Costs of sale and taxes to be considered in equitable distribution of a business

In Carney v. Carney, a recent decision by the Superior Court of Pennsylvania, the Court held that costs associated with the sale of a business and related tax effects were relevant to an equitable distribution order.

The trial court entered an equitable distribution order, which gave Husband the couple’s trucking business. Husband was required to make monthly payments to Wife for 10 years to offset the value of the business with the remaining marital assets, all of which were awarded to Wife. The monthly payment was calculated without accounting for costs associated with a potential future sale of the business and possible tax effects.

Under Pennsylvania law, costs of sale and related tax effects are relevant to equitable distribution regardless of the likelihood of the sale. Therefore, the value given to a marital asset for purposes of equitable distribution should be the value after deducting any expense required to liquidize the asset.

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Assisted Reproduction

Assisted reproduction refers to a number of procedures that may be utilized to achieve pregnancy including fertility treatments, in vitro fertilization and surrogacy. In vitro fertilization entails removing a woman’s eggs from her body and implanting the eggs with sperm to create an embryo. Those embryos can be stored until ready for use. However, couples should be aware of what happens to the embryos if they subsequently separate prior to using them. In Pennsylvania, frozen embryos are considered marital property and hence, subject to division in a divorce. The Pennsylvania Superior Court stated its position on the marital status of frozen pre-embryos in Reber v. Reiss, 2012 PA Super 86. In Reber, Wife wanted to use the frozen pre-embryos in order to have children of her own whereas Husband wanted the frozen pre-embryos either destroyed or donated for research.

Prior to reaching its decision, the Pennsylvania Superior Court considered how other states have dealt with this issue. Some states have focused on whether there is a prior agreement between the parties concerning disposition of the pre-embyros in the event of divorce and if so, will uphold the agreement as enforceable. Other states have held the enforcing such an agreement is a violation of public policy and have declined to do so. Another approach is a mutual consent model requiring both parties to agree on disposition, however, Pennsylvania did not find this model feasible since parties would not be in court in the first place if they could agree. The approach that was ultimately adopted in PA calls for the court to balance the interests of the parties.


In Reber, the court found that Wife’s interest in procreation using the frozen pre-embyros outweighed Husband’s interest against procreation since evidence established that the pre-embryos were likely Wife’s only opportunity to procreate along with testimony that Wife would allow Husband to be involved and wouldn’t pursue support in response to the concerns raised by Husband. The court did acknowledge that the party against procreation should normally prevail in a balancing test, however, due to the unique facts of the case, the scales tipped in Wife’s favor. It also seems that the court would’ve likely enforced an agreement on the issue if there had been one. Accordingly, parties who intend to undergo in vitro fertilization should draft a clear, unambiguous agreement as to the disposition of embryos upon separation, divorce or death, or else be subject to a balancing approach by the court.

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Dividing Property Outside of Divorce

A partition action is a legal proceeding to divide property amongst unmarried individuals that cannot agree what to do with the property. This may arise in a situation where two parties who were never married purchased a home together. It may also arise if real property is not properly dealt with at the time of the divorce action and the now divorced parties are still co-owners. Pennsylvania partition actions are governed by Rules 1551 – 1574 of the Rules of Civil Procedure. There are two options in a partition action. One option involves physically splitting the property, if possible. The alternative option, and more likely occurrence, involves the home being sold with the proceeds divided. As far as procedure, a complaint for partition should be brought in the county where the property is located and must include all co-tenants as parties.

The complaint must also include a description of the property along with each co-tenant’s interest in the property. Following the filing of the complaint and a court order on the partition, a court officer called a “master” is usually appointed to oversee the action. This usually includes an appraisal of the property to obtain an accurate value and setting up the sale of the property, be it private or public. The parties to the partition action are responsible for splitting all fees incurred during the partition proceeding as well as compensating the master. The parties can resolve at any time settle the matter amicably amongst themselves. Married couples should be sure to deal with real property issues at the time of divorce to avoid the potential for this additional proceeding down the road.

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Social Security Retirement

Social security retirement benefits are payable based on the individual’s earnings history as well as age of retirement. Full retirement age is presently 66 years old. The benefit is reduced if electing to receive the benefit earlier. The minimum age to start collecting is presently 62 years old. An individual can elect to receive benefits under the spouse’s earnings history instead. An individual may receive up to 50% of their spouse’s benefit. This does not impact the spouse’s benefit in any way. An individual may elect to receive under their spouse’s benefit if their earnings history was substantially higher.

Even after divorce it may be possible to collect under your prior spouse’s earnings history. There are a few conditions that must be met. First, you must have been married for a minimum of ten (10) years. Second, you must not have remarried. Third, you must be at least 62 years old. Finally, the amount you will receive under your ex-spouse’s earnings history must be more than what you would receive based on your own work history. Electing to receive under your ex-spouse’s history will not affect any new spouse. Retirement benefits may also be payable to your children until they are 18 or graduate high school, whichever is later.

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Supplemental Security Income

Supplemental Security income (SSI) is cash assistance to individuals who are disabled or over 65 years old. SSI can be payable to disabled children as well. Living arrangements may affect the amount of SSI received. You should report changes in living arrangements to the Social Security office. Similarly, relationship status may affect the amount of the benefit received. For example, the amount may be decreased following marriage depending on the income of the new spouse. If marrying another individual who receives SSI, the benefit may be converted from an individual benefit to a couple’s benefit.

Any other income or windfalls may also affect the payment. The changes may be temporary in the event of a one-time payment or more permanent in the event of employment. Payments may increase every year to account for cost of living adjustments. SSI is not be considered income for purposes of a support calculation. This is because SSI is a federal means-tested benefit. It operates as a welfare benefit. It is not meant to replace lost earnings but instead to provide some income to disabled people who would otherwise be poverty-stricken. Even though SSI cannot be considered, if a party is otherwise capable of working, income from employment can still be considered for a support award.

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Changes to NJ Custody Relocation Laws

If you are seeking to move to a distance that makes your current custody schedule difficult or impossible to follow it classifies as a relocation. In the event of a move that does classify as a relocation the party looking to move should obtain the written consent of the other parent or court approval. Previously, New Jersey courts primarily focused on if there would be any harm to the child in allowing the move. In a recent decision (Bisbing v. Bisbing) the New Jersey courts have shifted their focus to considering if the move is in the child’s best interests. This standard puts the burden on the party looking to relocate to demonstrate how it benefits the child. It also allows for a better look at how the move affects both parents.

In the instant case, a mother has primary custody of the parties’ two daughters pursuant to their marital settlement agreement. Mother sought to relocate with the daughters to Utah and Father objected to the move. At the initial court proceeding, the court agreed that the move would not be to the children’s detriment. On appeal, the court held that a best interest analysis should be applied instead. This change in the standard for relocation will certainly have an impact on the number of successful relocation requests given it requires a more stringent analysis as to the effects on the children.

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SSD

Social Security Disability (SSD) benefits are payable to individuals who have a long-term disability that limits their ability to earn income. The disability payments are meant to replace the income the recipient would have received if they had not become disabled. Essentially, disability payments have been pre-paid by the recipient during their employment. Accordingly, the recipient must have a sufficient earnings history, or in other words have paid social security long enough, to be eligible for payments. Your benefit will remain the same whether you are single or married. The issue of social security disability benefits may arise in the context of a support action. Social security disability benefits are recognized as a source of income pursuant to Pennsylvania Rule of Civil Procedure 1910.16-2. Accordingly, a support order may require payment of a portion of the benefit received.

Benefits may also be payable to the children of the disabled party. Where child support is being calculated and the child(ren) at issue are receiving their own social security benefit, the amount of their benefit also must be accounted for in the support calculation. PA RCP 1910.16-2(b) goes into detail about the treatment of benefits received by the children in the context of support. The child’s benefit should be added to the net income of the parents for determining what the basic child support award should be based on the state guidelines. The amount of child support based on the support guidelines is then reduced by the amount of the child’s benefit. After the reduction, the appropriate support award would be calculated after considering each parent’s share of the support obligation based on their income, as well as other relevant factors such as health insurance costs and custody.

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Grounds for Termination of Parental Rights

Termination of parental rights means the natural parent of a child forever loses or forfeits any rights as a parent. This would include the loss of any standing for future custody actions. On the flip side, it also means they are not financially responsible for their prior child in terms of support. Termination of parental rights can generally only occur in conjunction with an adoption matter. Termination of parental rights can be voluntary or involuntary. A biological parent can consent to an adoption and voluntarily relinquish their rights. Alternatively, parental rights may be subject to involuntary termination. Pursuant to 23 Pa.C.S. § 2511, there are nine (9) grounds for involuntary termination of parental rights.

(1) The parent by conduct continuing for a period of at least six months immediately preceding the filing of the petition either has evidenced a settled purpose of relinquishing parental claim to a child or has refused or failed to perform parental duties.

(2) The repeated and continued incapacity, abuse, neglect or refusal of the parent has caused the child to be without essential parental care, control or subsistence necessary for his physical or mental well‑being and the conditions and causes of the incapacity, abuse, neglect or refusal cannot or will not be remedied by the parent.

(3) The parent is the presumptive but not the natural father of the child.

(4) The child is in the custody of an agency, having been found under such circumstances that the identity or whereabouts of the parent is unknown and cannot be ascertained by diligent search and the parent does not claim the child within three months after the child is found.

(5) The child has been removed from the care of the parent by the court or under a voluntary agreement with an agency for a period of at least six months, the conditions which led to the removal or placement of the child continue to exist, the parent cannot or will not remedy those conditions within a reasonable period of time, the services or assistance reasonably available to the parent are not likely to remedy the conditions which led to the removal or placement of the child within a reasonable period of time and termination of the parental rights would best serve the needs and welfare of the child.

(6) In the case of a newborn child, the parent knows or has reason to know of the child’s birth, does not reside with the child, has not married the child’s other parent, has failed for a period of four months immediately preceding the filing of the petition to make reasonable efforts to maintain substantial and continuing contact with the child and has failed during the same four‑month period to provide substantial financial support for the child.

(7) The parent is the father of a child conceived as a result of a rape or incest.

(8) The child has been removed from the care of the parent by the court or under a voluntary agreement with an agency, 12 months or more have elapsed from the date of removal or placement, the conditions which led to the removal or placement of the child continue to exist and termination of parental rights would best serve the needs and welfare of the child.

(9) The parent has been convicted of one of the following in which the victim was a child of the parent: criminal homicide, aggravated assault, a comparable crime in a different jurisdiction, or any attempt/conspiracy to commit the above.

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Proving Cohabitation

Alimony is support paid to an ex-spouse following the divorce decree. The amount of alimony is largely based on the incomes of the parties but may also be affected by the distribution of the other assets, if any. Unless otherwise stated by agreement, alimony may be subsequently modified due the changed circumstances of either party. The changes must be substantial and of a continuing nature. Generally, the length of alimony is directly attributable to the length of the marriage such that the longer the marriage, the longer the term of alimony one may expect.

In Pennsylvania, alimony will terminate upon remarriage or cohabitation of the party receiving alimony with an unrelated partner. It may be difficult to prove there is in fact a cohabitation relationship as the party seeking to terminate alimony. Case law establishes that you need to show more than just some overnight visits. Starting points may include if both the party receiving alimony and their partner receive mail at the same address, if any utilities for the home are in their name, or if they have been added to the lease or mortgage. A private investigator may also be utilized to observe the comings and goings and report back as to whether the parties staying together is a regular occurrence as opposed to an occasional visit. This option can become very expensive since you will need to hire the investigator over a period of time to establish a pattern of conduct.

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Steps for Simple, Uncontested Divorce

The procedures outlined below are suitable for an amicable divorce where there are no ancillary issues such as equitable distribution, custody or support. First, a Complaint in Divorce must be filed with the court. This may be your local county court or another county courthouse within the Commonwealth provided you consent to their jurisdiction. The difference in filing fees is a reason why you may look into filing outside of your county. Second, the Complaint in Divorce needs to be served on the opposing party. This can be done informally by having the other party execute an Acceptance of Service. Other options include service via certified mail, return receipt requested, restricted delivery or personal service by a process server of the Sheriff’s office.

Third, you must establish grounds for the divorce. For a no-fault divorce this would be either mutual consent of the parties after ninety (90) days or one or more year(s) of separation. If pursuing mutual consent, both parties would need to sign an Affidavit of Consent as well as Waiver of Notice for the divorce. If doing a divorce on the basis of separation, one party would file an Affidavit of Separation with the court and then serve it on the other party with a counter-affidavit to make sure they don’t object to the date of separation. The final step is filing a Praecipe to Transmit for Divorce Decree. This motion details all the prior steps for a divorce have been properly completed and includes the actual form of decree for the court’s signature if the motion is satisfactory.

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