Domestic Relations

IRS offers special tax-filing options for domestic violence victims

Tax filing season opens tomorrow. As this local TV report suggests:

Financial control plays a big role in domestic violence, which is why an abuse survivor is thankful for a memo the IRS put out three months ago.

Rights of Domestic Violence Victim:

In the memo released in October 2016 specifically for domestic violence victims, the IRS highlighted that taxpayers have the following rights:

Domestic abuse is not just physical abuse. It often includes economic control. As a survivor of domestic abuse, you can take control of your finances. An important part of managing your finances is understanding your tax rights and responsibilities.
  • File a separate return even if they’re married
  • Review the entire tax return before signing a joint return
  • Refuse to sign a joint return
  • Request more time to file their tax return
  • Ask the IRS for copies of prior-year tax returns
  • Seek independent legal advice

Innocent Spouse:

“The IRS also offers a separate form called a Request for Innocent Spouse Relief, which is Form 8857. If a survivor and a spouse file a joint return and the survivor is not aware that the abuser has not paid the taxes, the survivor can fill out the form to be relieved of liability. It’s a right for all taxpayers, but it can be very helpful to someone under an abuser’s financial control.”

There are others as well: Injured spouse relief which releases a spouse from liability for certain past-due tax debt that are attributable to the other spouse. Separation of liability divides tax liability based on ability to pay for spouses who are legally separated or no longer married. Equitable relief divides tax liability based on the adjusted gross income of each spouse but does not clear either spouse of the total liability. Reasonable cause relief provides clearance from the obligation to file a tax return or pay penalties if you can present compelling facts to show why you were unable to do so on time.

Address Confidentiality:
Some state agencies or coalitions may offer an Address Confidentiality Program, which provides survivors with a safe address. Thirty-six states have Address Confidentiality Programs, but Alabama is not one of them.

Bank Accounts:

Some EITC coalitions can help survivors establish bank accounts. Some VITA sites have options for pre-paid debit cards.
Tax Credits:
Domestic violence survivors should know about three federal tax credits: the federal Earned Income Tax Credit, the federal
Child Tax Credit, and the federal Child and Dependent Care Tax Credit. Per the IRS:

The Earned Income Tax Credit (EITC) may be available if you are working and your earnings are low. The credit may be larger if you have one or more children living with you. You cannot take this credit if you file as married filing separately, but if your spouse didn’t live in your home at any time during the last six months of the year, you may be able to file as “head of household” and claim the EITC.

See IRS Publication 596, Earned Income Credit, for more information on the credit, and IRS Publication, 501 Exemptions, Standard Deduction, and Filing Information for more on filing as “head of household.”
The Child Tax Credit may reduce your tax or increase your refund for each qualifying child. See IRS Publication 17, Your Federal Income Tax, for more information.
Finally, the Child and Dependent Care Credit may reduce your tax. See IRS Publication 503, Child and Dependent Care Expenses, for more information.
Tax Preparation assistance:
VITA is a program that offers free tax help to low- to moderate-income (generally, $49,000 and below) people who cannot prepare their own tax returns. Trained certified volunteers sponsored by various organizations help prepare basic tax returns in communities across Alabama. VITA sites are generally located at community and neighborhood centers, churches, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing. To locate the nearest VITA site, call 1-800-906-9887.
The VITA in Alexander City is offers free tax help for taxpayers who qualify. (256-234-0347)

New Laws Affecting Divorce Litigation in Alabama (Alimony)

As I discussed in a previous post, the Alabama legislature passed new legislation affecting several areas of divorce litigation. Today, I will discuss the substantial changes to alimony rules. Major caveat: The new statute applies only to divorces filed on or after January 1, 2018. (At the end, I also briefly mention the impact of the new tax bill for alimony as well.)

Alabama’s law governing alimony is covered in Ala. Code §§ 30-2-51 through 30-2-55. 30-2-51 still covers the rules for alimony upon divorce. On Jan 1, 2018, a revised § 30-2-51 took effect.

But first, what is alimony? Alimony is separate and distinct from the equitable division of marital property. Alimony is an amount the court orders one person in a divorce to pay their ex-spouse in order to maintain their spouse in the standard of living they were accustomed to during the marriage.

In Alabama, there is no statutory for formula like other states. (See this multi-state calculator for a sample.) The American Academy of Matrimonial Lawyers suggests the following formula:

Take 30 percent of the payer’s gross income minus 20 percent of the payee’s gross income. That amount, when added to the gross income of the payee, should not exceed 40 percent of the combined gross incomes of the parties. The AAML suggests calculating duration of the award by multiplying the length of the marriage by a certain numerical factor.

A most helpful case in understanding periodic alimony is the case of Rieger v. Rieger, 147 So. 2d 421 (Ala. Civ. App. 2013). The Rieger Court began its analysis by noting that not every divorce spouse is entitled to periodic alimony, thus it is not mandatory. Instead, the decision of whether to award period alimony rests solely within the discretion of the court.

While I think practically remains the law, this technically has changed. The new statue requires  the court to award (“the court shall award”) rehabilitative or periodic alimony the court “expressly” finds certain conditions are present in the case. (The conditions give judges a lot of wiggle room through broad language.) If those conditions are present, the judge is mandated to award rehabilitative alimony, unless he expressly finds its not feasible, for a period not to exceed 5 years. If the court finds rehabilitative alimony is not feasible, then the court shall award periodic alimony. Otherwise, if a party can prove that they cannot maintain the “status quo” yet the other side can’t pay, the court can reserve jurisdiction for alimony.

The statute no where defines rehabilitative alimony versus periodic alimony. Prior cases have defined rehabilitative alimony as “a sub-class of periodic alimony” that allows a spouse “time to reestablish a self-supporting status.” See Giardina v. Giardina, 987 So. 2d 606

The Reiger court noted that property divisions should be equitable, not equal, and lists a series of factors which a court should use to determine alimony. These factors include: “the earning capacities of the parties, their future prospects, their ages, health, and station in life; the length of the parties’ marriage; and the source, value, and type of marital property.”

The goal of the court, then, should be to determine whether the spouse petitioning for alimony has demonstrated an actual need for support in order to sustain the standard of living enjoyed during the marriage (“preserve the economic status quo” in language of the new statute) and whether the responding spouse can and should meet that burden.  While a divorce judge has a great deal of discretion in deciding whether to award alimony, the court may act arbitrarily and capriciously by denying it when the petitioning spouse has shown a need and the responding spouse has the ability to
pay.

To prove the need for periodic alimony, a spouse must show that he or she will be “unable to sustain the parties’ former marital lifestyle” absent the support. The party must establish what the standard and mode of living was during the marriage as well as the nature of the costs of maintaining that standard. The spouse should then show his or her own individual assets, including the separate estate, marital property received as part of the
settlement or property division, and wage-earning capacity, again, taking into account the age, health, education and work experience of the petitioning spouse as well as prevailing economic conditions, as well as any rehabilitative alimony or benefits used for assistance in maintaining
and obtaining employment. There is an express list of items now including the special one: “if the party has primary physical custody of the child of the marriage whose condition or circumstances make it appropriate that the party not be required to seek employment outside the home.” If the spouse can show that, while using his or her assets, there is an inability to routinely meet all of the financial costs of maintaining the former marital standard of living, then the need for additional support is proven.

The second major step: the judge must next determine whether the other spouse can pay that amount and, if not, what amount the spouse could regularly meet.  The Rieger suggested judges should use net, rather than gross, monthly income as the basis for their calculation. The statute now mandates net income. In determining ability to pay, the court should take into account all of the responding spouses financial obligations, including those created by the divorce. The court must take into account the responding spouse’s ability to maintain the former marital lifestyle as well.

Per the new statute, lastly the court must determine the “equitable amount.” Since it is rare that one income is as good as two, it is rare that a responding spouse will be able to fully meet the needs of the petitioning spouse. Because of this, the court should determine the amount that the responding spouse can “fairly pay” consistently.The new statute delineates matters such as length of marriage, relative fault, prior contributions, lost opportunities, and excessive expenditures during the marriage.

Duration of alimony obligation, per the new statute, is now presumptively the length of the marriage. Unless however, the marriage lasted longer than 20 years, then there is no time limit.

The new statute does not alter these broad principles which have been present in precedential case law, but have irregularly been applied.

§ 30-2-52 remains unchanged; it still states that if the divorce is granted in favor of one spouse due to misconduct by the other spouse, the court may take that into consideration when determining the amount of alimony, but may not include any property acquired prior to the marriage or by inheritance or gift.

§ 30-2-55 similarly remains unchanged: it still states that periodic alimony shall terminate upon petition showing proof that the spouse receiving alimony has either remarried or is cohabitation with a member of the opposite sex. However, the new statue states that alimony can be modified on a showing of material change of circumstances.

Another major change, I think, in the new statute is a specific provision which allows a party to specifically obtain alimony and recover court expenses incurred in pursuit of pendente lite alimony or “equitable access to the marital property” before trial. Often, one party will leverage control of assets so that their spouse cannot retain counsel. The statute seems to grant an ex parte (without notice to the other side) right to obtain pre-trial alimony “in case of an emergency.”

IMPACT OF NEW TAX LAW ON ALIMONY

On top of these state level changes, Congress passed a new tax code which impacts alimony. Per CNN Money:

The final version of the tax plan . . . eliminates the tax deduction for alimony payments. Divorce lawyers say this move could make ending marriages an even more drawn-out and expensive process, and the change could be particularly painful for lower-income couples.

How will this impact alimony litigation? listen to this one divorce attorney:

“This deduction is a major, major factor in negotiating a settlement, and in terms of what a judge will give. This will dramatically change the landscape,” said Taub.

While alimony is getting statistically rarer, Taub said it still figures into most of the divorces he works on in his New York-based practice. Many of his cases involve long-term marriages and high-earning couples where one spouse — typically the wife — stayed at home to raise children.

Some 12 million tax returns claimed a deduction for paying alimony in 2015, according to IRS statistics. . .

“Payers will be less likely to agree to pay alimony because they will not get the tax break that they had previously received and judges will take the tax consequences into consideration as well, and I believe will order less alimony,” said Mary Kay Kisthardt, a professor of matrimonial law at the University of Missouri-Kansas City School of Law.

New Alabama Law Affecting Divorce Litigation and Retirement Accounts

Two new laws went into effect January 1, 2018, which will affect divorce litigation. The Alabama legislature sought in these new laws to more precisely direct certain practices within Alabama courts: one dealing with equitable division of retirement accounts and the second, dealing with alimony. I have broken the discussion into two posts; today, I will discuss the changes to the law concerning retirement accounts in divorce litigation.

During my initial consultation with a client about divorce, I detail each of the main categories or issues which must be addressed by the court in a divorce case. Those categories can be broken down broadly as follows:

  1. Legal and Physical Child Custody, if there are minor children, of course.
  2. Visitation Rights, if there are minor children.
  3. Child Support, if there are minor children.
  4. Determination and Equitable Division of Marital Assets
  5. Determination and Equitable Division of Marital Debts
  6. Lastly, Alimony

Discussion about retirement accounts falls into the determination and equitable division of marital assets. Generally, Alabama law requires a divorce court to first determine what are the marital assets, as distinct from separate property of the parties. “Marital property” is simply anything owned by the husband or wife which has been used for the benefit of the marriage. It does not matter whose name is on the title.

Alabama law requires the judge to then equitably divide all the marital property. A division of marital property in a divorce case does not have to be equal, only equitable (or fair) considering the facts of the case. When deciding what is a fair division of marital property, a judge considers several things: the length of the marriage; the age and health of the parties; the future prospects of the parties; the source, type, and value of the property; the standard of living to which the parties have become accustomed during the marriage; and the fault of the parties contributing to the breakup of the marriage. See Golden v. Golden, 681 So. 2d 605.

So aren’t retirement accounts treated as marital property? This has been a tricky question in Alabama cases, especially regarding military retirement accounts. Until 1993, retirement benefits could not even be considered for ordering property division or alimony. “Alabama was the last state in the country to recognize retirement plans and pensions as marital property.” Family Law in Alabama: Practice and Procedure In 1993, however, Congress passed federal legislation addressing military retirement. And in 1996, the Alabama legislature made its statutory entry into the area; that law was effectively unchanged until January 1, 2018.

Under the old law, retirement accounts were to be divided only if the parties had been married for 10 years. Also, the court could not consider amounts funding those accounts from before the marriage.  Retirement accounts could not be divided even if used for the benefit of the marriage. See Smith vs. Smith, 964 So.2d 663.

So what has changed on January 1, 2018?

Now, the judge may not consider any property acquired prior to the marriage or by inheritance or gift unless the judge also finds from the evidence that the property (including retirement accounts), or income produced by the property, had been used regularly for the common benefit of their marriage. The new law also now expressly states that marital property includes any interest, acquired, received, accumulated or earned during the marriage in any retirement account.

This new law also eliminates the requirement that the parties must be married for 10 years before the court may award retirement benefits. For the new statute, I think this actually may be the most critical practical change.

The revised statute also expands or clarifies the definition of retirement accounts to include not just retirement plans or accounts, but pensions, profit-sharing plans, savings plans, annuities, or similar benefit plans from any type of employment including self-employment, public or private employment, and military employment.

Lastly, the new statute also expresses that post-divorce passive increase or decrease in the value of retirement benefits shall borne by the parties on a pro rata basis.

(On a side note, if your divorce includes retirement accounts, make sure you include a “qualified domestic relations orders” (Q.D.R.O.) The Q.D.R.O. does nothing more than implement the division of property as stated in the divorce order for third party ERISA managers.)

For most of my cases in east central Alabama, I think courts were operating within the terms of this statute implicitly before its enactment, so I do not see much of change of practice.

Next week, I’ll discuss the changes to the alimony rules which may certainly prove to be a dramatic change in practice.

 

Star NFL player sued by NC man who says the player seduced his wife

According to the Charlotte Observer,

Fletcher Cox, a two-time Pro Bowl defensive tackle with the Philadelphia Eagles, is being sued for alienation of affection by Joshua Jeffords in Mecklenburg County Civil Court.

This lawsuit has been brought in North Carolina. “An action for alienation of affection permitted recovery for ‘loss of consortium, humiliation, shame, mental anguish, loss of sexual relations, and the disgrace the tortious acts of the defendant have brought.’” Andrews v. Gee, 599 F. Supp. 251, 253 (D.S.C. 1984)

I am not sure the policy reasons for such but this kind of suit is unavailable in Alabama. An Alabama statute, Section 6-5-331, reads:

There shall be no civil claims for alienation of affections, criminal conversation, or seduction of any female person of the age of 19 years or over.

“Since the abolition in Alabama of the heart-balm torts, this Court has refused to recognize ‘any claim for damages against a third party, no matter how denominated, that is based on allegations of interference with the marriage relationship.’” D.D., 600 So. 2d at 223

Laws like that in North Carolina seem to be good policy which protect the family and marriage; it certainly puts a financial penalty for potential adulterers. Perhaps its something the Alabama Legislature should reconsider. Seemingly, only Hawaii, Illinois, Mississippi, New Mexico, North Carolina, South Dakota and Utah still have such a cause of auction.

However, in some jurisdictions, alternative theories have been allowed. For instance, in Scamardo v. Dunaway, 650 So. 2d 417 (La. Ct. App. 1995), the Louisiana Court of Civil Appeals allowed an intentional infliction of emotional distress:

In comparing the two theories of recovery, we find that they are distinguishable. Neither the policies nor legal principles giving rise to the claims for framing the rights are the same. Although both have the emotional distress of plaintiff as a primary element of damages, and thus, may appear to overlap, the infliction of emotional distress is a separate, recognizable tort. The law does not limit the action to non-marital situations. However, the mere seduction and loss of one’s spouse due to the seduction or affair cannot be the basis for the action. There must be proof that defendant violated some legal duty to plaintiff, so that plaintiff is in fact the victim and not just the jilted party. Further, the burden of outrageous conduct is a heavy one. Otherwise, the cause of action is for alienation of affections, which is not legally recognized in this state.

D.D. seems to preclude this argument. (However, perhaps the existence of the separate duty towards the Plaintiff could make a difference to the Alabama courts.) See also, Gasper v. Lighthouse, Inc., 533 A.2d 1358 (1987); Accord Payne v. Osborne, No. 1997-CA-001818-MR (Ky. App. 06/04/1999).

Can a 16-year-old decide which parent he wants to live with?

NO!

Another prominent legal myth is that a 16 years can decide with which parent they are going to live. The typical scenario is that a couple divorce when their children are younger and the custody is awarded to the mother. Years pass and the child (usually boys) reach their teenage years. Suddenly, weekends at Dad’s looks more fun for the teen: more liberty, less strict. Dad and teen decide its a good idea to change custody. A 16 year old can decide their residence can’t they?

This is just not so. The child’s wishes are a mere consideration in a myriad of factors for custody but are not any where near decisive. How many sixteen years would choose to stay with the fun non-custodial parent? Or how many would choose to stay with the parent which doesn’t discipline them during their visitation periods? Of course, this would be unwise policy for the courts.

Before a court can change a custody order, first, there must be evidence that satisfies what is called the McLendon standard. The Ex parte McLendon standard states that a “parent seeking a change in custody must establish that the change would materially promote the interests and welfare of the child and that the benefits of the change in custody would more than offset the inherently disruptive effect caused by uprooting the child.” After a custody order is entered, a presumption arises in favor of the non-custodial parent; the playing field is no longer level.

A child’s preference doesn’t overcome that presumption. As the Alabama Court of Civil Appeals stated in one case: “The child merely prefers to live with her father at this time. Under Alabama law, this is simply not enough to justify a change of custody.” Glover v. Singleton, 598 So. 2d 995, 996 (Ala. Civ. App. 1992)

Child Support Arrears? Go after the house and boat.

Listen to the surprise of this journalist as he recounts the tactics in this child support collection case from this article entitled: County aims to take house, land of man who owes $40G in child support.

To force a Scott Twp. man to pay what he owes his ex-wife and two high-school-age children, Lackawanna County has taken the highly unusual route of going after his houses and land. Jeffrey Borsheski, 48, is nearly $40,000 behind in his child-support payments.

Most times, people which are owed child support merely rely upon wage garnishment and/or threats of jail to extract court-ordered child support from the non-custodial parent. Oddly, they act differently than any other judgment holder.

In Alabama, each month that a child support payment is due and unpaid, a judgment is rendered against that non-custodial parent. (This is why child support arrearage cannot be waived by a court.)  Sometimes, this sum total is reduced to a written order but this isn’t required.

Most any other kind of judgment holder would pursue physical assets (i.e. house, bank accounts, vehicles, guns, equipment, boats, etc.) first. Wage garnishment would be secondarily pursued. They want their money now and prefer to not wait each month for the garnishment to ta.

However, this is exactly opposite how most child support judgment holders act: they wait month-to-month for a trickle of income hopefully first. If arrears gets too great, they finally seek contempt of court: meaning jail for the child support obligor. (Typically a lose-lose scenario.)

I’m not sure why child support judgment holders act so differently than other judgment creditors. They should go after the physical assets. Issue post-judgment discovery to locate the assets. Search the revenue commissioner’s office for real estate. Search the DMV or probate office for vehicles. Have the Sheriff seize physical assets and auction them off. Have their banks freeze their accounts and give you the contents.

The county’s extreme action against the defendant is rarely employed, county officials said, because people way behind in their child support payments rarely have property. If they do, it’s usually owned jointly, often with a spouse. But when Mr. Luongo did a little research, he discovered the Scott Twp. home was owned solely by Mr. Borsheski, meaning the county could take and sell it to pay his massive bill to his ex-wife and kids.

And, in Alabama, you can take these actions privately, you don’t need to wait for DHR to become this aggressive in collection efforts. (When I prosecuted for DHR, I would inquire of parents in contempt about their assets and sometimes look to seizure on the judgment.)

As noted in the article, in Alabama, the judgment creditor couldn’t “give” the physical assets either. That would be a fraudulent transfer. The courts would set it aside and get the property back. Such a transfer may delay the result but only runs up the costs for the person in arrears.

Mr. Borsheski’s ex-wife, Anita Vadala, 50, of Mayfield, said she hopes her struggles can help other mothers reclaim some of the support they are owed, which in her case is $602 per month.