Before your final trial, the court will conduct a pretrial hearing. Learn here what will happen at the hearing and what needs to be prepared and filed at the hearing.
In November, I authored an article on same-sex marriages in the New Hampshire Bar News geared towards helping practioners understand unique issues in same-sex divorces. I reprint here the full article:
Practicing family law in one of the six states that recognizes same-sex marriage requires an understanding of the unique challenges that same-sex couples face in a divorce. Usually, a divorce provides a mechanism to dissolve the legal relationship, divide property and establish parental rights and responsibilities. Although same-sex couples can dissolve their marriage in New Hampshire, reaching a fair and reasonable property division or establishing parental rights and responsibilities is much more difficult.
Marriage & Divorce
New Hampshire practitioners have limited precedent to guide them on several thorny issues that are distinctive to same-sex couples. Ironically, one of the few cases involving same-sex relationships, which is still good law, is now inconsistent with the state’s recognition of same-sex marriage. In the Matter of Blanchflower held that adultery does not include homosexual relationships. The court based its decision on the definition in New Hampshire of adultery, which excludes all non-coital sex acts, no matter the gender of the persons engaging in the act. Thus, although other fault grounds may be pursued, adultery is off the table for same-sex divorcing couples. The Blanchflower Court noted that it was not the function of the judiciary to extend past legislation to provide for present needs.
A common dispute in same-sex divorce is the calculation of the length of the marriage. In cases where the parties’ cohabitated long term prior to the marriage, one party may attempt to tack on the cohabitation to increase the length of the marriage and impact alimony and property division. This argument stems from the claim that had the parties been able to marry, they would have. Without New Hampshire precedent, the court may look to Massachusetts for guidance, where the Massachusetts Supreme Judicial Court has held that marriage benefits apply prospectively to the legalization of same-sex marriage. In addition to the cohabitation argument, the question also remains whether domestic partnerships, like those in California or New Jersey, might be similar enough to a marriage to tack on and create a long-term marriage.
The IRS identifies alimony as payments made between spouses or former spouses pursuant to a divorce or separation agreement. Typically, alimony is deductible to the payor and includable as income to the payee for federal income tax purposes. However, the Defense of Marriage Act prohibits the federal recognition of same-sex marriages, and in turn precludes the IRS from recognizing a same-sex spouse as such. Although the IRS has not provided specific guidance on the issue, it seems clear that alimony payments are not tax deductible to the payor and may incur a gift tax liability. The IRS might alternatively consider the payments compensation for past services, with income tax, self-employment tax and possible withholding obligations. Either treatment will incur tax consequences that could be financially devastating to the family.
In "traditional" divorces, opposite-sex couples rarely invokes tax consequences during the division of their marital assets. Such property transfers meet specific IRS exemption rules. Same-sex couples on the other hand can be saddled with a large tax liability as a result of property division.
The Defense of Marriage Act disqualifies same-sex spouses from the tax exemptions for property transfers made pursuant to a divorce decree. Instead, same-sex couples incur a gift tax liability for most transfers made between the spouses or former spouses in excess of $13,000. For example, if one spouse transfers $30,000 to the other spouse for property settlement, $17,000 would be taxable. In addition to gift tax, same-sex couples must be aware of capital gains tax when the home is transferred from joint ownership to one spouse.
A specific part of property division is the ability of a spouse to transfer property to a spouse or former spouse by qualified domestic relations order (QDRO) pursuant to the federal Employment Retirement Income Security Act (ERISA), a portion of a retirement plan or tax sheltered annuity. The tax treatment of such transfers depends on the word "spouse." In other words, in order to qualify for the tax-free transfer benefits, the relationship must be recognized by the IRS as a marriage. Under the Defense of Marriage Act, which defines marriage as between a man and a woman, a QDRO is not a vehicle available to same-sex couples to transfer retirement assets tax-free. Instead, same-sex couples must pay taxes and early withdrawal penalties on transfers made to the other spouse, regardless of whether it is deposited into the other spouses’s retirement account.
Parental Rights & Responsibilities
New Hampshire follows the legal principal that a child born into a marriage is presumed to be the legal child of both spouses. This presumption of legitimacy may be attacked however, and if successful could drastically affect the non-biological parent’s right to seek parenting rights and responsibilities, including residential responsibilities. Although the step-parent statute might be a useful tool in this circumstance, the parenting rights accessed through this avenue could look much different than the rights of a legal parent. Co-parent adoption is the safest way to establish protected parenting rights for each spouse.
The divorce is finally over, and it is time to move on. There are still some loose ends to tie up though, even after the divorce decree has issued. Not every item may apply to your case, but here are the most common things that should be on a newly single person’s to-do list.
1. Update your life insurance and retirement account beneficiaries
2. Prepare a new will
3. Execute a quitclaim deed and record it at the registry of deeds to transfer the title of the house
4. Draft a QDRO, submit it to the court for approval and provide the order to the plan administrator
5. Resume your maiden name, and obtain a new social security card, driver’s license and debit and credit cards
6. Complete required paperwork to implement child support orders
7. Change your vehicle titles
8. Close all joint bank and credit card accounts
9. Make sure that COBRA benefits are in place and the necessary paperwork has been completed
10. Exchange personal property awarded to you or your former spouse
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.
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
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.