Tuesday, October 26, 2010

Securing a Maintenance Obligation in IL

An article in the September issue of the Illinois Bar Journal discusses whether a court may order a maintenance-paying spouse to obtain life insurance as security for the obligation:

Illinois law once gave trial judges the discretion to order a party to obtain reasonable security for a maintenance obligation. (1) The current Illinois Marriage and Dissolution of Marriage Act ("dissolution act") no longer specifically provides for such discretion. Recently, a conflict between the appellate districts arose over whether trial courts have the discretion to order a maintenance-paying spouse to obtain life insurance as security for the maintenance obligation.

Read more here.



October 26, 2010 in Maintenance (alimony) | Permalink | Comments (5) | TrackBack (0)

Monday, October 18, 2010

The “Cheats’ Charter”

This summer, the Court of Appeal in London ruled that, in divorce proceedings, it was an invasion of privacy for documents or emails obtained by stealth to be admitted as evidence because it was an invasion of privacy.  The judgment has been called a “cheats’ charter” by divorce lawyers.  Read the court’s opinion here and news coverage here and here.



October 18, 2010 in Maintenance (alimony) | Permalink | Comments (2) | TrackBack (0)

Wednesday, July 21, 2010

Perpetual Alimony

The battle rages on in Massachusetts to reform what many critics characterize as an antiquated and often inequitable set of principles governing alimony:

Steve Niro got married in 1981 at age 23 and divorced less than five years later. At the time of the divorce, he and his wife were in their late 20s, and both were working. Niro remarried nearly 15 years ago, but he’s still paying his alimony.

Two years ago, Niro’s youngest son graduated from college, ending child support payments and leaving his former wife with alimony of $65 a week. “The next thing I know, I get summonsed to court for alimony adjustment,’’ he says. A probate court judge increased the alimony to $700 a week even though the couple had divorced nearly a quarter of a century ago — five times longer than they were married.

“I paid child support. I paid college. I was never late. I fulfilled my obligations,’’ says Niro, 52, a Milford native who works for an environmental engineering firm in Portland, Maine. “I just have to hope that legislators in Massachusetts have enough sense to pass a law that puts guidelines on alimony because the courts don’t exercise any common sense or logic.’’

Niro and other men — and women — like him say the state’s alimony law is archaic, reflecting an era when women kept house and men provided. Today, with women making up nearly half the workforce, they say alimony should be a temporary boost, not a lifetime subsidy.

Critics charge that the Legislature has avoided the issue for years in part because drawn-out divorce litigation is lucrative for lawmakers, many of whom are lawyers. Now these critics are working to change the law, a vague statute that gives judges wide discretion over alimony awards. Two bills have been introduced, and a legislative task force is working on a third version.

The current law sets no formulas or guidelines, saying only that the length of the marriage, assets, occupation, and employment aspects will be considered in setting alimony. Massachusetts probate judges have relied largely on case law and generally consider any marriage of more than 20 years a long-term marriage that merits lifetime alimony, or payments until the recipient remarries. But often marriages of much shorter duration — such as Niro’s — also result in lifetime payments.

Last fall, a crowd of frustrated alimony payers testified at a State House hearing on a bill that would amend the law.

Introduced by Steven Walsh, Democrat of Lynn, the bill attracted 72 cosponsors. It would limit alimony payments to half the length of the marriage, with a cap of 12 years and automatic termination when the payer turns 65. It would protect second spouses’ income from contributing to the alimony award for first spouses. The court would have to consider “the marketable skills’’ and “willingness and diligence’’ of the recipient to seek work. In addition, if the recipient is cohabiting with a partner, alimony would be decreased substantially.

But that bill has been shelved, and critics of the existing law say the large number of lawyer legislators, many of whom practice family law, is the reason. They argue that the current law encourages endless expensive litigation.

Read the full story here.


July 21, 2010 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Friday, April 9, 2010

Time to Refinance Your Home…and Reduce Ex-Spouse’s Alimony

The UK Financial Times reports that bankers are using the current recession as a good opportunity to reduce their ex-wife’s alimony:

City financiers who have seen bonuses slashed or lost jobs are flocking to the courts to seek a reduction in the amount of maintenance they pay to ex-wives.

Family lawyers said they had seen a "huge rise" in applications of so-called varying orders which ask the court to alter the levels of annual maintenance that must be paid to former spouses.

The trend is particularly pronounced where bankers getting divorced did not have the ready cash to hand over a huge sum for a "clean break" and instead agreed to pay maintenance to their former spouses - which often took into account future bonuses.

"Over the last 18 months there has been a huge rise in people seeking to vary maintenance orders," said Julian Lipson, partner and head of the family law team at Withers.

Read the rest here.


April 9, 2010 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Monday, November 30, 2009

$65 Million in Annual Alimony?

Back in May, we speculated that Italian Prime Minister Silvio Berlusconi's wandering eye might cost him millions but the news of just how much money his estranged wife, Veronica Lario, wants is still shocking. The former actress is seeking 43 million euros (around $65 million) each year in alimony.

Lario, who is 20 years his junior, put up with Berlusconi's indiscretion for many years but earlier this year Berlusconi's attendance at an 18-year-old girl's birthday party seems to have been the final straw.

Read more here and here.


November 30, 2009 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 4, 2009

Proposed Changes to Alimony Legislation

The Wall Street Journal reports on political pressure building in some states to limit alimony in various ways, all getting at the core debate over the purpose of long-term alimony these days.  The report mentions legislation being introduced in Massachusetts, Ohio, Florida and Pennsylvania.  Read the full article here.

For a taste of the proposed changes, check out HB 1785, currently pending in the Massachusetts legislature.

The goal [of the bill is that] "any party needing alimony shall be self-supporting within a reasonable period of time."

It defines that period by capping alimony awards at half the duration of a marriage, with a maximum of 12 years unless the supported spouse still has custody of a child or children under 16 years old.

The House bill also would require alimony payments after five years to drop 10 percent annually, with the same caveat on custody of minors or if a recipient is unable to be gainfully employed.

Paying alimony would end upon retirement age. Increases in payments would be tied to the Consumer Price Index. The ability to pay would be determined by recent income, not including the resources of new significant others.

Finally, the bill says many alimony orders that do not comply with the new rules should be amended in court.

Read news coverage of the MA bill here.

AC and TO

November 4, 2009 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Saturday, August 18, 2007

Case Law Development: Modifying Alimony in the Golden Years

After an 18 year marriage dissolved, Husband was ordered to pay alimony to Wife.  Twenty-six years later, Husband (now 67 years old and in poor health) retires and sells his entire interest in his business, leaving him with social security benefits as his sole income.  In response to Husband's motion to modify alimony, the trial court ordered that his alimony be reduced from $ 78,000 to $ 1 per year.

The Supreme Court of Connecticut, noting that it is a rare case in which it will reverse a trial court's decision to modify alimony, found that the trial court's focus on Husband's poor health and reduced income was too narrow.

We conclude that, in reducing the defendant's alimony obligation from $ 78,000 to $ 1 per year, the trial court improperly focused on the fact that the defendant's monthly income had been reduced from $ 14,880.14 to $ 1640, and failed to give proper consideration to the defendant's other financial resources. In addition, although the trial court properly considered the fact that the defendant had retired and was in poor health, it failed to give due weight to the plaintiff's health and financial situation. Accordingly, we conclude that, although the trial court properly determined that there had been a substantial change in circumstances justifying a modification of the defendant's alimony obligation, the trial court abused its discretion in determining the amount of that modification. We recognize that a finding of abuse of discretion in making financial awards in marital dissolution cases is very rare..... Nevertheless, in light of the extreme nature  of the modification order and the trial court's misconception and misapplication of the statutory criteria, we are compelled to conclude that this is one of those rare cases.

Simms v. Simms, 2007 Conn. LEXIS 321  (August 14, 2007)
Opinion online (Last visited August 18, 2007 bgf)

August 18, 2007 in Maintenance (alimony) | Permalink | Comments (2) | TrackBack (0)

Thursday, June 14, 2007

Case Law Development: Characterizing Awards for Tax Purposes

The tax court, in a recent summary opinion, provides a good example for our students of the importance of careful drafting in light of the interrelationship between the tax code and state law when determining the tax consequences of divorce.  In this case, the divorce decree provided that Husband would pay Wife $1200 a month in “rehabilitative alimony” and an additional $72,000 in “lump-sum alimony”, payable in installments of $600 a month.  The decree did not indicate whether this lump sum
award would terminate upon Wife’s death.

Under section 71(b) of the tax code, alimony is not deductible if it does not terminate upon the payee spouse’s death.  Because the Florida courts have held that an award of lump-sum  alimony survives the death of both the obligor and the obligee, the alimony was not properly deductible.

Hinson v. Commissioner, US Tax Court Summary Opinion 2007-92 (June 7, 2007)

Read opinion (last visited June 14, 2007 bgf)

June 14, 2007 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 21, 2007

Case Law Development: Allegations of Wife's Attempted Murder of Husband Do Not State a Claim for Terminating His Maintenance Obligation

The Missouri Supreme Court affirms the dismissal of an ex-husband's petition to terminate maintenance based on his allegations that wife had sought to have him murdered.  The couple had agreed to a non-modifiable maintenance term in their divorce decree.  The Supreme Court noted that Missouri statutes provide that such an agreement, when found conscionable and incorporated into a divorce decree, binds the court:

A non-modification provision can cut both ways. No one can know which party will need more or deserve less as time passes. As with all contract terms, a non-modification provision is an agreed allocation of future risk, bargained for and for which consideration is exchanged. The Missouri legislature has seen fit to allow such a clause to be elevated from contractual to judicial status by incorporation into the dissolution decree. We are bound to respect the statute and to enforce these documents as agreed to and ordered.

The court rejected husband's argument that a court may reconsider the conscionability of the agreement based on later events. It likewise found that waiver was inapplicable as the attempt to murder husband would not establish a "clear and unequivocal attempt to relinquish her contractual right to maintenance so long as [husband] is living."  Finally, the court rejected the application of the public policy doctrine which prohibits an individual from receiving death benefits when they have murdered their spouse.  Reasoning that wife would not benefit from the successful murder of husband, the court found these cases inapplicable.

Richardson v. Richardson, 2007 Mo. LEXIS 39 (March 20, 2007)
Opinion on web (last visited March 20, 2007 bgf)

March 21, 2007 in Maintenance (alimony) | Permalink | Comments (1) | TrackBack (0)

Monday, February 26, 2007

Case Law Development: The Costs of Divorce

The Missouri Court of Appeals decided a case involving a divorce from a 27-year marriage in which maintenance, division of property and attorneys fees were disputed.  The court affirmed the trial court's decision to award maintenance to wife, who had been a homemaker for most of the marriage and who had health problems and few job skills, and to award her a portion of the husband's retirement account, as well as the decision to award attorneys fees. 

That the trial court's decisions were upheld is not particularly surprising given the high degree of deference given to trial courts on these issues and the fact that Missouri allows marital fault to impact these decisions. 

What is striking about the case from a teaching perspective are the numbers:

Wife stayed at home for most of the marriage and never had earned more than $2000 a year. 
At the time of trial, Husband had a monthly income of $3900, working as a machinest.

The couple had arrived at a settlement agreement and divided most of their marital property and debts.  After the trial court divided the retirement account, the total property Wife received under the judgment was $9908. The total value of the property awarded to Husband, less the marital debt, came to $14,341. The trial court ordered Husband to pay modifiable maintenance to Wife in the amount of $550 per month.

Each party incurred about $3000 in attorneys fees for the dissolution action. For the appeal, Wife was awarded $6000 attorneys fees for her representation on appeal; Husband paid $18,000 for his representation on appeal.

Russum v. Russum, February 20, 2007
Opinion on the web (last visited February 26, 2007 bgf)

February 26, 2007 in Attorneys, Maintenance (alimony), Property Division | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 13, 2006

Case Law Development: Improper Factors in Calculating Maintenance

The Supreme Court of Connecticut has affirmed the court of appeals ruling in a case in which a couple were married for 11 years, lived together for a number of years and then remarried for six years.  (See Family Law Prof Blog post of February 10, 2006) The cour of appeals had found that the trial court, in fixing the term of the maintenance award, improperly took into consideration both the prior marriage and cohabitation and the fact that there were adult children with grandchildren residing in the house.
The court concludes that " 'length of the marriage' criterion prescribed in [statutes governing maintenance awards], as a matter of law, does not include prior marriages or cohabitation preceding the marriage." 

As to the issue of the maintenance order being a disguished child support order for the adult children and grandchild in the home, the court reviewed cases from a number of other jurisdictions on the issue.  The court noted that the need to care for minor children can property affect alimony because of the lesser income a custodial parent is able to earn while caring for a minor child, but even then, "an alimony award should address the needs of that parent, not the minor child, whose needs properly are addressed under a support order."  However, the court found no justification for considering the impact of an adult child or grandchild in the home in crafting alimony.

Loughlin v. Loughlin, 2006 Conn. LEXIS 463  (December 12, 2006)
Opinion on the web (last visited December 13, 2006 bgf)

December 13, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 30, 2006

Case Law Development: Incorporation of Alimony Agreement into Divorce Decree Does not Transform Contractual Alimony into Decretal Alimony

Texas is an interesting state for studying approaches to spousal maintenance.  Texas courts long held that the statutes and public policy of the state precluded courts from awarding post-divorce alimony or spousal maintenance. However, the Texas Supreme Court held that parties could agree to such awards contractually and that these alimony agreements, as with other marital property agreements, even when incorporated into divorce decrees, were enforceable as contracts and governed by contract law. 

In 1995, Texas adopted legislation authorizing alimony in only two circumstances: in instances of recent violence by one spouse against the other or in a long-term marriage in which one spouse is unable to support him or herself.  Moreover, the legislation places strict limits on the length and total amount of alimony and provides a range of circumstances which terminate alimony, including cohabitation.

In this case, Husband had agreed to alimony in excess of the term and amount allowed by statute and that agreement was incorporated into the divorce decree.  He now sought to have the alimony terminated on the statutory grounds of wife's cohabitation, even though there was no contractual agreement that alimony would be terminable on this ground.  He argued that because the district court in the original divorce decree had incorporated the agreement into the decree and had ordered the parties to do all things necessary to effectuate the agreement, this "decretal" language transformed the contractual alimony payments into court-ordered maintenance payments. The trial court disagreed and the appellate court affirmed, holding that the agreement was governed by contract law rather than the family code.  "The fact that a court expressly approves such an agreement and incorporates it into the final divorce decree does not transform contractual alimony payments into court-ordered maintenance payments subject to the termination and modification provisions of chapter 8 of the family code." 

McCollough v. McCollough, 2006 Tex. App. LEXIS 7579 (August 25, 2006)
Opinion on web (last visited August 29, 2006 bgf)

August 30, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Saturday, July 22, 2006

Case Law Development: Supreme Court of Canada Allows Effect of Spousal Misconduct to be Considered in Awarding Alimony

Canada's Divorce Act eliminates consideration of misconduct in awarding spousal support.  The Supreme Court of Canada has now ruled that, although misconduct like adultery is not relevant in a divorce case, the consequences of that misconduct may be.  In justifying this nuanced distinction, the court noted:

The 1985 Divorce Act eliminates misconduct, as such, as a relevant consideration when making an award for spousal support.  Section 15.2(5) provides that in making an interim or final order for spousal support, “the court shall not take into consideration any misconduct of a spouse in relation to the marriage”.  In addition, s. 17(6) instructs the court not to consider in a variation application any conduct that could not be considered in the making of the initial order.  These provisions make it clear that misconduct should not creep back into the court’s deliberation as a relevant “condition” or “other circumstance” which the court is to consider under s. 15.2(4) in making or varying a spousal support order.  There is, of course, a distinction between the emotional consequences of misconduct and the misconduct itself.  Those consequences are not rendered irrelevant because of their genesis in the other spouse’s misconduct.  On the contrary, they can be highly relevant to factors, such as a claimant spouse’s capacity to be self‑sufficient, which must be considered when making a spousal support order.  Failure to achieve self‑sufficiency is not a breach of “a duty”.  It is simply one factor amongst others to be taken into account when considering a spousal support order. 

Leskun v. Leskun, 2006 SCC 25 (Sup. Ct. Canada June 21, 2006)
Opinion on web (last visited July 23, 2006)
Analysis of the opinion from Brampton News legal correspondent Meredith Cox.

July 22, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 28, 2006

Commentary: Canadian “Top Court Muddies Divorce Law”

Regular readers of this Blog may be interested in the commentary on no fault divorce and making an award of spousal support that appears in the Toronto Star and is authored by University of Toronto law professor Martha Shaffer.  Professor Shaffer analyzes  last week’s decision by the Canadian Supreme Court in Leskum v. Leskum, a no fault divorce action in which Ms. Leskum remained unable to work some eight years after the marriage because of depression caused by her ex-husband's adultery. The Supreme Court indicated that a trial judge could consider the consequences of the husband's conduct (the depression) on the wife when awarding spousal support. Professor Shaffer suggests that the decision is not all that ground breaking, rather, “the court could have carefully analyzed Leskun's situation to show how she was entitled to ongoing spousal support irrespective of Mr. Leskun's affair. Unfortunately, it did not. The result is a judgment that may be prone to misinterpretation.”  Source.  Martha Shaffer, Toronto Star, thestar.com. To read Professor Shaffer's commentary, please click here (last visited June 28, 2006).

June 28, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Saturday, June 24, 2006

Canada’s Supreme Court Rules that Courts May Consider the Consequences of Spousal Misconduct When Deciding Support Award

Although Canada's 1985 Divorce Act eliminates misconduct, as such, as a relevant consideration when making an award for spousal support, the Supreme Court ruled that courts may distinguish between the emotional consequences of misconduct and the misconduct itself. It said in Leskum v. Leskum, filed June 21, that the consequences are not rendered irrelevant because of their genesis in the other spouse’s misconduct. “On the contrary,” wrote the court, “they can be highly relevant to factors, such as a claimant spouse’s capacity to be self-sufficient, which must be considered when making a spousal support order. Failure to achieve self-sufficiency is . . . one factor amongst others to be taken into account when considering a spousal support order.”  In this case, the husband’s affair had a devastating effect on the wife and she was unable to attain self-sufficiency. Therefore, the consequences of the misconduct were correctly considered by the lower court. The opinion of the Supreme Court of Canada may be found by clicking on this link (last visited June 24, 2006, reo).

June 24, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Thursday, May 25, 2006

Wealthier Spouses Warned to Beware

"By the time the House of Lords had finished delivering its double ruling in the Miller and McFarlance cases today, divorce lawyers around the country were already scrambling to interpret its significance. There was disagreement as to whether it clarified or complicated divorce laws. Many believed it would lead to higher maintenance payments for ex-wives and an increase in pre-nuptial agreements. All agreed on one thing: it was a blow to wealthier spouses.

"Overall it hasn't got better for the husbands," Magnus Mills, a partner at Manches, said. "It's probably slightly better for the wives. White v White [the landmark 2000 case] was the watershed that made things better for wives everywhere and that swing hasn't halted." Justin Moss, a family law solicitor at Wilsons, a firm in Salisbury, said: "Rich men shouldn't get married, frankly. It's that simple. It's not sensible for anyone, man or woman, to marry anybody financially weaker than they are."" By Alex Spence, Times Online Link to Article (last visited 5-24-06 NVS)

May 25, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Discrimination in Scottish Divorce

"ONE of Scotland's most senior legal figures has launched a scathing attack on Scots law by claiming that women are being discriminated against in divorce settlements north of the Border. Lord Hope of Craighead yesterday took the unusual step of criticising Scottish law as he delivered a ruling on two multi-million pound divorce cases in England. The former lord president was among a panel of judges at the House of Lords that ruled Melissa Miller was entitled to £5 million of her former husband's assets after just two years and nine months of marriage. Meanwhile, Julia McFarlane, who was awarded £250,000 a year from her former husband's earnings, was told that she can keep her maintenance payments for life if necessary.

In his opinion on the cases, Lord Hope called for a review of the limited awards Scottish courts can grant to spouses to cushion the blow of divorce. He called on judges north of the Border to be given power to provide long-term compensation to the partner of a marriage who has given up well-paid, promising careers after marriage. The cases have been hailed as a significant victory for women. But as the judges were ruling on English cases, their judgments are not binding on Scotland." By Michael Howie,scotsman.com Link to Article (last visited 5-24-06 NVS)

May 25, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 10, 2006

Colorado Woman in Polygamous Marriage Seeks $2.5 Million from Alleged Spouse

A Colorado woman is seeking $2.5 million from a businessman who she claims was involved in a polygamous marriage with her. She alleges that when she left a business that she and the other wives were working in that the man had agreed to pay her $2.5 million to settle her interest in the business. Attorneys for the man contend that the woman is attempting to extort money by threatening to have him prosecuted for polygamy. Source. AP, cbs4denver.com. Please click here to read the complete story (last visited May 10, 2006, reo).

May 10, 2006 in Maintenance (alimony) | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 9, 2006

Case Law Development: Effect of Bankruptcy Discharge on State Court Judgements to Enforce Non-Discharged Debts

The United States Court of Appeals for the Fifth Circuit was called upon to revisit what it characterized as the “ceaseless litigation” involved following a couple’s divorce in 1993. The case addresses the issue of discharge of debt in bankruptcy but also provides yet another example of how difficult and contentious efforts to enforce obligations under divorce judgments can be.

After their 1993 divorce action, Husband filed bankruptcy and had discharged certain property settlement obligations but was unsuccessful in discharging his alimony debt. Wife then brought several state court contempt actions to enforce the obligations under the divorce proceeding.  In one of these actions, she obtained a state court judgment for contempt ordering that Husband pay the discharged property settlement (the court being unaware of the bankruptcy discharge at that point), the alimony arrearages of over $96,000, damages for failure to pay alimony (primarily Wife’s lost equity in property that was foreclosed when she was unable to pay her mortgage), and attorneys fees in enforcing the obligations.

Husband then brought an action in bankruptcy court to reopen the bankruptcy and requested the court to void the state court judgments. The bankruptcy court ruled that Husband's prior bankruptcy discharge caused all of Wife's claims, except for the claim for non-discharged alimony, to be barred by res judicata. The decision was affirmed by the district court.

The court of appeals, rejected the bankruptcy court’s use of res judicata to resolve the dispute and focused instead solely on the questions of focus instead on the requirements of section 524(a)(1) of the Bankruptcy Act regarding whether the state court judgments were for debts that had been discharged by the bankruptcy action. Thus, the court pointed out that the state court’s original judgment for non-payment of the property settlement was clearly an attempt to enforce a discharged debt and was void.

As to the judgment for attorney’s fees, the court of appeals noted that reasonable attorneys' fees incurred in collecting support obligations should be treated as support obligations while attorney’s fees related to discharged debts should be considered discharged debt. Wife’s award of attorneys’ fees related to efforts to enforce both discharged and non-discharged debt. The district court had held that, because of this, the entire judgment of attorneys' fees was void under the equitable doctrine of unclean hands. The court of appeals disapproved this use of the unclean hands doctrine, noting that this equitable doctrine may not be used by a federal court to void a state court judgment. Rather, the court held that the state court judgment for fees was void to the extent that those attorneys' fees were incurred in enforcing discharged debt and remanded for a determination of what portion of the attorneys’ fees related to that debt.

As to the damages for foreclosure of Wife’s property, the court noted that because the foreclosure occurred before Husband had filed for bankruptcy, they were “claims” in the bankruptcy and were discharged along with Husband’s other debts. As to losses of other property, the court remanded for a factual determination of how much of that award was for pre-petition and post-petition claims.

In re Egleston, 2006 U.S. App. LEXIS 11296 (May 5, 2006)
Opinion on the web (last visited May 8, 2006 bgf)

May 9, 2006 in Bankruptcy, Maintenance (alimony), Property Division | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 2, 2006

Case Law Development: New Hampshire Supreme Court Addresses Rehabilitative Maintenance Preference, Extended Payments of Property Settlements and Division of Moral Obligations that are not Legal Debts

The New Hampshire Supreme Court reviewed a divorce action with a spectrum of economic issues worth noting.  The couple in the case had been married 13 years and had four children.  Husband owns a dental practice with his father.  Wife earned a law degree early in the marriage but, by agreement between the couple, she remained at home as homemaker and primary caretaker of the children. 

One issue related to the choice of rehabilitative rather than permanent maintenance. The trial court awarded wife $3000 a month alimony for three years, based on the amount of time required for her to prepare herself (in terms of mental health and education and job placement) to return to the job market.  Wife argued that she should have been awarded permanent alimony, given the couple's agreement that she stay home with the children, the fact that the children would still be school aged in three years, and her current depression and anxiety.  The Supreme Court affirmed the alimony order, noting that rehabilitative alimony is the preferred approach and should only be rejected where "a supported spouse suffers from ill health and is not capable of establishing an individual source of income, or where the supported spouse in a long-term marriage lacks the requi-site job skills to independently ap-proximate the standard of living established during the marriage."  Neither situation existed in these facts.  Moreover, the court noted, Wife could petition for extension of the alimony if at the end of three years she was still not in a position to meet her reasonable needs.

A second issue concerned the division of property.  The court divided the marital estate of $ 2.9 million and awarded 55 percent to Wife.  The trial court then ordered that Husband be permitted to pay her the outstanding share of the property settlement over a period of 23 years.  The Supreme Court found such an extended payment schedule to be an abuse of discretion.  The court did observe that case law from other jurisdictions supported extended payment schedules where there were substantial nonliquid marital assets and a lump-sum cash payment would create a serious financial hardship for the obligor. The court further commented that "We acknowledge the frustration and inconvenience that may occur when one former spouse must sell part of his or her assets to make the payments required by a divorce judgment. It is an inevitable result of virtually every property division, however, that a former spouse who is required to turn over assets to the other at the termination of the marriage has fewer assets after the division than before.... Accordingly, we hold that the trial court unsustainably exercised its discretion by allowing the respondent to pay a substantial portion of the petitioner's share of the marital estate over a twenty-three year period."

Finally the court held that the trial court had abused its discretion in ordering reimbursement to Husband's parents of contributions they made to certain marital property.  The court cited the general rule that courts may not divide mere "moral" obligations but only legal debts.  The court concluded that if Husband reimbursed his parents for their contributions, "he would be doing so gratuitously and not as a result of an enforceable legal obligation. Accordingly, the trial court unsustainably exercised its discretion in ordering such a reimbursement and reducing the marital estate by $ 275,000."

Harvey v. Harvey, 2006 N.H. LEXIS 49 (April 26, 2006)
Opinion on  the web (last visited May 1, 2006 bgf)

May 2, 2006 in Maintenance (alimony), Property Division | Permalink | Comments (0) | TrackBack (0)