Archive for June, 2011

Incarceration for Non-payment of Child Support

Thursday, June 23rd, 2011

          A couple of years ago I received a call from a friend at the public defender’s office in Arlington.  She had been contacted by the adult children of a father who had been incarcerated for civil contempt nine months ago and remained in custody.  Since it was not a criminal case the P.D.’s office could not represent him.  I agreed to take the case.

            One of the things I learned in reviewing the case history was that, at the time the defendant was incarcerated his salary was being garnished the maximum allowable amount for support and other divorce obligations, but it was less than the amount ordered.  Hoping to shake loose the money the custodial parent thought Father had, her counsel sought contempt and incarceration and prevailed.  While the Father was incarcerated, he lost his job and lost his home to foreclosure.  And Mother and the child were deprived of the money that he had been paying by garnishment.  Talk about lose-lose. 

            We were able to obtain father’s release from prison but he was unemployed for a long time thereafter.  The last I heard of the matter he still earned much less than he did at the time he was incarcerated.  Had the safeguards that, on Monday, the Supreme Court held were required by the U.S. Constitution been in effect in this case, maybe this bad outcome for all involved would have been avoided.

            I have also had my share of frustrating child support and other family law collection cases as Plaintiff’s counsel.  This is an area of important competing interests that must be balanced in arriving at sound public policy.  The Supreme Court struck the proper balance in the Turner case.  See my June 21st post for the Court’s ruling in that case.

Turner v Rogers- Further Thoughts

Wednesday, June 22nd, 2011

           The Supreme Court struck the right balance in this case. (See yesterday’s post  summarizing the ruling.) Maryland and D.C already require essentially what the Court said was necessary in this case.  Virginia does not expressly require a showing that the alleged civil contemnor lacks the ability to pay. 

            The Court was correct to tread very carefully in setting up any procedural hurdles in the child support collection process.  Late or non-payment of child support usually causes immediate substantial financial difficulty to the custodial parent and children.  The states and federal government recognize this in providing many special streamlined procedural rules and extra remedies to encourage prompt payment and facilitate collection of child support. 

         But there is no more fundamental right than personal liberty.  And there are (especially now) child support obligors who really cannot pay what they owe. 

           This is an area of important competing interests that must be balanced in arriving at sound public policy.  The Supreme Court struck the proper balance in the Turner case.

U.S. Supreme Court Addresses Incarceration for Non-payment of Child Support

Tuesday, June 21st, 2011

            Yesterday, the Supreme Court decided Turner v Rogers, 387 S. C. 142, 691 S. E. 2d 470, a case involving incarceration for contempt of court for failure to pay child support, something which is an every day occurrence in courts all over the country. 

            The petitioner argued that an alleged contemnor facing imprisonment should be entitled to counsel under the U.S. Constitution. Two important policies were in play – individual liberty vs. the interest in prompt and full payment of court-ordered child support.  The Court has previously ruled that civil contempt penalties, including incarceration, do not trigger federal constitutional guaranties because they are not punishment, their purpose is to coerce compliance with the court order.  The time-worn phrase is the Defendant “has the keys to the jailhouse in his pocket.”  If he pays – he walks.

         The Court declined to rule that defendants in civil contempt cases are entitled to legal counsel and, if indigent, one provided by the state.  But the Court held that federal constitution guaranties require substitute procedural safeguards to reduce the risks of erroneous incarcerations of child support defendants who lack the ability to pay.  These safeguards include (1) notice to the defendant that his “ability to pay” is a critical issue in the contempt proceeding; (2) the use of a form (or the equivalent) to elicit relevant financial information from him; (3) an opportunity at the hearing for him to respond to statements and questions about his financial status; and (4) an express finding by the court that the defendant has the ability to pay.  Since the record indicated that Turner was incarcerated without these safeguards, the Court vacated the ruling and remanded the case to the lower court.

Determining Marital Property In Maryland, Virginia and the District Of Columbia

Friday, June 17th, 2011

Determining Marital Property in Maryland, Virginia and The District Of Columbia

 When you are married, everything you acquire during the marriage is marital property unless it’s a gift or inheritance, proceeds of gift or inheritance, or excluded by a valid agreement.  Whether something is marital property does not affect title to the property, transferability, right to possession or anything else.  It’s a concept that only matters at the time of divorce.  Marital property is what gets divided between the parties by their agreement of the judge’s order.

This post 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. 

Section 8-201(e) of the Family Law Article of the Maryland Code provides that  marital property means the property, however titled, acquired by 1 or both parties during the marriage.  The applicable D.C statute is Section 16-910 which provides in part that the Court shall value and distribute … property and debt accumulated during the marriage.  The applicable Virginia statute is Virginia Code Section 20-107.3 which provides in part A.2 that  All propertyacquired by either spouse during the marriage, and before the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, is presumed to be marital property in the absence of satisfactory evidence that it is separate property.

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 it is not presumptively marital, and in general is determined to be separate property, unless special facts and circumstances are established to overcome the presumption.

Property means anything of value including wages, 401(k) accumulations, vehicles, real property, etc.  In a particular case, like one with a long separation before divorce where one spouse earned a lot more and acquired a lot more property than the other, this difference in the law can make a huge difference in outcome. 

I had such a case a couple of years ago.   It was a second marriage, no children of the marriage, the parties had been married a relatively long time but had not spent much time together.  The higher earner and our client, the wife, spent lots of time on the road for her employment.   The separation was sort of a gradual thing.  They had not seen each other at all for about three years.  They had only spent holidays together for about the four years before that, and had not had marital relations in all that time.  The clearest event establishing the separation was Wife’s purchase of a home in Virginia in her own name with her own funds three years past.  Husband lived in Maryland.

We decided to try to make this a Virginia divorce case even though the Virginia Courts did not have personal jurisdiction  over the Husband who had never lived in Virginia.  I thought it was worth the effort because it seemed unfair that Wife would have to divide everything she had acquired over the seven year period that the spouses had lived apart and had completely separate finances.

I sent a settlement proposal – no response.  I filed a Complaint for Divorce and served it on Defendant by mail with a form called waiver/acceptance of service.  If he signed and returned it we could go forward.  On the last day for a timely Answer I got a call from a Virginia law firm requesting a short extension of time to respond.  I agreed and waited for the motion to dismiss that I expected would be filed and then granted, leaving us with a Maryland case in which our client’s accumulated property for seven years of separation and counting would be on the table.  I updated our client and told her what I expected to happen.

But it didn’t.  Husband’s Virginia counsel filed an Answer submitting Husband to the Court’s jurisdiction and never raised the lack of personal jurisdiction.  In the negotiations Husband’s counsel worked tirelessly, brilliantly and somewhat successfully to discover and assert facts to move the date of final separation forward so that husband could share in the substantial property Wife has accumulated during the early years of the separation.  Nice work but it would have been totally unnecessary if the case had been filed in Maryland as it should have been.  Everything Wife had accumulated for the seven years of separation to date and thereafter continuing to the date of divorce or date of Agreement would have been marital property.

If you have a long separation and a big difference in post-separation property you probably want your divorce case to be heard in Virginia if you are the spouse with more post-separation property and you want it heard in D.C. or Maryland if you are the spouse with less post-separation property.  As you can see, a little planning and a little audacity can get you into the Court you want to be in.

Post-divorce Review of Estate Plan

Tuesday, June 14th, 2011

          After your divorce you should review your Will and all beneficiary designations to ensure that you do not unintentionally include a gift to your former spouse.  Although we strongly recommend against relying on statutes to correct your estate plan despite your own inaction, there are statutes that provide that the judgment of divorce eliminates prior bequests or certain beneficiary designations to the former spouse.   See Va. Code Sec. 20-111, 20-111.1, 64.1-59; Md. Code, Estates and Trusts Article, Sec. 4-105(4); DC Code Sec. 18-109 and Estate of Roscoe H. Liles, 435 A.2d 379; 1981 D.C. App. LEXIS 355.  The effect of these statutes on the treatment of a now former spouse in an estate plan is uncertain and incomplete and may be frustrated by federal law spousal protections.  The savings statutes are no substitute for a careful review of estate planning documents and beneficiary designations and corrective action based on the divorce settlement or judgment.

Wills and Elections Against the Will

Monday, June 13th, 2011

             You can improve on the intestate estate outcome by unilateral action.  You can make a Will or a new Will; or revoke a Will that leaves everything to your now estranged spouse.  We encourage clients to consider taking these actions early on in the process.

            However you cannot freely disinherit your spouse.  In each local jurisdiction the surviving spouse can renounce the gift, if any, to the spouse in the Will and elect to take a statutory share of the estate.  The surviving spouse is entitled to claim an elective share as follows:

Maryland – an allowance of $5,000 and one-half of the net probate estate if there are no surviving issue of the decedent and one-third if there are surviving issue.  Md. Code, Estates and Trusts Article, Sec. 3-201 and 3-203.

Virginia –  one-half of the augmented estate if there are no surviving issue of the decedent and one-third of the augmented estate if there are surviving issue.  Va. Code Sec. 64.1-16.1.

 District of Columbia – the surviving spouse who renounces the gift under the Will is entitled to the amount he or she would take if the decedent did not make a Will.  D.C. Code Sec. 19-113.

Spousal Claims in Intestate Estates

Saturday, June 11th, 2011

If you die intestate (without a valid Will) your spouse is entitled to the following percentages of your net probate estate:

Maryland – the surviving spouse takes entire net probate estate unless there are surviving decedents or surviving parents of the decedent;

the surviving spouse takes $15,000 plus one-half of the net probate estate if the decedent is survived by decedents who are not minor children, or by parents of the decedent; and

the surviving spouse takes one-half of the net probate estate if the decedent is survived by his or her minor children.

See MD Code, Estates and Trust Article, Sec. 3-102.

 Virginia – surviving spouse takes entire net probate estate unless there are surviving descendants of the decedent who are not descendants of the surviving spouse, in that event the surviving spouse takes one-third of the net probate estate;

the surviving spouse also has a claim to one-half of the augmented estate if the decedent is not survived by descendants and one-third if the decedent is survived by descendants,

See Va. Code Sec. 64.1-1.

 District of Columbia – D.C. law provides that the surviving spouse or domestic partner, and minor children, are entitled to a reasonable allowance from the probate estate for maintenance during estate administration.  D.C. Code section 19-101.04

The surviving spouse or domestic partner takes the entire net probate estate if the decedent is not survived by descendants or parents;

The surviving spouse or domestic partner takes two-thirds of the net probate estate if the decedent is survived only by descendants who are issue of the decedent and the surviving spouse;

The surviving spouse or domestic partner takes three-fourths of the net probate estate if the decedent is not survived by descendants but is survived by a parent;

The surviving spouse or domestic partner takes one-half of the net probate estate if the decedent is  survived only by descendants who are issue of the decedent and the surviving spouse, and the surviving spouse has other issue; and

The surviving spouse or domestic partner takes one-half of the net probate estate if the decedent is survived by descendants one or more of who are not issue of the surviving spouse.  D.C. Code section 19-302.

            Also in each local jurisdiction there is a statutory preference for the surviving spouse to be the personal representative or executor of the estate.

Spousal Rights and Non-Probate assets

Friday, June 10th, 2011

Generally spousal claims apply to the probate estate which only includes assets that the decedent owned at death and which did not pass by operation of law or beneficiary designation or other contract provision.   Virginia expands the spousal protections to the “augmented” estate, the calculation of which includes certain non-probate assets and prior gifts.  A federal law known by the acronym ERISA protects spouses’ rights to certain retirement plans and accounts.  Often the vast majority of a decedent’s property passes outside of probate.

            For example, many spouses own the marital home and sometime other real property in a form of ownership called tenants by the entirety (“T by E”).  One of the characteristics of this tenancy is survivorship – if one tenant dies the other succeeds to ownership of the entire property by operation of law.  A Will cannot change this result.

            Often spouses hold bank accounts as joint tenants with right of survivorship (“JTWROS”) or name each other as pay on death (“POD”) beneficiaries of their financial accounts.  These arrangements can be changed by transferring the funds or changing the beneficiary.

            You can freely change the beneficiary designation on your IRA’s.  However 401(k) accounts are subject to ERISA spousal protections.  You cannot name a beneficiary other than your spouse without your spouse’s consent and if you name no beneficiary your spouse takes by default.  A spouse’s ERISA rights in 401(k) accounts, 403(b) accounts, pensions, etc. can be eliminated only by a final judgment of divorce, or completion and delivery of a beneficiary designation with spousal consent to the plan administrator.

Spousal Estate Rights

Thursday, June 9th, 2011

The marital contract that spouses enter into at the time of the marriage includes many provisions that I often find are a surprise to some people.   One area where marriage makes a big difference is how property passes at death. 

If you are married at the time of your death your spouse has important rights to your estate, whether or not you made a Will.  And the law does not consider you unmarried just because you are separated or there is a divorce case pending.  Only the final judgment of divorce changes your status for decedent estate purposes.  A limited divorce does not terminate spousal estate rights although Virginia, but not Maryland and the District of Columbia, bars the estate claims of surviving spouses who abandoned the decedent. See Va. Code Sec. 64.1-16.3.

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