Tuesday, November 29, 2011

Does the Staggered Duration Formula for Alimony Mean that Lawyers Will Encourage Potential Clients to File for Divorce?

Hopefully not! However, it does make anniversaries more important than they already are.

Under the Massachusetts Alimony Reform Act of 2011, which becomes officially effective on March 1, 2012, general term alimony will now have a time limit, determined by the length of the marriage.

  • For marriages lasting 5 years or less, general term alimony will last no longer than one-half of the number of months of the marriage.
  • For marriages lasting more than 5 years but less than 10 years, general term alimony will last no longer than 60% of the number of months of the marriage.
  • For marriages lasting more than 10 years but less than 15 years, general term alimony will last no longer than 70% of the number of months of the marriage.
  • For marriages lasting more than 15 years but less than 20 years, general term alimony will last no longer than 80% of the number of months of the marriage.
  • For marriages lasting more than 20 years, the court may order that general term alimony will last indefinitely.

There are circumstances that would justify a deviation from this staggered scheme, such as the recipient spouse co-habitating with a significant other, and the death of either spouse, and I would encourage you to speak to an attorney if you have questions about the Alimony Reform Act of 2011.

The staggered scheme creates a jump in the duration of an alimony order for each five years of marriage. This creates a dilemma for individuals who are approaching a five, ten, fifteen, or twenty year anniversary and are struggling with whether to seek a divorce. Waiting until after one of these pivotal anniversaries, should their situation be one where alimony is later awarded, would result in paying alimony for a longer period of time.

This puts attorneys in an uncomfortable position. Any respectable family law attorney would never advise or encourage an individual that is struggling with the decision of whether to remain in a marriage and commit to repairing any existing damage to get a divorce. For individuals that come into our conference room for an initial consultation, walking through our door is often one of the most difficult decisions that they have made. It is not the attorney's job to make that decision any more difficult.

The dilemma lies with individuals who are seeking legal advice but have not yet made a final decision as to whether they will file for divorce. Part of our job as attorneys is to inform our clients, and potential clients, what the law is. With the staggered scheme for calculating the duration of alimony, this means that remaining married past a five, ten, fifteen, or twenty year anniversary could result in a longer alimony order.  It is up to the individual whether this is a tipping point for filing, or just a consequence of not yet being sure whether their marriage is over.

Monday, November 28, 2011

Does Reducing and Limiting Alimony Force Primary Caretakers into the Workforce?

When a child is born out of wedlock, either parent may initiate a court proceeding to establish certain rights and obligations that come with raising a child. Such rights include visitation, the ability to make significant life decisions for the child, and child support. The purpose of child support is to provide a measure of financial security for a child from a parent that might not be living with the child full-time.

When a child is born into a marriage that later dissolves, child support may be ordered, and usually is. The purpose of child support for children born into a marriage, or out of wedlock, is identical: to provide for the financial costs of raising a child.

However, when marriages dissolve, the finances of the couple might be such that a court will order alimony as well. The purpose of alimony is to provide for the financial well-being of a former spouse. The issue of alimony always has been, and will likely always be, controversial. The rationale behind it is that in a marriage, both people contribute in (ideally) complementary ways. When one spouse devotes time to furthering his or her career, it is (ideally) with the contribution of support from the other spouse. For example, if one spouse is picking up extra hours at work to get a promotion, he or she is doing so while his or her spouse is taking care of the home, or the kids. Often times, one spouse is not as able to further his or her career while their partner does. When the marriage dissolves, courts want the spouse who was not as able to further his or her career to smoothly transition into a financially independent unit, and the tool through which this is accomplished is alimony.

In Massachusetts, alimony is still officially a matter of great discretion for judges. The Alimony Reform Act of 2011 does not become effective until March 1, 2012, although many judges are issuing orders consistent with its new limits. The Act, for the first time in Massachusetts, creates a formula for calculating alimony, much like the existing child support guidelines in Massachusetts. One of the more important provisions of the Alimony Reform Act is that no income included in the calculation of child support will be then included in a calculation of alimony. The child support guidelines in Massachusetts are limited to a combined income of $250,000. Thus, unless the combined income in a marriage where there are minor children is more than $250,000, absent circumstances that would convince a judge to vary from the formulas, there will be only child support and no alimony order (provided that the lesser earning spouse is the primary caretaker of the minor child or children -- judges still have a good deal of discretion, and I would encourage you to speak to an attorney if you have any questions or concerns about your specific case).

This muddies the waters a bit from the varying justifications for child support (provide for the child) and alimony (provide for the former spouse). One justification for this is attrition. For couples earning less than $250,000 combined, there is usually not enough income to justify both child support and alimony. What the court will label as "child support" (and the IRS and Department of Revenue will treat as "child support") does assist the primary caretaker into transitioning into a financially independent unit.

However, it is not enough to provide for the economic quality of life enjoyed during the marriage. When a couple divorces, the expenses once shared (one home, one electricity bill, etc.) are now separated. Now there are two homes to pay for, and two electricity bills. Even if the combined income stays the same, the combined expenses will increase. For many individuals, receiving child support will not be enough. They will need to transition back into the workforce, or focus more time on increasing their income to meet their expenses. The "child support" will provide a measure of financial security to the recipient spouse as he or she transitions to devoting more energy towards furthering his or her career. This, unfortunately, comes at the cost (usually) of spending time at home with the children.

You have been appointed as Guardian, do you need to be appointed as Conservator, too?

When an individual is determined to be incapable of making independent decisions necessary for proper management of his or her life, a guardianship is often necessary. The form, or limits, to the scope of the guardianship (meaning what management authority is being transferred from the "incapacitated" individual to the guardian) depends on the circumstances of the individual. A guardianship may be permanent, temporary, or limited to particular decision-making authority.

A guardianship does not provide for the authority to manage the incapacitated individual's assets, unless the incapacitated person's only assets stem from monthly income. In order to manage existing assets of an incapacitated individual, a conservatorship is necessary.

Under a conservatorship, the incapacitated individual may actually lose the legal ability to manage their bank accounts, enter into contracts, or accrue debt, so that the conservator is responsible for these responsibilities. A conservatorship may be limited to certain financial decisions, such as the authority to pay for medical expenses.

If you would like more information on guardianships or conservatorships, or you would like to schedule a one-hour consultation, contact the attorneys at Kelsey & Trask, P.C. by email or by calling 508 655-5980.

Thursday, November 17, 2011

Is Alimony Always Tax Deductible?

Generally, alimony is tax deductible to the payor and taxable income to the recipient. The purpose of this tax treatment is to treat the alimony as a transfer of income from payor to recipient. However, there are requirements for alimony payments to qualify for this favorable tax treatment.

The IRS defines alimony as: "a payment to or for a spouse or former spouse under a divorce or separation instrument. It does not include voluntary payments that are not made under a divorce or separation instrument."

Agreements executed after 1984 have different requirements than agreements executed before 1985. For purposes of this post we are only going to discuss post-1984 agreements:

Under a post-1984 agreement, judgment, or order, alimony is only tax-deductible to the payor if the following requirements are met:

  • The parties file separate tax returns; 
  • The payments are in cash; 
  • The agreement, judgment or decree does not indicate that the payments are not alimony; 
  • The spouses are not members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance (i.e. doesn't apply to temporary orders). You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment; 
  • Payments end upon death of the recipient spouse; and 
  • The payment is not treated as child support (which includes making the payment contingent on an event relating to your child).

For more information and examples that pass or fail these requirements read IRS Publication 504.

Wednesday, November 9, 2011

A Response to "What Triggers Violence in Custody Battles in the United States?"

A colleague in California, Attorney Mark B. Baer, recently wrote a post discussing some horrific and recent tragedies of domestic violence that have occurred during the process of divorce or child custody court cases.

Attorney Baer points out that our courts are not designed to deal with all of the emotions that come with a divorce, or a child custody dispute, and neither are most attorneys. Attorney Baer then posits a direct connection between these cases of violence in divorce or child custody disputes, and concludes that the family law system in the United States is to blame for that violence.

We respectfully but strongly disagree. The frustrating delays and other inefficiencies of the court system are not the cause of domestic violence. Abusers, making their own choices, are the cause of domestic violence.

The following response was written jointly by Jonathan Eaton, Esq. and Justin Kelsey, Esq. as a reaction to Attorney Baer's article:

Attorney Baer's post describes two problems: (1) frustration borne from an extended court process and (2) domestic violence. He then assumes that one can lead to the other, and that therefore the alternatives to one (alternative dispute resolution instead of the traditional court process) would be an effective way to prevent or solve the other problem (domestic violence, particularly extreme cases of domestic violence). Attorney Baer's rationale is faulty because frustration with the court process is not the root cause of domestic violence.

Domestic violence is on the extreme end of the spectrum of controlling behavior. It occurs when one partner in a relationship desires to control the other, which may escalate to acts of emotional or physical violence. Although frustration with the court process could trigger a specific act of violence, simply avoiding court does not remove the underlying problem.

Furthermore, in cases where the controlling behavior has been an issue prior to the start of the divorce process, alternative dispute resolution could be used to continue a pattern of intimidation and abuse.

Mediation and collaborative divorce are voluntary, consensual processes. They require open and honest participation and if either individual is dissatisfied with the process, he or she may end it at any time. If an emotionally controlling individual is feeling that he or she is not getting his or her way in mediation or in the collaborative law process (in other words, feels as if he or she is not in control), then that process is likely to fail. If control is more important than resolution to a spouse, then they will revert back to their controlling behavior, regardless of the process being used.

Child custody battles can be the most emotionally charged family law disputes. Attorney Baer illustrates three examples of child custody disputes ending when one parent allegedly murdered the other (and sometimes the children and bystanders). It is impossible to know for sure whether any of these tragedies would have been avoided had the respective couples engaged in alternative dispute resolution, but it is unlikely that a person who is willing to resort to murder when they don't get their way was going to be satisfied with compromise. It is far more likely that an abuser would take advantage of alternative dispute resolution to get their way. Allowing abusers to control a situation so as to avoid outbreaks of violence is not a solution, it is tantamount to condoning their behavior and perpetuates the pattern of control.

Attorney Bear is correct that for many cases alternative dispute resolution can greatly increase the likelihood of a peaceful resolution, and successful co-parenting plans. However, in cases where there is a history or risk of domestic violence, the delays and frustrations of the court system are far outweighed by the protections that the court can provide to abuse victims (such as orders from protection from abuse).

Like Attorney Bear we encourage potential divorce litigants to consider the alternative ways to get divorced, but at the same time we feel it is very important to recognize that his article significantly misrepresents the causes of domestic violence:

The court does not create abusers, and there is no excuse for domestic violence.

At Kelsey & Trask, P.C., we pride ourselves in our mediation and our collaborative law practice, and we hope that it becomes more widespread as more individuals become aware of the alternatives to the traditional litigation track. In general, we feel that it is the most effective forum for accomplishing what is in the best interests of the children. However, we recognize that it is not "one size fits all."

In Massachusetts, our probate and family courts have become so backlogged with cases that clerks and registers have cut their hours working with the public in order to allocate more of their hours to performing the administrative work necessary to move the existing cases along. The traditional litigation process is too long, and often very frustrating for people already transitioning through a difficult period. If you and your spouse are willing to participate openly and honestly in mediation or collaborative divorce, then we encourage you to learn more about these processes.

But if you are a victim of domestic violence, your first priority should be the safety of you and your children. You should explore all of your options, including the protections offered by the court. If you or someone you know suffers from Sexual or Domestic Violence, call the National Domestic Violence Hotline at 1-800-799-SAFE, or if you live in Massachusetts check out these resources available on the Massachusetts State website, and seek help.

Friday, November 4, 2011

Self-Employment Income & Child Support: Massachusetts vs. the National View

We are pleased to link to an Article published by a colleague of ours, Jason V. Owens, Esq. of Stevenson & Lynch, P.C., in the June 2011 edition of the Suffolk Journal of Trial & Appellate Advocacy entitled Determining Self-Employment Income for Child Support Purposes: the Massachusetts View Compared with the National View. The article focuses on the thorny problem of calculating “income” for child support purposes in cases involving self-employed parents who operate a business over which the parent exerts financial control.

Much of the article explores the differences and similarities between “business income”, as defined by federal tax law, and “self-employment income”, as defined by child support guidelines in Massachusetts and other states. Much of the impetus behind this “compare and contrast” approach is practical. Determining a business owner’s “income” for child support purposes almost always begins with an examination of the business’s state and federal tax returns. The challenge for attorneys, parties, and judges often lies in determining which sections of the business’s tax returns can be applied to the child support analysis – and which sections must be carefully scrutinized or rejected altogether when analyzing the return from the child support perspective.

How does “business income” on a tax return differ from “self-employment income” on a financial statement filed in a child support case? Which tax deductible business expenses are most likely to be abused and manipulated by a self-employed parent? When can a business expense be legitimately deductible under the tax code but countable as “income” under child support law? The Article explores the legal underpinnings of these and related questions, identifies and pinpoints the prevailing law and national trends, and acknowledges the ambiguities and approaches taken among the states.

Reprinted with permission from Stevenson & Lynch, P.C.

Tuesday, November 1, 2011

And It's All Your Fault! MA "Fault" Based Divorce #7: Impotency

This rarely-used ground for divorce illustrates why "no fault" divorces are heavily favored by modern practitioners. Judges are wary to turn the courtroom into a "Jerry Springer"-type environment. A divorce is an immensely personal transition. Given the social stigma of the word "impotency", there is a high risk that any divorce action citing impotency as its grounds will make it more difficult to come to any agreements with the allegedly impotent individual, and the courtroom could likely become a forum for uncomfortably personal critiques.

In a "no fault" divorce, the judge need only be convinced that there has been an "irretrievable breakdown" in the marriage with no chance of reconciliation. In practical terms, all that means is that one spouse needs to be able to tell the judge just that.

By contrast, in order to obtain a divorce citing impotency, the court needs to be satisfied that your spouse is incapable of having sexual intercourse. This can obviously be embarrassing to one or both spouses. Other than the added embarrassment, and the increased likelihood that the divorce proceedings will become more difficult to resolve, there is nothing else to gain. The division of property, child support, alimony, and visitation will not be affected by impotency. As such, very few practitioners choose to plead impotency when filing a complaint for divorce.
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