A Taxing Issue During a Divorce

Divorcing parties need to remember to change the number of allowances they claim for Federal and State income tax withholding during the divorce process.  Failure to do so could result in significant, and unplanned, tax liability.

For example, many people file joint income tax returns with their spouse and claim their children as dependents.  However, once divorced, or even during the divorce process, the parties may decide to file individual tax returns, even before the divorce becomes finalized.  Doing so usually results in increased tax liability.  There may also be disputes as to who claims the children on their tax return as dependents.

To mitigate against a change in tax liability based on your filing status, a party going through a divorce should consider adjusting the number of allowances he or she claims on IRS Form W-4.  Although this may result in lower net pay each pay period, it will offset the potential increased tax liability at year end.

You should contact your lawyer or accountant to see if this issue affects you.

For a free initial divorce consultation, call our offices at 301-444-4660 today. 

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Fighting Over Shoes

An ex-husband has sued his professional poker playing wife claiming that she failed to disclose to him the value of her $1,000,000 shoe collection during their divorce proceedings.  The ex-husband claims that he would have sought hundreds of thousands of dollars more from his ex-wife had he known the value of her shoes, which he claims she hid from him. 

This case highlights the importance of creating an inventory and valuing personal property in divorce cases.  In most cases, division of personal property is not given much thought and each party may walk away from the marriage with their own items of personal property without any discussion or negotiation, but, in some cases, this may lead to an inequitable division of property, especially where one party acquires expensive items of value during the marriage, including sports equipment (an avid bicycle rider can spend up to $10,000 on a bike), collectibles, jewelry, furniture, and, now, of course, shoes. 

If you believe your spouse has spent substantial sums on items of personal property during the marriage, make sure you advise your lawyer so that he or she can review and make a determination on the issue. 

PETS AND DIVORCE: OFTEN A DOG-GONE TOUGH ISSUE

NBC's The Today Show ran a story yesterday about a New Yorker who paid over $60,000.00 in legal fees fighting with his ex-girlfriend over their dog.  Apparently, the ex-girlfriend took the dog to California and the boyfriend wanted it back.

This story reminds me of a case I had in Montgomery County where the only unresolved issue between the parties was a dog, an English Bulldog to be exact.  Both parties wanted the dog, no one was willing to compromise (despite at least one blank check offer) and so we appeared ready for trial, with only one issue to be litigated:  who got the dog.

Before our case was called, opposing counsel and I went to meet with then Family Law Master (now Judge) Steven Salant to discuss with him the issues to be heard at trial.  Frankly, we were both a little embarrassed to tell him that the only issue we were presenting at trial was who would get the dog.  We did not anticipate that Judge Salant was a "dog person" and, under Maryland law, pets are simply property. 

After we explained the issue, Judge Salant leaned back in his chair to think about what we told him.  Then he told us, as we suspected, that he was not a dog person but that he had friends who loved their dogs dearly and would do anything for them.  He then instructed us to tell our clients that he was going to treat the dog like it was a child and he was going to order that the parties share joint custody of the dog.  He told us to have our clients work out a "custody" agreement between themselves and we would put the agreement on the record.

And that is exactly what we did.  The parties agreed to a week on/week off schedule, we stipulated who could pick-up and drop-off the dog, when and where the pick-ups would occur, and we made a provision for the payment of vet bills.  The agreement worked, both parties were satisfied and I think the dog was happy too.

Unlike the New York case, this deal was achievable because both parties stayed in the same geographic area.  And, neither side paid $60,000 in legal fees.

Sometimes if you think outside the Box(er), you can come up with a good and equitable result.

Woof.

Trends in Family Law: Bad Faith Tactics to Delay the Sale of the Marital Home

A recent trend I have been seeing in family law cases is where one party is purposefully delaying the sale of the former marital home to the detriment of the other. I am involved in several cases currently where this is occurring.

Oftentimes, in a settlement agreement, the parties will agree that one party will stay in the marital home and will have the option to refinance the mortgage or buy out the other party's interest in the home within a set period of time. These agreements typically provide that if the party who remains in the house does not refinance the mortgage and/or buy-out the other party within a set period of time, the house will then be sold with the net proceeds divided in some manner between the parties.

I am currently involved in several cases where the party who has remained in the house has not refinanced the mortgage or bought out their ex-spouse, and then has failed to take the steps necessary to sell the house in a timely manner as contemplated by the party's separation agreement.

Tactics to delay the sale of the house include prolonging disputes over which agent will list the house, only agreeing to list the house at a price significantly above its fair market value, refusing to market the house, keeping the house dirty and cluttered during open houses and prospective buyer showings and removing items that typically convey with the property.

Although the Court has the authority to appoint a trustee to sell a house when a dispute over its sale arises, it can take months to get a court hearing to have the trustee appointed, and trustee (and lawyer) fees can be substantial.

With house delaying tactics trending in this area, it is important for parties who enter into a separation agreement to include detailed provisions regarding how and by whom the house will be sold in their agreements. Separation agreements should include, among other things, provisions on who will sell the house, at what price the house will be sold, how the house will be marketed, what steps will be taken if the house does not sell within a set period of time, what conveys with the house and the responsibilities of each party. Parties may have reasonable disagreements regarding the sale of their home, but steps should be taken to minimize these disagreements before they arise.

Addressing these issues in the separation agreement will avoid problems down the road and help ensure that no one has any wiggle room to act in bad faith or hinder the sale of real estate.

For help with your divorce, or the preparation of a separation agreement, call my office today for a free initial consultation. 301-444-4660.

PENDING HOUSE BILL WOULD EXTEND CHILD SUPPORT THROUGH COLLEGE

On February 10, 2012, House Bill 986 was introduced in Annapolis. If passed into law, this bill would significantly change current Maryland law regarding child support. Under existing law, child support is generally paid until a minor child turns 18 or graduates from high school, whichever is later (but does not run past the age of 19). Maryland parents currently have no legal obliigation to pay for their children's college or post-secondary education.

Under HB986, if a child is in college, child support would continue until the (now adult) child turned 21. This would have the effect of continuing child support for an additional three years for children enrolled in college or a vocationsal school. This is a big change for all parties involved.

Furthermore, the bill would apply to existing child support orders. So, for example, if a parent is paying child support under an existing support order, that parent might have to pay child support until the child turns 21, even though when the support order was first entered, support was to only be paid until the child graduated from high school.

Note that as the bill is written these extended support payments would continue to go to the recipient spouse, not the adult child.

For or againt the bill? Contact your representatives in Annapolis and let them know where you stand.

Changes in Custody and Teenage Children

Many divorced parents want to know at what age their children can make decisions regarding the custody arrangement they are subject to. By Maryland statute, a 16 year old can file a petition with the Court in their own name seeking a change in custody.

Maryland Family Law Article 9-103 provides:

§ 9-103. Petition by child to change custody (a) Petition by child. -- A child who is 16 years old or older and who is subject to a custody order or decree may file a petition to change custody.

(b) Guardian or next friend not required. -- A petitioner under this section may file the proceeding in the petitioner's own name and need not proceed by guardian or next friend.

(c) Hearing required; amendment of custody order or decree. -- Notwithstanding any other provision of this article, if a petitioner under this section petitions a court to amend a custody order or decree, the court: (1) shall hold a hearing; and (2) may amend the order or decree and place the child in the custody of the parent designated by the child.

Getting a Divorce Gets Easier In Maryland

On October 1, 2011, getting a divorce will get easier for many Maryland residents. On that date, a new law goes into effect allowing people to get divorced if they have been living separate and apart for more than 12 months. Under prior law, you could get divorced in Maryland if you had been separated from your spouse for 12 months, but you had to prove that the separation was "mutual and voluntary" on the part of both parties. A spouse who wanted to delay the divorce could assert that the separation was not mutual and voluntary and could drag out the divorce for an additional 12 months. That is no longer the case under the new law.