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Divorce Mediation Blog

Civility Guidelines for Family Lawyers

Wednesday, August 16, 2017

The Massachusetts Bar Association recently endorsed a set of “Civility Guidelines for Family Law Attorneys”. It is amazing to us that in 2017 this project should have been necessary, but we have no doubt of it; and the ten points are both simple and profound.

Moreover, these tenets don’t just apply to the courtroom. They are equally applicable to the arbitration or mediation room, the four-way meeting, attorney correspondence, and the ongoing processing of every case, including negotiation. In truncated form the ten commandments of civility are:

  • Dress appropriately.
  • Be on time and prepared.
  • Treat people with courtesy and respect.
  • Wait your turn – don’t interrupt or shout.
  • Be honest – in verbal and written word.
  • Follow the rules (about notice and service)
  • Respond timely.
  • Focus on the facts in issue.
  • Negotiate in good faith after full disclosure.
  • Do not use court in a revengeful manner.

Sometimes the truest things shouldn’t have to be said – be bear reminder nonetheless.

 

“Corporate Mortality” and Valuation

Wednesday, August 02, 2017

We have often puzzled over business valuation methodologies that assume a company’s perpetual life. We recently read for the first time about the expert questioning of this assumption within the context of a discounted cash flow analysis. Business immortality is unrealistic and maturing companies also tend to experience slowing growth.

It appears that the data is not yet clear on these phenomena, which may explain why the valuation community has not yet embraced this consciousness. But, pursuit and application of this knowledge seems material to not overstating business values, while reflecting reality more closely.

We look forward to reading further about positive developments on the important issue.

 

Treasury Department trumps Proposed IRC §2704 Regulations?

Friday, July 28, 2017

We have been following the saga of the Obama-era proposed regulations to tighten practices in valuing family-controlled businesses, which spent much of last year plus in public scrutiny and commentary. The proposed rules have been a lightning rod for valuation experts and family business representatives alike, since they would pretty much eradicate discounts, establish minimum valuations and increase federal tax receipts upon sales of these closely held-entities during lifetime, and upon death, for those fortunate few who qualify for estate tax liability.

Now, courtesy of presidential Executive Order 13789 (April 21, 2017), the United States Treasury Department has put the proposed §2704 in its crosshairs, in the name of de-regulating business. In its 60-day interim report, Treasury identified including §2704 among eight “Regulations identified for burden reduction”.

We can’t help but wonder how much the president, his cabinet, West Wing advisors – and all of their heirs -- stand to gain personally, by “unburdening” the American people in this way.

Think we’ll ever know?

 

Online Dispute Resolution: Ready or Not, Its Already Here

Wednesday, July 19, 2017

Recently, we attended the Massachusetts Bar Association’s inaugural Dispute Resolution Section symposium, and the annual AFCC meeting, each in Boston. Both programs featured extended discussions of mediation involving a “fourth party”, as in, the two parties, the mediator and technology.

We expected the focus to be running divorce mediations with an absent party or two, attending virtually by Skype or FaceTime, or even the good old-fashioned speaker phone. Most of us have done a bit of this and addressed the limitations imposed by the lack of eye-to-eye contact and the sense that the person on the screen or behind the phone is actually checking his email, or her text chain.

More profound was an AFCC speaker’s demonstration of a Dutch program wherein parties log on to a website that guides divorcing parties through a progression of multiple choice questions that range from the prosaic (biographical) to the attitudinal (“you image your child living…”) to the transactional (“you propose to…”). The notion is that mediation does not even have to be synchronous. As one speaker put it, in essence: “the client can sit in bed with a glass of cabernet and ponder a response…and we don’t often have a chance to mediate with cab.”

The upshot of the Dutch notion of online mediation for family law is that the mediator may just be reduced to the “chat” person you get when you go on a retailer’s website: “may we help you select a model?”. The Dutch model will even assign a mediator to “run” the process, taking our theoretical descriptor of “facilitative” to a new low, or new high, depending on your perspective.

We get how for many divorcing couples, whose issues are fairly rote and shaped by state-mandated formulas, much resolution can emerge from hi-tech questionnaires. But we, who spend our days doing the intensely personal work of educating, observing, empathizing, encouraging and reasoning with emotionally fraught parents and spouses, have a hard time seeing how the application of this kind of dispute resolution will translate to the population whom we generally serve.

Another AFCC speaker pointed out that we who pride ourselves on the personal attention we devote, are already engaged in Online Dispute Resolution when we email, text, spreadsheet and utilize cloud based services to communicate with and assist our clients. So, maybe we have the best of both worlds already.

 

The Goose, the Gander and the Alimony Reform Act

Wednesday, July 19, 2017

Five years and many appellate cases later, the Alimony Reform Act (eff. March 1, 2012) (“ARA”) now has some meat on its bones. The more we work with it, however, more scenarios emerge that we had not previously considered; and we wonder if the drafters did either. One aspect we have been pondering is how critical elements of the statute address the scenario where former spouses “trade places” after divorce. In other words, the parties’ earnings change inversely, sufficiently to make the initial alimony payor a putative payee.

In an era of predominantly two earner (former) households, changes of relative fortunes are not only possible, but they are, in fact, easy to imagine. Consider, for example, any pair of business people or professionals: their levels of success will vary over time, under any circumstances. With the ARA’s income comparison model - the presumed metric for general term alimony under M. G. L., ch. 208, §53(b) generally not exceeding 30-35% of the difference in the spouses’ respective earnings - the parties’ income capacities may not only fluctuate, but at some point, converge and intersect.

For example, at divorce, Leslie earns $90,000 per year while Morgan earns $60,000, it is predictable that Leslie would pay about $10,000 of alimony. (Hassey v. Hassey, 85 Mass. App. Ct. 518 (2014) would deem it “reasonable and legal”). Yet, some years later, Morgan could easily be earning $120,000 while Leslie treads water at $90,000. Thus, the alimony shoe shifts feet, the law then presuming that Morgan should pay the same $10,000.

Assume now that Morgan and Leslie were married for 15 years. Under M.G.L., ch, 208, §49(b)(3), the presumed duration of alimony is 10 1/2 years. Assume further that the parties traded places 5 years after divorce. In a modification action, would Morgan’s durational limit be the “remaining” 5 1/2 years? Or, would Morgan begin her own 10 ½ year run? If they switched fortunes again (always presuming that someone has “need”), would Leslie resume her 10 ½ track at the point of first modification, or the second?

Alternatively, suppose that Leslie has paid alimony for 9.5 years, only to find herself laid off, and no longer employable at a comparable level. Or, worse yet, disabled. Morgan continues to be both healthy and happily employed. Is the newly vulnerable Leslie now limited to a year and half of alimony despite her straightened circumstances? Is she left to the vagaries of the court’s discretionary extension of the initial durational limit under M.G.L., ch. 208, § 53(e)(9)? Or, conversely, will that spouse now be eligible for period of up to 10 1/2 years as an alimony recipient himself?

Now, imagine that the parties never traded places organically. Leslie paid alimony shy of the 10 ½ year duration limit because she attained full social security retirement age after 10 years only, under M.G.L., ch. 208, §49(f). In fact, she retired. Meanwhile, the younger Morgan continues to work. Since the court cannot impute income to Leslie despite her voluntary retirement, is Morgan now on the hook for alimony? And, then, for how long? Is the duration limit 6 months, or is it re-set to reflect Morgan’s new status as payor? And since §49(f) precludes attributing income beyond full social security retirement age as a “reason to extend alimony”, does that prohibition hold if the retiree is now a recipient rather than the alimony source?

While we’re at it, what of M.G.L., ch. 53, §53(9)(g), which regulates alimony orders that commence subsequent to, or simultaneous with, child support? Where the statute limits alimony to the combined duration of alimony or child support available at the time of divorce, does that apply to one party as a payor, or to both?

As we write, we are unaware of any appellate precedent or any pending cases that will provide the answers to these questions. But rest assured, that even if they do, there are plenty of other questions in the pipeline.

 

House Bill No. 3091: An Act to Expedite Care and Custody of Minor Children Modification Proceedings

Wednesday, July 05, 2017

Representative Markey of the 9th Bristol District has filed a bill to permit modification of a judgment on child care and custody matters only, without the need to file a new action. It contains provisions for a motion filing fee, preliminary hearing and discovery. The bill provides for evidentiary hearings, but only if requested by a party or set by the court as an exercise of discretion. Temporary orders may enter, mirroring the standards of M.G.L., ch. 208, §28.

We wonder why this bill and why now? It dispenses with the due process requirement of a modification complaint and encourages expedited proceedings, but is that a good idea? Current practice requires a new modification action, but it permits temporary orders and mandates a case management conference at which the court may enter expedient procedural orders that regulate discovery. So, what is new, really?

We presume that the drafters believe that child custody matters require a faster track than other matters involving child support and alimony. But the bill begs two questions: is this really an improvement; and it is good to make custody proceedings a little bit easier to pursue? The answers, in our view are “not really” and “not necessarily.”

There is no doubt that family law proceedings generally take too long and cost too much. But cherry-picking custody cases does not cure these manifest problems, and it may just encourage heedless litigation. Research shows that the most damaging part of post-divorce custody is parental failure to agree on a parenting plan, and continued fighting. Making custody modification even a little bit easier may just encourage more custody modification litigation, which, as a phenomenon, benefits only lawyers.

If permitting judgment modifications by motion, as some states do permit, on the theory that any custody or support matter is technically a continuing matter until terminus, then it should be part of a broader reform of all family law statutes. But, singling out custody matters strikes us as symbolic at best while encouraging litigious parenting.

 

“Judicial Restraint” an Interesting Bercume Redux in McClelland v. McClelland

Wednesday, June 21, 2017

Levine Dispute Resolution - Judicial Restraint

Two aspects of the a recent “unreported” decision of a Massachusetts Appels Court panel, are worthy of note, and provide important cautions to judges, family law arbitrators and drafters, alike.

  1. Judicial restraint. We don’t recall ever seeing this phrase about the divorce court’s exercise of broad discretion before. In McClelland v. McClelland, the parties provided in their separation agreement that the husband would pay 75% of the children’s secondary school expense. In a later modification action, they agreed that each parent would pay 1/3 of college costs.

    In a second modification, neither party sought review of either education term, focusing rather on periodic alimony and child support matters. The trial judge terminated alimony, increased child support (more below) and – on her own initiative - loaded the full college burden on the father.

    In reversing, the Appeals Court panel called this a “forceful case for judicial restraint”, cautioning judges against unravelling prior agreements reached by parties when no one is complaining about them.

    As divorce mediators, we certainly understand and support the concept that a court should not undo consensus where it exists (assuming no public policy problems). After all, client empowerment is our calling card.

    Yet, as a family law arbitrator and special master, and as a former judge, we also understand the trial judge’s temptation. After all, education costs are an adjunct to support; and one could easily see how a change in support as compelled by the evidence of changed circumstances, could render a previous college cost arrangement unfair or even untenable.

    It is tempting to think that a failure to address this reality will just beg a follow-on modification action to demand exactly what seems sensible to adjust, now.

    On balance, we think that the Appeals Court’s suggestion is sound. It is the judge’s job to decide pleaded controversies, not create them. If the new judgment does not make sense in the context of matters not pleaded, that does not make the court responsible for the collateral outcome, even if those matters that should have been pleaded. A good pre-trial conference, and with effective divorce mediation, should surface these issues, sometimes causing the parties to broaden their issue lens, and perhaps even amend pleadings. But once adjudication begins – as McClelland suggests - judicial restraint, in the form of fixing what is before the court, and not what should be there, is both prudent and proper.

  2. Parties’ Intent. The divorce agreement and judgment required the husband to pay 19% of his pre-tax income as alimony and 19% as child support. The judge in McClelland, terminated alimony but increased child support to 25% of the father’s gross pay.

    The Appeals Court supported the alimony ruling but vacated the child support, indicating that the judge’s writing did not evidence proper heed to the parties’ perceived intent that child support be limited, on its own merits, to 19%; and Bercume v. Bercume requires special care in trying to observe and make when possible defer to intent, even when the provision under review merged in the previous judgment.

    The Appeals Court remanded the case to the trial judge, simply ordering her to write additional findings in explanation of why respect for the parties’ apparent intent was overcome by other material changes of circumstance, necessitating a support change.

    Negotiators, divorce mediators and agreement drafters should take heed. Frequently, the parties strike support deals with the assumed comfort that a judge would have broad discretion to re-structure a support package to meet changed facts in the future; and that the initial structure, will not unduly hamper a modification judge, when the parties’ financial profile has substantially changed. This should not deter any one from careful and efficient support structuring, but as Huddleston and Bercume taught, the parties spell out their intent where they can.

    For example, a divorce agreement could say that: “The income percentages expressed in this provision meet the parties’ current needs, but the parties do not intend to limit or impair the court’s discretion to modify support in accordance with circumstances existing at the time of any future modification judgment.”

    The law of unintended consequences can hurt a lot, and at other times, it can be a gift. There is a time for strategic ambiguity, but only when it is itself intended. Careful drafting that spells out intent and does not leave it to later inference, or even speculation, from the bench, when someone’s ox will be gored.

    Just ask poor old Dr. Huddleston.

 

Just What is a “New Legal Consequence”?

Wednesday, June 07, 2017

Not a Shifting Alimony Presumption, under Van Ardsdale v. Van Ardsdale

Levine Dispute Resolution - Alimony

The crux of the Massachusetts Supreme Judicial Court’s (SJC) recent Van Ardsdale v. Van Ardsdale, is that the retroactive effect of durational limits under the Alimony Reform Act (eff. 3.1.12) (ARA) is constitutional because the imposition of these constraints is “merely” presumptive and, therefore, do not “attach new legal consequences to events completed before its enactment”.

We do not question precedent. While its comparison of a sex offender’s right to contest registration requirement for adjudications that occurred before the registry legislation, in Doe, Sex Offender Registry Bd. 3839 v. Sex Offender Registry Bd., to alimony recipients’ right to seek deviation from the “presumed” durational limits is cringe-worthy, we get the analysis. Because the sex offender and the alimony payee both have some chance of eluding the impact of new legislation, the former by an appeal to the Board, and the latter by an “interests of justice” court deviation from alimony termination, the individual’s jeopardy is not foregone; therefore, it does not rise to the level of a “new legal consequence”.

Presumptions, the SJC reasons, are “simply rules of evidence”.

But, sometimes good legal analysis defies reality, or at least practicality.

Before ARA, the burden of proving changed circumstances to justify the termination of alimony sat squarely on the shoulders of the payor. Retirement? Just one circumstance to consider. Income loss? Well, maybe, but just how did that happen, anyway. Cohabitation of the recipient? Forgettaboutit.

Now, the burden falls just as squarely the recipient, as the secondary holding Van Ardsdale, and the same day’s Popp v. Popp, demonstrate. It is a small sample to be sure, but the appellate scoreboard on reported cases for alimony payees seeking to extend alimony beyond “presumed” time limits is 0-2. In many cases, the answer will be the same for recipients as it used to be for obligors whose alimony check supported the household of not only the ex- spouse, but a new “friend” as well.

We are not at all criticizing that this burden shift has occurred. That is a policy question, and one properly reserved to the legislature. The old alimony system was, in many respects, out of control.

But, calling a major burden shift as a mere rule of evidence trivializes a very real and substantive change in our statutory law. And, it denies the everyday experience of litigants and their counsel, many of whom will not sue for alimony extensions, because presumptions are meant to be hard to overcome. And, expensive. And, risky.

 

Parenting Coordination Case with Implications for Family Law Arbitration: Leon v. Cormier

Wednesday, May 24, 2017

The Massachusetts Appeals Court recently upheld a Probate and Family Court contempt judgment where the defendant had not violated any specific order of the court, in the important case Leon v. Carpenter.

The parties had agreed at the time of divorce that they might someday appoint a parenting coordinator, with the power to make binding decisions on parenting matters, with the reservation that either party could seek court review of the PC’s decisions. Later, they hired a PC, who proceeded to issue decisions in a series of emails, from which the mother did not seek judicial review, and with which she did not comply. A trial judge sanctioned her with a contempt finding and associated remedies; whereupon, and the mother appealed.

She argued that there was no order made by a judge to disobey. The Appeals Court responded that the voluntary undertaking of the parties to comply with the potential PC’s future orders was itself enough to form the core of an unequivocal command, without reference to any specific possible order.

The mother complained that the court had impermissibly delegated its parens patraie role as final arbiter of all things custodial. The Appeals Court disagreed because the trial judge hadn’t imposed the PC on the parties and because some right of review was included in the underlying agreement.

The mother contended that the PC’s decisions had no force since the father had not sought their confirmation by the court, but the Appeals Court held her to her agreement’s words: the burden was on her to seek review; she didn’t; so she was stuck.

The Appeals Court “take” is consistent with many of its family law arbitration cases, including last summer’s Gravelin v. Gravelin, which reiterated the parties’ ability to opt out of the public system in favor of private family law arbitration generally, with the implication that some form of review may be required, but without clear articulation of it form, format or substance.

It is unfortunate that we still don’t have real clarity on the level of review implicated by the cases, but Leon does seem to support two important points:

  1. That arbitration of child matters does not require any heightened level of review, let alone any specific kind (though we still believe that there must be some inherent “best interests’ standard); and
  2. The parties can agree to be bound by an arbitrator’s decision that arises from an agreement that was made well before the onset of the controversy that is arbitrated.

Both points touch on highly sensitive matters for those who resist the spread of family law arbitration. It really is time for a statute to codify this important remedy in a way that reflects societal consensus on its acceptability, standards and boundaries.

 

A Cautionary Concurrence on Decanting: Ferri v. Powell-Ferri

Wednesday, May 10, 2017

In an unusual context, the Massachusetts Supreme Judicial Court recently answered questions put to it by the Connecticut Supreme Court about its view of whether the decanting of a divorce litigant’s trust assets to another trust, with spendthrift provisions, was permitted by Massachusetts law.

The SJC concluded that the trustee’s maneuver, which likely placed the trust assets outside the equitable division reach of the non-beneficiary’s divorcing wife, respected the probable intent of the settlor, making the asset transfer permissible, even though under the original trust’s terms, the beneficiary-husband had the unfettered right to withdraw 75% of the trust res at the time of decanting.

This seems a harsh result from the spouse’s perspective. We wonder how this situation really differs from the case of a self-settled revocable trust, the contents of which are uniformly treated as unfettered marital assets because the grantor can seize the trust assets at any time; therefore, for divorce purposes, the trust is a nullity. Mr. Ferri, too, could demand and receive 75% of the original trust corpus, too, so how is that different, at least regarding that portion? Yet, the Ferri ruling will presumably put those same assets out of reach for Ms. Powell-Ferri, and the divorce court.

Did the SJC elevate form over substance?

The SJC’s answer, at the bottom line, is “no”, because the beneficiary had not in fact, taken control of the trust principal, and the trust instrument established the settlor’s intent that, the trustee’s obligations of asset protection and control persist until distribution of the trust corpus, irrespective of the beneficiary’s prior withdrawal rights.

So, as the trust instrument compelled the trustee to shield the trust corpus from others, could decant (i.e., transfer the entire trust asset base to a new, more restrictive trust) to further the settlor’s wish.

Yet, Chief Justice Gants clearly recognized, the mischief that this decision might work in Massachusetts divorce world: encouraging divorce planning by spouses and fiduciaries, and resulting disruption to the commonwealth’s generally policies in favor of broad marital asset identification and against prejudgment manipulation.

Thus, in a rare concurrence, he (with Justices Lenk and Budd) “[wrote] separately” to emphasize what the SJC did not decide:

    … whether Massachusetts law will permit trustees in Massachusetts to create a new spendthrift trust where the sole purpose of the transfer is to remove the trust’s assets from the marital assets that might be distributed to the beneficiary’s spouse in a divorce action.

    Exactly what the Ferri trustee had done in Connecticut, now blessed by the SJC.

Justice Gants girded his caution on the Massachusetts Uniform Trust Code’s prohibition against trusts that violate public policy (M.G.L., ch. 203E, §404), and common law, suggesting strongly, while not explicitly stating, that decanting for the sole purpose of divorce planning just – might – well – be such a violation. While not cited by the him, procedural rules of the Probate and Family Court, common bench and bar understanding and perhaps an ethics-based view, all support Justice Gants’ caution.

In the end, what the Ferri family and trustee got away with in Connecticut, will likely not pass muster in future Massachusetts. The Ferri concurrence may be its most influential part: a bright, flashing yellow light, with a red light against trustee divorce planning likely to follow.

 



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