781.708.4445

wmlevine@levinedisputeresolution.com

Divorce Mediation Blog

Financial Bigamy: Failing the Irony Test and An Important SJC Alimony Decision in Connor v. Benedict

Wednesday, March 20, 2019

Levine Dispute Resolution Center - Alimony

“Financial bigamy”.

It sounds like a name that we might see on the back of a 40-footer in the local marina, as in “my family is expensive, but man, you should see my boat!” Or, a bad reality TV show (sorry for redundancy).

The term actually finds its origin in the recent Supreme Judicial Court (SJC) case Connor v. Benedict, an important and well-reasoned case on the question, in part, of just how high the evidentiary bar is in pre-dating the start of marriage (for durational limit calculation purposes) to a time before the actual marriage ceremony because:

    “…there is evidence that the parties’ economic marital partnership began during their cohabitation period prior to the marriage.” M.G.L., ch. 208, §48.

Previously, the SJC’s Duff-Koreores v. Kaoreores (2016) lifted a set of fact criteria for the determination of pre-marital “economic partnership” from the Alimony Reform Act’s enumerated factors for finding “common household” of an alimony recipient post-divorce. While this may or may not been what the legislature intended, it certainly works well enough.

The challenge in Connor was that the husband argued that he and the wife could not, as a matter of law, have been engaged in a marital partnership because while –

    the parties lived together -

    they shared health insurance -

    they bought, carried and improved a home together and -

    they publicly held out a filial relationship between the husband and his future step-son -

    they were engaged in “financial bigamy” because the wife was simultaneously collecting alimony from her ex-husband!

After gaining benefit from the wife’s previous alimony, the husband doubled down now by using that same alimony as a shield against his own obligation to her. He plainly missed the irony of his double recovery effort. A really good trial judge didn’t, and clearly the SJC did not miss it either.

These are busy days for the Appellate Irony Chutzpah Scale (AICS). First, last November’s Boblis v. Costa, where a father tried to cut off child support for “military enlistment” emancipation, after his son reduced his father’s tuition bills by accepting a ROTC scholarship (November 7, 2019 blog entry); then, Dilanian v. Dilanian in December, in which the husband asked the judge to take his word about material facts while giving the court documents that established the opposite! (December 8, 2018 blog entry) Luckily, In all three cases, the courts’ irony sensors have been up to the task.

 

Michael Cohen: Bringing Home the Swamp

Wednesday, March 06, 2019

Levine Dispute Resolution - Alimony

Litigating colleagues tell me that the casual relationship between “facts” and reality in the Probate and Family Court has become more attenuated, accelerating with the daily lying of the 45th president. Stephen Colbert’s “truthiness” has given way to Trump’s “when in doubt, lie - the more - and the bigger - the better”.

This echoes the political jousting in Washington at large, which reminds me of the arguing of bomb-throwing divorce lawyers in court, but every day, and impacting the world, rather than “merely” the family.

The political and family law circles merged last week during Michael Cohen’s testimony to the House Oversight Committee. Rep. Robin Kelly (D-Ill.) asked Cohen why, for goodness sake, he used a home equity line of credit to source hush money payments to cover up his client’s extramarital romps. It is something about which I have long wondered.

I didn’t see the hearing live. So, it took Michelle Singletary’s “Color of Money” column in the March 3 Boston Sunday Globe to tell me Cohen’s answer: it was the best way to do it without his wife getting wise to the payment.

Perhaps he feared Washington Post. Maybe the Democrats or the FBI. But, of course, Mrs. Cohen. A lawyer, a fixer; but ultimately, a guilty husband!

How’d did a recovering divorce litigator miss that one?

 

The Goose, the Gander and the TCJA

Wednesday, February 20, 2019

Levine Dispute Resolution - Alimony

We know that under the federal Tax Cuts and Jobs Act of 2017 (TCJA) alimony instruments executed before December 31, 2018 will carry over deductibility when modified thereafter so long as the parties (or the court?) don’t opt out of that treatment. While we all hope that we can successfully maintain this important tax leverage for the sake of restructured families by incorporating existing temporary (interlocutory) orders into 2019-and-later agreements, a question (among many) that continues to nag is, just how malleable is this rule?

It seems clear that if one modifies former Spouse A’s alimony by reducing the sum or increasing it, deductibility remains intact.

I also assume that if we change former Spouse A’s alimony from an expressed sum to a formula, in whole or in part (i.e., $5000 per month to .325 of gross pay, or $5,000 per month to $4,000 per month plus .325 of future bonuses) deductibility is not jeopardized.

And, if former Spouse A’s alimony durational term is reduced or extended, there seems to be no reason why the opt out rule should not apply.

But, here is the payoff question:

    What if former Spouse A loses her job, former Spouse B’s career has taken off, and the modification shifts the payment obligation from A to B, is deductibility still available for this new obligation?

If this sounds a bit familiar, we wondered in an earlier blog entry if the durational limits of the Massachusetts Alimony Reform Act (eff. 3.1.12) apply to one spouse, or to both when they trade alimony places. As in, if the presumed duration is 7 years, and halfway through, the alimony obligation shifts, does the clock re-set, or does the second payor get credit for the former payor’s time served?

In an era of 2 partner family income predominance, this is not a far-fetched scenario — and now we have to worry about deductibility, too.

What do you think?

 

Dreaming About Alimony…

Wednesday, February 06, 2019

Levine Dispute Resolution Center - Alimony

In 2017, any waking person knew that Congress and the administration were furiously digging for ways to stem the flood of money out of the U.S. Treasury that they were about to cause by cutting corporate and top individual income tax rates. After all, “elections have consequences.”

In the fourth quarter, it became apparent that Congress had the alimony deduction – a longtime GOP target -- in its crosshairs. As a fiscal matter in context, its cost was marginal, but the decades-old subsidy for divorcing families offended some on moral grounds and compliance was poorly enforced by the IRS, causing greater treasury losses.

But, while the potential yield was small (see our August 15, 2018 post “Alimony and TCJA: Less A Misconception than a Worry…at www.levinedisputeresolution/divorce-mediation-blog/) but the target was rich: middle income and upper middle-class families – many professional – many Democrat – families with large tax rate gaps between spouses, where the alimony deduction helped most. (Low marginal tax rate families gained little from the alimony deduction while both spouses of the uber-rich donor class live at the highest rates, eliminating the value of leveraging family dollars with alimony.)

By December 2017, EVERYONE knew that Congress had repealed the alimony deduction, but had deferred the effective date of repeal by a full year, being effective January 1, 2019.

That’s when Massachusetts’ prominently specialized court, its sophisticated family law bar, financial expert cohort and state legislature all kicked into high gear, to buffer the impact of the family losses engineered by Congress that would soon impact a significant portion of their constituency…

… bar groups immediately conferred on how to press the state legislature to amend the Alimony Reform Act (eff. 3.1.12) in plenty of time to be sure that by January 1, 2019, the courts would have an alimony statute (initially based and passed on presumed deductibility) that is reconciled with the new reality that the federal deduction is gone…

… as they did so, the Probate and Family Court swung into action, setting up “listening” sessions in the various counties so that local practitioners and county bar associations could weigh in on their fears and suggested solutions…

… the court sought out the most prominent experts in the field to begin to come to grips with the economic impact of the lost alimony deduction on its constituent families…

… the court conferred with its judges to see how they might create common approaches to making sure that no one would gain unfair advantage by demanding windfalls for payors or payees, because of an ARA that was now out of sync with federal tax law…

… interest groups communicated to make sure that none of them would advocate for results that would unfairly advantage one side or the other because of the tax law changes…

… the court and various bar groups worked closely to make sure that a legislative fix would be put before the legislature in plenty of time for it to act before January 1st, so that everyone would hit the ground running with the understood goals of the ARA preserved despite federal action...

… the proactivity of the court, the bar and the interest groups led to a unified approach, a smooth glide path to the 2019 reality, so that predictability reigned, and the system didn’t miss a beat…

As I said, I was dreaming…

February 4, 2019’s Massachusetts Lawyers Weekly, Vol. 45, Issue No. 5, article, “Bar: need for alimony fix is urgent” recounts the efforts of the joint alimony task force to move a bill to the legislature with the simplest form of fix, the reticence of at least one interest group, silence from the court -- and as for the legislature – well, who knows. Per Lawyers Weekly, “…the effort is just now gearing up…”, with the horse well outside the barn

As I have asked lawyers in my divorce mediation sessions if they are seeing a common approach in the courts, they look at me like I am still dreaming.

 

Dividing the Personal Possessions at Divorce: A Primer

Wednesday, December 19, 2018

Levine Dispute Resolution - Divorce Mediation

As Christmas approaches, I am drawn to the sad irony that some of the impending happy gifts between spouses may someday turn to bitter lemons, riven by sour grapes in divorce. While none of us can make lemonade out this sad fruit salad, we can help make it all a bit easier for our parties in divorce mediation by giving them ideas of how to take some of the emotion out of this transaction, which is frequently (and intentionally) the last issue tackled, packing one last punch to the gut of the negotiating parties.

Our colleague and friend, David Hoffman of Boston Law Collaborative has synthesized a host of ways to offer people ways out of the worst of this last insult, in his recent piece “Fair and Square…” in Massachusetts Lawyers Weekly. With David’s permission, I am linking it here as a between-the-holidays guest blog. We have all implemented some, but undoubtedly not all of David’s strategies in the past, and it is really great to have it all under one headline, both as a refresher and as and a fantastic handout for mediating spouses.

Sometimes the parties will select one of these processes. They are all interesting, useful and clever.

More often than not, the tired spouses will say, “Really? Do we really have to do this?” Most of the time, they will then figure out how to swallow enough pride and hurt to adopt their own “good enough” solution, which is usually good enough to end this unique form of pain.

Thanks, David.

 

Can’t Blame a Guy for Trying, But the Courts Do their Job in Dilanian v. Dilanian

Wednesday, December 05, 2018

Levine Dispute Resolution - Alimony

The recent decision, Dilanian v. Dilanian, from the Massachusetts Appeals Court describes a litany of unreliable evidence from which a trial judge drew negative inferences about the malfeasance of a divorce-litigant husband, finding that he tried to obscure and shelter both assets and income from his wife and from the court. The Appeals Court agreed with the Probate and Family Court judge, and upheld her decision.

The self-employed husband depressed his apparent income after the divorce filing, by decreasing his profit distributions and increasing his retained, undistributed earnings, without legitimate explanation. You can’t do that!

On a defined contribution plan, the sole- business-owner husband presented documents with the number of retirement plan participants yo-yoing periodically, attempting to reduce his share of the pension pool, for equitable division with his wife. Can’t do that either.

By post-trial motion, the executor-trustee-beneficiary husband tried to take back his inaccurate trial testimony in which he overstated his rights in his father’s estate, which the court had accepted, and later sourced to the husband’s own inexcusable neglect. That doesn’t work.

But the howler in the bunch, of which the Appeals Court made but passing note, the pension plan-administrator husband tried to dilute his share of a defined benefit pension plan by including his late father as a member of the plan, thus trying to divert a chunk of the pension from the court’s equitable division powers.

Only problem was that the plan documents that the husband himself offered in evidence showed that his father was no longer alive when the plan was created.

None of this is particularly surprising in the Probate & Family Court, where Stephen Colbert’s notion of “truthiness” has a long history. But, the audacity to lie in plain sight of a dated document that he himself put into evidence is, simply put, Trumpian.

To borrow a cliché from left wing TV, the “institutions held”: the trial judge sniffed out the ruse, and the appellate court backed her up.

Good for them.

 

Lost in Translation: Reading Tea Leaves on 2019 Alimony Deduction

Wednesday, November 21, 2018

Translation can be a tricky thing.


Just ask this restaurant owner in China, above. (https://lingualinx.com/blog/the-funniest-examples-of-translation-gone-wrong/).

Or, yourself, as you try to assemble your kid’s imported toy next month using instructions that seem reverse engineered from Chinese to Japanese to English; and while reading your next off-shore spam email.

Q4 2018 is a time of searching for clues from the U.S. Treasury about how it will apply 2019’s alimony prohibition for those still struggling to strike alimony deals this year in hope of retaining future deductibility. We’d hope that the challenge would not be compounded by language whose meaning has been lost in translation, but…

While lawyers, judges, mediators and arbitrators struggle to glean government’s intentions through statutes and regulations, the public relies on IRS instructional publications for their primary understanding of tax law.

A colleague recently shared the following draft language for Publication 504 “Divorced or Separated Persons”, the IRS’s public instructions about matters including alimony. Read it as a layperson might:

    Line 11 Alimony Received Enter amounts received as alimony or separate maintenance. You must let the person who made the payments know your social security number. If you don’t, you may have to pay a penalty. For more details, see Pub. 504.

That’s my underlining. It is self-referential and circular, but hey, it’s only a draft.

More substantively, the language continues:

    TAX TIP: Alimony received will no longer be included in your income if you entered into a divorce or separation agreement on or before December 31, 2018, and the agreement is changed after December 31, 2018, to expressly provide that alimony received is not included in your income.

That is their italics, presumably to draw us to its importance. The color-coding is mine, to help illustrate the following. What does this communicate to the reader?

  • The impatient reader, or one who recalls her English teacher defining an independent clause as phasing that has a subject and a verb, and produces a complete thought, may focus on

    “Alimony received will no longer be included in your income if you entered into a divorce or separation agreement on or before December 31, 2018…”

    From which taxpayer might rightfully conclude that her lawyer was crazy in trying to craft an alimony deal in 2018 since taxable alimony has been retroactively repealed. What was the rush about, anyway?

    She might also conclude, let’s wait to talk turkey until after new year, since this clause also implies that 2019 agreements will produce deductible alimony. Huh?
  • The more patient taxpayer will also read “…and the agreement is changed after December 31, 2018, to expressly provide that alimony received is not included in your income.” After suffering through two dependent clauses that rely on the passive tense and a sort of double negative (“no longer” and “not”), one may well wonder “what’s the big deal?” After all, if my 2018 alimony deal does not produce reportable income to me, then who cares if a change to my agreement simply confirms that result?

Careful and repeated readings of this one sentence, by one who understands tax law, will ultimately yield an accurate statement of law. But given its intended audience, might not the drafters have simply said:

    “If you and your spouse signed a divorce or separation agreement before December 31, 2018, that required taxable alimony, the alimony that you receive in 2019 or later will be included in your income. However, if you and your spouse or former spouse amend that agreement in 2019 or later, and your amended agreement expresses that future alimony will not be taxable, then the alimony that you receive in 2019 or later will not be included in your income.”

Is draft publication 504 a symptom of poor drafting or something more insidious, like deliberate obfuscation of taxpayer’s rights and obligations?

On a more nuanced level, does the fact that draft publication 504 makes reference to “divorce and separation agreements” only, and not to court orders or judgments, imply that 2018 alimony agreements will be deemed qualified deductible support in 2019 without the need for a judge’s endorsement, as much precedent suggests?

I hope so. The absence of reference to court orders is soothing, and perhaps indicates that my previously expressed worries are misplaced.

But then, what happens if the parties take a merging agreement for alimony, signed in 2018, to a court in 2019, and the judge does not approve the deal for incorporation into an order or judgment?

Of course, this is only a draft, and as a public “instruction” only, it is not law. See, https://www.forbes.com/sites/robertwood/2015/11/11/amazingly-irs-says-you-cant-rely-on-irs-instructions/#21b2923d341a.

So, I think I’ll still wait for the temporary regulations before I let down my guard entirely.

Thanks to David H. Goodman, CPA, of Gosule, Butkus & Jesson, LLP for the draft language. Stay tuned for David’s piece about alimony trusts in the next LDRC newsletter.

 

Food & Beverages Aren’t Entertaining Under JCTA

Wednesday, October 24, 2018

Our colleagues at Gosule, Butkus & Jesson, LLP sent out an interesting newsletter recently in which they address the fact that the Job Cuts and Tax Act of 2017 (JCTA) has eliminated the entertainment portion of business deductibility, but not the 50% deduction for food and beverages. As the meat (ahem) on the statutory bone, the Treasury Department “intend[s] to publish” proposed regulations to clarify what will remain both ingestible and deductible:

  1. The expense must be ordinary and necessary
  2. It may not be lavish or extravagant
  3. The taxpayer or employee must be present
  4. The food & drink must be consistent with that provided to other similarly situated business contacts
  5. And, if the grub is purchased during entertainment it must be invoiced or specified separately from the entertainment.

What could possibly go wrong?

They’re all fun, but Item 5 on the menu caught my eye particularly. Gosule points out a $5 hot dog at a Red Sox game will be half deductible, while the $1,500 game tickets (hell, it’s playoff time) are not; while $200 worth of food and drink in a Celtics luxury box will not be deductible at all because it is not paid or billed separately from the ticket.

That’s as logical as calling another 9th inning pitching change in a 16-1 rout or 4th quarter NBA garbage time “entertainment”.

It does call to mind the tricky job of courts, arbitrators and special masters in adjudicating adjustments to a self-employed spouse’s income for attribution purposes. A lot of season tickets get packed into pass-through expense schedules! And, many of those tickets actually do go to customers…

It also reminds me of the dilemma of creating and parsing Probate and Family Court Rule 401 financial statements, where “food”, “meals out” and “entertainment”, both personal and business, mix and mingle with regularity, with double counting galore!

Coming to a deposition or hearing room near you…

 

Spousal Disqualification Still a Good Rule After M.T.J.C. LLC, et als. v. Steven Simon

Thursday, October 11, 2018

Levine Dispute Resolution - Alimony

In the unusual context of a U.S. Bankruptcy Court case, Judge Melvin S. Hoffman examined an evidentiary statute that is daily fodder in family law litigation, M.L.G., ch. 233, §20, known as the “spousal disqualification”. In short, §20 prohibits married or divorced person from testifying to private conversations between them that occurred during marriage.

It is not a waivable privilege, like the right to withhold testimony in a criminal proceeding against one’s spouse. It is a rule that neither party may relax, certainly not unilaterally; and, arguably, a judge should not rely on disqualified testimony, even if neither party is vigilant enough to object to its admission.

There are exceptions to the rule: domestic and child abuse cases, and at issue in M.T.J.C. LLC, et als. v. Steven Simon, cases where the spouses have entered into a contract with each other. Appellate cases have previously addressed construction questions such as: “can a ‘conversation’ be in writing?” (no); and “what is private”? (where a reasonable expectation of privacy exists, which may be negated by the presence of other persons who have the capacity to overhear and understand); and most recently, does the Alimony Reform Act (eff. 3.1.12) definition of marriage length (M.G.L., ch. 208, §48) terminate the period of disqualification? (no, private conversations remain disqualified until absolute divorce, under Balistreri v. Balistreri, Appeals Court 2018).

But, this bankruptcy judge faced a question that neither §20 nor appellate case law have yet addressed, namely, does the contract exemption to spousal disqualification apply in a lawsuit in which a third party is litigating against one of the spouses?

Because of the paucity of authority, Judge Hoffman tasked himself with “… predict[ing] how the Massachusetts Supreme Judicial Court would rule on this issue”. In doing so, he carefully reviewed the statute and interpretive case law, and concluded, soundly, that the contract exemption only applies when the spouses are themselves lawsuit opponents.

In other words, the court could not order Ms. Simon to testify about her private conversations with Mr. Simon about a contract between them, at the demand of someone else suing her husband.

Judge Hoffman’s scholarship is an interesting read, especially for those who encounter the disqualification on a daily basis, and rarely question its premises. He recites history and policy that underlay the statute: that spouses were considered “as one” in common law, that their interests were uniformly aligned, that the “bias of affection” would undermine reliable testimony, that marital peace would be disturbed, and that cross examination of the declarant might cause prejudice to the other spouse.

He concludes that even if many of these reservations “seem quaintly outdated”, they nevertheless ground a statute, which the trial courts are not free to alter.

As a family law arbitratorspecial master and litigating-lawyer-in-recovery, I can’t miss the unavoidable irony in the “bias of affection” justification for spousal disqualification. The divorce court’s problem is in fact, the polar opposite: think, “the bias of disaffection”.

Who among us has not encountered an estranged couple about whom we have thought “they can’t even agree that the sky is blue”? Hell, many of us have been there in ourselves personally…

The fact of the matter is that, quaint or not, spousal disqualification is a good rule. What harmonious couples talk about privately is no one else’s business; and how conflicting spouses remember it, or choose to recount it, clouded by conflation, confusion or convenience, gives rise to inherently unreliable testimony.

Factfinders struggle enough with the quantum of evidence in a field where parties and counsel fear leaving even the smallest pebble unturned. Opening divorce trials to endless “he/she/they said” testimony would be a race to the evidentiary bottom, producing even more heat and precious little light.

As a young litigator I felt the opposite. Age has its privileges, I guess.

 

No Country for Old Men, Part 5: The Appeals Court Tells 79-Year Old Alimony Payor “Si, Mas” Muellner v. Muellner

Thursday, September 06, 2018

Levine Dispute Resolution - Alimony

In an unpublished opinion under Rule 1:28, the Massachusetts Appeals Court recently consigned a septuagenarian couple to resumed legal combat in the Probate and Family Court, 14 years after their divorce. The appellate court vacated two modification judgments of the Probate and Family Court, reducing the now 79-year-old husband’s alimony to his former wife, for the judge’s failure to “demonstrate ‘appropriate consideration’” of:

  • the husband’s ability to pay;
  • the wife’s financial need; and
  • the “intent” of the parties as evidenced by their divorce agreement.

Putting aside completely the M.G.L., ch. 208, §49 (f) presumption that alimony terminates upon the payor’s attainment of full social security retirement age - a distant memory for this payor - since this divorce predated the Massachusetts Alimony Reform Act (eff. 3.1.12) (See, LDRC previous blog entries, “No Country for Old Men”, Parts 1 through 4) this decision is problematic for at least two reasons:

  • it appears that the trial judge is faulted for not considering information that the parties didn’t offer him at trial; and
  • the Appeals Court’s inference of the parties’ intent is pure speculation – the kind for which it might well criticize a trial judge.

Ah, Rule 1:28 decisions. The facts are not “fully addressed”, but one fact that the Appeals Court did disclose is that both modification “trials” were decisions entrusted to the Probate and Family Court judge by agreement of the parties, to be rendered on “stipulation[s] of facts in lieu of testimony”. No one gave direct testimony, and no one was cross-examined, no experts opined.

In other words, no trial at all, with all of its glorious inefficiencies and protections.

Then again, this is what the parties signed up for. Competent adults are, or should be, allowed to make decisions, including ones that disadvantage them. These parties were not juveniles – far from it – and they chose the rules by which they would play. No parens patriae, here. Essentially, they put the judge in the position of an arbitrator, limiting the evidence and circumscribing procedure; and accepting that the decision in generally binding.

The specters of 80-year-olds paying alimony, golden years spent in litigation and my self-indulgent blog title totally aside: shouldn’t the Appeals Court have left well enough alone?

 



Get e-mail notifications of new blog posts! Enter email address below.:



Delivered by FeedBurner

other articles


recent posts


tags

Boston family law Levine Dispute Resolution Center LLC Massachusetts lawyers lawyers med/arb child support Baseball Arbitration family mediation divorce judgment alimony law divorced medical benefits Self-adjusting alimony orders Massachusetts divorce mediators COLA MLB labor agreement disputes Levine Dispute Resolution Center divorce agreement how baseball arbitration works high-risk methodology Child Support Guidelines family law arbitrators divorce and family law divorce arbitration General term alimony arbitrator rehabilitative alimony DOMA LDRC Obamacare family and probate law disputes Act Reforming Alimony in the Commonwealth Major League Baseball Arbitration mediations divorce mediator Same Sex Marriage divorce and family law mediators Chouteau Levine alimony Massachusetts alimony and child support self-adjusting alimony Uniform Arbitration Act lawyer-attended mediation Massachusetts Lawyers Weekly family support Divorce pre-ARA alimony Alimony Reform Act resolve disputes separation Defense of Marriage Act divorce mediation divorce arbitrator facilitated negotiations med-arb health coverage Massachusetts Alimony Reform Act fraud Matrimonial Arbitration family law mediation alimony statute Baseball divorce mediations Massachusetts Levine Dispute Resolution Levine Dispute Resolutions alimony reform legislation divorce litigation arbitration family law arbitrator IRC §2704 mediators arbitrators dispute resolution mediation divorce process Massachusetts alimony divorce arbitrators mediator divorce lawyers private dispute resolution annulment divorce mediators Cohabitation lawyer The Seven Sins of Alimony Divorce Agreements special master SJC conciliation Family Law Arbitration Massachusetts divorce lawyers support orders traditional negotiations Baseball Players litigation alimony orders health insurance