Wednesday, October 30, 2013

Should you get renters insurance?

A divorce or separation often involves one party moving into a new residence and that residence is often a rental unit.  While homeowner’s insurance covered your home and the contents, your landlord’s property insurance typically only covers the property and not your belongings.  Therefore, rental insurance should be a priority.  

Renters insurance policies can cover your personal property and sometimes additional living expenses if you must move, as well as liability coverage or payment for medical treatment for accidents occurring at your rental home.  

To purchase a rental insurance policy, first ascertain how much your belongings are worth and remember that the replacement value will be a higher figure than the actual cash value.  For example, your computer may only be worth a few hundred dollars today, but to buy a new computer could cost $1,000.00 or more.  Once you know how much insurance you need, you can shop around for policies.  You can usually reduce your premiums if you increase your deductible.  A deductible is the amount that your loss must exceed in order for your insurance company to begin paying for the loss.  For example, if you had a $500.00 deductible, and you were burglarized and less than $500.00 worth of items were stolen, you would not be reimbursed by the insurance company and you would be responsible for the whole loss.  You would always be responsible for paying for the first $500.00 in losses and the insurance company could cover the remainder.  Choose a deductible that makes you comfortable and you can ask your agent to explain how different deductibles will affect the premiums.   If you have specific valuables, such as expensive jewelry, musical equipment or artwork, make sure your agent knows, because you may need an endorsement (additional coverage) added to your policy to cover those items.  Additionally, work-related items (for example, a photographer’s professional equipment) may need a separate policy.  The renters insurance will usually also involve a liability limit.  For example, there would be an upper maximum that your company will pay in the event of a loss or accident.  Depending on the value of your items and your exposure for liability, the amount of your liability maximum will vary.  

Although adding an expense to your monthly budget can seem impossible, renters insurance is a smart use of money in the event that an unexpected loss or accident occurs.

Tuesday, October 29, 2013

What’s in a name?

In New Jersey, can one of the parents unilaterally change a child’s name after separation?

When the joy surrounding the birth of a child gets replaced by the acrimony between separating parents, custody litigation, judges and custody schedules, one or both of the parents may regret the choice of the child’s name.  Traditionally, parents, whether married or unmarried, tend to give the child the father’s surname (the last name).  Upon separation, however, the mother can come to regret this decision, and believe that the child should carry her surname.  Sometimes, one parent may simply start using a different name on behalf of the child, registering the child at school under the new name and referring to that child under the new name.  Sometimes, a parent may start using a hyphenated combination of the mother’s and father’s name.  In other cases, the parent could seek court intervention to officially change the name.  When fathers oppose the name change, they do not want to give up their link to the child and the paternal lineage that runs through the name.

Just this summer, the New Jersey Supreme Court decided a case centered on whether the mother should be permitted to change the surnames of the children, when she divorced from their father and changed her own name.  In the case of Paul Emma v. Jessica Evans, Jessica and Paul had two children, one born in 2006 and one in 2007.  They separated and their divorce was finalized in 2010.  Shortly thereafter, Jessica began using a hyphenated name for the children, referring to them with both her last name and their father’s last name.  Neither the court nor the father gave her the authority to use this hyphenated name.  The children were born in 2006 and 2007, so they were still quite young.  When father learned of it, he applied for court intervention, asking for an Order directing the mother to only be permitted to use his surname for the children, which they were given at birth. The mother counterclaimed, asking for permission to change the children’s name based mostly on the fact that she was the primary custodial parent and therefore knew what was in their best interest.  The case wound its way through both the trial court and the appellate court.  The trial court found for the mother and allowed her to change the name.  However, the appellate court reversed the trial court’s decision finding that mother was not permitted to change their name.

The Supreme Court of New Jersey evaluated the case and considered other cases of its kind as well as practices in other jurisdictions.  In an extremely detailed opinion, the court directed that when parents agree on the name at birth, the parent later seeking the name change must bear the burden of showing, by a preponderance of the evidence, that changing a child’s name is in that child’s best interest.  Notably, this best interest of the child test will apply to all children, whether the parents were married at the time of the child’s birth or not, in a civil union, or in a short or long term relationship or perhaps no relationship at all.  Rather than focusing on the parents’ relationship, the court looks to whether the parents agreed on the surname at birth.  Once the child is given that surname, the parent wishing to change it must bear the burden of showing why the child would benefit.

The Supreme Court laid out a test although admitted that it did not include all of the possible factors.  However, the court found that in order to analyze the best interest of the child, it would consider:

1. The length of time the child had been using the surname.
2. The identification of the child within a particular family unit.
3. Any potential embarrassing, anxiety or discomfort that the child could suffer as a result of having a different surname than their custodial parent.
4. The child’s preference in cases where the child was mature enough.
5. Parental misconduct or neglect.
6. The community respect, or lack thereof, associated with the name.
7. Motivation of the name change.
8. Whether the mother will change her name upon remarriage.
9. Whether the child has siblings with different names and the strength of the relationship.
10. Whether the name has ties to an ethnic identity or family heritage.
11. How the name change will affect the relationship of the child with each parent.

In a contested name change case, the court should analyze all of the above factors in the context of the best interests of the children.

Thursday, October 17, 2013

Are you the Father?

Take a Paternity test before signing that Acknowledgement of Paternity if you are not sure!

Recently, in a detailed opinion, the Superior Court of Pennsylvania confirmed the doctrine of Paternity by Estoppel.  In the case of R.K.J. v. S.P.K., the Mother and alleged Father met while Mother was still going through a divorce.  Mother was not exactly honest about her marital status but the alleged Father stayed with her anyway.  They engaged in an "on again off again" relationship for two years before the child was born.  Even know the alleged Father knew he was not the actual biological father of the child, he signed the Acknowledgement of Paternity, financially supported both Mother and child, allowed the child to call him "dad" and claimed the child on his federal taxes.

However, after about six years, Mother and the alleged Father broke up.  Mother then field a complaint for child support against the alleged Father.  He responded by demanding a paternity test and claiming that because he was not the child's biological father, he could not be held responsible for child support.

The trial court disagreed and found him liable for child support because he had held the child out as his own for six years, acted as the child's father, supported him and signed an Acknowledgement of Paternity.  Unfortunately, according to the opinion, the alleged Father is no longer in contact with the child and the child misses him.

The moral of the story?  Be absolutely sure that you are the father of any child that you claim as your own.  Additionally, if you hold yourself out as a child's father, support him, he calls you "dad" and he believes you are his father, when you break up, depending on the facts of your case, you could be held liable for child support.

These cases are extremely fact specific so if you are embroiled in a paternity issue, consult with an attorney right away.

Wednesday, October 16, 2013

Tips and Hints for working out your Child Custody Holidays and Vacations

As an attorney, an especially heartbreaking telephone call I receive is when a family is all ready to celebrate a special holiday: Christmas, Easter, Thanksgiving, a Bar Mitzvah, birthdays, anniversaries....... Only to find out that the other parent will not cooperate with the schedule or arrangements.   The best way to prevent these type of disputes is to work out your holiday and vacation schedule well in advance and have a well thought out, detailed plan so everyone knows what to expect.

Do not put your child in the middle.

When deciding on a holiday schedule, take into account how your family usually spends holidays.  Remember the following:

1. If you travel, what would be the best pickup and drop-off times.  For example, if you spend Thanksgiving at a relative’s house, two hours away, allow for adequate travel time, so that you child is not spending the bulk of the special holiday in the car or you do not have to leave halfway through your turkey.

2. Who should provide transportation? Make sure your plan is clear as to which parent will transport the child.

3. Are there holidays that you celebrate and your spouse does not? Use as a bargaining chip.  For example, if your family has a huge New Year's Day party but Thanksgiving is low key - you can arrange to have New Year's every year - so your spouse can enjoy Thanksgiving every year.

4. Consider your work schedule and the children’s school schedules.  Look at your child's school calendar -- if they have off for two weeks for winter break, decide how those days will be split.

5. If there is a Monday holiday, would you like it to include the entire weekend or just Monday during the day?

6.  Would you like to define Thanksgiving as the entire weekend, to allow for travel?

Reduce your agreement to writing.

7. Should school breaks, such as a week-long spring or winter break,  be alternated and rotated or divided midweek?

8.  Would you like your custody schedule to include Mother’s or Father’s birthday or the child’s birthday?  Some people believe this is vital while others celebrate on the next available day.

9.  Go through the list carefully – are there other holidays you would like to add that your family celebrates?  This is your chance to personalize your arrangement to your own family's traditions.

10.  Reduce all agreements to writing and have it incorporated into an enforceable court order.  You can always negotiate changes between yourselves but, in the event of a misunderstanding, you will have a set agreement on which to rely.

Monday, October 14, 2013

Read your divorce judgment and make sure it is correct - before the ink is dry!

Unless the former husband and wife agree otherwise, alimony is taxable to the person receiving it and tax deductible to the person paying it.  An employer takes taxes out of your paycheck --- so you usually only receive your paycheck after the taxes are already paid.  However, your spouse will not be deducting the taxes from your alimony payment -- which means you must take care of paying the taxes on the alimony yourself.  Usually, you pay estimated payments to the IRS every quarter.

When you file your tax return with the IRS on April 15 (or October 15 if you are on extension), if you received alimony, you note the total amount received as well as the social security number of the person who paid it to you.  If you pay alimony, you note the total amount paid as well as the social security number of the recipient.  The IRS matches those social security numbers and the amounts reported.  If the amounts do not match - both ex-spouses usually receive audit notices.  If you were supposed to pay taxes and did not, you could not be liable for back taxes, interest and penalties.

The IRS produces Publication 504: Divorced or Separated Individuals which is updated every year and explains the taxability of alimony, among other issues.Your attorney should explain these concepts to you but understanding them yourself will help you make more informed decisions.

Recently, in New Jersey, a woman sued her divorce attorney because she thought that she and her ex-husband had agreed that her alimony WOULD NOT be taxable.  Parties are free to agree that the alimony will not be taxable -- it must be put in writing.  In the case of Marcia Venturi v. Edward O'Donnell, Esquire, Wife and Husband settled their case and placed the terms "on the record."  This means that the parties recited all of the terms of their agreement in open court -- and a transcript of that agreement can then be produced at the request of one of the parties.  In court, the parties decided and agreed that ms. Venturi's alimony WOULD NOT be taxable.  However, when the final judgment of divorce was finally issued, that document did not state that the alimony WOULD NOT be taxable.  Wife called her attorney when she received it but he basically told her not to worry about it --- and she did not push the issue.

Unfortunately, her ex-husband took advantage of the omission of the language and deducted the alimony he paid to her.  She was not paying taxes on the alimony because she thought she had agreed that it was not required.  The IRS eventually caught up with her and she owed thousands of dollars in interest, penalties and back taxes.

She eventually sued her divorce attorney but her claim was time barred due to the statute of limitations.  You can read the entire case here: Venturi v. O'Donnell.  The moral of the story?  Read your divorce judgment carefully.  If there is anything in there that you do not understand or you believe is incorrect, call your attorney and get it fixed right away or a little problem could become a huge, expensive headache down the road.

Tuesday, October 08, 2013

Who claims the kids on the tax returns?

Divorced and separated parents often clash over who claims the children as dependents on their tax returns. If both parents claim the same child on their separate returns, the IRS then audits and decides the issue, usually resulting in one parent owing back taxes, penalties and interest.

Generally, IRS regulations dictate that the person with primary custody claims the children as tax deductions.  However, sometimes, parties agree otherwise or a divorce or support court will reallocate those deductions.  Unfortunately, a state divorce or support court cannot bind the IRS, which is a federal agency.  One father found this out the hard way, when the divorce court allocated the children's exemptions to him.  He claimed them, but so did his ex-wife, in defiance of their divorce agreement.  Because she was the primary custody, the IRS sided with her.  You can read the full opinion here.

How to prevent such a mess?  Make sure each parent executes an IRS Form 8332 Release/Revocation of Release of Claim to Exemption or Child by Custodial Parent. Attach the signed form to your tax return each year and protect yourself from IRS scrutiny on the issue or a trick by the other parent to go against your agreement or court order.

Even if a court orders that the non-custodial parent claim the children, in addition to the court order, make sure you have a signed IRS Form 8332.