New York Law Journal, January 10, 2025 —
Matrimonial law is derived from judicial decisions (i.e., “caselaw”) and statutes. As well intentioned and precise as those statutes and the caselaw interpreting them, are and can be, the fact remains that how matrimonial courts apply the law is by and large case specific.
This is a long-winded way of saying that because each matrimonial case tends to depend upon its own unique set of facts, courts are often compelled to reexamine and reevaluate the legislative intent underlying the statutory framework otherwise known as the Domestic Relations Law (the “DRL”).
That brings us to Justice Edmund M. Dane’s recent decision in LKF v. MTF, 2024 NY Slip OP 24312 (Sup. Ct., Nassau Cty. 12/9/2024), which addresses the “novel issue” of “how to classify a 529 account under the Automatic Orders” and “whether or not a party’s post-commencement withdrawal of money from a 529 account to pay their own counsel fees violates” the Automatic Orders.
Preliminarily, as the decision explains, a “529 Account is a type of investment account that someone can use for higher education savings (emphasis added).” See www.nysaves.org. In general terms, inter alia, the Automatic Orders, codified at Section 236 of the DRL, prohibit transfers/withdrawals/sales/encumbrances of various assets while a divorce action is pending absent written consent of the parties or a court order.
Notably for purposes of this discussion, with regard to the restraint on the transfer of assets such as real estate, personal property, cash accounts, stocks, mutual funds, bank accounts, cars, and boats, there is a carve out for transfers made “in the usual course of business, for customary and usual household expenses or for reasonable attorney’s fees” in connection with the divorce action.