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Archive for Matrimonial

Tax Cuts and Jobs Act of 2017 Creates Dynamic Problems for Divorcing Spouses.

The U.S. tax code has long been a labyrinth of convoluted legal jargon that has left even the most astute of wanderers lost in its maze. Decades’ worth of opinions from the Tax Courts have served as guiding lighthouses to aid in navigating its many wayward roads , but with the recent passage of the “Tax Cuts and Jobs Act of 2017” the maze’s pattern has suddenly changed, potentially rendering those opinions null and void. One of the areas that has seemingly been flipped on its head by the tax code is Alimony or Spousal Maintenance (as it is called in New York).

Under the old code, maintenance awards were deductible to the payor and included as taxable income to the payee, which generally resulted in more money to be distributed to the payee.  Why? Well the answer is best illustrated by way of example.  Say the payor (the higher earning spouse) is obligated to pay maintenance in an amount of $30,000 per year to the payee (the lower earning spouse).  The payor, who earns more is taxed at a much higher rater of 33% than the payee who is taxed at only 15%.  Under the old code, the payor would be able to deduct the $30,000 and thus save on paying the 33% due in taxes on that amount for a total savings of $9,900.  Meanwhile the $30,000 is included to the payee and taxed at the lower rate of 15% and the payee only owes taxes in the amount of $4,500. The parties have saved $5,400 by using the deduction.  This deduction has served as a critical tool in negotiating prenuptial, separation and divorce agreements as it encourages the payment of more funds to the payee.  New York’s recently amended law on maintenance guidelines went into effect on January 25, 2016 and was enacted based upon the presumption that the payor was entitled to deduct maintenance.

The new law under the Tax Cuts and Jobs Act of 2017 terminates this deduction, thereby reversing the current maintenance dynamic.  In other words, the payor must now pay taxes on the maintenance award and the payee shall not be taxed on the money received.  The new law will not go into effect until after December 31, 2018.  Divorcing spouses in New York will soon be left to face a new maze where guideline amounts exist based upon a presumption that is no longer valid.  Without suitable guidance, litigants will be left fighting over the proper amount of maintenance (a fight that the new maintenance guidelines had sought to put to rest).  Dynamic problems require creative “outside the box” solutions.  The attorneys at the Law Offices of Steven E. Rosenfeld, P.C. are here to guide you through this new and complicated frontier and insure that you make it out of the maze in one piece.

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NYC Divorce Lawyer Summarizes Issues Regarding Foreign Prenuptial Agreement

If your prenuptial agreement includes wording to the effect that the property of the parties acquired before and during the marriage is to remain separate, you may be wondering how such provisions would be applied in the event of a divorce.  As noted, NYC divorce lawyer advises the Court of Appeals of New York handed down an answer to this very question on December 18, 2008.  In Van Kipnis v. Van Kipnis the Court enforced a prenuptial agreement agreed to in France, and gave effect to a provision barring the equitable division of property.

In the provisions of the Van Kipnis agreement, the parties elected to follow a separation of estates scheme, rather than the community property system that is the default in France.  The terms of the contract were that, “each spouse shall retain ownership and possession of the chattels and real property that he/she may own at this time or may come to own subsequently by any means whatsoever.”  One party contended that this provision was only intended to apply to property ownership while the parties were married, but not its distribution should a divorce occur.  The Court disagreed based on the plain language of the contract, which contained nothing to that effect.  Courts enforce the terms of a prenuptial agreement based on the intent of the parties executing.  The way that courts determine that intent is by looking at the plain wording of the contract, not the claims of the parties make about it’s meaning after the fact.

The party opposing the separate property provisions also contended that because the agreement was not an express waiver of New York’s equitable distribution default, but instead an opt out of France’s community property system, the property had to be divided equitably under New York’s Domestic Relations Law §236(B)(5).  Again, the Court disagreed, reasoning that there are two ways that prenuptial contracts may be worded to circumvent the default system of equitable distribution.  First, parties may include specific wording that expressly waives equitable distribution, and second, they may designate property that would normally be considered marital property subject to equitable distribution, as separate assets, never to be construed as jointly owned.  The Court held that the Van Kipnis agreement was an example of the latter method of bypassing equitable distribution.

As a couple negotiates the terms of a prenuptial agreement, it is important that both individuals ensure that the language therein is a complete, clear, and unambiguous representation of their intentions in the event of a divorce.  This language is what courts will use to interpret the meaning of the agreement, not any other statements of the intended meaning.  Moreover, the fact that a prenuptial contract does not explicitly opt out of the default property division scheme of equitable distribution does not mean that the terms of the agreement are not providing for exactly that.

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Considering Adding Your Spouse to the Deed on Your House? Here’s Why This NYC Divorce Lawyer Might Advise You Otherwise

A recent Third Department case, Myers v. Myers, demonstrates the consequences which may befall a spouse who owns property prior to marriage and then transfers same into joint name in order to satisfy a mortgage lender’s requirement that the other spouse’s name appear on the deed, as well. As noted by an experienced NYC Divorce Lawyer, In Myers, the wife owned the marital residence prior to the marriage, but approximately five (5) years into the marriage, transferred it into joint name, consistent with the mortgage lender’s demands. The purpose of obtaining the mortgage was to consolidate debt.

In December 2011, the wife commenced an action for divorce. The parties resolved all issues of equitable distribution, save for the distribution of the marital residence. The wife claimed that the value of the residence at the time of transfer was approximately $165,000.00 – and she was entitled to a separate property credit.

The Supreme Court issued a Decision & Order that both the marital residence and the mortgage debt were to be divided equally between the parties. The wife appealed such Decision & Order. On appeal, the Third Department, while noting that its 2012 decision in Campfield v. Campfield (upon which the Supreme Court based its Decision & Order), did not necessarily require the result as determined by the Lower Court. The Appellate Division noted:

“…To the limited extent that Campfield may be read to limit a court’s discretion to award a separate property credit to a spouse, like the wife, who transmutes separate property into marital property without changing the nature of the property itself, it should no longer be followed.”

The Court also noted that the decision to award a separate property origination credit is a determination left to the sound discretion of the trial court. The facts of the case were determinative that a separate property origination credit was not strictly mandated. Moreover, the trial court did not abuse its discretion.

Any spouse thinking of transferring separate property into joint name should think seriously about doing so for fear of what may transpire in the event of a divorce.

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First Department Issues Important Decision on Custody

Perhaps one of the most difficult decisions a Court will make in the area of family law are those regarding custody. The Court makes its determination on custody by examining what is in the best interests of the child. How the Court determines what is in the child’s best interests often involves a very detailed factual analyses of varying factors, including, but not limited to, the current custody arrangement, the current home environment, the financial status of the parties, the ability of each parent to provide for the emotional and intellectual development, whether the custodial parent will encourage a good relationship with the non-custodial parent, and the wishes of the child.

On May 1st, 2014, the First Department issued a decision, Melissa C.D. v. Rene I.D. , which is a good example of how the Court applies the various factors in determining the best interests of the child. In Melissa C.D., it appeared that the status quo (the child’s living with her father), the neutral expert’s opinion that the child remain with the father, and the child’s express wish to remain living with her father (the child was 14 and so her opinion was given substantial weight), were the prominent factors in the First Department’s decision. The Court held it would not be in the child’s best interest to remove her “against her wishes, from her father and brother in Manhattan, where she has always lived, and placing her with her mother and her mother’s lover, a situation that she is not comfortable with, on Long Island, in a community that she does not know.”

Interestingly, in an apparent nod to recent case law, holding that the parent who is more likely to encourage a good relationship with the other parent should be granted custody, the First Department to specifically held that the father’s conduct herein “did not rise to the level of deliberately frustrating, denying or interfering with the parent rights of the mother so as to raise doubts about his custodial fitness.” Thus, one cannot understate the emphasis the Courts are giving to that factor now as, even where the child is living with the father, the neutral has issued an opinion that the child should live with the father, and the child has expressed a desire to stay with the father, the Court still made sure to make this specific finding.

Significantly, although the First Department reversed the trial court and granted the father sole custody, it still cautioned the father to “consider the effects of his comments to the children, to refrain from interfering from the children’s relationship with the mother and to do all that is within his power to encourage and support their relationship with her.” This further buttresses the importance of this one factor.

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Why experienced matrimonial counsel is necessary in a divorce.

Perhaps you are thinking about filing for divorce.  Perhaps your spouse has just informed you that she/he wants a divorce.  Going through a divorce is one of the most painful processes someone will experience.  The divorce laws can be complex and the manner in which they are implemented may be different depending upon certain variables, including, but not limited to the county in which an action is brought.

While many believe that they can represent themselves in a divorce, this is generally not a good idea.  Children and assets such as homes, retirement accounts, business interests, and other financial assets can make a divorce quite complex.  Add in the emotional aspects of losing a spouse and representing oneself,pro seis usually a recipe for disaster.

Retaining an experienced matrimonial counsel to represent you in a divorce could be invaluable to your divorce.  Experienced matrimonial counsel will aid you in obtaining maintenance (alimony), child support, and equitable distribution of marital property.  If you are the “monied spouse” (sometimes a misnomer), seasoned matrimonial counsel can assist you in minimizing your expenses.  If you have a professional license or own a business or are married to someone who has a professional license or owns a business, the business or professional license may be marital property subject to equitable distribution.  Thus, hiring experienced matrimonial counsel could aid you in protecting these assets or fighting for your rights.

We have represented celebrities, professional athletes, business owners, finance and other professionals and their spouses in near every type of divorce and family matter imaginable.  We have represented these individuals in New York, Bronx, Kings, Queens, Richmond, Westchester, Putnam, Rockland, Nassau, and Suffolk Counties in New York and throughout New Jersey as well.  Thus, we at the Law Offices of Steven E. Rosenfeld, P.C. have the experience necessary to protect and fight for your rights in a divorce.  Call us to schedule a consultation today.

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The Importance of Pre-Nuptial Agreements for Same Sex Married Couples in New York

While the Supreme Court has declared the Defense of Marriage Act (“DOMA”) to be dead, as Chief Justice Roberts noted in his dissent, DOMA is not quite dead yet. States which have not legalized Same Sex Marriages are not required to recognize a Sister State’s Same Sex Marriage. This creates a myriad of problems for same-sex couples.

The equality of a same sex marriage may depend upon which State the spouses are located in at a given moment. In fact, in order to see the full implications of DOMA, all one needconsider is what would have been the outcome in the Terri Schiavo case, had Terri been a partner of a same-sexmarriage,rather than a heterosexual marriage. Under DOMA, inasmuch as Florida does not recognizesame-sex marriage, it would not have had to give legal effect to Terri’s marriage. Hence, the Court may have allowed Terri’s parents, not Terri’s spouse, to make decisions on her behalf. In this respect, DOMA would have been a matter of life and death.

A prenuptial agreement may serve to protect many of the rights which a state not recognizing a same sex marriage would otherwise deny spouses. Living will and health care proxies could be included with the agreement so as to assure the spouse’s rights in the event the other spouse ends upon terminally ill within a State which does not recognize same-sex marriage. Language with respect to adoption of children could be included to assure a spouse’s right to access to children of the marriage, in the event a State chooses not to recognize such rights. Choice of law and waiver of personal jurisdiction language could be included as well, in order to assure that some Court has jurisdiction to dissolve the marriage.

Thus, entering into a prenuptial agreement is something every same-sex couple should seriously consider. Given DOMA, a prenuptial agreement could be used not only in the event the marriage is to be dissolved, but also, and maybe more importantly, it could be used to protect a spouse’s rights in the event a same-sex partneris in a State which does not recognize same-sex marriage.

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