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Divorce Mediation Blog

Rule 2704 Opposition - Talking Points

Wednesday, November 23, 2016

Recently, we blogged about the Internal Revenue Service proposed new section 2704 rules, which if enacted in their current form would create a new minimum value for businesses subject to intra-family transactions, and essentially eliminate discounts for marketability in that context.

Many in the business appraisal and estate planning communities are up in arms, and they mobilizing to defeat this IRS move, before it becomes entrenched.

While keeping an eye on unfolding commentary, we ran across “talking points” suggested by the American Society of Appraisers for use in opposing the new regulations. In summary they are:

  1. By increasing the value of fractional interests in family businesses, the new rules would result in an "stealth" tax increase of 25-50% in estate and gift taxes.
  2. By treating intra-family actors as "known parties", rather than hypothetical buyers and sellers, the rule would disregard the reality that a fractional interest is in fact, fractional, and not controlling, reducing its economic value.
  3. The notion that families will always work in concert has been rejected previously by the United States Supreme Court.
  4. The suggestion that intra-family transfers should be treated differently than those between unrelated parties is unsupported by any public reasoning advanced by the IRS.
  5. The proposed rule may put IRS regulations on a collision course with various state laws which recognize applicability of marketability discounts.
  6. This new approach will cause family-owned businesses to delay capital investment, and inhibit new hiring, as they preserve cash for pain increased taxes.

As divorce mediators and arbitrators, a former Probate judge, and litigators-in-recovery, we are used to this approach from Bernier, in the divorce context, but in estate and gift taxation?

What do you think?

 

Random Thoughts While Not Blogging

Monday, January 27, 2014

While on an extended holiday break from blogging, the world most definitely did not stop, with mediators and arbitrators staying in the news.

In New York, an arbitrator decided that Alex Rodriguez was guilty as sin, but 49 games less guilty than originally decreed by the baseball commissioner. Arbitration and arbitrary share six letters but they are not supposed to synonymous. Wonder if he felt pressure not to relieve the Yankees of too much salary burden...

In Jerusalem, surrogates for Prime Minister Benjamin Netanyahu pulled the mediation move of the year. Faced with apparent pressure from Secretary of State John Kerry, the Israeli side moved to “expand the pie” by making the mediator pay! Somehow, it seems, that if only the United States would kick in clemency for Jonathan Pollard, peace with Palestinians would be at hand. Guess that’s what happens when the “mediator” has skin in the game…

In Geneva, mediators struggle to get the antagonists in Syria to look at each other….

Meanwhile, in New Jersey, Governor Chris Christie’s invoked the dreary “mistakes were made”, after his staff shut the GW Bridge as political payback, or more aptly, after they were caught at it. Any idea what those mistakes were and who made them? Almost as meaningless as “I take full responsibility”…

Speaking of poor apologies, in Washington, President Barack Obama actually said that “No one is more upset than me” about the tragi-comic ACA website rollout. Nothing like telling an angry public that, really, you are more a victim than they. It makes us nostalgic for “I feel your pain”. And the grammar…

No bit of random reflection is complete without some reference to NSA metadata. Can you imagine the next U.S. Senate battle over a Supreme Court nominee when the Judiciary Committee has access to all of his or her email, texts, cell phone chatter and url history? Or the 2016 presidential race…

While waiting for that rush of new alimony cases from the Massachusetts appellate courts, one last, belated Happy New Year to you!

 

“Trivial” Disclosures…Where’s the Balance?

Wednesday, November 06, 2013

We received an update this week from a LinkedIn discussion group that highlights a recent California Second Appellate District Court decision to vacate an arbitral award in a legal malpractice case. The defendants discovered, after the fact and after an adverse award, of course, that the arbitrator, a retired Los Angeles Circuit Court judge, who had disclosed his professional work with the defendant law firm, but had not stated that a partner of that firm was listed as a reference on an online resume, many years before (the synopsis called it a “decade old”). The commentator concluded “…the trend seems to be toward disclosure of all matters, however trivial, as well as the imposition of a duty of due diligence in identifying matters to disclose.”

We are challenged by this issue every day as family and divorce mediators and arbitrators. People come to us almost exclusively because they either know us, or know of us by reputation, (shhh, don’t tell our website/SEO experts, who like to feel otherwise) so the potential for disclosures, trivial and otherwise abounds. It is a sensitive matter in mediations, an uber-sensitive in arbitrations. We are surprised how few questions people ask about conflicts and potential conflicts; and we do our best to disclose anything at all that could possibly impact our objectivity – or just as importantly – the appearance of it. But, who’s perfect?

In a long career and with all kinds of significant and passing electronic contacts abounding, among cases, bar programs, educational activities and previous private dispute resolution engagements, the potential for “relationships” of all kinds is too great to quantify. Surely, we are the ones holding ourselves out as available competent and ethical service providers. We do and need to take our disclosures entirely seriously. And, people sometimes think us silly for the disclosures that we do make.

But, shouldn’t this responsibility be shared to some reasonable degree? The internet is equally available to consumers of our services, as it is to us. Anyone, anytime, can Google us, inquire about search results, or simply walk away. But to await an unhappy result, then suddenly discover the web, and complain, seems like a good idea run amok: appeal by ambush, perhaps. Didn’t the plaintiffs in the California case have some due diligence obligations themselves – before the fact?

We will work every day to get this right. But, how about some balance?

 

Justice Delayed…

Wednesday, October 30, 2013

In the October 20, 2013 edition of the Boston Globe, Bella English wrote about alimony in Massachusetts, which she described as a model for the country that is being subverted, in her view, by judges who are slow to honor some of the limiting aspects of the Alimony Reform Act (eff. 3.1.12). She focused on a couple of hard cases: one where a judge attributed income to a payor who claimed to have no ability to pay; and another where a judge ordered to a payor to pay past his social security full retirement age.

We read the piece with interest as it dealt with scenarios that we deal daily as Boston area and Western Massachusetts family and divorce mediators and arbitrators. But, as sometimes happens, we were struck in the end, not so much by the main theme of the article, as by by subsidiary detail in the last paragraph; namely that the man's divorce case was heard for one day in January and next heard, for day 2 of trial, in October.

An axiom of criminal law is "justice delayed is justice denied". Well, it is not a constitutional matter for divorcing parties, but it sure is a substantive one. How can a judge possibly remember anything about a single day of trial, ten months later, with literally hundreds of intervening cases heard? How many facts and circumstances have shifted in nearly a year of family life during a truncated trial? For someone who is over-paying, or for another who is not receiving enough, how can a two-day trial over ten months ever serve their needs?

The court system struggles, in some respects heroically, in others with futility, with short resources, longer and increasing demands and a shrinking social safety net. But how can the public feel confident that it is being served, regardless of any substantive law reform, when cases cannot be effectively tried?

 

Divorce Arbitration: Three Reasons Why It is Not Just for the Wealthy

Wednesday, March 13, 2013

Divorce Arbitration, or the presentation of family law disputes to an agreed impartial third party, for decision outside of court, is not a remedy that is either intended for or beneficial only to the wealthy. In fact, it may be of greater use to the “99 percent” because of its ability to be tailored by cost-sensitivity. Here are three examples:

  1. The costs of delays in court and court proceedings hit lower economic clients harder as a proportion of their resources than wealthier people, as for example, non-progressive taxes do (think cigarette, gasoline and MA state income taxes).
  2. The ability to define procedural rules by contract permits lower economic clients to have a trial that they
    1. time limit overall (i.e., “no more than 3 hours for hearing”;
    2. limit time of direct or cross examination of witnesses (i.e., direct examination of 1 hour with, or cross-examination limited to ½ hour);
    3. use written direct testimony (already in use in the federal courts);
    4. relax rules regarding hearsay and other forms of objections;
    5. eliminate written findings of fact and/or limit scope of the arbitator’s written rationale; or
    6. create a mutual trial “budget” (ie, agree that the marital estate will pay no more than $2,500 for the arbitration hearing and to accomplish that...).
  3. As arbitration becomes more prevalent, there will inevitably be more arbitrators who cater to different segments of the market by use of lower or higher hourly rates, or even lump sum fee arrangements.

 

ALIMONY, PALIMONY AND (NOW) PREGLIMONY The past, present and future of support obligations in Family Law

Thursday, November 01, 2012

By Madeline Marzano-Lesnevich.

Former spouses may receive alimony; former partners may receive palimony; children indirectly receive child support; and now unborn children and their mothers may be able to receive preglimony. “Preglimony?” you ask. Is this even a word, perhaps a spoonerism or mash-up of some kind? If you Google it, the search engine will auto-complete the suffix of the word for you if you make it to p-r-e-g-l, so someone must have searched for it before you did.

Preglimony is the term that is being given to the prospect of support being paid to mothers for the costs associated with the unborn children they are presently carrying. As a comparison, these are the type of expenses that are normally paid voluntarily by adoptive parents, and often paid to a woman in cases of surrogacy by couples or individuals who are unable to have children. The unsettled issue of preglimony pertains only to children born to unmarried couples because when a child is born during a marriage, the husband is presumed to be the biological father of the child unless and until a paternity test demonstrates otherwise. The husband’s financial obligations to the mother (i.e., his wife) and to the unborn child commence automatically based upon the fact of the marriage itself. In contrast, an unmarried mother does not yet have an automatic right to seek contribution for prenatal costs from the putative father.

Furthermore, medical insurance coverage generally cannot extend to another person unless he or she is related by blood, or through marriage or some other legally recognized form of partnership, or unless the obligation is ordered by a court. Therein lies a potential benefit for a newborn child, but whether an unborn child can similarly benefit remains to be debated and resolved.

Through the further development of technology, a paternity test no longer requires a child to be born to confirm the father of the child. A prenatal blood test now allows a woman’s blood to be drawn during the pendency of her pregnancy to genetically link the father to the child. As a result, there is a growing dialogue that suggests fathers should contribute to the cost of the expenses incurred before birth once confirmed to be the father of the unborn child. At present a father’s obligation to contribute to the support of a child only begins at birth in most non-dissolution matters. This raises complex issues that are not yet being addressed by the New Jersey courts.

I anticipate that there will be much debate about which prenatal costs are necessary and reasonably incurred by a mother, when and if she seeks financial contribution from the father, and whether he was appropriately consulted before they were incurred. These prenatal costs would ostensibly include gynecological visits, Lamaze classes, ultrasound expenses and blood tests. However, the question remains whether this would also require the mother to limit her prenatal expenses to those covered by insurance, or for a judge to determine whether a C-section or natural birth was more cost-effective. Further, preglimony may function as a catalyst to the premature termination of relationships due to the pecuniary interests that may become viable, which were not previously made available by the courts. While these types of disputes are likely to occur if in fact preglimony becomes a viable and codified claim in New Jersey, there is a more far-reaching constitutional issue that may also arise from this nebulous financial obligation.

If a father has an obligation to contribute to the cost of prenatal care, he would likely also be obligated to contribute to the cost of an abortion if the mother chooses that option. In turn, this raises the novel consideration that if a father has an obligation to contribute to the cost of the abortion, he may also have a say in its implementation. While the holding of Roe v. Wade may have confirmed a woman’s right to privacy under the due process clause of the 14th Amendment, it did not contemplate that that the pro-life and pro-choice camps could be further fractured into determining when joint legal custody rights really begin. Given that many parents already have a difficult time co-parenting their children with allegations of parental alienation and child abduction unfortunately becoming far too common place, it goes without saying that litigation surrounding abortion, if it ceased to be an individual’s right, would be inevitable. Either way, the legislature will have to determine whether a woman’s constitutional right to choose could be jeopardized by compelling a father’s contribution to her prenatal medical expenses. Further, they will need to consider how the suppression of that right is being quantified and if that potential burden would be outweighed by the benefit of this additional financial obligation.

It will further raise the issue in determining the parties’ respective percentage obligations to contribute to these prenatal costs. In turn, fathers will likely want to know when mothers choose to begin their maternity leave, and whether there should be income imputed to them to offset a potential lack of income. Further, it may incentivize a father’s contribution to these costs in order to ensure that the child’s surname contains his own, at least before or after a hyphen. This will likely increase litigation as complaints for custody and support will be filed approximately six to eight months earlier than they are now. Normally, claims for child support can only be sought retroactive from when the original application is filed, and normally require there to be written notice given to the father.  It will be interesting to see how stringently these two requirements will be applied to the issue of preglimony in the context of unplanned pregnancies.

Moreover, the legal battles that could and would likely arise from the advent of preglimony are numerous. For example, could a father have a say in when and if a pregnant mother could fly and under which circumstances this would be in the best interest of the unborn child? Could a father seek reimbursement for prenatal costs he has paid if a miscarriage occurs due to the fault of a mother involved in a risky behavior? Further, fathers could be permitted to inquire about and potentially limit an expecting mother’s diet and activity in invasive ways never before deemed permissible by the court system. The intricacies of this form of support could further polarize the already too frequent denizens of the Family Part courtrooms of New Jersey.

It has been suggested in other articles that the prospect of these costs would somehow function as a deterrent to unprotected sex. If the prospect of contributing to the cost of unreimbursed medical expenses, extracurricular activities and college expenses on top of periodic child support is an insufficient financial deterrent, I would suggest that the additional trimester or two of support would not make much of a difference in increasing the likelihood of partners practicing safe sex.

The issue of preglimony gives rise to the potential for far reaching and multifaceted consequences in the ever evolving world of family law in New Jersey. On one hand, some individuals may argue that preglimony will overcomplicate and inflame the already litigious nature of our society, and that its limited financial value to a mother will be outweighed by her resultant loss of privacy. On the other hand, some may argue that the financial burden of a pregnancy should not be the mother’s sole responsibility, and that whether a woman is married or unmarried should not alter a father’s financial obligation to his child. It remains to be seen whether the legislature shall give credence to the claim of preglimony, the way that it presently does with alimony and child support. Either way the issue shall further inform the ongoing dialogue about reproductive equality in this country.

Originally printed in the New Jersey Law Journal, Vol. 209, No. 12, on September 17, 2012

 

Putting the Alternative into Dispute Resolution

Wednesday, May 30, 2012

By William M. Levine and E. Chouteau Levine Putting the Alternative into Dispute Resolution

When lawyers think about how to resolve disputes, they usually first consider traditional modes such as lawyer-to-lawyer negotiation or litigation. Other processes — such as mediation, collaborative law or even arbitration — often are considered marginal “alternatives.”

Together, the traditional and alternative approaches comprise what Cleveland family law attorney James H. Cahn calls the dispute resolution “food court.” Cahn’s analogy aptly conjures an image of an easily accessed array of process options. But it also conveys a secondary principle worth considering: that, as with food court offerings, legal consumers can mix and match dispute resolution methods fluidly to address changing needs.

Parties have the ability to take control of their legal process, to change course if necessary, and to utilize a variety of approaches when appropriate and beneficial.

We all know the many advantages and limitations of dispute resolution options. We also are used to considering some or all of them with our clients.

One suspects, though, that many of those discussions are perfunctory. Yet we still too often see each alternative course as linear, in isolation, and not as complementary parts of what can be an eclectic process.

As a result, we risk missing the opportunity for a more efficient and client-friendly experience.

Take the example of traditional negotiation, in which a divorcing couple cannot agree on interim arrangements for the payment of bills, the use of assets or the sharing of parenting responsibilities. Lawyers need to attend to those matters, if only to “put out the fire” before addressing the larger, long-term issues of the case.

Sometimes, the firefighter’s water turns out to be gasoline, in the form of inflammatory letters, motions and affidavits. Goodwill is undermined, and the clients and their lawyers can get burned in the process.

Retainers are consumed before their time, but the damage is by no means financial only. Clients may become disillusioned with their newly formed attorney relationships that did not yield immediate, positive and cost-effective results. Sometimes the result is an expensive stalemate.

When early impasse does occur, the case-in-chief is at least delayed, while the parties posture about going to court and preparing motions. Then, they wait (sometimes for a long period) for counsel and court availability.

When the appointed date arrives, the parties and counsel often spend a long day in court for a contrastingly short argument. The parties then wait again, this time for temporary orders from a judge who does the best he can with minimal, overheated and frequently distorted exposure to the important “facts” in play. Usually, the decision is reasoned; sometimes it is not.

What divorce lawyer has not experienced the exhaustion, runaway costs and client-lawyer alienation of such early infighting and spiraling of an out-of-control case?

Think about a different kind of case, one in which the parties are not plagued by preliminary feuding. They are equipped to handle interest-based negotiation without mutual destruction, but they just cannot get past significant property valuation issues.

Unlike temporary support or custody matters, these litigants cannot even go to court to resolve these necessary questions that may alone stand as obstacles to a rational distributive negotiation.

Rather, the parties and counsel must complete discovery, prepare for and attend a pre-trial conference, await trial and finally try valuation.

Many thousands of dollars (the range is obviously great), and many months or even years later, a judge will finally (well, subject to appeal) settle the controverted value, but at the cost of time, money and the loss of autonomy in making both the valuation and the distributive decisions.

Enter single-issue mediation or “bullet”arbitration. Just as lawyers think of traditional representation and litigation in a linear fashion, so, too, do they tend to think of mediation or arbitration as a single means to the end of comprehensive resolution. Yet these alternatives can and do work in tandem with other processes.

Referring interim support, custody matters or a valuation question out to a brief and focused mediation can reduce the wear on the relationship among lawyers and clients at the early stages of divorce, allowing for interim resolutions at arm’s length.

For a more assured and prompt result, arbitration will put interim issues to rest and make resolution of the later, larger issue by other means less bruising for all concerned. And costs are mitigated in the process.

Mediators themselves should take note as well. Consider the same scenarios as above, but in the context of an agreed mediation process. As hard as the mediator may try, he sometimes simply cannot get the parties on track to focus on substantial, longer-term matters because of the acute focus that an early crisis provokes.

That can doom a mediation that might otherwise empower the parties to control and shape their own outcome.

Is there an alternative to abandoning the mediation, or letting it become bogged down in stalemate?

Rather than have the mediator spend all his goodwill on seemingly intractable preliminary matters, why not engage an arbitrator who will settle those early issues quickly, impartially and economically?

The parties may then return to focus on the larger issues in a renewed mediation that is less tainted by the previous impasse over which the mediator, and the parties, seemed to be powerless.

Similarly, in collaborative law, the parties may not focus on court outcomes, but the process may also never gain traction because of seemingly intractable preliminary disputes.

A mediator’s intervention or a quick and efficient arbitrator’s award may keep people out of court for good, as the collaborative practitioners keep themselves and their clients focused on the big picture.

We are not advocating for or against any one way of resolving disputes, traditional or alternative.

Rather, we suggest that counsel think about process in a more elastic way and consider interventions, perhaps cut outs, that may make the chosen primary process more efficient and less damaging for all.

The alternative in dispute resolution should not be lost to a rote adherence to one process alone when dynamic use of alternatives “as needed” just may help.

Remember the food court.

William M. Levine and retired Judge E. Chouteau Levine are the principals of Levine Dispute Resolution Center in Westwood and Northampton, Mass., where they mediate and arbitrate family law, probate and other matters..

Previously published in the May 21, 2012 issue of Massachusetts Lawyers Weekly, reprinted here by permission of the author.

 

Bill and Chouteau Levine Participating at the Divorce Mediation Training Program in Boston

Monday, April 09, 2012

Bill Levine will be participating as a faculty member at the Mediation Works Incorporated, Inc.'s Divorce Mediation Training program in Boston from April 20 through April 23, 2012. Chouteau Levine will be lecturing at the same program on April 20th. This annual training program combines substantive law and procedure and mediation skills for a limited number of qualified professional attendees, under the direction of M.W.I.'s own Josh Hoch.

 

Why don’t we represent individual clients?

Monday, March 26, 2012

As we have transitioned from private law practice (Bill Levine) and as a sitting judge (Chouteau Levine) to doing full-time work as mediators, arbitrators and other neutral roles only with Levine Dispute Resolution Center LLC, many people continue to ask us to take on engagements that are representational in nature. For example, several lawyers and clients from one side of a case have asked us to consult on issues presented by a court-based controversy. For another, we have been asked to represent children in court.

We have declined all of these potential roles.

True, none of these jobs would place us in a position to represent a spouse who is an essential stakeholder to litigation issues. But, by their very nature, these jobs imply something that we are not anymore: practicing lawyers whose job it is to “advocate”. Even a private consultation is a form of advocacy, because we are helping one party or another figure out strengths and weaknesses in his or her case, for the purpose of either honing trial preparations or clarifying/enhancing negotiating positions, to the detriment of another party or parties. Thus, the engagement is neither impartial nor it is neutral. Similarly, representing children is a form of advocacy for a particular point of view, even if the represented party is not “responsible” for causing the conflict.

At LDRC, when we mediate, we see it as our mission to open the minds of the parties to see each other’s points of view, to encourage introspection about one’s own real needs, and to detect where mutual needs and priorities intersect. Then, we try to promote sincere efforts to find creative and efficient ways to make agreements that promote these common areas of interest. When we arbitrate, our job is to make a decision, rather than to promote exploration of interests, but our role is nonetheless one that demands that we remain impartial, or indifferent to who “wins or loses”. We must decide the case strictly based in the facts as we hear them and conclude them to be, and the law to which they relate.

In neither of our roles is there room for advocacy for one side or another; and for us, it is important that our market both see us and understand us to be impartial all of the time. It is equally important or us to maintain this intellectual distinction throughout our workday that helps us to stay “neutral” to the very greatest extent that we possibly can.

Along with skills, experience and judgment, our impartiality it is our calling card.

 



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