Vanishing Credit

The court may give credit for individual property brought into the marriage depending on the circumstances. Generally, any credit to be received decreases with the length of the marriage. For example, Bucks County will reduce the credit by 5% a year such that there is no longer a credit after 20 years. A prime example of a situation where this rule would be applicable is the purchase of a marital home. Say Spouse A contributed $40,000 of their pre-marital money to the purchase of the house. If the parties separated after 5 years, the amount of Spouse A’s individual contribution is reduced by 25%. Accordingly, Spouse A would argue that 75% of the $40,000 down payment, or $30,000, is their separate property and not subject to equitable distribution in the divorce.

The rules on credit for individual or pre-marital property can vary county to county since it’s not a statute, but more or less a policy used by the respective Masters when looking at the marital estate in a divorce matter. Be careful with the commingling of individual property with marital property. It will be hard to make an argument on the amount of individual property that should be credited to a party if it’s hard to trace the source of the funds. If you encounter a situation in your divorce where it may be necessary to make a distinction between assets that are clearly marital versus those that you can trace back as being pre-marital and/or separate, you should be sure to consult with an attorney with experience in the valuation of these type of assets or risk all of the assets being addressed in equitable distribution and subject to division with your spouse.

Click here to read more on dividing marital property in divorce.

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Pre-Trial Conferences in Custody

A number of changes to the Pennsylvania Rules of Civil Procedure regarding custody took place this summer. One change, Rule 1915.4-4, provides the opportunity for a pre-trial conference in a custody matter. Either party may request the conference by written request in the form of a praecipe. Alternatively, the court can schedule one on its own motion. The timing of the pre-trial conference is after the parties have made their initial appearance at a custody conference but prior to the hearing scheduled before a Judge. The Rule provides the pre-trial conference should be scheduled at least 30 days prior to the start of a custody hearing. The Judge will preside over the pre-trial conference in chambers if both parties are represented.

 

At least 5 days prior to the pre-trial conference, each party must submit a statement to the court as well as the opposing party. The statement must include the name and address of all anticipated witnesses, including expert witnesses, along with their relationship to either of the parties, if any. The statement should also include a proposed custody order setting forth the schedule sought. Finally, all exhibits and/or reports that may be referenced in a hearing must be served on the opposing party but not submitted to the court. The goal of the pre-trial conference is to narrow and/or resolve any issues remaining for trial and encourage settlement of the case. At the conclusion of the conference, the court will enter an order outlining any agreements reached and limiting the issues for trial to those not already resolved. Hopefully this new procedure will be useful and reduce the likelihood of unnecessarily contentious custody battles in open court.

Click here to read more on child custody.

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Service Members Civil Relief Act

The Service Members Civil Relief Act (SCRA) was signed into law by President Bush in 2003. It was an overhaul of the SSCRA which had been law since 1940. The main purpose of the SCRA is to protect service members from civil lawsuits while they are on active duty and unable to adequately defend themselves. The protections of the SCRA, accordingly, apply to family law matters such as divorce, custody and support. Divorce complaints must either include a statement that neither party is a service member on active duty or be accompanied by an affidavit of non-military service. The service member has the right to waive their protection under the SCRA and still proceed if they desire to. Any waiver of rights under the SCRA must be in writing.

The SCRA provides for a mandatory stay of civil proceedings if the case does involve a service member in active duty. The stay period may be extended if necessary. An application for a stay should establish that the present active duty impairs the ability of the service member to appear and defend themselves in the civil action. The application should also indicate when the service member expects to be available to participate. A statement by the service member’s commanding officer needs to be provided corroborating the facts alleged by the service member in the application. An SCRA website is available where inquiries can be made into the active duty status of any individual.

Click here to read more on the impact of military obligations.

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Health Insurance for Children

Health insurance for minor children is an issue dealt with in the context of child support. If the children are presently covered under a plan through one of the parents, the children can remain on that plan. The other parent would then contribute to the premium being paid if applicable. This can be achieved by an increase over the guideline support amount if the party receiving support is paying the premium or a decrease if the parent who is receiving support is not the one providing the coverage. A change in which parent provides the coverage may be beneficial if one parent’s coverage is better than the other or less expensive but with similar coverage. Sometimes, the motive in changing plans is for the parent paying support to reduce the support paid directly to the other parent by adding the children to their plan instead.

If the children are receiving health insurance at no cost to either party it does not affect the guideline support amount. This may happen if one of the parents is employed by a company that covers 100% of the premium. This can also occur if the children are insured through a government program such as medical assistance or CHIP (Children’s Health Insurance Program). Health insurance is only to be provided by one of the parents if at a reasonable cost. The court does not go so far as to mandate health insurance regardless of the financial circumstances of the parties. Again, thanks to programs like CHIP it is possible to ensure the children have health insurance even if the parents cannot afford it. However, even parents should reconsider the financial consequence of not having health insurance given the enactment of the Affordable Health Care Act and the penalties of failing to obtain health insurance going forward. Subsidies may be available based on income to ensure health insurance coverage at a reasonable cost.

 

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Consenting to Adoption

One of the ways an adoption can proceed is if the natural parent(s) consent to the adoption. Pursuant to 23 Pa. C.S. Section 2711, a consent must be signed by the following individuals where applicable: (1) the child(ren) being adopted if over 12 years of age; (2) the spouse of the adopting parent if that spouse is not also a petitioner; (3) the natural parent(s) of any minor child(ren) being adopted; (4) the guardian of an incapacitated child up for adoption; and (5) the guardian of a minor child or persons having custody when the adoptee has no parent whose consent is required. There are several timing rules that must be adhered to. First, the consent cannot be signed by a natural mother within 72 hours, or three days, after the birth of a child. A consent can be signed by a natural father at any time after he has been notified the child is expected to be born or has been born. Executed consents become irrevocable after 30 days. The can be revoked on the basis of fraud or duress within 60 days.

As far as other technical requirements, the consent must include the date, full address of place of execution, and be witnessed by two adults whose name, address and relationship to the person executing the consent are provided. It is good practice to also have the consent notarized nad the notary’s complete address should be included. Another practical tip is to be careful who you select as a witness. The persons witnessing the consents may be called upon in court to testify as to the circumstances under which the consent was executed. The court must be satisfied that there was no fraud or duress and the person executing the consent was of sound mind. Having the prospective adoptive parents as witnesses can lead to an inference of duress whereas relatives of the natural parents can be biased so it is preferable to use impartial and credible witnesses with no interest in the outcome of the adoption. Without either proper consent or termination of parental rights, an adoption cannot proceed.

 

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Military Service and Child Support

There are several options in providing for child support of minor children when one of the parents is in the military. One option is the traditional method of pursuing court-ordered support through the state court with jurisdiction. An issue that may pop up in this instance is the Servicemember’s Civil Relief Act (SCRA) which mandates a stay on civil matters while a servicemember is on active duty. A servicemember can waive this statutory protection in writing and proceed with any civil matter, including family law issues, at their discretion. Another option is to reach an agreement on support. Written support agreements can be enforced through the military or the state court with jurisdiction.

A final option where there is no agreement and the servicemember has not elected to proceed with a state court child support proceeding is for the relevant branch of military to establish an interim support amount based on their regulations. All branches of the military maintain regulations that require a duty of support by the servicemember to their family/dependents. Most branches of the military have established support requirements that are tied to the number of dependents requiring support (spouse and minor children) and their gross pay and/or Basic Allowance for Housing (BAH). See the links below or specific information on how support is calculated by the various branches of the military in the absence of a court order or agreement.

Air Force: www.e-publishing.af.mil/shared/media/epubs/AFI36-2906.pdf

Army: http://armypubs.army.mil/epubs/pdf/R608_99.PDF

Navy:http://www.public.navy.mil/bupers-npc/reference/milpersman/1000/1700Morale/Documents/1754-030.pdf

Marine Corps: http://www.lejeune.usmc.mil/legal/dependent_support_regulations.pdf

Coast Guard: http://www.uscg.mil/lsc/coast_guard_provisions.asp 

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Splitting Real Estate Outside of a Divorce

A Partition Action is the type of legal proceeding needed to divide property amongst unmarried individuals that cannot agree what to do with the property. 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 to settle the matter amicably amongst themselves.

Click here to read about division of marital property.

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Same-Sex Marriage & Divorce

Last month the U.S. Supreme Court found that the Defense of Marriage Act (DOMA) was unconstitutional as it violates the Fifth amendment in failing to provide due process for all. DOMA was initially enacted in 1996 and provided that the federal government could refuse to recognize same-sex marriages granted under state laws. This resulted in same-sex couples being denied federal marriage benefits available to heterosexual couples including, but not limited to, insurance benefits for government employees, social security survivors’ benefits, evaluating financial aid eligibility and filing joint tax returns.

While the federal government will no longer discriminate against same-sex couples who have been married in a state recognizing same-sex marriage, there may still be unique issues as it relates to divorce. For one, only states granting same-sex marriages will be able to do the divorces. With divorce there is often a residency requirement of six months or more meaning one of the parties may need to relocate and establish residency in a state that can preside over the divorce action before it can proceed. Further, if same-sex couples have children and subsequently separate, there are issues they can run into as far as custody. For example, PA custody laws state exactly which persons are eligible to even apply for custody rights and limit that group to the parents, grandparents, or third persons standing in loco parentis. Accordingly, if the non-biological parent hasn’t already adopted any children thereby making them a parent, they could run into issues establishing standing for custody. To date, PA does not recognize same-sex marriages. The ACLU did file a lawsuit to allow same-sex marriage in PA following the decision on DOMA.

Click here to read more on divorce.

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Tax Consequences

Many clients going through family law matters will have questions regarding how they can/should file their taxes as well as what tax consequences may arise in their situation and the answers vary depending on if it’s a divorce, custody, or support matter. To start with divorce, while married parties can choose between married filing jointly and married filing separately. Generally speaking, it is more beneficial to file jointly. If the divorce finalizes by December 31st, parties can then opt to file single or head of household for that year. The head of household status may also be available while still considered married if you’ve been separated for at least six months, have paid at least half the cost of maintaining your own residence, and can rightfully claim any dependent children. In dividing property as part of a divorce, it is possible to rollover some assets (namely retirement accounts) to avoid immediate tax penalty. Also, certain transfers in the context of a divorce matter are exempt from being taxed such as transfer of real property.

Speaking of claiming dependent children, this leads right into considerations in custody. The primary custodial parent has the right to claim minor children on their tax return. To be the primary custodial parent you must have a greater number of overnights. It is however possible for the non-custodial parent to be able to claim the exemption if the custodial parent completes IRS form 8332 waiving their right to the exemption. The number of deductions claimed or filing status can impact a support award as it can alter the net monthly income of the parties which is used to calculate support awards. Alimony is deductible from the party paying alimony and taxed as income to the party receiving it. It is always a good idea to confer with a tax expert for the most sound advice on addressing your individual tax matters.

Click here to read more on how the IRS views Divorced/Separated Parents

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Post-Divorce Issues

Finally receiving the divorce decree is an accomplishment for divorcing parties, however, it does not always mean the end of the matter. If custody and support were issues were raised as part of the divorce, even though an initial resolution may have been met, both are issues which can be revisited based on change of circumstances. Additionally, in either a court order on equitable distribution or a settlement agreement reached between the parties, there may be provisions which carry additional obligations to be fulfilled even after the divorce has concluded. Support and custody issues always carry a continuing obligation to either pay a certain amount per month or follow a certain custody schedule. There are also several scenarios when dealing with marital property that can create a continuing obligation.

For example, when a marital residence is being kept by one party, there will likely be a provision granting the party a certain number of days to refinance the property and buy the other party out for their share of the equity. If the refinance does occur, a deed will probably be needed to place the title into only one party’s name if not already done. If the refinance does not occur in that time frame, the alternative is usually to put the house up for sale and split the proceeds. If the parties cannot agree about selling the house, selecting a realtor, setting a price, etc., either party may seek assistance from the court. This would involve a Petition for Contempt and Enforcement of the court order or agreement. Most well-drafted agreements will include a provision that the party defaulting on their obligations will be the party responsible for any additional legal costs incurred to enforce the agreement.

Click here to read more on life after divorce.

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