I was researching material for this blog when courtesy of some “cookie” embedded in a website, I was treated to an opportunity to save substantially on my divorce legal fees by signing on for a service that offered me “al a carte” divorce services by law firms standing by to help me without the “unnecessary” cost associated with full service divorce representation. Sounds appealing, right? Why buy the whole car when only the tires need to be replaced?

So as the reader has probably already surmised, this piece is being written by one of those pricey full service divorce lawyers. Thus, as the Latin’s would say Caveat emptor (let the buyer or in this case the reader, beware).

The typical person in an unhappy marriage faces a myriad of issues. Custody. Division of property and the debt that accompanies it. Division of future assets like pensions or other retirement plans; child support; spousal support; alimony; health insurance; life insurance. The list goes on but you get the point.

If each of these issues was wholly independent of the other, a la carte divorce services might make more sense. But, that is usually not the case. So let’s take custody. That should be an easy topic to sever from the rest, right? Kids are not for sale and so money issues should not really tie into custody.

Well, not so fast. Do you have primary custody? Then you will probably be a head of household for tax rates and you will be able to deduct the kids on your return even though the other parent contributes more to child support than you do. Do you have shared custody? Then your tax treatment is probably going to be different. Do you have the kiddies more than 146 nights per year? Then your support is subject to adjustment. If you have primary custody of minor children that’s a reason why you should get a greater percentage of the marital estate. At least that’s what the statute says. Spousal support and alimony pendent lite (which is to say spousal support with a Latin spelling) are calculated differently if you are getting child support and you get child support because of how much custody you have of your children. The parent with primary custody will want to ask whether there is life or disability insurance should the other parent experience disability or its more lasting cousin, death.

So you hire a la carte lawyer to help you draft a custody stipulation. Is that lawyer also going to assess and advise on the issues I just described? You want to say yes but you know better.

Let’s use property division as another example. Mother keeps the house subject to the mortgage because she will have primary custody. Do you want Mother to refinance the house to get your name off the mortgage or are you OK with having an extra $200,000 in debt sitting on your Experian credit report for a house that’s now in her name? And if Mother takes up with Mr. Loser and together they decide not to pay the mortgage on that home where the kids live, do you know whose credit rating is going to be dinged and who might be liable if the house sells for less than the principal balance due in foreclosure? One guess only.

In fairy tales, everything turns out right. That’s why you don’t read a lot about lawyers in books by the Grimm Brothers or Hans Christian Andersen. Lawyers came about because things go wrong. Like the parent who signed up to pay for his kids’ college in 2006 thinking that he had a solid job paying him $200,000 a year. He loved his kids and with $12,000 a month in after tax income he felt confident that he could afford it. But then came the Great Recession and it has now been eight years since he cracked $140,000 a year in income. Meanwhile his loving children all chose to go to private universities and so far they have averaged 6 years to complete a four-year program. He didn’t need a lawyer, right? So now he wanders the streets with a $250,000 judgment accruing interest at 6% that has almost no chance of being addressed in a bankruptcy. A lawyer might have suggested capitating the cost of enrollment, the length of enrollment and a failsafe provision in case he lost his job. But, this 21st century Dr. Pangloss trusted that all would be well.

Some readers will call these war stories a form of fear mongering. Bad things don’t always happen. The entire life insurance industry is built around the premise that in any given year only a small fraction of people actually die. Only a small portion of legal agreements blow up in bad ways. But when they do, they can inflict a lifetime of financial pain. The trouble with on line or over the phone legal advice is that you’ll never be able to find the lawyer or algorithm that gave it to you when it turns out badly.

We’ve reported on the United States v. Elonis in the past. This case involved a Northampton County man who made a series of threats on his Facebook page directed at his estranged wife, his employer, and an FBI agent who came to investigate a threat he made to attack an elementary school. Elonis, in his defense, claimed that his posts were not, in fact, threats, but rap lyrics and forms of artistic expression.

He was nonetheless charged with under 18 U.S.C. 875(c) which prohibits transmitting in interstate commerce a communication containing a threat to injure the person of another. He was eventually convicted at trial of four out of the five charges against him and sentenced to forty-four (44) months in jail. He conviction was upheld by through the appellate system and eventually appealed to the U.S. Supreme Court who granted cert to hear his appeal. The Supreme Court overturned his conviction, but did not address any of the First Amendment claims or other issues raised on appeal except for what they viewed as an error in the jury instruction identifying the standard the jury was to apply to the offenses. Helpfully, however, Justice Samuel Alito articulated in a concurring/dissenting opinion a road map for the Third Circuit Court of Appeals – the court where the Supreme Court was remanding the case for further consideration – on how to have Elonis conviction upheld.

The Third Circuit did just that, finding that the jury instruction amounted to harmless error and he would have been convicted under either of the discussed standards since there was indisputable evidence in the record that Elonis intended his wife and others to perceive the statements as threats.

The reason this case is relevant to family law cases is that Elonis conviction proves that social media posts will be closely scrutinized by the courts to determine whether or not they can be construed as threats. There is no special First Amendment protection attached to them and context will have a huge affect on whether or not a statement will be interpreted as art or as a threat of harm. In this case, there can be little confusion that Elonis wanted to inflict fear and anxiety on his estranged wife and others around him. His threat to attack an elementary school with the intent to die in “blaze of glory” was concerning enough to prompt a visit from the FBI – an episode that prompted Elonis to “creatively write” and post shortly thereafter a scenario where he uses a knife to quickly slit the agent’s throat as she stood on his porch.

In short, even if Elonis had no intention of carrying out these acts, the trial court and Third Circuit found that he clearly intended them to be threats and whether that determination is made by a reasonable person or if his acts were interpreted as reckless was immaterial to the fact they were made and with a desired affect. Issues of the First Amendment and free speech were never considered and, frankly, I don’t think any court will be looking to carve out violent lyrics as being a protected class of speech. For every Eminem who wins Grammys for writing vividly violent verses about his ex-wife, there will be hundreds or thousands of people who try to circumvent their PFA Orders or try to intimidate an ex-partner through social media or other means and use the facade of “art” and “lyrics” to shield themselves from prosecution or being found to have violated a protective order.

What Court wants to define the line between art and threats? Quite simply, the courts – like many of us – don’t know how to define art, but know it when we see it. Similarly, we might not be able to define an easy catch-all definition of what constitutes a threat over social media, but we can discern context and content make those determinations on a case-by-case basis to ensure both the accused and accuser are protected under the law.

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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.

 

There are times when two conversations with two wholly separate individuals causes a person to distill some interesting new thoughts. Earlier this month I had lunch with a woman who has long run the intake program for the Domestic Relations Office in Chester County. We were discussing the triumphs and tragedies associated with the daily business of processing support cases where both emotions and money are at stake. My lunch companion, Rae Morgan, observed that one of the real problems they encounter is that because the litigants are so nervous about going to court over support they lose their ability to listen and appropriately process even simple instructions.

Two weeks later my lunch companion was Judge Daniel Clifford from Montgomery County. Dan is new to the judging business but a long time divorce practitioner before he was elected to the bench in January of this year. He has been hearing a lot of custody cases and we spent some time discussing how his perspective has changed as he transitioned from before the bench to behind it. His comments echoed those of Rae Morgan. Namely, that he wishes that litigants could observe their own testimony because in many instances what they were advocating was really not consistent with a child’s best interest. Put another way, their anxiety about the hearing often deprived them of what might otherwise seem common sense.

In both instances we spoke about how lawyers can try to help people understand how the judicial process works and how they could be less reactive to it. But then today my inbox brought me an article from Popsugar captioned “30 Things that Children of Divorce Wish Their Parents Knew” I commend every parent to take a few minutes to look at this because a great deal of it would address the kinds of concerns Judge Clifford was talking about in a custody setting. I will edit what I saw as editors tend to do. Their 30 became my 15.

  1. As your kid, I want to love both of you fairly and equally and not have you think that my love for you diminishes my love for the person you once promised to love “forever.”
  2. Moving from one house to another sucks and it’s made even worse when you get all stressed about my leaving. I will be back, just like the court order says.
  3. You are not responsible for everything that happens to me and I realize that when parents disagree, it gets disagreeable. But please don’t make it worse by making yourself crazy. If you feel trapped, try being in my place with two powerful adults wrangling over me.
  4. Please don’t share with me what you and my other parent are fighting about. And, oh yes, I did tell you each something different about what sport I want to play because I didn’t have the courage to stand up to either of you and feel your disappointment.
  5. Let me figure out whether I like the other parent’s new significant other. I am stressed with conflicting loyalty issues already.
  6. It really, really hurts when you don’t show up for something we have scheduled.
  7. Yes, gifts and trips are great but I can tell when the motivation is “Love me more.”
  8. When I’m with you, I do miss my other parent and that does not diminish my love for you.
  9. I am not staying with you to provide information about what the other parent is doing.
  10. Understand that when you share your animosity for the other parent or the frustration you have with them, I have just about no ability to help you with that. I am just the child which usually means all I can really do is channel your stress together with mine.
  11. You may have “moved on” emotionally and found the man or woman of your dreams. Please don’t ask me to share your dream until I am ready. I also know when your “friend” is a lot more than a friend.
  12. If I score a goal or play Dorothy in the “Wiz” I would like you both there sharing my joy. If I hug the other one first afterward, it is not a judgment.
  13. I don’t need to know your side of what happened. I don’t have the coping abilities of an adult and I have never been an adult. If money (or its absence) means you can’t say yes to me, that is something you can tell me without feeling that you failed me.
  14. If there is bad news, please don’t ask me to be the courier.
  15. Over time, I may judge the other parent harshly either with justification or without. I may be asking you to listen. I do want you to listen but I’m not ready to sign up permanently for the “Hate the Other Parent” team.

On September 26, the Pennsylvania Senate returned to session and adopted amendments to the Pennsylvania Divorce Code that reduced the period by which a party can secure a no-fault divorce on the basis of irretrievable breakdown from two years to one. The bill is awaiting signature by Governor Wolf.

When first enacted in 1980 the Divorce Code required a three-year separation before a divorce could be obtained on no-fault grounds without consent. In 1988 the law was amended to reduce the waiting period to two years. Legislation to further reduce the wait was introduced in February, 2015 and secured approval from the House of Representatives in June of 2016.

The new law does not affect pending divorces and does not become effective until 60 days after Governor Wolf signs the bill. But it is a major change and will bring improvement to the lives of many for whom divorce is a financially and emotionally draining life event. Ironically, while many argue that this will only promote divorce, the greatest number of divorces to be processed in any one year, came in 1979, the year before no fault came into play. Today the number of divorces is much lower than in the 1980s and 1990s but the real cause for that statistic may be the reluctance of millennials to embrace marriage as the sine qua non of a meaningful relationship.

There is also an amendment to Section 3323(C.1) of the Divorce Code related to bifurcation. It mandates that Courts evaluate the impact of a proposed bifurcation on any minor children of the marriage as it relates to the economics of the case.

This author is not much for the world of Hollywood although this law firm does have an office there. But in reviewing the general news of the day, the screen divulged that the divorce involving Halle Berry and Olivier Martinez is now on hold, nine months after that party started.

This is a new phenomenon affecting the ordinary world as well. We have several cases where the parties have either found a reason to stop the presses of divorce filings or just take a pause to refresh.

In olden times, like the 20th century, a break in the action was very rare.  Once a split occurred both parties tended to pound away until the case was either litigated or settled.  There was no “Finland” or Christmas 1914 when soldiers from the Allies and Axis gathered to sing “Silent Night”.  But today, people are doing a better job of taking stock in the havoc that divorce can wreak and sometimes they realize that things were not as bad as they seemed or that the man or woman who may have enticed a separation was not “the best” or even “better.”

The problem with a break is a financial one. For people securing divorce, trust levels are low and the job of the lawyer is to identify the assets that existed at or about the time of separation and make certain they don’t disappear.  That can be hard enough to do when the couple are unhappily split but when they re-unite only to divide once again, it is the task of the lawyer and the forensic accountant to make certain that during the Summer of Love or reconciliation no one stole or dissipated the assets to be divided.  In many instances as well, reconciliation prompts decisions to buy a new home or to take the dream vacation that the couple always wanted.  If the marriage survives, the couple can typically absorb that financial wave.  But if things don’t work out, the financial burdens are now greater and, as we all know, houses can’t be split down the middle.

So if you decide to take a break either from exhaustion or out of renewed affection, just be certain to keep it real and maintain very careful records of your assets and expenses.

One other note. There certainly was plenty of news during the Johnny Depp/Amber Heard controversy that erupted this spring with allegations of physical violence.  What made this matter all the more interesting is the fact that for both participants there was a lot at stake.  Here were two people with enormously lucrative star power whose agents no doubt grimaced when the abuse case was filed.  The risk was that either or both would be found to be violent or dishonest in their statements as to what occurred.  The public tends to be tolerant of what celebrities do but no one ever got a lucrative role for unsocial behavior.  Although there was a dust up at the end about “how” Depp paid the settlement, the end was otherwise peaceable and the brand names remain bankable.  Even real world clients need to realize that while there is undeniable power in getting out the whole truth that truth can come with very drastic consequence.

We have written before about the subject of when and how a person can be in “contempt” of a court order. The word itself is riddled with often misunderstood meaning.  What could be worse than having a court decide that you are contemptible?

In the past week I have been called to court to prosecute or defend two of these cases. The first instance involved a request to find my client in contempt of a custody order.  The court where the matter was heard summons people to a non-record hearing where a hearing officer either recommends or denies a request for a finding of contempt.  The hearings are scheduled one per hour and if you don’t like the recommendation you take an appeal and have a record hearing before a judge.  The typical remedy of make up time for lost custody, an award of $118 in costs and a $200-300 fine makes it such that the game is not worth the candle.  I recommended to my client to do what he wanted as Step 1 would cost $1000-2000 in attorney time and an appeal would consume that much and more.  Who wins contempt proceedings?  Almost without exception it is the party who has superior financial resources. The litigant with $50,000 in net earnings has twice the staying power of the one making $25,000 and the remedies are pathetically weak.  So if you want to exhaust your opponent financially, spurious or weak contempt proceedings and appeals are a great way to win a custody war by attrition.

This week was a petition to enforce a prior court order in divorce. I had the enforcing side and the spouse had been held in contempt on at least two prior occasions for ignoring an order to sell a house. The most recent petition was filed after the house was finally sold while in foreclosure and the actual damages could be calculated and assessed as the hemorrhaging had ended.  The petition to assess the damages had been filed almost 90 days earlier but, the Respondent waited until the day before the hearing to retain counsel.  That begot a request for a continuance to prepare.

My newfound opposing counsel is resourceful. As I anticipated she came to court ready to challenge every paragraph of the petition and to assert defenses that might have had some traction two or more years ago but were effectively waived by the fact that they should have been raised in prior proceedings.  But in contempt court the rules work to the advantage of the party who plays games.  You see, they are entitled to a specific pleading setting forth how they violated the court’s orders.  Do they have to specify their defenses?  Not in Pennsylvania.  The joke is on the party seeking to enforce the order because the responding party needs to do nothing except appear in court on the appointed day. So in my case, we killed three hours of time while new counsel asserted defenses and demanded “proofs” never before articulated.  In candor, some of them had merit.  But whether the defense arguments were good, bad or indifferent, the party prosecuting the contempt never gets to see or hear about them until the case is called.  The cost of preparing a contempt hearing is always unnecessarily high because the person prosecuting the case has to conjure what the defenses might be.  Why force a party to explain why he or she disobeyed a court order or put in writing the reasons their conduct did not violate the order?  That would be efficient.

Then we get to the remedies. In under Section 3502(e)(7) a divorce setting you can at least claim attorneys fees.  But what about damages caused by a party’s refusal to comply with a court order?  You won’t find that remedy in the statute.  Support law is even worse.  Section 4345 allows 180 days of county subsidized imprisonment, a fine not to exceed $1,000 which is payable to the Court and up to a year of taxpayer funded probation.  You have to go to Section 4351(b) to get reasonable fees and costs and you have to prove the obligor did not have good cause for his failure to comply.  Once again, burden is not on the person with the duty to comply but on the person supposedly benefiting from the award.  Custody violations are covered by Section 5339 and impose the same standard as 42 Pa.C.S. 2503.  The action must be obdurate, vexatious, repetitive or in bad faith. Pa.R.C.P. 1915.12’s notice for hearing makes no reference to counsel fees as a remedy which, of course, creates a due process problem in its own right should an award be made.

The statute and the rules need to make it clear that failure to obey costs money and lots of it. The sanction of a fine or award for failure to comply should be monetary and have a temporal element. When the message gets out that failure costs $25 a day or $250 a day, people will pay attention.  Putting parents and divorcing people in prison or on parole only punishes the taxpayer without corresponding benefit to the innocent party victimized by the non-compliance.  But the starting point is to force litigants to frame the issues in writing before anyone enters the courthouse.  It takes what is supposed to be a pointed procedure and dulls it beyond recognition.

This is not a major news story for most Americans, but if you participate in a defined benefit retirement plan, one where you are due to receive regular payments of a fixed amount monthly when you reach retirement; pay heed: Bad things are happening.

The current news relates to the International Brotherhood of Teamsters and their Central States Pension Fund. Ironically, irregularities in the fund’s investment strategies are part of what caused Congress to codify pension reform in the 1970s with the Employee Retirement Income Security Act (ERISA).

The Teamsters started to collect and invest pension funds in the 1950s. In the 1970s it came out that many of these investments had lots to do with the needs of union management and little to do with those of pension beneficiaries.  One of the reforms brought about by ERISA was a requirement that pensions be separately managed from the unions or businesses which collected and invested the money.

The ideal pension plan collects contributions and has them independently and intelligently managed so that funds are there to meet all of the obligations the employer or union has promised. It all should make sense except that some assumptions once considered reliable just aren’t reliable any more.  In the 1960 and 1970s when many contributions were made, the assumption was that most retirees would not collect beyond age 70 or 75 at the latest.  That’s when people died back then.  Of course today, the number of retirees living and collecting into their 80s and 90s grows every day.  Problem 1 is that the plans were modeled on the wrong life expectancy assumptions.  Problem 2 is the stock market and its brother the real estate market.  Historically, pension contributions have been invested in securities and/or real estate because these investments could be relied upon to increase 7-8% per annum over the long term.  At these assumed rates, money doubles in value every 8 to 9 years.  Yes, we all know that some years are up and some are down but in the long term the 7-8% returns were thought reasonable.

Using the Standard & Poor 500 stock index as a benchmark stocks reliably increased from 1985 to 2000 when we had the Enron crash. They did not recover their 2000 values until 2008 and as soon as they did, that crash caused another huge decline.  Again it took us six years to get back to 2008 values or, as some would say, back to 2000 values.  Stocks snapped back and rose quickly until August, 2015 but since that date, values have been bouncing, bouncing, bouncing.  From February 2014 to February, 2016 the index made no real headway.

Pension plans need to liquidate investments like real estate and securities to pay benefits. They don’t get to tell the retiree, “Hey we will pay later this year when stocks recover.”  The money is due every month no matter what condition the market.

Today, the Central States Teamsters Pension Fund pays out almost $3.50 for every dollar it takes in. In theory, that should not make a difference because today’s dollar in should not be paid out for many years.  But, some of the dollars paid in overtime not only haven’t earned their 7-8% returns.  In fact some “lost” value, particularly those invested in hedge funds during the past 10 years.  What that means is that huge swaths of defined benefit plans are grossly underfunded.  The crisis the Central States Plan faces is that it has no place to go to secure enough to pay the benefits it promised.   So, there is now a very acrimonious debate underway involving Congress, crisis manager Ken Feinberg and the Teamsters over who will pay.  The Teamsters say the taxpayer should make up the shortfall.  Needless to say, Congress is not viewing those prospects with any contentment and Feinberg is saying top end benefits in particular need to be cut or the whole ship goes down.

State pensions are another animal. A state obligation to pay a retirement benefit comes with the guarantee that if the state lacks the money, the taxpayer will be assessed.  Pennsylvania has some of the worst funded pension plans in the United States.  The effect is that state contributions to pension payments have quadrupled in the past six years.  Underfunded obligations to public employees were 1.5% of state expenditures in 2010.  By 2019 it will be 10% by 2019.  If you think that’s a problem take a look at Philadelphia’s situation.  Today 20% of the city’s budget is devoted to paying retirees.  At the state level, the pension fund actually declined in value in 2015.  When bond agencies see these kinds of problems, ratings are downgraded and interest rates soar.

So, why is this part of a divorce law blog? Because, if you or your spouse are due money in the future on a monthly basis, there is a very real possibility that you won’t see all of it.  Yes, we just wrote that by law states cannot cut pension benefits because these are contracts for deferred compensation on services the state already got from its employee.  But much as with the situation in Puerto Rico and Atlantic City where governments are verging on default of their bond payments and other general obligations every day, these problems do not present easy solutions.  Taxpayers earning $4,000 a month are not going to quietly accept large tax increases to pay unfunded retirement obligations that often are double that amount.

If you are an attorney dividing a defined benefit pension, get your client to investigate how well funded that obligation is. And if there is a reason for concern, the retirement model for settlement or trial should consider sharing that risk.  This is not an easy evaluation in any circumstance.  Let’s say that wife is a teacher with a defined benefit plan that has a $300,000 cash value, but she is five years away from retirement and the plan is only 70% funded.  Does that not arguably make it a $210,000 plan? Conversely, suppose she is married to a spouse with a $300,000 IRA who is also five years to retirement. In theory, during the next five years she can still be accruing benefits, albeit underfunded benefits, while spouse’s IRA undergoes a 10% market correction that reduces his $300,000 to $270,000.  He may also be self-funding IRA contributions but they could decline as soon as they are funded if he invests in oil and gas or department stores or office supply chains.  There is no happy solution here but there is reason to model a retirement distribution where the risk is shared.  In other words, perhaps both the IRA and the defined benefit plan should be divided even though they are today, technically of equal value.

 

For some time now, the General Assembly has been working towards amendment of the Divorce Code to reduce the waiting period for an unconsented no-fault divorce from two years to one. That legislation (House Bill 380) has passed committee and is awaiting final action.

Meanwhile another amendment to the Divorce Code quietly slipped through the legislature and was signed into law by the Governor on April 21, effective June 21, 2016. It is an odd piece of legislation; a kind of fault based no fault divorce ground.

Under House Bill 12 of 2015 (printer’s No. 2404) if one spouse has been convicted of a misdemeanor or felony involving

Criminal homicide

Assault

Kidnapping

Human Trafficking

Sexual Offense

Arson

Robbery

Victim/Witness Intimidation

Homicide by Vehicle

Accident Causing Death or Personal Injury

AND the Plaintiff sues for a mutual consent no-fault divorce, the consent of the convict is “presumed” if the Plaintiff is the victim of any of these crimes.

This is the first time this writer has seen the bill and I begin by confessing that I have not studied this subject very carefully. But if I am the victim of homicide or an accident causing death, one of the formalities I can dispense with is a posthumous divorce from my perp spouse.

I do offer that perhaps the intention is to include attempts at homicide or personal injury but the statute is not very clear on this subject.

I also note that for more than a century Pennsylvania has conferred divorces for “treatment” endangering the life or health of an innocent and injured spouse (Section 3301(a)(4) and conduct amounting to “indignities” to an innocent and injured spouse such as rendered the life of the victim intolerable and burdensome.(Sec. 3301(a)(6). Conviction of any of the above specified crimes in a case where the victim was a spouse would have res judicata effect in the subsequent divorce proceeding.  The only plausible defense would be that the victim was not innocent and injured.

The new statute requires a conviction to create a presumption. The statute does not make the presumption irrebuttable so, one must assume that a defendant spouse can still force the victim to trial so that the offender may rebut his presumed consent.  Even more vexing would be the task left to the trier of fact.  Husband attempts to kill or rape wife.  He is convicted but somehow draws a sentence of less than two years (another divorce ground under Sec. 3301 (a)(5).  Wife sues for divorce and tenders her own consent and the “presumed” consent of her spouse.  The offender spouse appears and testifies under oath that he does not consent.  What now?  Can the Court hold that he consented when he didn’t?  Wasn’t it just easier the old way, where the injured spouse tendered a certified copy of the conviction and rested her case?  Yes, the offender spouse could argue and present a case that his wife/victim was neither innocent nor injured, i.e., she deserved her beating or rape or robbing or burning.  But, I think that I like my chances of getting my client divorced better this way than relying upon a presumed consent that may be rebutted.  I know how to cross examine a person who claims the spouse got what she deserved. I’m not so sure how to cross a guy who says simply “I don’t care about the statute, I do not consent.”

So we have a change in the law, but I am not certain it can be termed an “advance”. One small consolation is an amendment to Section 3302.  This is the counseling provision and it now states no counseling can be ordered where one party has a Protection from Abuse Order or where one of the specified crimes listed above has resulted in a conviction.  Of course, one can still insist on the counseling while the criminal charges are pending unless a PFA found its way onto the docket.

There was a time not so long ago when clients would unload their domestic troubles on lawyers like a cord of rotted wood. They might take care in shopping for the right fit in terms of who would represent them. But once the selection was made, the answer was “Let the lawyer do it.” That’s what they get paid for, right?

True enough, but as the quantity and quality of on line resources have proliferated, legal advice has started to be viewed as an indulgence. Anyone can tell you it’s expensive, and it is. And, there is a huge array of free information on the internet (like this blog) calibrated to be useful.

Millennials, in particular, like to do it themselves. In domestic affairs, they see this as their relationship and they should be able to regulate how it ends. They may grudgingly tolerate advice from others but they see that as a plot to abridge their right and their power to manage their own affairs. Their parents tend to be more practical at least in their own view. “For what I pay a lawyer, I could go to Disney, replace a car or some other entirely useful thing.” All true. Until it bites you in the backside.

In the past couple of weeks here are some of the internet myths we have had to detonate for true believers in the power of the web. Divorces are granted automatically in Pennsylvania after two years. Custody courts automatically impose shared physical (50/50) custody arrangements. The person paying the child support always gets to deduct the children. There is no alimony in Pennsylvania. Every child over 10 gets to decide where he will reside. Courts can’t divide pensions because they belong only to the employed spouses who earned them. All of these myths contain a kernel of truth but are more wrong than right. Not any of the websites we have seen actually misrepresent the law. But none of us relies exclusively on the net for information. We dose it with the information we get from the yoga instructor, the bartender at the favorite restaurant or the well- meaning advice of great uncle Ellwood who left his horrible first wife in 1978 to marry your not so great aunt.

So, does this mean forego Disney, the new car, or the 72” flat screen? Perhaps yes. But if you are doing a divorce where money matters or it is going to affect whether your kid spends two non-consecutive weeks or half the summer with his dope smoking mother, some legal counsel may be in order. There are times when we actually do advise clients that the battle is not worth the personal or economic price. But we had people come to us with agreements they have signed or court orders they never appealed that promise them a lifetime of pain. Like the spouse who assumed that lifetime alimony meant “until he retired”. Or the parent who thought that if she just let father relocate to San Diego with the child, she could always go back to her local court to undo it later. This has become more true over time. We now commonly see executives who once could easily afford the college commitment they signed up for in 2005. Ten years later, their child has been admitted to a college with tuition that consumed more than half of their downsized net income.

Lawyers are not retailers devoted to crafting a “happy” shopping experience. Like physicians we sometimes have to report unhappy results. But the results you get will be directed toward your assets, your children, your experience and not some well-crafted avatar which might seem to be similar to your life experience, but really does not.  Your domestic affairs are about your skin and, like it or not your skin is a custom made suit, not something you found on line or at Kohl’s or Boscov. If you must do it yourself, at least find out whether  it needs to be done, and how best to do it.

 

This is not a money management blog but what we increasingly find is that many divorce clients simply “trusted” that their resources would be sufficient to carry them through retirement. The great awakening comes when they discover they are now splitting what looked like a comfortable retirement and that their ability to make up for lost time has been lost amidst the sands of time.

So today, lawyers need to help clients be creative, and based on an article in the March 22 Wall Street Journal, there is reason to take a second look at a device invented a few years ago called the reverse mortgage. When first introduced, they were disparaged as a kind of sleight of hand trick. The number of them issued spiked just after the Great Recession but then eased off as the economy (or at least the stock markets) recovered.

A reverse mortgage is what it sounds like. You have equity in a home that is essentially a trapped asset. A reverse mortgage involves your pledge of that equity to a lender who gives you your own trapped money. The true economist would dismiss this as absurd. If you need cash out of your home, don’t pay anyone fees or anything else to tap it; just sell, downsize and take the cash from the settlement proceeds. That’s why economics is called the dismal science.

The problem with today’s older divorced couples is that they want everything to stay the same. Sure, it’s only you living in the house that once held three or four. But you like it, you like the neighborhood, and besides, moving means dealing with 30 years of accumulated things that you call treasures and your child dismiss as “crap” when they come for Thanksgiving.

I typically advise clients that they should at least consider downsizing. The response is the same. A longing look like I told them they need to put the dog down unless his health improves and either a testy “Maybe next year” or even more challenging “Must I?” In the end, we assess matters and give clients options. No pets have met their demise on my watch but I have told several clients that unless they reduce their housing costs in the near term, they may need to consider a shorter life.

Reverse mortgages can be a way to ease the pain. At their worst, people borrow them to speculate. This is pure foolishness. But the mortgage in reverse can be a very effective tool, especially to cover late life rainy days. The best example is a sustained down market. If you are retired and drawing $4000 a month while getting $2,000 in social security, when the market tumbled, your $4,000 is coming out of a measurable smaller pool. If you had $300,000 in retirement and drew $3,000 a month in January, 2008 you had  100 months of retirement assuming no increase in value and no inflation. Your draw was 1%. By late Fall, your $300,000 was now $150,000 which mean your pool had halved and your draws were 2% a month.  The market quickly shot back up to 11,000 but if the trough had been sustained and you didn’t halve your expenses, you were burning retirement fast.

If you had a line of credit associated with a reverse mortgage, you could have reduced the impact on your portfolio by drawing on your home equity. Then you would have had more on hand to ride the market back to some form of equilibrium even though your home equity would have been reduced. There was a time when home prices could be said to keep pace with the market. But that is not a recent trend. A tract home in the Philadelphia region with 3,000 square feet  sold in July, 2008 for $400,000. Six years later it sold for $420,000 and it today draws estimates for $410-425,000.  Had you known in Fall, 2008, you could have borrowed $100,000 in home equity; stuck it in a Dow index fund and today your $100,000 would be worth $251,000. But, alas, that would require speculation.

But there are good times to draw on home equity. You sit, happily in your crap filled house burning through $3,000 a month of retirement. The roofer tells you “It’s time for me to get $20,000.” That roof can come out of home equity much more readily than an investment portfolio because the house is not really gaining value.

Now for some of the trickier strategies; tricky but solid if done in the right way. You are on a fixed income. You have $300,000 in equity but $200,000 in mortgage debt. The monthly mortgage of $200,000 plus $600 a month in real estate taxes is really crimping your ability to see the grandkids. Why not take a reverse mortgage on the equity to service the real mortgage you owe. This cuts expenses while leaving your investment portfolio intact. Yes, your real estate portfolio is going to decline but that wealth right now is trapped in housing and not really increasing.

Another strategy. We are told that if you delay drawing on Social Security from ordinary retirement to age 70, the monthly benefit payable rises by 7% a year. That’s a pretty solid return and it’s guaranteed unless you conk out along the way. But, you may look at the pension and retirement money you now have and say, I can’t really make it to 70 without tapping my social security. Why not consider a reverse mortgage to fund the “gap” of payments you might otherwise get if you applied early or at normal retirement age.

Your employer lays you off in December 2015. Because you are not a kid it is going to take time to find a job, which means that your 2016 income will be low. Financial planners will suggest that the off-year is a prime time to convert a traditional IRA to a Roth because your income will be low. But you do still have to pay the tax on the conversion. Why not take that out of a reverse mortgage to cover the taxes.

Typically, reverse mortgage payments come without tax because the payment is not income but a reduction in home equity. You are effectively getting your own money. Federal regulations now make it so that a steep decline in home equity such that the amount you took out exceeds the equity does not open the door to liability on your part. So this is now a tool and not a toy. It can be abused but it has options that can make your retirement far more comfortable.