Settling your divorce case out of court is almost always better than a divorce trial.  But so many people don’t know how to use principled negotiation techniques to reach a settlement.    Here are some examples of the wrong way to respond to an offer:

Give an Ultimatum.

I received a response to a divorce settlement offer last week that was dead on arrival.  It said its terms were “non-negotiable”.  I have never seen that work.  Instead it closes down the settlement discussions.  The same can be said for deadlines pulling the offer, like “You have one week to say yes to this counteroffer or it is revoked forever.”  A lawyer I know expressed a better attitude when he said, “Everything I’ve got is negotiable.”

Respond Indirectly.

If you receive an offer that numbers the issues, like (1) child custody, (2) child support, and so on, don’t start your response by telling me that your spouse won’t agree to a visitation schedule. Respond in the same order, using the same numbers, and propose a visitation schedule that you want.  Save the blame for court.

Throw Out Everything.

I have received more than one letter from opposing counsel that my client‘s offer is ridiculous or unreasonable or unacceptable.   What am I supposed to do with that?  It would be more helpful for them to say which items are unacceptable and propose a counteroffer.

Go Backwards.

The purpose of negotiation to is reduce difference between offer and counteroffer until you reach a settlement.  If you are increasing the difference, you are not going anywhere.  Once you have offered alimony of $2,000 a year, it will be impossible to get your spouse to accept $1,000 a month in the next round of negotiations.

The right way to respond to an offer of settlement is through principled negotiations.  That means you respond specifically and directly only to the items in dispute, state your objections clearly, and propose compromises.

Word of a case has reached us from India.  A woman there asked the Bombay High Court to increase her alimony award granted in a divorce.

The court rejected her request because it found that she was already wealthy and therefore not entitled to alimony.

The court said that a woman who is able to maintain her lifestyle despite the estrangement doesn’t need alimony.

We have a similar concept in Maryland, although stated in different words.  Alimony is not intended to be a pension for life.

The objective of alimony is to help a dependent spouse time to become self-supporting even if that results in a lower standard of living.  Holston v. Holston, 58 Md. App. 308, 473 A.2d 459 (1984).

Parties who each had over a million dollars in assets were already self-supporting and therefore not entitled to alimony.  Hull v. Hull, 83 Md. App. 218, 574 A.2d 20 (1990).

by James J. Gross

She was an army nurse and he was in the army. Mr. and Mrs. Donigan married in 1943. A daughter was born two years later. They lived in Baltimore until 1948 when the husband rejoined the army and was assigned to Japan.

The wife and child joined him six months later but discovered the husband had become infatuated with a girl serving with the Red Cross. Eventually they returned to the US and the husband filed for divorce. The trial judge denied alimony to the wife because he found that she as employed and self-supporting.

The appeals court viewed it differently, however, and said “The husband is about forty years of age but  prefers to travel about the country rather than work, or as his wife puts it, he enjoys play more than he does work….if the wife’s income is insufficient for her needs, the husband’s obligation is not less because he would rather be idle than industrious and peripatetic than productive, although he has the mental and physical ability to earn a living.”

Donigan v. Donigan, 208 Md. 511, 119 A.2d 430 (1956)

Dr. Murray Malin, an anesthesiologist, was 38 when he met Marcie Minenberg, 27. She went to law school but did not pass the bar exam and was working in a jewelry store. They wed, had one child, and divorced in Maryland after three years of marriage. At the time of trial, Murray had stopped practicing as a doctor due to a drug addiction.

The trial court awarded Marcie alimony of $3,500 a month, non-taxable to her, for five years. Murray appealed arguing that (1) the court could not award alimony that was non-taxable and (2) the court could not award alimony for longer than the marriage.

The Maryland Court of Special Appeals agreed with Murray that the only alimony a court can award is taxable alimony. Parties can make alimony non-taxable, but only by agreement.

As for the length of alimony, the appeals court said there was no law against alimony that lasts longer than the marriage.

Malin v. Mininberg, 153 Md. App. 358, 837 A.2d 178 (2003)

In the Mumma case, the wife called the court’s attention to the depreciation deduction that the Husband was taking for his business.  She pointed out that depreciation is a non-cash flow event and so the money is available to the Husband.

The argument on the other side is that equipment really does wear out and needs to be replaced eventually.  When it does, it will take cash flow to purchase new equipment.

Taking a look at the Maryland Child Support Guidelines in Section 12-201 of the Family Law Article, we see that income from self employment means gross receipts minus ordinary and necessary expenses.

However, the statute goes on to say that ordinary and necessary expenses do not include accelerated depreciation, investment tax credits, or any other expenses the court determines in not appropriate to subtract.

So what about straight line depreciation?  Does the fact that the law expressly disqualifies accelerated depreciation but not straight line depreciation mean you get to deduct it from income?  Or does the catch-all provision at the end allow the court to decide?  In the cases I have tried, the trial judges have included straight line depreciation as income.

Albert  Mumma married Jean in 1952 and they had three children together.   Albert supported the family as an architect.  He had an office in Georgetown.  In 1968 the parties had a violent altercation and they decided to divorce.

The judge awarded $200 a month in alimony and $500 a month in child support to Jean, plus attorney fees and costs.  Albert appealed complaining that he was ordered to pay support of $8,400 a year, while his income was only $9,422 in 1968 and $12,726  in 1969.   Jean countered that, among other things, he received gifts from his parents.

The DC Court of Appeals reversed the trial court, holding that “gifts do not constitute income” and suggested that Albert’s income tax returns would be an appropriate guide to his actual income in the absence of affirmative evidence otherwise.

Mumma v. Mumma, 280 A.2d 73 (1971)

If you have been “Keeping Up With the Kardashians” on television, you will be interested to know that Kris Jenner filed divorce papers against Bruce Jenner yesterday in Los Angeles Superior Court, citing irreconcilable differences.

The couple have been married for 23 years.  It is the third marriage for Bruce and the second for Kris.  They had no prenuptial agreement.

The split appears to be amicable and the parties have agreed on joint physical and legal custody of their only child who is still a minor, Kylie Jenner.  Neither is asking for alimony.

George and Betty Lou Blake had been married for 37 years. He was 56 and she was 57 when they got divorced. He made $42,500 a year and she made $20,000 a year.

Courts now favor rehabilitative alimony for a set period rather than indefinite alimony, but there are two exceptions. The judge granted Betty indefinite alimony and the appeals court affirmed.

Since George made twice as much as Betty, the judge might have applied the second exception to rehabilitative alimony and given Betty indefinite alimony on the basis of unconscionable disparity.

Instead, the judge applied the second exception, finding that in view of her age and, given the time necessary for further education or training, “I don’t know that there’s a whole lot more that she can do. She’s doing the best she can.”

Blake v. Blake, 81 Md. App. 712, 569 A.2d 724 (1990)

When someone pays alimony they get a tax deduction for it. But the same amount should be included as taxable income on the return of the person receiving alimony. I think most divorce lawyers believed, and cautioned their clients that the IRS computers will automatically detect any variances and flag the returns. It turns out the IRS computers are not that good.

The inspector general for the IRS has issued a report, according to the Washington Times, that the U.S. government loses hundreds of millions of dollars a year in false alimony deductions. The report says that the IRS doesn’t have a system for detecting the false claims. 47 percent of returns filed in 2010 got it wrong said the inspector general.

Most cases involved a deduction for alimony without matching income on the recipient’s return. In other cases, taxpayers did not report who they were paying alimony to or gave a false taxpayer identification number for the recipient. “Apart from examining a small number of tax returns, the IRS generally has no processes or procedures to address this substantial compliance gap,” the report said.

In order to make a fair and equitable alimony award, the divorce court judge must look at all the factors necessary, including the following:

(2) the time necessary for the party seeking alimony to gain sufficient education or training to enable that party to find suitable employment.

Employment is not required, however, if a party is already self-supporting. Mrs. Hull was almost 61 years old and her husband was 66 at the time of their divorce. The wife never worked during the marriage and the husband was retired from the CIA. The parties had both inherited funds and when they sold their home, they each had assets of over one million dollars.

The trial judge found that both parties were self-supporting and therefore no alimony was required. The wife appealed and the appeals court affirmed the ruling of the trial court.

Hull v. Hull, 83 Md. App. 218; 574 A.2d 20 (1990)