Tag Archive for: Divorce

The Morning of Trial

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The morning of the divorce trial, lawyer Fred Holmes, woke up at 5:00 am without an alarm clock.

He stumbled downstairs to feed the cat and the fish.

He put away the dishes from the dishwasher, fixed himself a bowl of Honey Nut Cheerios, and added some fresh blueberries and skim milk.  He made a fresh cup of coffee with the Netpresso machine and poured in some Amaretto flavored cream.

He flicked on the tv to watch the morning news while he ate his breakfast.  The international situation was desperate as usual.

Then he did 15 minutes of P90X Plyometrics and 100 pushups in sets of 25 with a few minutes rest between each set.

After a shower and shave, he picked out a white shirt, red power tie, and his best grey suit.

He drove to the office.  He polished his shoes to a high black gloss.  He threw his pen, phone, yellow legal pad and files into his litigation bag.  Then he drove to the courthouse.

The judge asked, “Is Counsel ready for trial?”

Fred said, “Ready, Your Honor.”

/by James J. Gross

Using Bitcoin to Hide Assets

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Bitcoin, a digital currency, can be used to hide assets in a divorce, warns Jane Croft in the Financial Times.  Dishonest spouses are failing to disclose Bitcoin investments.  Unlike bank accounts or stock, it is harder to link Bitcoin investments to a particular person. There are also online forum discussions on how to use Bitcoin to hide wealth. Divorce lawyers are starting to add questions about digital currencies to their discovery requests.

/by James J. Gross

IRS Loses Millions in False Alimony Deductions

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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.

/by James J. Gross

The “Wright” Strategy for Increasing What You Keep in Your Divorce

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In a post titled “Determining Marital Property in Maryland, Virginia and the District Of Columbia” (June 17, 2011), I said:

“This article is about when the accumulation of marital property ends. It starts at the time of the marriage. When you return from the honeymoon and go to work the next Monday morning you are earning marital property – the stuff the divorce judge divides. When is the first day you can go to work and earn separate non-marital property? It depends on the jurisdiction.”

And after reviewing the applicable statutes, I said:

“When you and your spouse have separated, intending to remain separated, and do not have a property settlement agreement, in Maryland and the District of Columbia the property you acquire from the date of separation until the date of divorce is marital property. In Virginia such property is not presumptively marital, and in general is determined to be separate property, unless special facts and circumstances are established to overcome the presumption.”

In a recent case, Wright v Wright, 61 Va. App. 432; 737 S.E. 2d 519; 2013 Va. App. LEXIS 53, the Court of Appeals of Virginia considered whether Mr. Wright’s strategy in the two plus years between the date of separation and date of the divorce hearing required a finding to bring post-separation expenditures of marital property back into the marital pot to be divided with Mrs. Wright.

Husband had certain marital accounts totaling about $2,800,000. Husband earned approximately $1,500,000 per year; Wife was a homemaker. During the post-separation period, the marital accounts declined to about $1,415,000 on account of Husband’s payment of joint income taxes, real estate taxes on the marital home, tuition and school expenses for a child of the parties, spousal support to Wife and his own attorney’s fees and expert witness fees. Husband deposited the money he did not spend on these expenses to his separate accounts which, of course, were not marital.

The Court of Appeals said none of those expenditure were improper so they did not amount to “marital waste.” They explained that there are only two categories of expenditures of marital funds “proper” and “waste.” If your spending of marital funds falls into the “proper” categories it’s okay even if that permits a big decline in marital assets to be divided and a big increase in the separate funds of the party following the strategy.

The result in Wright provides a road map for the higher earning spouse to skew the division of marital property in his or her favor in some Virginia cases. If you are the lower earning spouse you want prompt filings, quick hearings and, if the stakes justify it, an injunction on expenditure of marital property.

Also, for multi-state or potentially multi-state cases, Wright is another reason that in a case with a relatively long separation, all other things being equal, the higher earning spouse probably wants the divorce case to be heard in Virginia. As I’ve said here before, a little planning and a little audacity can get you into the Court you want to be in. And a little more planning during separation can increase the property you get to keep.

Some of the facts here are from an article by one of the lawyers involved in the case. What’s wrong with Wright, Ronald R. Tweel (Virginia Family Law Quarterly, Spring 2014)

/by Michael Callahan

Watching Movies Together May Reduce Risk of Divorce

I told my wife, Holly, this morning, about a study last year that concluded couples who watched movies together, and then had a conversation about what they saw, were 50 percent less likely to divorce.

Now Professor Ronald Rogge is conducting a new study in which he is asking couples to watch five movies in one month and then discuss them. Couples will pick their own movie or select one from a list of pre-selected films, then talk about the movie, guided by questions provided to them. The questions are about subjects like conflict resolution and providing support to each other during stressful times.

I said the movies were probably “chick flicks”. Holly asked me if they had done any studies on divorces by couples where the wife was forced to watch bad science fiction movies with the husband.

/by James J. Gross

Quick, Watson, the Game Is Afoot!

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My son is too cool to be in the chess club at middle school. He thinks it is too nerdy. What can I say? I was a nerd.  I joined the chess club when I was in middle school. Only it was called junior high back then.

I played a lot of chess in my youth. I thought I was pretty good. That is until I met Marc. I met Marc in the army. He was a chess master. While waiting for the Viet Nam war to wind down, we had a lot of time on our hands. So Marc taught me chess.

I already knew how the pieces moved and how to checkmate. I thought that was all there was to know about chess. Marc opened my eyes.

I learned about power, time and space. I learned that each piece had a value and some pieces changed value depending on what stage of the game you were in. I learned that there was an open, middle and end game. I learned tactics with names like pin, fork and x-ray attack. There was a whole new level of complexity to the game I had played for years unaware.

I think this is true in practicing law as well, and divorce law in particular. When I started practicing, I knew the law (how the pieces moved) and how to win a trial (checkmate). But over the years, I have learned that my cases and clients have many more levels of complexity than I had first supposed.

/by James J. Gross

January Is Divorce Month

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Many couples will file for divorce in January as they seek a new start in 2014.

Some troubled relationships come to a head at the end of the year.  The pressures of the holiday season build up. Or some couples may be able to cope with their marriage when they are at work, but being home together during the holidays is just too much.  There may also be pressure from a person they are having an affair with.

Financial issues, like spending,debt and taxes, may be considerations at year end, or some may be waiting for the year end bonus check to be deposited.  People may not look forward to spending another year with their spouse and resolve to call it quits. And an improving economy and housing market gives struggling couples more options in a divorce.

Whatever the reason, look for the number of divorces to rise this month.

/by James J. Gross

A Stormy Divorce

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Some people going through divorce will find anything to argue about.  Stephen Benson, a 64 year old investment banker, settled his divorce with his wife of three years, Kim Charlton, 56, a former model.  He agreed to pay her $365,000.

But when she removed a $150 copper weather vane from the top of their $4 million mansion, he claimed she damaged the house and refused to pay her until she returned it.

Charlton lugged the bulky weather vane to court as Exhibit A.  She pointed out the four screws she hired a worker to detach.

The Judge ordered Benson to pay the $365,000 immediately and let Charlton keep the weather vane.

/by James J. Gross

Late Counterclaim

If your spouse files a Complaint for Divorce against you, you have 30 days from the date you are served to file an Answer if served in the state of Maryland.   Maryland Rule 2-321(a).

You may also file a Counterclaim against your spouse.  Maryland Rule 2-331(a).

But if you file it more than 30 days after your Answer was due, your spouse can file a Motion to Strike your Counterclaim for being late.  The court shall grant the motion unless you can persuade the judge that the delay will not prejudice your spouse.  Maryland Rule 2-331(d).

/by James J. Gross

Tax Planning for Divorce (Part 7-Home Sales)

Guest Post by John Ellsworth, Esq.

If you and your ex decide to sell your home as part of the divorce, that decision may have capital-gains tax implications. Normally, the law allows you to avoid tax on the first $250,000 of gain on the sale of your primary home if you have owned the home and lived there at least two years out of the last five. Married couples filing jointly can exclude up to $500,000 as long as either one has owned the residence and both used it as a primary home for at least two out of the last five years.

For sales after a divorce, if those two-year ownership-and-use tests are met, you and your ex can each exclude up to $250,000 of gain on your individual returns. And sales after a divorce can qualify for a reduced exclusion if the two-year tests haven’t been met. What happens if you receive the house in the divorce settlement and sell it several years later? Then you can exclude a maximum of $250,000.

/by Guest Post