New York’s no fault divorce law provides that a party may be granted a judgment of divorce if “the relationship between husband and wife has broken down irretrievably for a period of at least six months, provided that one party has so stated under oath."

As I previously reported, two other New York courts (here and here) ruled that that a spouse is not entitled to a trial to challenge the other's allegation that the marriage has irretrievably broken down. The ground is established by simply alleging in a signed pleading that the marriage has irretrievably broken down.

In Sorrentino v. Sorrentino, the Court noted that the husband alleged that the Wife was “was extremely frail, was not of her "right mind" and was under the unnatural sway of at least two of her four children.” While the judge opined that he had to consider these affirmative defenses, he concluded that they were without merit and the Wife was entitled to a divorce.

While I think many judges will simply take the position that New York’s no fault divorce law does not require a trial to prove that the marriage has irretrievably broken down (the mere allegation will conclusively prove the allegation), there will be other judges who believe that there may be defenses to the claim and, as a result, will require a trial. Until the Appellate Division rules to the contrary, there will not be consistency; one judge may allow party to defend against a no fault divorce and another may not. This case may not be the last no fault divorce trial.

The mediators do not represent or counsel either spouse. Instead, the mediator’s role is that of an unbiased, neutral third party who facilitates an agreement that addresses the needs, wants and desires of both parties.

Mediation is particularly effective when the parties have children and both parents share the common goal of doing what is best for the children. 

Since everything discussed as part of the mediation is confidential, the parties are free to exchange idea and discuss settlement scenarios that they may not otherwise be open to in a more adversarial or litigated setting.   As a result, it may only take a few sessions to identify and resolve all of the issues relating to the divorce, saving the parties the emotional and economic expense associated with drawn out court battles.

A good and effective mediator will keep the lines of communication open, encourage the parties to think out of the box and brainstorm about ideas that will lead to a lasting settlement.   A successful mediation will result in an agreement, drafted by the mediator, memorializing the terms of agreement.  Most importantly, the parties will be satisfied that even if they did not get everything they wanted, the settlement is fair and, at a minimum, their voice was heard.  

In a previous post, I wrote that a client should seek an attorney who is practical, creative and pragmatic. The attorney should be capable of being fierce advocate, but also a dealmaker, able and willing to settle the case.   

But, how do you find such an attorney? The Blog  Mom Talk offers 5 Tips to Picking a Divorce Attorney to which, I add my thoughts.

1.  Get a Referral.

Talk to friends, family and other acquaintances who have been through a divorce; ask them about their attorney.   Was the attorney responsive to their calls and emails?  Did the attorney fully explain the process and properly manage their expectations.  

The number one complaint against attorneys is that they don’t return telephone calls.  In my office, all calls and emails are returned within hours. 

2. How Much Will the Divorce Cost?

In most litigated or contested cases, since the attorney’s fee is time based, the ultimate cost is unpredictable.  The fee is based on the amount of time that the attorney spends working on your case.   The more acrimonious the divorce, the more expensive it will be.   If you make unreasonable settlement demands, in all likelihood, your legal fees will be higher.

On the other hand, in cases where the parties contemplate an agreement or where the divorce will be uncontested, I have found flat fees to be an effective way to limit the costs of divorce or, at least, to make them predictable.

3.  Consult with Attorneys.

Meet with prospective attorneys.  Come prepared to talk about your case, your expectations and your concerns; arrive prepared with relevant information about your income, assets, liabilities and expenses.  You should leave educated about your rights and with a case strategy.  

You should, however, expect to pay for the consultation. After all, would you really want to be represented by the attorney who has so much free time that he can spend his day doing free consultations?  

4.  Experience and Competence.

Use the consultation to learn about the attorney, his or her experience.  Find out what percentage of their practice is devoted to divorce and family law issues.  Does that attorney have the skill set to understand your case and protect your rights?

5.  Is it a good fit?

This person is going to be your advocate, your guide, advisor and friend during an incredibly stressful time in your life.  Are you comfortable with this person?

As reported in the Bitter Lawyer:

Under a proposed “marital opt-out agreement,” couples will determine the time limit of their union, with two years being the minimum term and “’til death do us part” presumably being a bit longer term. The agreement will function much like a partnership agreement. Property and children (if any at the time of the marriage) are divvied up prior to marriage, much like a prenup.

No one would seriously advocate that marriages have an expiration date or that parties simply be able to walk away from their marital responsibilities with impunity.   Even when couples have a prenuptial agreement, the issues of child custody and support have to be resolved when the parties divorce.   Courts have an opportunity to decide if the marital agreements are enforceable; pre-nuptial agreement can, for instance, be set aside, for example, if they have been procured by fraud or undue influence.   

While the idea of totally disposable marriage may look like a great idea to litigant caught in the mist of a contested divorce, a marriage by contact is simply not realistic. According to the BBC, the marriage licenses are to be renewable.  Because the parties’ roles, needs and expectations will evolve and change over the course of the marriage, the marital contracts, would have to be renegotiated.  I suspect these negotiations would never end well.  If divorces are acrimonious and unpleasant, just imagine having the “when the marriage ends, I want. . .” negotiation with spouse you intend to stay with.     

Divorce is simply the process of unraveling the marital partnership.   Even before New York adopted no fault divorce and, except in the most egregious cases, marital fault had no impact equitable distribution.   No fault divorce simply institutionalized that. 

Divorce need not be about lying blame, pointing fingers or airing dirty laundry.   The process, even without a need to establish fault, is emotionally and economically draining.   If the purpose of divorce was to award “compensation for your loss” divorce would be a blood sport; there would be no winners, except divorce attorney’s who profit from litigation.  Ironically, divorce attorneys were the moving force behind no fault divorce.    

 Ms. Willett writes about how no-fault divorce empowers one spouse to unilaterally end a marriage and obtain a divorce against the will or to the surprise of the other.  In most cases, one spouse does not simply wake up one morning and spontaneously decide that their marriage is over and file for divorce; at some level the couple must be experiencing problems.  My antidotal experience is that people who are surprised by their spouse’s desire to divorce are simply living with blinders on.

Regardless, even if the announcement “I want a divorce” comes out of the blue, placing a barrier to divorce will not revive a dead marriage.   A denial of a fault based ground did not require the parties to reconcile; it just locked two resentful people in a dead marriage.

Interestingly, Ms. Willet calls the matrimonial parts a “divorce factory” “Because most judges face a huge volume of cases, litigants get herded in and out as quickly as possible.” This is true. Judges, however, freed of the need to hear pointless and, often, long winded, tales of adultery, abandonment and name calling, can have more time to do justice - to evaluate custody disputes and to equitably distribute the property of the marriage. 

No fault divorce rather than leading to lunacy, brings rationality to divorce.  Gone from the process are the emotional issues of blame and wrong-doing.  Judges are instead empowered to deal with the issues that really matter-the financial well being of the family and the health, welfare and safety of the children. 

Effective immediately, the IRS will no longer enforce a rule that required taxpayers to file for innocent spouse status within two years after receipt of an IRS collection notice.   The deadline prevented taxpayers, who were in the dark about their spouse’s tax debts,  from seeking relief.

There are three types of innocent spouse relief: the innocent spouse provision, separation of liability and equitable relief. The removal of the two-year limit only affects requests under the equitable relief provision.

Under the innocent spouse provision, a tax-payer must establish that at the time the joint tax return was signed, he/she did not know, and had no reason to know, that there was an understatement of tax.  The separation of liability allows the “innocent spouse” to pay only the taxes  for which he/she is responsible.  The equitable relief provision is a “catchall” of other relevant factors and is oft used by taxpayers who were victims of domestic abuse.  As reported in the Washington Post,

In practice, many individuals who otherwise qualified for equitable innocent spouse relief had no idea the IRS had initiated collection activity because the other spouse had concealed that information. . . As a consequence, it was impossible for these individuals to bring a claim for relief before the two-year deadline to obtain consideration of the merits of their claims.

The change in the law is intended to protect innocent spouse’s like Cathy Marie Lantz.  According to the Wall Street Journal:

Last summer, a federal appeals court upheld an IRS argument for the two-year deadline in the case of Cathy Marie Lantz, the former wife of an Indiana dentist. In 2000, her husband, Dr. Richard Chentnik, was arrested and convicted of Medicaid fraud, resulting in a $900,000 bill from the IRS. Ms. Lantz didn't file for innocent spouse relief because Dr. Chentnik told her he had taken care of it, and he died shortly afterward

Rather than falsely assuming that the floodgates have opened and that no-fault divorce encourages divorce, I think the increase in divorce filings is readily explainable. 

During the period between the time the no fault divorce law was enacted and became effective, I suspect divorce filings were down.   I certainly held off on filing for divorce in cases in which grounds would be an issue; in such cases, I waited until after the effective date of no fault divorce to file.   In one instance, I even discontinued a case in which a grounds trial had been scheduled in order that it could re-commenced after no fault divorce became effective.  By waiting until after the effective date of the no fault divorce statute to file, my client was able to completely avoid the trial and the issue of grounds.  

Secondly, by coincidence, I suspect divorce clients have grown economically optimistic since the enactment of no fault divorce.   Divorce filings were “down” during the recession; divorce became a luxury item when clients were facing unemployment.    In my present discussions with clients, I sense greater optimism; clients seem to be more secure in their jobs and more willing to address their marital discontent. 

While it would be interesting to see the impact of no fault divorce on the divorce rate, a longer sample period may be required in order to draw any meaningful conclusions about the correlative effect of no fault and the divorce rate.   

Though same sex couples cannot marry in New York, New York courts have recognized, as valid, marriages performed in jurisdictions where same sex marriages are legal.   Same sex marriages are, however, no more immune from marital discontent, infidelity, or the other problems that doom marriages than their heterosexual counterparts.     Inevitably, there is same sex divorce.  

 As reported in the Fort Greene-Clinton Patch, if New York were to enact a law permitting same sex marriage:

21,309 gay and lesbian couples in New York would get married during the first three years the law is put into place. With New York's current divorce rate of 8.4 percent, that would mean 1,790 of these couples could potentially split up.

Even in the absence of a law permitting same sex marriage, I have been representing same sex litigants in divorce actions.   Same sex divorces are no different than heterosexual divorces.  The issues of equitable distribution, spousal maintenance, and child support and access (parenting time or custody and visitation), permeate a divorce case without regard to sexual orientation;  same sex couples suffer the same misery and costs as divorcing heterosexual litigants. 

The New York economy, however would certainly benefit from same sex marriage.

In light of the recent report published by the State Senate's Independent Democratic Conference, which showed marriage equality in New York would generate $391 million over the first three years it is put into law, local lawyers have been considering that gay divorce could potentially bring in tens of millions of dollars for the state economy.

This blast from the past is not only topical, it is funny.  Enjoy.

Here are five tax tips that should be considered before entering into a divorce settlement

1.While two assets may have the same “value” they may not be equal. 

Two assets, though equal in value, may be treated differently for tax purposes.  Capital gains taxes for instance are calculated based on the profit reaped from the sale of the asset.   The profit is the difference between the sale price and the asset’s cost basis.   Though the assets may, at thee time of divorce, be equally valued, the asset which cost less may have a bigger capital gain, resulting in a higher tax bill

 In a common scenario, a couple possesses a stock portfolio and a home equally valued- which one should you choose?  A homeowner, under certain conditions, is permitted to exempt $250,000 ($500,000 for a couple) from capital gains from the sale of the marital residence.  The stock portfolio will be taxed on each stock’s capital gain or loss. 

2.  You may spend time with your children, but they may not your dependants.

The right to the dependency exemption for the children goes to the custodial parent. In the case of joint custody arrangements, the exemption goes to the parent whose home the child spent the most number of nights. If custody is truly equal, the parent with the highest adjusted gross income gets the deduction

The parents can agree to alternate or transfer the dependency exemption by filing the IRS form 8332.    Where there are multiple children, the parties can even agree to split the children so that each parent can benefit from the dependency exemption. 

3. Maintenance/alimony is deductible.

Periodic support payments to your spouse made pursuant to a written agreement or judgment that are not child support may be income to the recipient and deductible by the payor. 

4.  You may be able to time the entry of the divorce to your tax advantage.

Your income tax filling status is determined by your marital status on the last day for your filing period, for most people, December 31.    If, for instance, you would benefit from filing a joint return- for example, if there was a capital gain of $500,000 from the sale of the marital home which could be exempted by filing a joint return, it may be prudent to delay finalizing the divorce if the sale and the divorce were to occur at the end of the tax year.   

5.  Child support is tax neutral.

Unlike maintenance, child support is tax neutral

 Earlier this year, an upstate court opined that a trial was required when one party challenged the allegation that the marriage had irretrievably broken down.

Recently,  however, a judge on Long Island opined that not only is a trial not required, there is no defense to the action; all that necessary to satisfy the no fault ground for divorce is a party’s sworn statement alleging that the marriage has irretrievably broken down. 

 It is sufficient that one or both of the parties subjectively decide that their marriage is over and there is no hope for reconciliation.  In other words, a plaintiff's self-serving declaration about his or her state of mind is all that is required for the dissolution of a marriage on grounds that it is irretrievably broken.

Provided that all the issues relating to the divorce, including equitable distribution, maintenance, child custody and support are resolved, a party should be granted a divorce based solely on his/her subjective allegation that the marriage has irretrievably broken down, a position I suggested in my earlier posting.    Hopefully, the holding of the more recent case will be widely adopted, giving New York a true no fault divorce.  

 1. Cheating Does Not Matter.

All states, including New York,  have some form of no fault divorce.   As a result of no-fault divorce, adultery and other fault grounds are largely irrelevant to the division of assets.    Marital fault could be relevant to child custody issues. 

 2. You really cannot hide assets. 

Forensic accountants will scrutinize the financial records, looking for discrepancies, inconsistencies and missing funds.   If funds cannot be accounted for, they will be charged against the “liable party’s” share.            

 3.  Pre-Nuptial Agreement can protect you.

While any discussion about divorce and distributing assets on the eve of marriage may be unromantic and unseemly, a pre-nup is the best way to protect assets in the event of divorce.  At a minimum, the parties will be far more reasonable in their demands when they are planning to wed then they will be when they are divorcing.  

A common mis-conception is that pre-nups are only for the rich and famous they are not.  A pre-nup is appropriate for anyone conemplating marriage.  

4. With a spouse who has been short-changed, the divorce may never be over.

A divorce settlement can always be set aside if one party can demonstrate that it was procured by fraud.  As Raoul Felder noted, "An angry spouse is more lethal than the IRS, because the spurned spouse hates you. The IRS doesn’t actually hate you."

5. You can afford to fight a divorce.

There are now business that are willing to finance the divorce in exchange of a share of the settlement. 

 Because social media is really a new frontier, by necessity, new ethical rules and case law involving privacy rights are evolving.  

The New Jersey Law Blog, for instance, is reporting about a New York case in which a Suffolk County Supreme Court ordered a plaintiff to sign an authorization permitting the defendant to access her Facebook and MySpace accounts, including any records previously deleted or archived.

In a personal injury action, defendant found pictures of plaintiff on her Facebook and MySpace accounts that yielded relevant information regarding damages and the extent of plaintiff’s injuries.  Acting Justice Jeffrey Arlen Spinner rejected plaintiff’s arguments that it violated her Fourth Amendment right to privacy.  In analyzing the websites privacy policies, the court found users are aware that they post content to the sites at their “own risk.” 

As a result of this decision, even postings that have been deleted from social networking sites are discoverable in litigation.  Understand that anything that is put on the internet has a long “shelf life.”   Boastful and false statements made for reasons wholly unrelated to your litigation, may be discovered and used against you; the lesson to be learned-be circumspect in your postings and proceed with caution.  

So why do couples, who are aware of the risks, fail to even consider entering into a pre-nuptial agreement?   Diana Mercer in This is Not Your Parents' Prenup: Debunking Prenup Myths offers several explanations, with my comments added:

•  Prenuptial agreements are only for wealthy people; my fiancé and I are just starting out or have nothing. 

Things change.  As you become older and more accomplished in your career your income will increase.  Your assets, particularly your  home, your savings and your retirement accounts will become more valuable.  You may inherit money or property from your family.  The pre-nuptial agreement can protect the accumulated wealth and provide for how it will be dealt with if a marriage ends in divorce or death.

•  Prenuptial agreements only protect the wealthier spouse and leave the other spouse with little or nothing.

Pre nuptial agreements must be fair.  If the agreement is found to be unconscionable, it will be set aside.  Particularly where there is disparate wealth, the pre-nup can  provide for maintenance for the non-moneyed spouse in the event of divorce.    

• Premarital Agreements must cover everything, soup to nuts.

The agreement can be tailored to your specific desires.   I have written agreements that were limited to how one asset how- a prospective inheritance -would be handled in the event of divorce.   On the flip side, I have prepared agreements that micro-manage how funds will be budgeted and expenses paid throughout the marriage. 

•  Premarital Agreements Aren't ROMANTIC

 The words “pre nuptial agreement” may be the most unromantic words I know.  However, those words are generally uttered between two people who love each other and plan to invest their lives together so that there is incentive to work together and be reasonable in planning for a possible future without each other.   Contrast the pain of saying the word “pre-nup” with the bitterness of a divorce, where greed and irrationality dominate- there is no question which is more painful.   

Alimony paid in accordance with a properly drafted divorce agreement or Court Order is deductible to the person paying it and reportable as income to the recipient. Thus, if you are receiving alimony, you must set aside a sufficient portion to pay federal and state income taxes in order not to be unpleasantly surprised come tax time.

Child support is "tax neutral"; non-deductible to the payer or income to the payee.

A capital gain exclusion of $250,000 (single) and $500,000 (married) exists for the sale of a principal residence, defined as where you lived for any two of the past five years.  If after a separation, this rule tells us that the home must be sold within three years of departure for the exclusion to apply to the departing spouse.

Marital status for tax filing purposes is set on the last day of the year--December 31. If you are divorced before December 31, you must file as a single taxpayer or head of household if you qualify. If you are still married on December 31, you can file jointly or separately, although the latter is not recommended since the total combined tax liability is greater than in the case of joint filing.

If filing separately, the first to file's election of standard or itemized deductions requires the other filer to do the same. Ouch!

Joint tax return = joint liability despite what your divorce agreement or Judgment says. The IRS "innocent spouse" exceptions are very limited.

The custodial parent is entitled to claim the children as dependency exemptions unless otherwise agreed in writing.

Attorneys fees related to a divorce are not generally deductible, whether your own or paid to your spouse's lawyer. Tax advice related to the divorce is deductible, as are fees paid to determine or collect alimony.

If a person is obligated to pay child support and alimony but pays less than the monthly amount due, payments are first applied to satisfy the child support obligation (tax neutral) before alimony.

A tenth tip -  Two assets with same value at the time of the settlement may have very different values when tax impacted.  You have to be very conscious of the basis of assets and the appropriate tax rules.   For example because of the capital gain exclusion on the martial residence, the house sold for a profit of $250,000 may be worth more than a stock portfolio sold for an equal gain. 

In the end, you should discuss the tax impact of your divorce with your attorney and accountant. 

When enacted, it was assumed that the allegation that “the marriage had irretrievably broken down with no prospect of reconciliation,” would create an irrebuttable  presumption that would, in essence, establish the ground for divorce, completely eliminating the need for a grounds trial. 

However, in Strack v. Strack, an upstate judge ruled that because the new law does not explicitly abolish a right to trial in a divorce action, a party is entitled to a trial to determine:

whether a breakdown of a marriage is irretrievable. . .. This Court does hold, however, that whether a marriage is so broken that it is irretrievable need not necessarily be so viewed by both parties. Accordingly, the fact finder may conclude that a marriage is broken down irretrievably even though one of the parties continues to believe that the breakdown is not irretrievable and/or that there is still some possibility of reconciliation.

I am not sure what a divorce defendant gains by forcing a trial on the issue of whether a marriage has irretrievably broken down.  Even if the defendant prevails at trial, it is doubtful the other party will put all the problems of the marriage behind him and resume the marital relationship.  

Doesn’t the fact that a trial is required to resolve a conflict about the viability and the health of marriage actually prove that the marriage has irretrievably broken down? 

This nonsense must end.  New York’s no fault divorce law must be amended to provide that mere allegation, made under oath, that a marriage has irretrievably broken down establishes this ground for divorce, thereby eliminating the need to ever try this issue. 

 In a thoughtful article, Jacob Schiffer poses four questions everyone should consider before seeking a divorce

 1.   Why you are contemplating a divorce?

What is the problem with your marriage?   Will a divorce solve the problem or can it be resolved through counseling?   If the motivation for a divorce was a fight, has there been a sufficient “cooling off period?”  Is there a less drastic remedy than divorce?  

2.  Have you considered your worst and best case scenarios of your case?  Can you accept either outcome?  

3    Do you have the support system available to help you and your children through the divorce process.   Do you have friends or extended family to emotionally support you through the divorce?

 4. Will you be able to act maturely after the divorce?

Particularly, when there are children, you will have to interact with your ex for many years following the divorce; are you willing to let go of any resentments you have towards your spouse?   Is there anything you can do in advance of the divorce to expedite the healing process? 

While consideration of these factors may not make the divorce process any easier, it may  force you to realistically assess your expectations and may hasten the healing process. 

 According to Stacey Napp, the founder of one funding company, Balance Point, “Everybody knows somebody where at the end of the day, the divorce was not equitable,” she said. “We want to help those people, the underdog, to make sure they get their fair share.”

So, is there a need to have a third party to invest in a divorce action?   Perhaps!

Recently, New York amended its law regarding awards of attorney’s fees in divorce and other matrimonial actions.  The law was intended to even the playing field in divorce actions between the money and non-moneyed spouses.   According the law, judges are to presumptively award attorneys’ fees and expert expenses to the non-moneyed or economically dependent spouse.

 In most cases, an award of attorneys’ fees is sufficient to even the playing field between moneyed and non-moneyed spouses in a divorce.   However, in the extreme cases, where money and assets have been secreted or the moneyed spouse is employing a strategy of delay and obfuscation intended to economically wear the other party out, third party financing may be useful.  

 Indeed, Napp conceded that third party funding is not for everyone. 

The company wants to focus on people with marital assets between $2 million and $15 million, a bracket Ms. Napp described as “the lower end of the high end.” She said that investing in smaller disputes was not worthwhile. Wealthier people, she said, seemed to resolve divorces more easily — perhaps because they still felt wealthy in the aftermath. 

 Another concern is control of the case. 

Most lawsuit lenders avoid any role in the management of cases, seeking to disarm critics who worry that lenders seeking profits will corrupt the pursuit of justice. Ms. Napp, by contrast, sells the benefit of her own experience.

Ms. Napp said that as she decided to create Balance Point, she realized that she could not settle her own case. “I had to win,” she said. “Because I don’t know that, if you don’t have a happy ending, that people are going to think it’s such a fantastic idea.”

It is no secret that mounting legal fees and the costs of litigation often facilitate the settlement of a divorce.   No one wants to pay legal fees.    If the case is resolved, the hemorrhage of seemingly endless legal fees stops.  On the other hand, if the costs of going forward are removed, there would no incentive to settle.  

The “divorce loans” are not free.   The litigant has to pay an undisclosed percentage of the “winnings” to the lender.      

Divorce funding would be appropriate in limited circumstances.   It would only be appropriate it cases where the marital estate is sizable and one spouse is economically dependant on the other.   Obviously, this type of financing would not be appropriate where the issues are non-economic, like custody or access to children.