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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.

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 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)

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.

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.

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.

A new survey by Netmums.com, that included 1,000 parents and 100 children in the U.K., found the following results about the impact of divorce:

Children

  • 39% hid their feelings from their parents
  • 20% said it was no use talking to their parents who were too wrapped up in themselves
  • 14% said they couldn’t be honest about their feelings with their parents
  • 33% said they were devastated by divorce
  • 13% blamed themselves

Parents

  • 77% said their kids were coping fine
  • 10% said their kids were relieved
  • 5% were aware that kids blamed themselves

The conclusions are that most  parents are not aware of the negative impact divorce has on their children and should take extra care to assure the children it is not their fault.

Here’s a divorce case to illustrate marriage annulment in Maryland.

Arthur Hall met Patricia in 1966.  They were both separated and in the process of divorcing their respective spouses.  Patricia was divorced in 1967 and in 1968 Arthur received a copy of a divorce decree from his attorney.  Arthur and Patricia married in 1970.

But there was a glitch with Arthur’s divorce from Helen and, in 1973, he learned that it had been invalidated.  In 1974, Arthur and Patricia separated.  He filed for an annulment stating the marriage was void from the beginning since he was married to his first wife at the time of the marriage to his second wife.  Patricia counterclaimed for divorce.

The Court had the power to either annul the marriage or dissolve it by divorce.  Guess which one it chose.

The Court said:

“It is conceded that the parties entered into the marriage in good faith. Thereafter they pursued a rather normal marital relationship for almost four years during which time they sincerely believed they were legally married. An annulment of the marriage fails to recognize any marital relationship between the parties, while a divorce, on the other hand, does recognize the marital relationship. It can hardly be denied that a normal marital relationship did exist between the parties to this cause, even after Arthur obtained a divorce from his first wife in December 1973.  Under such circumstances this Court believes that the dissolution of the marriage by divorce is more appropriate than by declaring it annulled.”

Hall v. Hall, 32 Md. App. 363 (1976)

Guest post by Evelyn Crowther

Divorce changes us. That’s obvious on many levels. We go from being part of a couple who share a home, finances, interests and a mutual set of values on what’s important in life, to two separate people who appear to disagree on everything.

At the beginning we are hopeful, perhaps naively so? We are in love with the other and full of anticipation at the great life we are going to build together.

There is a sense of invincibility about being able to withstand difficulties that will arise; after all, our love is the real thing. We communicate well, listen attentively, we are thoughtful and considerate with one another. Our lovemaking is passionate and inventive, and the concept of separation and divorce is unthinkable – something that happens to others, but not us.

For many couples, divorce can be just as passionate as those early months of new love; only the passion is expressed as anger, bitterness and hatred for the person we once cherished. It’s as if love has turned itself inside out and upside down.

Divorce might sometimes be a necessary process, but are anger and nastiness really inevitable? Is it possible to make the whole process less traumatic by simply attempting kindness? Many couples find themselves on a path of vengeance, because they have forgotten who the other person really is.

Remember what you initially loved about your spouse. What are the characteristics that drew you towards him or her? Is it possible to see beyond the current difficulties, to the person who still exists beneath the layers of grievance?

The pain of divorce makes us selfish.  We forget that the other person is hurting just as much as ourselves. We may not immediately want to see angry, manipulative or greedy behavior as a result of deep hurt, but why do we believe that we alone have the monopoly on pain?

Pain is ugly, it’s infuriating, but perhaps by relaxing our clenched fists surrounding our need to be right, we could be the one to extend small acts of grace to the other, and by so doing, open up the possibility of reciprocal kindness in return.

Kindness takes courage, but it could be a risk worth taking.

Guest post by Evelyn Crowther

In the strictest sense, addiction refers to physical dependence on a substance that provokes unpleasant or dangerous symptoms upon its withdrawal, such as certain drugs or alcohol. However, addiction is a term that’s also used in a wider sense to mean the compulsive repetition of certain behaviors that cause disruption to life, and over which the participant has little control. Gambling, sex and online gaming are examples of the kinds of behaviors that can easily spin out of control, resulting in personality changes that threaten the integrity of a relationship.

Divorce and Addiction

Relationships fall apart and couples divorce for a multitude of reasons and it’s rarely an easy process. For the couple dealing with addiction, it can be as traumatic as divorce involving infidelity, because the addiction itself is like a third person in the relationship.

Admitting the Truth

Addicts are liars, and deceive nobody more effectively than themselves. Addiction creates a huge amount of shame for the person ensnared by the behavioral or substance dependency, often leading to elaborate attempts to cover up their behavior.

Partners of addicts often notice troubling personality changes as their loved one becomes increasingly defensive or angry. There are often worrying financial issues that come to light, and in some cases – also the threat of violence.

Struggling alone with confusing and contradictory behavior can create anxiety and depression for someone living with an addict, as they attempt to understand what is happening around them.

One of the most courageous things either party can do is to break the silence and admit that an area of life is out of control. Admitting helplessness is the first of the steps in the famous 12 Step Program, but isn’t necessarily limited to alcohol addiction. Surrender can be seen as a principle that applies to all areas where we have lost control of our lives.

Support of Others

It’s usually by taking that first difficult step of admitting what is happening, that people seek and find a connection with others who are also struggling, or on the road to recovery. There is so much help and support out there – often locally, and discovering that we are not alone makes disclosure a risk well worth taking.