, the new statute permits the court to effectuate equitable distribution when a complaint for divorce or dissolution of civil union has been filed and either party has died prior to final judgment. It also provides that the surviving party would not receive intestate or elective share. Prior to the statute, typically a divorce was dismissed if one party died and the surviving spouse would have to seek an equitable remedy which was not assured to them.
Given that it took almost 33 years for the legislature to create a statutory remedy that the Supreme Court suggested that they do in the Carr case, I did not expect to be writing about the Black Hole again 10 days later. However, on January 18, 2024, the Appellate Division decided the case of Roik v. Roik in a reported (precedential) decision.
In Roik, the parties divorced after a 46 year marriage before a divorce complaint was filed in 2020. In late 2021, the parties settled the case, entering into a Marital Settlement Agreement (MDA) that they each signed, as did their counsel. The MSA contained typical boiler plate language including (1) that it was effective on the date that the second party signed it; (2) that each was fully and adequately informed of the finances; (3) that they knew of and waived their right to trial based upon the MSA; (4) they waived their rights of inheritance from the other; (5) that they read and voluntarily, without force, coercion and duress signed the MSA and (6) that the MSA was fair and equitable under all of the circumstances.
The parties then went back and forth as to whether to schedule a zoom uncontested divorce hearing or submit the matter for a divorce “on the papers.” Before the divorce hearing or divorce on the papers took place, the husband died. His executor sought to substitute the estate as the party in interest to enforce the MSA or for a constructive trust. Of course, the wife, getting a windfall of more than she would have recieved in the MSA, opposed the application.
The trial judge agreed with the wife, denied the estate’s motion and dismissed the divorce. The judge’s rationale was that since the wife did not cause the husband’s death, and there was no adjudication by the court before the husband’s death regarding the actual divorce, and since the parties were not questioned on whether they knowingly and voluntarily entered into the MSA, he could not grant the estate’s motion. He also denied the request for a constructive trust finding that the wife would not be unjustly enriched.
The Appellate Division, knowing that the new law was pending, held the decision until it was enacted. In their decision, they reversed the trial court finding that because the statute was meant to be curative, it applied retroactively. As to the particular circumstances of this case, they held:
“Independent of the new statutes, we hold where, as here, parties have entered a matrimonial
settlement agreement (MSA) and one of the parties has died pending an uncontested divorce hearing, the Family Part may enforce the MSA as long as it is entered at arm’s length, and it is fair and equitable to effectuate the parties’ mutual intent to divide their assets and liabilities.
The court also noted that there were other public policy considerations at play, specifically, the oft cited law that public policy favors the enforcement of agreement and that MSAs are no less an contract than an agreement to resolve a business dispute.
So, as I noted last week, the black hole seems closed for good and both the surviving spouse as well as the estate of the spouse that died, has rights and remedies to seek equitable distribution.
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