New Hampshire Family Law Blog : New Hampshire Divorce Lawyer & Attorney : Crusco Law Firm : Family Law, Custody, Child Support : Manchester, New Hampshire, Massachusetts

In the last session of 2009, the New Hampshire Supreme Court issued its opinion In the Matter of Michele Sukerman and William Sukerman, in which the court held that accidental disability pension benefits are subject to equitable distribution in divorce proceedings. Court litigants should keep in mind that this case does not govern how accidental disability benefits or other marital assets will be divided, but rather holds that any property not excluded by law is thrown into “the pot.” How it will be divided is subject to the specific facts and circumstances of each case, and the factors set forth in RSA 458:16-a

William Sukerman was an employee at the Massachusetts Port Authority (MassPort) Fire and Rescue in Boston from 1991 until a heart attack forced him into retirement in 2008. Upon retirement William began receiving a pension under the Massachusetts retirement system which consisted of an ordinary pension benefit, an annuity and an accidental disability pension benefit. The final divorce decree of the Derry Family Division awarded Michele one-half of the William’s entire “pension plan which accrued between the date of the marriage . . . and the date of the filing of the petition for divorce.”

William argued on appeal that the accidental disability benefit should not have been included in the marital property distribution because it was compensation for lost earning capacity as well as pain and suffering. The court disagreed, and took a “mechanistic approach,” under which all property acquired during the marriage “without regard to title, or to when or how acquired is deemed to be marital property unless it is specifically excepted by statute.” There is no such exception for accidental disability pension benefits in RSA 458:16-a.

The court concluded that this so-called mechanistic approach “best comports with New Hampshire’s equitable distribution law,” under RSA 458:16-a, which provides that “all tangible and intangible property and assets, real or personal, belonging to either or both parties, whether title is held in the name of either or both parties” is subject to equitable distribution. Consequently, the Sukerman case stands for the proposition that so long as there is no specific statutory authority excepting accidental disability benefits from property settlement, such benefits, being acquired during marriage, are marital property and therefore subject to distribution.

Crusco Law Office, PLLC law clerk Daniel McLaughlin contributed to this post.

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The United States Supreme Court issued an opinion on January 26, 2009 for Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, a rare family-law related case heard by the Court. This case is an important reminder to all parties in a divorce action to change your beneficiaries in your retirement plans and life insurance policies after your divorce has been finalized, or your ex-spouse could inherit the funds.

William Kennedy participated in his employer DuPont’s savings and investment plan (SIP) which is covered under the Employment Retirement Income Security Act. ERISA is a federal law that sets minimum standards for most private industry pension plans. This plan gave William the power to both designate a beneficiary to receive the funds upon his death and to replace or revoke that designation. If there is no surviving spouse or designated beneficiary at the time of death then the distribution of funds goes directly to the estate’s executor or administrator.

Upon William’s marriage to Liv, William designated Liv as his SIP beneficiary but did not name a contingent beneficiary. When the couple divorced some years later the divorce decree divested Liv of her interest in William’s SIP benefits.  However, the decree did not call for the execution of a Qualified Domestic Relations Order (QDRO) which would have been one way under ERISA to address the elimination of a spouse’s interest in plan benefits. In addition, William did not execute any documents with his SIP removing Liv as the beneficiary. Nor did Liv follow the SIP’s specific method for disclaiming her interest.

When William died his daughter Kari was named executrix of his estate. Kari asked DuPont to distribute the SIP funds to William’s estate. However, DuPont relied on William’s designation form and paid the funds to Liv. Kari, as executrix of William’s estate, filed suit arguing that Liv had waived her SIP benefits in the divorce and therefore DuPont had violated ERISA by paying the distribution to Liv.

The district court held that the SIP funds should be awarded to William’s estate. However, the court of appeals reversed that decision by holding that while the divorce decree purported to divest Liv of her interest it was not a QDRO and therefore under ERISA it could not be used to waive Liv’s interest. Therefore, the funds were properly distributed to Liv as designated by the plan documents William executed naming her as beneficiary.

The Supreme Court agreed with the court of appeals and held that DuPont had a duty under ERISA to follow the SIP participant’s beneficiary designation even if the waiver incorporated into the divorce decree was conflicting. The incorporated waiver did not amount to a QDRO and the SIP is bound by the plan documents. Therefore, Dupont properly distributed the pension benefits to Liv pursuant to the beneficiary designation form and despite the divorce decree waiver.

Crusco Law Office Law Clerk Marisa L. Ulloa contributed to this post.

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On January 30, 2009 the NH Supreme Court released the opinion for In the Matter of Joseph Goulart, Jr. and Marcia Goulart in which the Court held that parents are not free to waive the provisions of the statute that prohibit any child support order requiring a parent to contribute to an adult child’s college expenses or other educational expenses beyond the completion of high school. The Court urged the legislature to reexamine the statutory language regarding approval or enforcement of a stipulated parenting plan in order to take into consideration a situation where the divorcing parties are fully informed, represented by counsel and mutually agree that one or both will voluntarily contribute to their adult child’s college expenses.

Joseph and Marcia divorced in 2005 while their son was still a minor. Part of their final divorce decree incorporated a Stipulated Parenting Plan, negotiated with counsel, which included a provision stating:

 

The parties are aware of the statutory provisions prohibiting the Court from ordering any parent to contribute to expenses for an adult child. Despite this prohibition the parties agree that Joseph shall be responsible for payment of the son’s college educational expenses.

 

In 2007, Joseph filed a motion to define his obligation regarding college expenses for the same reasons he cited before. There was a hearing and the family division ruled that Joseph was expected to assist with college expenses as agreed to in the Parenting Plan.

 

Joseph appealed that decision to the NH Supreme Court, contending that the family division has no authority to enforce the college education funding obligation because the court lacked subject matter jurisdiction to enter such an order under NH RSA 461-A:14, V. The statute reads: “No child support order shall require a parent to contribute to an adult child’s college expenses or other educational expenses beyond the completion of high school.”

 

The Court agreed with Joseph that the statute deprived both the superior court and the family division of subject matter jurisdiction to either approve or enforce a provision in a stipulated parenting plan that requires parents to contribute to their adult child’s college expenses. The family division should have modified the parenting plan by striking the college expense provision.

 

Crusco Law Office Law Clerk Marisa L. Ulloa contributed to this post.

 

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During a divorce, the tax consquences of a settlement often take a backseat to heated issues such as parenting rights and asset division. However, tax consquences can have a very big impact on the outcome of a case and are an important factor to consider.  Attorney Jason C. Brown of Brown Law Offices, P.A. posted an informative piece on his Minnesota Divorce and Family Law Blog with tax tips for divorcing couples. Attorney Brown suggested the following issues to consider during a divorce:

1. Child Support. Child support is not income to the recipient and is not deductible for the payer. Keep this in mind if your spouse is seeking alimony. Child support payments that they receive are not taxable and, as a result, increase their net income each month dollar for dollar. As a result, the "need" of your spouse will be diminished and you may be able to argue that their imputed gross income exceeds their gross pay coupled with untaxed child support.
2. Alimony. Alimony is income to the recipient and is deductible for the payer. High income earners can reduce their taxable income by paying alimony. If your spouse's tax bracket is low, the government winds up picking up the tab for a good share of the alimony obligation.
3. Sale of Homestead. The sale of the marital homestead usually does not involve a taxable event. Capital gains (up to $500,000) from the sale of your marital homestead are not taxable if you've lived there for two of the last five years. Nor is a transfer of title to the residence, allowing your spouse to keep some or all of the equity. Many couples opt to forego alimony payments in, instead, pay a disproportionate property settlement to their spouse. In other words, they "buy off" alimony by giving a larger share of home sale proceeds, or equity, to their spouse. The result? No tax implications for either. Ideal for alimony recipients in a high tax bracket.
4. Filing Status. The status of your marriage on December 31 of the relevant year determines whether you file as single or married. If you are divorced by that date, you file as single for the entire year. If your case appears to be coming to a close near the end of the year, best to speak with a tax preparer about the consequence of holding up at bit or expediting matters. We find that courts are usually willing to facilitate bringing matters to a close by the end of the year if tax implications in doing so are substantial.
5. Dependents. While the law provides that the custodial parent is entitled to claim the relevant dependency exemptions, most couples agree to share them. Offering a non-custodial parent the right to claim the dependency exemption under the condition that their child support is current at the end of the relevant tax year provides them with incentive to keep current with payments.
6. Child Care Credit. Custodial parents who incur work-related child care costs can deduct up to 30% of the cost. It is for that reason that the child support guidelines usually require a custodial parent to assume responsibility for a greater share of daycare expense.
7. Liabilities and Refunds. Taxes owed, or refunds received, are usually treated as "marital" and are, therefore, split equally among the parties. In the heat of the moment, some spouses will intercept a tax refund and cash it without the other's knowledge. All funds must be accounted for and it is likely that if they do so their share of the final property settlement will be reduced proportionately. Because income is "marital," a tax liability is a shared responsibility.
8. Attorney Fees. Any fees paid to a lawyer for tax advice are deductible. Ask your attorney for to break out all billable time devoted to tax issues and you can save big.

A good family law attorney will point out these and other issues to consider during your divorce. It is also important to discuss your divorce and the tax consquences of any settlement with a knowledgeable accountant.

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On June 13, the NH Supreme Court released an opinion on In the Matter of Richard R. Lemieux and Joanne Lemieux. In this case, Richard and Joanne were divorced in 1990. Their final divorce decree included stipulations regarding Joanne’s portion of Richard’s pension plan benefits, including the percentage each spouse would be awarded and the date that it would be divided. In 2001, Joanne filed a claim with the U.S. Office of Personal Management (OPM) and was awarded a monthly amount based on the date upon which Richard became eligible for retirement.

Richard challenged OPM’s decision by arguing that the monthly amount is based on the value of the pension when the initial divorce action was filed, not when Richard became eligible for retirement. Richard’s position is that the stipulation in the divorce decree should be reformed due to a mutual mistake of law.

The Court states that, “It is well established that courts may grant reformation in proper cases where the instrument fails to express the intentions that the parties had in making the contract.” The Court acknowledges that there is a mistake of law and rules that the parties intended to award Joanne a portion of Richard’s pension as of the date of the divorce decree and not as of the date of his eventual retirement.  

Blog Credit: Marisa L. Ulloa, Crusco Law Office Law Clerk

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Once the divorce, either by agreement or court order, becomes final, retirement accounts are often divided by a qualified domestic relations order (commonly called a QDRO) as ordered in the divorce decree. Attorneys must go about drafting the QDRO, getting it approved by the court and the plan, and then have the plan process it. A recent blog by Divorce Law Journal's Diana L. Skaggs warns about plans charging large fees to process QDROs, and even to approve their own sample forms. Attorney Skaggs' is right on the money, so to speak, to advise checking with the Summary Plan Description to determine the fees charged by the plan and who the fee is charged to. Allocating the fee in the divorce decree will save headaches later on when the issue pops us.

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A very concerning issue for many people facing divorce is what will happen to the family pet. Currently, the law recognizes pets as property which will be divided in a final divorce decree pursuant to RSA 458:16-a. Property distribution factors were recently discussed here. A court is more likely to permanently award a pet to one of the parties rather than ordering a "shared parenting" arrangement. On the one hand, the law is not able to recognize that pets have strong emotional ties and separation from that pet will be much more detrimental to a family member than the loss of a kitchen table or a television. On the other hand, enforcing a court order with a "shared parenting" schedule and calls for division of vet and doggie daycare expenses could place an additional burden on the all ready over-worked courts.

Attorney Danny Meeks, who publishes the Pet Trust Law Blog, recently wrote about these issues in a posting called  "Is your pet a family member subject to 'shared parenting.'" Attorney Meeks sited interesting pending legislation in Massachusetts that would grant court's the authority to restrain a party from a pet in a temporary domestic violence restraining order.

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New Hampshire law grants courts the authority to order an equitable distribution of property between parties. Although the law presumes that an equal distribution is also an equitable distribution, the court may decide that equitable is not equal when one or more of several factors are present. Some of the factors include the 1) the duration of the marriage, 2) the opportunity of each party for future acquisition of capital assets and income, 3) the need of the custodial parent to occupy or own the marital residence for the benefit of the children, 4) tax consequences of the property settlement, 5) expectations of retirement assets and 6) the fault of either party. The law includes fifteen different factors, including the broad final factor of “any other factor that the court deems relevant.” Click here to read all of the factors listed in the property settlement law.

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