Saturday, February 23, 2013

Inspiration on a Saturday

"No man's credit is as good as his money."

- E. W. Howe, Sinner Sermons

Thursday, February 21, 2013

Can a biological parent vacate an adoption?

In a 2010 Pennsylvania adoption case, the Natural Father filed a Petition to Vacate the Adoption Decree. In the Interest of Skyler, 14 Pa. D. & C. 5th 225 (2010). Adoptions in Pennsylvania are governed by the Adoption Act, 23 Pa.C.S. §2101. Pennsylvania requires that the natural parents’ rights be terminated prior to finalizing an adoption, whether the adoption is voluntary or not.

In November 2006, Natural Father voluntarily consented to the adoption of his minor child. This consent indicated his intent to relinquish all rights he had as the child’s natural father. Curiously, the consent contained a provision that Natural Father would have biweekly visitation with the child. Such frequent and scheduled conduct is unusual. However, the consent further provided that  if Natural Father did not exercise more than half of those biweekly visitation days, then his right to visit the child would be terminated. Furthermore, Natural Father’s consent stated that he believed that the best interest and welfare of the child was supported by adoption and he intended that his consent to be irrevocable. After 30 days, Father would not be able to revoke his consent to the adoption.

In March 2007, the court held a hearing pursuant to the requirements in 23 Pa.C.S. §2504 to confirm consent to adoption by the natural parents. Natural Father failed to appear before the court, but he did have legal counsel there and, consequently, the court confirmed the consent. The final decree for the adoption was issued in May 2007, but it did not include any visitation rights for Natural Father. Furthermore, the adoptive parents never entered into an agreement with Natural Father giving him any rights to visitation. In November 2009, Natural Father filed a Motion to Enforce the consent agreement, which allowed him biweekly visitation with the child. In January 2010, a hearing was held to determine whether Natural Father had a legal right to enforce the terms of the consent to adoption agreement he signed in November 2006.

An adoption decree is presumed to be valid. Therefore, a person who challenges that decree has the burden of proving by clear and convincing evidence that the adoption decree is invalid. Additionally, in Pennsylvania, unless the person who challenges the adoption decree can satisfy this heightened burden of proof, the adoption decree should not be vacated.

Here, Natural Father could not demonstrate with clear and convincing evidence that the decree should be invalid. Natural Father had notice of the adoption proceedings, and he was represented by legal counsel at a hearing where the court properly terminated his parental rights in March 2007. Furthermore, Natural Father was aware that his consent to the adoption would result in complete termination of his parental rights to the child and any obligation to care for the child. Natural Father presented no evidence to show that his consent was not intelligent, voluntary or deliberate. The record showed that Natural Father’s consent reflected his true intent to let the child be adopted.

Natural Father also asked the court to withdraw his consent to the adoption. However, there is ample Pennsylvania case law that states that a natural parent can only withdraw consent to adoption before the entry of a final decree of adoption. Here, Natural Father’s consent expressly stated that he intended for the child to be adopted, and he had every opportunity to withdraw that consent prior to the May 2007 final decree.

If you have questions concerning the adoption laws in your state, you should contact an attorney.

Written by Allyson Lutley, law clerk at The Law Offices of Linda A. Kerns, LLC.  Edited by Elizabeth A. Bokermann, Esquire, associate attorney.

Wednesday, February 20, 2013

Living beyond your means during marriage usually means an extra devastating divorce

Divorce will turn an already shaky financial situation into an unmitigated disaster.  If a couple can barely meet their expenses while living under the same roof, imagine the havoc that supporting two separate households will cause.  Additionally, sometimes people spend more than they make and have nothing to show for their earnings.  The house may be beautiful - but has no equity.  The furnishings are bought on credit and wear out before the credit card bill is paid.  Every cent of income goes towards maintaining on-going expenses so the family saves little or no money.  In these scenarios, divorce usually causes a stark change in lifestyle -- from lavishness to austerity.  It can even take years to recover.  But you can get through this.

For a touching, yet painful, story of one woman's journey, check out My Celebrity Marriage Left Me $4 Million in Debt.

Tuesday, February 19, 2013

Think before you post. Better yet - Do not post at all!

Facebook and other social networking sites cause havoc in many custody and family law cases.  I tell my clients to be very careful about what they post but I would prefer that they not have any type of a personal internet presence.  The lure of spreading the minutiae of their lives tends to overwhelm people, however, and they give in to the temptation.  People consider no thought, feeling or opinion too trivial or too dangerous for spreading to the world.  However, before you push SEND, think about the potential consequences.

That send button can be dangerous!

In a recent New York case, a court took away custody of a Mother's children as a direct result of her Facebook postings.  You can read the case here.

Rule to live by:  DO NOT POST AT ALL.  If you must post, and for some reason, people cannot stay away from the internet - even if their case depends on it, only press send if what you post is something that you would want the judge and your grandmother to read.  Of course, this does not mean to use Facebook as your own personal public relations site -- that can also backfire and you can be viewed as someone oblivious to the privacy concerns of children and your family.

Monday, February 18, 2013

Multiple States, Multiple Problems

What happens to the child support orders if Mom and child live in New York but eventually move to New Jersey where Dad resides?  If Mom obtained a child support order in New York, does the child support stay there . . . even if no one lives there any more?

The New Jersey Appellate Division recently addressed this very fact pattern in Alayon v. Demeter, a complicated custody and child support case.  Mom and child had lived in New York but Dad lived in New Jersey.  Dad sued for custody and after fourteen days of trial in New York, the court decided that Dad would be the primary custodian, unless Mom moved to New Jersey.  If so, they could share custody.  Mom indeed moved to New Jersey, however, support remained in New York.  Despite that, Mom filed a Petition for Support in New Jersey.

After a long and complicated trip through the complex procedural history, the Court ultimately decided that the child support would remain in New York until someone registered the child support order in New Jersey.  You can read the entire case here.

Moving?  Do not forget to register your support/custody order in the new jurisdiction!

Saturday, February 16, 2013

Inspiration on a Saturday

"The only man who sticks closer to you in adversity than a friend is a creditor."

- Author Unknown

Thursday, February 14, 2013

I am getting a divorce, should I file a joint tax return with my spouse?

When a married couple files a Form 1040 U.S. Tax Return together, claiming their income, deductions and credits on the same form, they are filing a joint tax return.  Both spouses must sign the return or give their permission for e-filing. Generally, filing a joint tax return results in lower overall tax rates for the couple.  However, the tax rate should not be your only consideration when deciding to file jointly.

What are your rights and responsibilities?

Filing a joint tax return requires trust in your spouse, because both spouses become responsible for the tax and any interest or penalty due on a joint return.  Both parties must ensure the accuracy and completeness of the return.  One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.  This concept is called joint and several liability.  

The IRS does provide a process wherein a spouse can request to be relieved from joint tax debt after the fact, but the application and pursuit of the debt forgiveness can be a long, expensive process.  Spouses are better served by avoiding the potential battlefield of unpaid joint tax debt by carefully considering whether to file a joint tax return in the first place.

When should you consider filing separately from your spouse?

1. You do not trust that your spouse is honest in reporting his or her income, deductions and credits.  When in doubt, file separately.  

2. Sometimes, one spouse may take extremely aggressive positions on income or deductions.  The other spouse may want to file separately for protection in the event the IRS disputes the positions taken on the tax return.

3. You can amend a separately filed return and file jointly within a certain time period, but returns originally filed as joint returns cannot be split into separate filings by amendment after the due date.  If you believe you may want to amend your return and file separately, then you should file the original return separately.  

4. A spouse may have child support or alimony obligations from a previous relationship, and does not want his/her income combined with a new spouse either for calculation of the support or because the tax returns may be discoverable in the litigation.  

5. If a refund is due because of one spouse’s income, but the other spouse has outstanding tax debts, student loans, or child support in arrears be aware that the entire refund of both parties can be seized when the tax return is filed jointly. If you are concerned, file separately.

6. Certain medical bills and other expenses are deductible, but they must exceed a certain percentage of your Adjusted Gross Income.  Joint income may be too high to benefit from the deduction.  Have your accountant run both scenarios for you (filing jointly and separately) to determine if your medical expense or other deductions are high enough to warrant a joint return.

So, what is best for me?

Consult with your lawyer and accountant to determine the best course of action in your particular situation.  Your accountant will be able to prepare your tax return using different scenarios so that you can compare tax liabilities.  Your lawyer will be able to discuss your risk and exposure.  

Saturday, February 09, 2013

Inspiration on a Saturday

"Today, there are three kinds of people: the have's, the have-not's, and the have-not-paid-for-what-they-have's."

- Earl Wilson, Major League Baseball Pitcher

Thursday, February 07, 2013

Common QDRO Errors

What is a QDRO (pronounced “Quadro”)?  A QDRO is a Qualified Domestic Relations Order, and is the document used to divide qualified retirement plans between spouses.  If spouses wish to divide their pensions or retirement plans as part of their divorce, they will need a QDRO to separate the accounts.  QDROs require care in drafting and an understanding of the legal and financial complexities of retirement plans.  Unfortunately, poorly drafted QDROs often slip through the cracks, resulting in negative financial consequences.  

While a QDRO is often one of the last items to be completed in a divorce, it can be the most important, especially if the retirement plans compromise a significant part of the marital estate.  Make sure that you understand the process.

Here are some points to consider:

1. Know the type of plan.  A defined benefit plan, simply put, pays a monthly amount at retirement.  A defined contribution plan, simply put, allows the party to contribute tax free dollars into a retirement account to be withdrawn, usually in intervals, at retirement.  QDROs for defined benefit plans differ from QDROs for defined contribution plans.  

2. Because a QDRO is a court order and a legal document, the plan name must be correctly named.  When companies are bought, sold and merged, the names of plans can change. The plan name in the QDRO must be the correct, complete legal name.  Sometimes, parties or their lawyers confuse the name of the fiduciary trust company – such as “Vanguard” – with the plan name. If the participant spouse (the spouse who owns the plan) has a 401(k) plan with Widget Company, but the money is held in accounts with Vanguard then the correct plan name would most likely be Widget 401(k) Plan NOT Vanguard 401(k) Plan.  Check your plan name with the plan administrator before drafting your QDRO.  

3. What happens if the plan gains or loses money?  You may have $100,000.00 in your retirement plan as of the date of separation, but the market could crash and your balance could drop to only $75,000.00 as of the date the QDRO is put into effect.  How do we account for the changes in value and make sure both spouses take part in the risks and rewards associated with the plan?  The QDRO must address the provision for increases and/or decreases in the amount of money going to the alternate payee (the spouse who is receiving a portion of the plan). If the alternate payee automatically shares in gains and losses, then both parties benefit from market increases and share in the risks of a volatile market.  

4. Picking a valuation date.  Check with the plan before choosing a valuation date because some plans only use specific dates, such as the end of the month or the end of the quarter. 

5. Who are the named beneficiaries?  What if the alternate payee dies before he or she receives their distribution?  Some plans require that the QDRO name additional alternate payees or include language that provides that the funds are paid to the estate of the alternate payee.  Know what the plan permits and draft your QDRO to account for unexpected deaths.

6. Combining a percentage and a dollar amount. When the drafter of a QDRO uses ambiguous language, chaos ensues.  For example, if the QDRO states that the alternate payee receives 50% of the account balance less $15,000.00, different lawyers could interpret this provision different ways.  Does the $15,000.00 gets subtracted first, then 50% set aside, or, do we set aside 50% taken, then $15,000.00 gets subtracted?  Be precise in the language and realize that your document must stand on its own and allow only one interpretation.  

7. What benefits are available?  Make sure you understand the benefit options available under the plan.  Some plans will not allow the alternate payee to choose to have the benefit paid for the lifetime of the alternate payee instead of the lifetime of the participant, and making that choice in the QDRO will cause rejection by the plan administrator.  Understand what the plan provides and draft accordingly.  

8. When do payments begin? Understand when the terms of the plans will allow payments to begin.  In a defined contribution plan, if the plan prohibits it, an alternate payee cannot request an immediate distribution of funds.  In a defined benefit plan, an alternate payee cannot request a time for the plan to begin paying benefits that contradicts the plan policy.  Be specific when requesting a starting date for benefit payments and make sure the starting date conforms to the rules of the plan.  The QDRO should allow the alternate payee the option of choosing when payments begin, but only as allowed by the plan, usually at a designated retirement age or another designated date.

9. Form of payment. Designating a form of payment that is not consistent with plan guidelines will ensure a rejection by the plan administrator. Many parties mistakenly assume that a traditional defined benefit plan will allow a lump sum distribution, but, realistically speaking, most will not offer that form of payment.  Make sure you understand how the benefits will be paid.

Saturday, February 02, 2013

Inspiration on a Saturday

"Creditors have better memories than debtors."

- Benjamin Franklin