Views of Shared Physical Custody

Recent social science research has suggested that shared physical custody may be more viable than previously believed.  Traditionally, sole physical custody to one parent was believed to be in the best interest of the child.  Children were thought to be more attached to one parent and to benefit from the stability and continuity of sole physical custody.  Additionally, the conflict between the parents at the time of the divorce was believed to make shared custody unworkable.  Shared physical custody was thought to be viable only for the unusual family in which the parents still get along well at the time of the divorce and mutually agree to share custody.

But studies over the last ten years have suggested that shared physical custody may work better than previously believed.  Children seem to adapt fairly well to going back and forth between two homes. Most parents seem to be able to settle into a shared physical custody arrangement, even if they were in conflict at the time of the divorce.  Finally, shared custody kept both parents involved with the children.  The studies indicate that children usually benefit over the course of their lives from stronger relationships with both parents.

There are times when shared physical custody will not work.  A pattern of domestic violence points strongly against shared physical custody.  Unfitness of a parent, or a parent who has a high conflict personality, also points away from shared custody.

While each situation is unique and the studies found plenty of shared custody arrangements that failed, the research indicates that shared physical custody may work better for children than previously believed.

Drafting Settlement Agreements

A recent case illustrated the pitfalls for the unwary in drafting settlement agreements. The agreement provided that (a) husband would pay alimony until the wife remarried, and (b) after the wife remarried husband would continue to make payments until August 1, 2015, or until the wife’s children from a prior marriage finished school, whichever came first.   Wife remarried in October of 2008, triggering the switch to plan b.   Husband made payments until December of 2009, when wife died.  Husband stopped making paying, thinking that the death of the wife terminated the payments. The administrator of wife’s estate sued husband, claiming that his obligation continued until August 1, 2015, or until the children finished school.

Normally, both child support and alimony would automatically terminate upon the death of the wife, while a division of property would continue after death and could be enforced by the administrator of the estate.  Upon reviewing the parties’ agreement, the court decided that part b of husband’s payments were neither child support, alimony, nor property division. According to the court, they weren’t alimony because they were for the benefit of wife’s children.  They weren’t child support because the children weren’t the husband’s children. They weren’t property division because the payments were contingent upon the wife’s remarriage.   The court ruled that the payments were simply a contractual obligation and as such continued after the wife’s death.

There are several lessons here.  First, it is very easy to make a mistake in drafting a settlement agreement.  When this agreement was drafted it is likely that nobody thought about what would happen if wife died while the plan b payments were in effect.  While there is certainly nothing wrong with the husband’s obligation continuing after the wife’s death–it was going to help the wife’s children while they were in school, after all–the agreement needed to address clearly the effect of wife’s death on the payments.

Second, the drafting mistake here was failing to clearly identify what category the plan b payments fit into to.  Were they child support, alimony, or property division?  These different categories are treated differently, not only regarding the impact of the wife’s death, but also in the way they are taxed and enforced.  Clarity is essential.

Third, courts will have a tendency to enforce agreements to support children.  It is a long way from clear that the plan b payments were an uncategorized, “contractual obligation.”  The payments could have reasonably been seen as alimony to help the wife meet some of her expenses.  The fact that those expenses involved her support for her children does not necessarily mean that the payments are not alimony.

Assuming that the parties intended for the plan b payments to be alimony, the agreement could have explicitly said so: “The parties agree that the husband’s payments after the remarriage of the wife shall be alimony, taxable to the wife and deductible by the husband, and shall terminate upon the death of the wife.”  Of course, if the parties had intended for the payments to continue after the death of the wife, the agreement could have said so as well.

Divorce Mediation in Brunswick, Georgia

Some divorces are settled fairly easily.  The parties may sit down at the kitchen table and work out an agreement.  The lawyers may be able to resolve differences between the parties with correspondence and telephone conversations.  But if settlement discussions prove difficult, a mediator should be brought in to assist in negotiations.

A divorce mediator works primarily by bringing everybody to the table and asking questions.  A skilled mediator can use questions to focus everyone on settlement and explore possibilities they had not considered before.  Our experience has been that divorce mediation often helps settle cases, saving the parties a lot of money and aggravation.

Divorce mediation can be conducted at any stage in the proceedings, from early in settlement negotiations until just before the trial.  Divorce mediation can be useful in all areas of family law, including divorce, property division, child support, alimony, custody, and visitation.

Divorce mediation in Brunswick and St. Simons, Georgia, is done with one of the domestic mediators registered with the Brunswick Superior Court.  The following registered divorce mediators have had training both in mediation and family mediation:

James R. Coppage, 3176 Cypress Mill Road, Brunswick, GA 31525 (912) 265-1237.

Wallace E. Harrell, 777 Gloucester St, Ste 200, Brunswick, GA 31521 (912) 265-6700.

Larry Kimel, 200 Salt Air Drive, #130, St. Simons Island, GA 31522 (912) 506-4082.

Leslie Mattingly, 4315 Tenth St. EB, St. Simons Island, GA 31522 (912) 638-5430.

Mary Helen Moses, 228 Redfern Village, Suite 203, St. Simons Island, GA 31522 (912) 634-8595.

Rita Spalding, 1522 Richmond St., Brunswick, GA 31520 (912) 261-8686.

Brunswick CASA

Casa in Glynn County and Brunswick

Georgia CASA stands for Georgia Court Appointed Special Advocates.  They are trained volunteers who are appointed by Judge Roundtree of the Brunswick Juvenile Court. They are appointed to promote and protect the best interests of children who are the subject of proceedings in the Juvenile Court.  These children have been neglected or abused and often need placements with relatives or foster families.

A Brunswick CASA volunteer must be 21 years of age, willing to undergo 40 hours of training, and able to commit to the program for at least one year.  Once appointed for a child by the Brunswick Juvenile Court a CASA stays involved until the child is permanently placed.  While working for a child, a CASA: (a) meets with the child regularly; (b) makes an assessment of the needs of the child; (c) performs their own review of the facts of the case; (d) locates potential family and community resources for the child; and (e) prepares a written report for submission to the court.

Glynn County Casa volunteers enable the Brunswick Juvenile Court to make better decisions about children.  If interested, you can contact them at: 1615 Reynolds Street, Brunswick, CA 31520, (912) 264-4448, www.casaglynn.com.

Child Support Deviation for Shared Custody

It comes as a surprise to many the child support does not automatically change when custody moves from sole to shared.  With sole physical custody, the child lives with one parent and visits with the other parent, typically on alternating weekends and holidays.  With shared physical custody the child lives about half the time with one parent and half the time with the other. Yet the parent with the larger income can wind up paying the same amount of child support as if the child was living with the other parent full time.

Under Georgia child support law, full child support is presumed correct, even with shared physical custody.   The parent seeking a child support deviation from the presumptively correct amount must convince the judge to exercise his or her discretion.  The judge can only grant any request for deviation if the party seeking the deviation proves:

1.  The presumptive amount of child support would be unjust or inappropriate; and

2.  The best interest of the child will be served by the deviation.

So how is this proven?  Let’s say Mom and Dad share equal time with the child and Dad’s income is $75,000 per month and Mom’s income is $25,000.  For simplicity, let’s also say that it costs $500 to feed the child for a month. Some of Dad’s child support is a contribution toward Mom’s cost of feeding the child.  But now that the child spends half of her time with Dad, Mom’s cost for food is reduced to $250 and Dad is now paying $250 directly for food.  Mom’s cost for supporting the child is being reduced, while Dad’s cost has increased.

Dad’s argument for a downward deviation should be made in detail from the actual expenses for all such costs for the child.  Dad should show that it is appropriate and in the best interest of the child for him to keep some of the child support money so he can pay the expenses while the child is with him.  Essentially, he argues that he is now supporting the child directly at some extend by buying food rather than indirectly by paying Mom child support so that she can buy food.

If we are representing Mom, we argue as follows:

1.  Many of Mom’s major expenses, such as her lease or mortgage, her car loan, etc., do not change at all.

2.  With her much lower income, Mom is barely scraping by as it is.  She can’t pay her bills if child support is reduced.

3.  If child support is reduced, Mom’s ability to provide for the child while the child is with her will suffer.

4.  Dad’s income is three times Mom’s income.  He is able to pay the presumptively correct amount of child support and still provide for the child while the child is with him.

Again, all of the claims would be supported by the actual costs and income of the parties.

So who wins the argument?  It’s up to the judge.  But the judge is much more likely to rule in your favor if you put forward a detailed argument based on the specific income and expenses of the parties. A Brunswick family law specialist can help you prepare and present a strong argument.

Finally, in order to make any of these arguments you must prepare an accurate financial statement based on calculations from actual expenses.  All too often parties submit dubious financial statements based only an estimates and guesses. It is hard to convince a judge with numbers that the judge does not believe.

 

 

Taxation of Retirement Account Division

Divorce involves the division of the parties’ retirement accounts.  Since distributions of retirement accounts are taxable, and premature distributions are penalized, we need to keep a close eye on the tax treatment of any distributions we make to avoid unpleasant surprises at tax time.  Two situations typically arise in divorce: (a) a distribution from a retirement account to pay expenses; and (b) a division of a retirement asset as part of the division of marital property.

Let’s say Husband has an individual retirement account.  During a divorce Husband may need money to pay expenses, such as attorney’s fees.  He can take a withdrawal from his IRA anytime he wants.  But such a withdrawal is both taxed as income and, if Husband has not yet reached the age of retirement, penalized with an additional 10% tax.  The administrator of the IRA will automatically withhold 20% of the distribution as a prepayment toward the tax.  If Husband wants to receive $20,000 he will need to take out $25,000 because the administrator with automatically deduct $5,000 (20%).  Depending on the Husband’s income tax bracket, when he files his taxes he may have to pay more, or he may get money back.

If instead of paying expenses Husband needs to transfer a share of the IRA to Wife, either as part of a settlement agreement or as part of a court order, then Husband provides the plan administrator with the necessary paperwork and the  IRA administrator sends a check.  The Husband pays no taxes or penalties as a result of this transfer, but Wife may:

1.  If the check is sent directly to Wife, then it is taxable income to Wife. Wife does not have to pay the 10% penalty. The plan administrator will withhold 20% as prepayment of wife’s taxes. If Wife promptly deposits the check in her own IRA she does not have to pay the tax and will get the 20% back when she files her taxes.

2.  If the check is sent directly to the administrator of Wife’s IRA there is no tax and no withholding.

Obviously, we want to avoid paying the taxes and the penalties, but sometimes Husband or Wife may need the cash in hand.

Retirement account division is complex and tricky.  Each type of retirement asset, pension, IRA, 401(k), etc., has its own rules and procedures.  An experienced divorce lawyer can guide you through the maze of property division.

Divorce Business Valuation

Divorce business valuation requires an expert, typically an accountant who has been specially trained and certified in business valuation.  While working on a settlement agreement or preparing for a divorce trial, a divorce lawyer would retain and work with a valuation expert to estimate the value of the business.

There are three different methods that may be used to value business assets in a divorce. The methods are not mutually exclusive, and the expert hired by the family law lawyer valuing the property may use all three methods to find a reliable amount for the business. The three approaches are:

The Market Approach works well when similar businesses are bought and sold on a regular basis.  Then the business can be valued in much the same way that real estate is valued: by looking at recent sales of similar properties and then making adjustments for differences.

The Income Approach multiplies the income the owner receives from the business to calculate an initial estimate of value.  This is similar to the price earnings ratio of a publicity traded company. Adjustments to the estimate are then made based on the particular features of the business.

The Asset Approach is rarely used.  It looks at the assets owned by the business to estimate a value.  These can be both tangible and intangible assets. Some tangible assets include:

Intangible assets that a business may own include:

This method is rarely used because most business are valuable because of the income stream they produce, rather than the assets they own.

Divorce business valuation is an art rather than a science.  Often in divorce both the husband’s lawyer and the wife’s lawyer will each hire their own valuation expert.  The resulting valuations will often differ by a factor of five and can differ by a factor of ten.  An expensive courtroom battle of experts  may then result.  In such a situation, settlement can become impossible.

While we are experienced in such battles, most people involved in a divorce would rather settle their issues without undue expense.  One solution is for the parties to jointly hire one valuation expert that everyone has confidence in.  A single valuation for the business facilitates settlement negotiations.  Even if settlement negotiations still fail, a single value for the business streamlines the divorce trial as well.

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