Parents May Agree on Enforceable Orders for Payment of College Expenses


Since 2004, the New Hampshire family courts lacked authority to order a parent to pay for college expenses, with the exception of enforcing orders and agreements made prior to 2004. As it was written then, RSA 461-A:14 (V) provided that “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 New Hampshire Supreme Court later held in Goulart that the family court did not have subject matter jurisdiction to approve an agreement between to parents for the payment of college expenses.

 

Recent changes in the law now allow the family court to approve an agreement that provides for the payment of educational expenses beyond high school by one or both parents. Beginning on October 1, 2013, RSA 461-A:21 provides the family court with jurisdiction to approve and enforce new agreements for payment of college and educational expenses. Specifically:  

Parents may agree to contribute to their child's college expenses or other educational expenses beyond the completion of high school as part of a stipulated decree, signed by both parents and approved by the court. The agreed-on contribution may be made by one or both parents. The agreement may provide for contributions to an account to save for college, for the use of an asset, or for payment of educational expenses as incurred. Any such agreement shall specify the amount of the contribution, a percentage, or a formula to determine the amount of the contribution.

The new divorce decree court form provides sample language for an agreement in paragraph 4. However, the parenting decree court form has not been updated yet to include similar language, so parties will have to adapt their own if they want to include arrangements for college expenses. Parties must agree on whether the agreement is or is not modifiable based upon a substantial change in circumstances. The court form also requires parties to attend mediation before the court will hear a petition to modify or enforce an agreement on college expenses.  

This change is great news for New Hampshire parents. It allows parents to negotiate agreements based on their mutual shared interest in higher education for their children. Furthermore, parents can rely on their agreement and enforce when necessary. At the same time, parents who cannot agree are on equal footing with married parents and cannot be forced to pay for college for their children. 

In the Matter of Mason: Debt to a former spouse is non-dischargeable in bankruptcy

The Facts

Husband and Wife divorced, and the final decree directs Wife to pay 50% of Husband’s 2006 taxes. Wife later files for Chapter 7 bankruptcy, listing her obligation under the divorce decree in the bankruptcy petition. She lists Husband as a co-debtor on the tax debt, and as a creditor holding an unsecured non-priority claim. Wife received a discharge from the U.S. Bankruptcy Court. Each spouse petitioned the IRS for “innocent spouse” relief from their federal income tax liability for 2006. The Wife’s petition was granted, the Husband’s denied.

Husband filed a motion for contempt, asking the trial court to compel the wife to pay the obligation to him as ordered in the divorce decree. The trial court denied the motion, reasoning that:

[Wife] sought to have her debt to [Husband] discharged in bankruptcy. Toward [that] end, in her bankruptcy petition [Wife] noticed [Husband] as a creditor for “2010: divorce settlement” in the amount of the original debt to the IRS. [Husband] was duly noticed that he was listed as a creditor and had the opportunity to litigate the issue in the bankruptcy court. [Husband] was granted a bankruptcy and the debt was discharged.

The Appeal

Husband appealed, arguing that: 1) the trial court erred as a matter of law when it found that Wife’s obligation to pay 50% of his 2006 federal income taxes had been discharged in bankruptcy because he failed to litigate in the bankruptcy court that her obligation was non-dischargeable; and, 2) that the trial court erred as a matter of law and unsustainably exercised its discretion when it declined to award him attorney’s fees and costs.

The Supreme Court issued an opinion on November 28, 2012. 

The Holding

Wife’s debt to Husband to pay 50% of his 2006 taxes was automatically non-dischargeable under 11 U.S.C. § 523(a)(15) as a debt to a former spouse. Even if the Wife was ordered to make payments on the obligation to a third party instead of directly to Husband, it is still a debt to the spouse and therefore non-dischargeable.

The trial court did not err when it declined to award Husband attorney’s fees. The general rule in New Hampshire is that each party must bear their own costs in litigation. A prevailing party may only recover attorney’s fees when it is authorized by statute, there is an agreement between the parties allocating or awarding attorney fees, or there is an established judicial exception to the general rule. Exceptions to the general rule include:

(W)here an individual is forced to seek judicial assistance to secure a clearly defined and established right if bad faith can be established; where litigation is instituted  or unnecessarily prolonged through a party’s oppressive, vexatious, arbitrary, capricious or bad faith conduct; as compensation for those who are forced to litigate in order to enjoy what a court has already decreed; and for those who are forced to litigate against an opponent whose position is patently unreasonable.

The Supreme Court noted that although it held that Wife’s position was erroneous under the law, her position was not patently unreasonable. Therefore, Husband was not entitled to an award of attorney’s fees.

The Takeaway

Whether a financial obligation to a former spouse is incurred by an agreement approved by the court or by court order, that obligation cannot be discharged in bankruptcy. Plan on the obligation surviving the discharge, and ask your bankruptcy attorney whether the bankruptcy court can restructure the repayment of the debt. 

Raybeck and Raybeck: Providing a definition of cohabitation

The Facts

Husband and Wife divorce after forty-two years of marriage in 2005. The divorce decree divides the property and requires the Husband to pay $25,000 per year for ten years. However, the decree provided that alimony would stop if the Wife cohabitated with “an unrelated adult male.”

In 2010, the Wife moved from her home, and rented it to reduce her expenses. She moved into the upper level of a single family home that was owned by a man she met through an online dating service. The man lived on the lower floor, and they had shared space on the middle floor of the home. The Wife did not pay rent, but she did pay $300 per month for food and often cooked for him.

The Husband stopped paying alimony when he learned of the move, and Wife sought enforcement of the alimony obligation. The trial court ruled that the Wife was not cohabitating under the terms of the decree and enforced the alimony obligation.

The Appeal

The Husband appealed the trial court’s order, initially arguing that the trial court erred in concluding that the Wife was not cohabitating. However, at oral argument the Husband abandoned that argument, and instead argued that the trial court did not a have a workable definition of cohabitation and urged the court to adopt a standard.

The Holding

The Supreme Court defines cohabitation as “a relationship between persons resembling that of a marriage.” Whether two people are cohabitating will depend on the facts and circumstances of each particular case. The Supreme Court offered guidance on factors to be considered:

  • Whether the couple is living together continually
  • What the financial arrangements between the couple are and to the extent that they are entangled, including whether there are shared expenses, to what extent one supports the other, whether there are shared investments or retirement planning, if the couple have joint bank accounts, and whether there are life insurance policies naming the other.
  • The extent of the personal relationship, including the intimacy of the connection, shared vacations, shared friends and social connections, and a sexual relationship (although not necessarily dispositive)
  • Whether the couple share and enjoy each other’s personal property, such as household furnishings, appliances, vehicles, and personal items, such as toiletries or clothing
  • The age of the couple may be an important consideration, which may give more or less weight to the support of one by the other and estate planning providing for children of prior relationships
  • Whether friends, family or the community view the couple was engaging in a personal intimate relationship

The Takeaway

The guidance provided in this case should assist a trial court in determining whether a coupld is cohabitating, even though the facts and circumstances in each particular case. Perhaps the old adage “if it walks like a duck, and quacks like a duck” is most appropriate.