When Divorcing: A Deal is a Deal Even When it Involves Bernie Madoff

Being swindled by Bernie Madoff is not enough to modify equitable distribution.

A New York Court of Appeals ruled that a divorced spouse is not entitled to revise his property settlement agreement even when the assets that he received from the marriage were accounts that were held with Bernie Madoff’s investment firm.  You can read Peter Lattman’s story in the New York Times by clicking here. This headline grabbing sensational story involving one of the greatest Ponzi schemes of all time is an important reminder that equitable distribution in New Jersey is not modifiable.  Said another way, “a deal is a deal”.  This trite saying was confirmed by the court in Schwartzman v. Schwartzman,

It has long been held that “[s]ubsequent events which should have been in contemplation of the parties as possible contingencies when they entered into the contract will not excuse performance.”

Of course, as with almost every other area of the law, there are exceptions to the rule.  There is a very limited exception to modify equitable distribution.  It is generally only available where a party can show “exceptional and compelling circumstances” where the enforcement of the agreement would be unjust, oppressive or inequitable.  The standard, by its very nature is designed to be difficult to meet and available in a very limited set of circumstances. While equitable distribution is generally not modifiable, child custody, child support, and parenting time is modifiable based on a current change of circumstances. Alimony is generally modifiable unless the property settlement agreement or judgment of divorce specifically provides that it is not modifiable.   This principle was further eloquently set forth in Mahoney v. Mahoney decision.

… it is settled law in New Jersey that, unlike an award of alimony or support, property division or equitable distribution provisions may not be adjusted after divorce to reflect unanticipated changes in the parties’ circumstances, because the finality of a property division precludes any modification based on such changed circumstances.

  If you have questions about any aspect of your current or past divorce contact the family law attorneys at DeMichele & DeMichele for a confidential consultation. You can reach us by phone at (856) 546-1350.