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Pennsylvania Family Law

Updates, Events & Useful Tips Surrounding Family Law Issues

THE EMERGING STUDENT DEBT CRISIS IS AFFECTING PARENTS, TOO.

Posted in Custody, Divorce, Support

A decade ago, a debt crisis was looming; erected upon the twin foundations of mortgage and consumer debt.  The downturn of 2008-2009 shifted that as lenders realized that much of the debt they had issued could not or would not be repaid.  While the availability of credit has been more limited in recent years in the consumer and commercial markets, lenders have shifted to student loans as a substitute. The difficulty here is that these loans are based on little more than assumed levels of post-graduation earnings.  As we have seen, the job market for college graduates is not what it once was and herein lays a problem that is affecting the divorce process.

For lenders, student debt enjoys a special safe harbor in that student loans are ordinarily not dischargeable in bankruptcy.  But lenders recognized that the advantage of non-dischargeability came with the risk that the students simply “walked” on the debt; paying nothing.  So lenders began to press for parents of students to “co-sign” the student debt.  And co-sign they did taking student debt owed by adults ages 60 and older from $15 billion in 2007 to $43 billion in 2012.  It is self-evident that adults 60 and up are not typically students of any kind and that those who are pay for education out of current income or savings.

We all understand that parents and grandparents want their children to succeed and for most of American history, investments in post-secondary education have yielded excellent returns financially.  But today, labor markets are not absorbing college graduates in the same way they did 20-30 years ago.  According to U.S. News & World Report over the past decade college tuition has risen a stunning 79%, almost double the rise in health care costs.  But a recent study from the San Francisco Federal Reserve Bank indicates that from 2006-2013 wages for recent college graduates grew by only 6%.

Parents faced with the dilemma of either guaranteeing student debt or seeing their children drop out are stepping up, but they do so at considerable risk.  If the child cannot pay his own student debt, the guarantor parent will have to.  And what parents don’t seem to consider is the fact that as they age, their life in the workforce is coming to its end.  The response of many is that they expect to keep on working far beyond what used to be called normal retirement at 65.  But while those who are self-employed may have that option, many older workers are finding that they are targeted when businesses elect to reduce their labor forces.  Parents also tend to assume, they will always be able to work.  But that assumption ignores the fact that as we age, we become less healthy.

These financial commitments to help children are causing a rippling effect in the domestic relations field.  An intact couple with roughly $80,000 in earnings can often absorb several hundred dollars a month in guaranteed student debt.  But once that intact couple separates and now resides in two households, the student debt service becomes unsustainable.

We have come to see post-secondary education and training as a kind of birth right.  Today, like any other form of investment, education costs should be viewed in the same light as the prospectus of any financial instrument.  “Past Performance is not necessarily indicative of future results.”  This is true enough for the student but potentially disastrous for the parent with assets who signs the guarantee for a $50,000 obligation when, at age 50, his expected life in the work force is already 2/3 behind him.

WINDSOR DECISION AFFECTS RETIREMENT ACCOUNTS

Posted in Equitable Distribution, Practice Issues, Same Sex Marriage, Taxes

Last May, Susan Foreman Jordan in our Pittsburgh office issued a very informative alert on the impact of the United States Supreme Court’s decision in United States v. Windsor on the IRS and Department of Labor recognition of same-sex marriages.

Susan identifies and explains how the IRS and Department of Labor clarified, so as to avoid any ambiguity, that if the same-sex marriage was legally entered into, then they would consider it a valid marriage even if the parties were domiciled in a jurisdiction which does not recognize same-sex marriage.

More technically, the IRS issued a Notice (Notice 2014-19) confirming that for qualified retirement plans and other employee benefit programs must recognize same-sex marriages as of June 26, 2013 when the Windsor decision was made, but that they do not have to extend retroactive recognition to that marriage. Susan expands upon that point and amending plan language to confirm to the Windsor decision.

Susan’s alert is really aimed at plan sponsors and what they can do to confirm with the law. It is also informative to plan participants to understand how the Windsor decision has affected their retirement plan.

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a partner in Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter @AaronWeemsAtty.

 

SUPERIOR COURT CLARIFIES WHEN CUSTODY FACTORS MUST BE EVALUATED

Posted in Custody, Practice Issues

We are slowly observing some flesh of judicial precedent applied to the bones of the custody stature enacted by the General Assembly and made effective in January, 2011.  A recent and significant contribution to that came in a Superior Court decision which was ascribed precedential value on July 11.

S.W.D. v. S.A.R. is an appeal from a custody decision made in Armstrong County.  The dispute involved a child identified by initials in the opinion as B.A.D. and is reported at 2014 Pa. Super. 146.  The primary dispute revolved around where a five year old would attend kindergarten.  The parents disagreed and when that disagreement ended in selection of public versus church oriented kindergarten, the Father appealed.

The seminal question decided in this case was whether a school decision required the trial court to evaluate the sixteen specified custody factors legislated by 23 Pa.C.S. 5328(a).[1]  The Superior Court’s panel, consisting of Judges Stabile, Bowes and Wecht provide bench and bar with a cogent analysis of when the factors must be drawn from the statute book and applied to the facts in order for a trial court decision to be fully reviewed.

The Court latches on to the statute itself and its internal statement that the factors must be applied to any form of custody.  This is distinguished from custody decisions which may change terms but not form.  The Court decided that a decision related to where a child is schooled is not one that warrants analysis of all of the statutory factors, although it did note that a school change that required a change in the form of the custody (e.g.,  a school so distant that one parent could not fulfill the custody arrangement and get the child to school) might require the complete analysis.

The Court also cited its own decision in M.O. v. J.T.R. wherein the question was whether a parent awarded a custodial period had the duty to take time off from work when awarded custody during school vacation times.  85. A.3d 1058 (Pa. Super, 2014). In that opinion the Court stated that if the decision does not affect the physical allocation of time between the parents, the Section 5328 factors do not come into play. Id., at p. 1063, n. 4.

The panel also cited three other cases involving school selection as cases which did not involve changing the form of the custodial arrangement.  See, Staub, 960 A.2d 848 (Pa.S. 2008); Fox v. Garzilla, 875 A.2d 1104(Pa.S. 2005); Dolan, 548 A.2d 632 (Pa. S. 1988)

The Court notes that the 16 factors may become relevant in any custody decision and that both the factors and the general mission of any Court are to promote the child’s interest. All that the decision really concludes is that not every trial court opinion need come wrapped in a 16 point analysis.

Meanwhile, the ultimate decision is to reverse and remand. Why? In 2010 the trial court had imposed its version of a physical custody arrangement. But somewhere along the way the parties had decided to alter it to something else.  The petitions that brought them to court requested reinstatement of the 2010 order and, alternatively, judicial endorsement of the existing arrangement (i.e., “something else”). The Superior Court held that a request for something else besides the docketed order was, per force, a request to modify and required an analysis that did incorporate the statutory factors. So the cases was remanded for a full hearing on the question of whether a five year old is better served by spending 42.86% of time with Father or 50%.


[1] The newest factor effective 1/1/14 is involvement with child abuse and related protective services.  Sec 5328(a)(2.1)

PA COURTS WILL ENFORCE OUT-OF-STATE RESTRAINING ORDERS

Posted in Child Abuse, Evidence, Practice Issues, Protection from Abuse
Welcome Gift for Coming to PA and Violating a Restraining Order

Welcome Gift for Coming to PA and Violating a Restraining Order

Like many border areas of states, living in eastern Pennsylvania commonly results in legal issues which “span the river” into New Jersey, New York, Maryland, or Delaware (for our colleagues in the central and western part of the state, you can add West Virginia and Ohio); states with distinct laws and procedures from each other. Jurisdictional issues, choice of law issues, and standing can become important considerations for cases. For an action like a Protection from Abuse (“PFA”) or, in New Jersey, a Final Restraining Order (“FRO”), it is not uncommon for parties to live in each state and for incidents to occur in each jurisdiction.

Such is the recent Bucks County case on appeal to the Pennsylvania Superior Court. In this case, the issue arose as to whether Pennsylvania Courts had jurisdiction to enforce a New Jersey FRO. The FRO was entered against two individuals in New Jersey in 2009. Later, in 2012 and 2013, the protected party had interactions with the defendants which rose to violations of the FRO. He brought contempt actions in Bucks County after a series of incidents with the defendants in Pennsylvania.

The Bucks County wrote this opinion after the defendants sought appeal on three different grounds based on a due process claim, insufficiency of evidence, and, the one relevant for this discussion, that Bucks County did not have jurisdiction to adjudicate the contempt action against the defendants.

The Bucks County court relies on 23 Pa.C.S. § 6114.1 of the PFA Act which allows a plaintiff to file a petition for civil contempt with the issuing court or on a foreign protection order. As defined by 18 U.S.C. § 2266, a foreign protection order covers any order or injunction in civil or criminal court which prevents violent or threatening acts or harassment against sexual violence, contact or communication with or physical proximity to the protected person. In other words, if any jurisdiction issues a restraining order or something comparable, Pennsylvania will enforce it provided the violating act occurred in Pennsylvania.

The logic behind this section of the PFA code is obvious: what good does a restraining order do if its effectiveness stops at the state line? By allowing for the enforcement of the order in Pennsylvania’s courts, the goal – the protection of an individual from harm by others – is accomplished. Furthermore, by limiting the enforcement to incidents happening in Pennsylvania, there is no opportunity for forum shopping or abuse of the system by plaintiffs looking for a favorable jurisdiction.

The Bucks County opinion strongly argues that jurisdiction exists to consider the Pennsylvania incidents for contempt of the New Jersey FRO. What this cases serves to demonstrate, however, is that restraining orders travel in Pennsylvania; the Courts will not deny someone an opportunity to enforce that protection simply because the restraining order was issued by a court in another state. The emphasis should be on the protection of the individual.

Smithers v. Stanton, C.P. Bucks County, Family Division, No. A06-09-61861-A-36; 2014 BCBA, 87 Bucks Co. L. Rep. 286 (2013).

(Image: www.wisegeek.com)

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a partner in Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter @AaronWeemsAtty.

ATTORNEY-EXPERT CONFIDENTIALITY NOW A RULE

Posted in Divorce, Practice Issues

In May I wrote about the Pennsylvania Supreme Court’s split decision (resulting in affirmation) on protecting the communication between attorneys and the experts working on their cases. This was an important decision for a number of reasons, but despite the affirmation of the lower court’s decision, the fact it was a 3-3 split with some dissent made it precedence, but not without some concern that another case could cause the courts to shift course again.

The Pennsylvania Supreme Court has now taken that decision one-step further and codified it as the new Rule 4003.5 of the Pennsylvania Rules of Civil Procedure. Unlike the Federal rule on attorney-expert communications, the Pennsylvania rule has no exceptions to its prohibition against producing this information. Some attorneys have cited concerns about this rule effectively making it impossible to detect manipulation of their opponent’s expert or the expert simply signing their name to a report prepared by the attorney. Nevertheless,this “bright-line rule” has gone into effect and precludes any production of communication between an expert and the attorney.

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a partner in Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter @AaronWeemsAtty.

 

COLLEGE SUPPORT AND THE APPARENT REVIVAL OF MILNE V. MILNE

Posted in Custody, Divorce, Support

MAZUREK v. RUSSELL   2014 Pa Super. 130 (2014)

College provisions in property settlement issues have always been a source of controversy.  The typical provision calls for mutual consent “which consent shall not be unreasonably withheld”.  The language seems clear enough when pen is set to paper but when enrollment time comes the games begin as mother has one set of ideas and father another.  The other wrinkle is that by the time college rolls around a child may be estranged from one parent.  So what is “consent” and can it ever be reasonably withheld?

A case decided on June 24 affords us some insight into these questions.  In Mazurek v. Russell, the parties agreed in 2010 to the typical language recited above.  When Mother filed an emergency petition to compel payment for one of the children to attend Marymount Manhattan college in NY, Father blasted back with several defenses including:

1.            Son had lackluster academic performance in high school;

2.            Son had been estranged from Father for five years despite Father’s best efforts. 

Father then said, he would pay if Luke reconciled with Father, maintained a 3.0 GPA and did not take a car.  His terms were not agreed to.  He then noted that there had been no consultation about the school selection.  

A hearing was held in late July, 2013.  The trial court heard evidence and ruled that Father was on the hook for the college and Mother’s counsel fees. 

On appeal a panel of the Superior Court found the “not unreasonably withheld” consent language to be ambiguous as a matter of law and subject to parole evidence to help interpret the intent of the parties.  The Court then looked at two conflicting cases where consent has been an issue.  The first, Fina v. Fina, 737 A,2d 760 (Pa. Super, 1999) held that mutual consent language required meaningful interaction.  A second case, Wineburgh v. Wineburgh, required payment on the basis that the agreement’s use of language that Father would “have a say” did not require consultation. 

The Mazurek Court sided with the ruling in Fina, noting that “we cannot ignore the significant of {mutual consent} language to which the parties contracted.  The Court found that Father evinced a reasonable basis for withholding his consent.  It also appears from the opinion that Father’s prior history of paying large sums for private secondary school for all children and private college tuitions for two other children were factors that weighed in his favor.  

There is an interesting twist to this reported opinion.  Judge Allen devotes a fair amount of time to discussing the estrangement issue and the opinion has a strong flavor of Judge Cirillo’s famous opinion in Milne v. Milne, 556 A.2d 854 (1989) where nine judges of the Superior Court decided that a child’s conduct toward a parent could be grounds to forfeit what was then a judicially imposed, non-contractual duty to contribute to college.  The question the bar will grapple with in the wake of this opinion is whether “reconciliation” with a parent is a necessary component to consultation and consent.  What makes the question even more complicated is that if Father’s testimony is to be credited, he was estranged from his child two years before he contracted to pay 100% of his reasonable expenses for college.  Did Father not have the last clear chance to demand “reconciliation” as a condition to assuming this pricey obligation?

FAMILY LAW TAX ISSUES: THE GIFT TAX EXCLUSION

Posted in Divorce, Equitable Distribution, Taxes
I hope you enjoy your box full of $20's

I hope you enjoy your box full of $20′s

As we head into the second half of 2014, now is a good time to take stock of your financial and tax situation, particularly if you are separated or divorcing. Over the next few posts, I am going to highlight some areas worth considering if you are in either situation since it is much easier to stay ahead of these issues rather than scramble to catch up to them in January or February next year.

For this post, I wanted to give a brief summary of how monetary gifts are dealt with by the IRS and how they can impact a divorce case.

The first thing to know is that the IRS has a maximum tax exclusion of $14,000.00 for gifts.  The IRS allows up to that amount to be excluded from taxes, however, anything above $14,000.00 requires a Gift Tax Return to be filed by the person giving the gift and the possibility that they will have to pay tax on the gift. The recipient (or “donee”) does not have to file anything with the IRS or pay any taxes on the gift they receive. Anyone giving gifts in excess of $14,000.00 has to file a Form 709. The exception to this rule is if the gifts are made to a spouse.

Understanding the rules on gifts and the threshold for what requires the filing of a gift tax return is important for those receiving financial assistance from a third-party during a divorce action. The donor may be able to contribute the money as an excluded gift.  From the perspective of litigation, it is also important where there are concerns that an estranged spouse is dissipating the marital estate through gifts to third parties. Requesting the production of gift tax returns should be a standard discovery request in most divorce cases.

Though this is really an estate planning concept, it nevertheless can be relevant in a divorce action. There may also be situations where a spouse receives a portion of the estate and there are tax ramifications which he or she cannot address due to their income levels. Gifts and other estate planning devices may be useful tools for managing such issues. If you have questions about gifts and gifts exclusions, speak to your attorney. In my firm, we are fortunate to have many excellent estate planning attorneys who collaborate with us on family law cases to help address such issues.

Form 709 can be found here.

(Photo Credit: www.giftster.com)

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a partner in Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter @AaronWeemsAtty.

 

 

SOCIAL MEDIA PRENUPS TRY TO ENSURE PRIVATE MOMENTS STAY PRIVATE

Posted in Equitable Distribution, Evidence, Practice Issues, Prenuptial Agreements
The Instruments of Embarrassment

The Instruments of Embarrassment

A recent story through ABC’s Good Morning America website highlighted the evolution of the prenuptial agreement in the social media age. Divorce lawyers are reporting an increasing amount of requests for language in prenuptial agreements – if not stand-alone agreements – addressing social media usage.

It makes a lot of sense. In an age where nothing ever really seems to be removed from the internet, protecting one’s privacy or “personal brand” on social media is a major personal and professional priority. People have been fired from their jobs due to content someone posted about them online; personal and professional reputations have been tarnished over embarrassing photos.

The concept of this clause does raise some intriguing legal issues. First, your ex-wife posting an embarrassing photo of you is not going to be defamation per se; after all, it is difficult to assert she is lying when the photographic evidence speaks for itself. Secondly, how can financial damages even be measured for someone posting on social media? Unless a job is lost or there is a concrete connection between the posted content and the outcome, I think a person calling “foul” over their ex-spouse posting photos will have a difficult time proving they lost income.

The way to give such an agreement “teeth,” therefore, is to provide for a defined financial sanction against the posting party. One attorney in the story suggests that the sanction should be relative to the earning power of the violating party and apply to each incident in which barred information was published. Practically speaking, the sanction has to be great enough that neither party will feel that the personal satisfaction of humiliating their former spouse outweighs the financial penalty.

I would think such an agreement, however, would need to carve out an exception for trial evidence or at least be narrowly tailored to the dissemination of information through social media platforms. Pictures and video acquired during the marriage can be a valuable resource for the corroborating behavior or actions of a party; it can provide important, admissible evidence. A blanket prohibition of the dissemination of pictures or video could undermine their application at trial and would certainly be subject to a discovery motion as to whether the agreement precluded the use of information at trial or, merely, the use of such information on social media. I would be surprised if people – particularly if they plan to have children – would want to prospectively preclude the introduction of certain types of evidence which may be relevant at a custody trial. An exception for the use of such media evidence at trial or, possibly, an agreement that such evidence would be viewed by the judge “in camera” (i.e. not in open court) could also help address the sensitive nature of the evidence.

It is axiomatic that technology changes faster than the court system can keep up. Private agreements, however, can mirror the shifting landscape of technology and privacy. Expect to see greater creativity in prenuptial and post-nuptial agreements dealing with this and other technologically based issues.

(picture credit: celeritystaffing.com)

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a partner in Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter @AaronWeemsAtty

SAME-SEX MARRIAGE LEGAL IN PENNSYLVANIA

Posted in Divorce, Same Sex Marriage

This afternoon,U.S. District Judge John Jones ruled that Pennsylvania’s version of the Defense of Marriage Act banning same-sex marriage is unconstitutional. This decision, out of the Middle District of Pennsylvania, paves the way for legal, same-sex marriage in Pennsylvania. The repercussions of this decision remain to be seen, however, since there are other pending cases in other courts in the state, namely the validity of same-sex marriage licenses in Montgomery County.

This decision is the recent result of both sides of the case asking the court to make a determination on the pleadings, rather than going through a trial.

Read the full memorandum opinion here.

 

SECRET, SECRET, I’VE GOT A WORK-PRODUCT PROTECTED SECRET

Posted in Divorce, Equitable Distribution, Evidence, Practice Issues
Psst, can I stop whispering in your ear and just email you instead? Its work-product.

Psst, can I stop whispering in your ear and just email you instead? Its protected as work-product.

Many of my cases involve the use of expert witnesses; individuals hired to review and testify about a specific issue or topic. Usually they are financial experts whose job is value a particular asset such as a business, while other experts could be psychologists conducting a custody evaluation. In other areas of law, there are individuals qualified as experts in virtually every conceivable topic and issue.  Whatever the underlying issue of a case, it is reasonable to assume there is an expert out there prepared to testify about it.

Consequently, communication between an attorney and the expert working on the case is critical and often encompasses trial strategy. It is vitally important that the expert and the attorney can openly and easily communicate about the case.  Not too long ago, however, this relationship and communication became subject to discovery in the case of Barrick et al. v. Holy Spirit Hospital of the Sisters of the Christian Charity et al.  At the time, the trial court ruled that expert testimony was subject to Pennsylvania’s liberal discovery rules and should be turned over to the other side. This was a radical departure from commonly held beliefs and practices protecting this communication and created significant consternation among attorneys.

The Superior Court heard the case in 2011 and overruled the trial court’s decision and barred the production of communication between a surgeon serving as an expert and the plaintiff’s attorney in a personal injury case. Attorneys across the state breathed a sigh of relief; they could actually email their experts again.

Recently, any ambiguity was mostly removed when the Pennsylvania Supreme Court upheld the Superior Court’s decision through a split, 3-3 decision (an evenly divided court results in affirmation of the Superior Court decision). I say mostly because it was a 3-3 split, but in affirming the decision, three justices created a bright-line rule denying the production of expert/attorney communication.

The argument that communications with experts did not fall within the work-product doctrine of confidentiality and were critical for counsel to the cross-examination and critiquing by counsel was not accepted by the Court. The Court felt that by having the opportunity to cross-examine the expert, there was sufficient opportunity to attack his/her opinion without having to divulge communications between the expert and attorney.

This is an important decision in Pennsylvania and affects every litigator, regardless of area of expertise and will allow for experts and attorneys to freely exchange ideas without fear that they will turn into trial exhibits.

Photo Credit: www.health.com

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Aaron Weems is an attorney and editor of the Pennsylvania Family Law Blog. Aaron is a resident of Fox Rothschild’s Blue Bell, Pennsylvania office and practices throughout the greater Philadelphia region. Aaron can be reached at 610-397-7989; aweems@foxrothschild.com, and on Twitter @AaronWeemsAtty