Pennsylvania Family Law : Pennsylvania Divorce Lawyer & Attorney : PA Family Law Blog : Fox Rothschild Law Firm : Family Law Serving Philadelphia, Pittsburgh, Bucks County, Montgomery County, Chester County

We are involved in a relatively simple case.  Wife is a homemaker only recently returned to work.  Husband is a mortgage broker.  Like many couples they became a bit over committed in the real estate market of the last few years. They wanted to participate in the real estate gains of the last few years and some of their investments had not panned out.  This is a classic work out settlement of the type we see with increasing frequency.  The smart move is to realize the problem and negotiate a settlement that preserves assets.

We have been litigating this case for the past 18 months.  In our judgment almost all of the litigation was not only unnecessary, but detrimental to preservation of the marital estate.  We entreated our opponents that more litigation was the last thing the parties needed.  Still the other side insisted that the battles go on.  We fought over support for a full day in a world where the incomes of both parties were either agreed upon or plain from the information provided by the employers.

Next we received a counsel fee petition.  The dependent spouse owed her counsel tens of thousands of dollars even after securing a substantial retainer. We resisted this request vigorously arguing that the facts were apparent from the beginning and the litigation almost completely unnecessary.  When the request for attorneys fees did not go in the direction she aspired, the opposing counsel filed a petition to withdraw.

The wife filed an answer professing that she had wanted to settle her case all along but that her attorney had told her the litigation was necessary and that her husband would be required to pay her attorneys fees.

We don’t know whether these allegations are true. But we can state almost without exception, that if an attorney tells a client in a domestic relations proceeding that he or she is certain to secure attorney fees in that proceeding, a second opinion should be secured. Even in cases where there is a contractual undertaking for a party breaching an agreement to pay attorneys fees, we have found that courts award such fees on a very conservative basis.  And in situations where attorneys fees are sought by reason of statutory allowance (i.e., the law expressly allows award of attorneys fees) such awards are usually a fraction of what is sought.

When can one ask for attorneys fees? Absent an agreement, attorney awards require a statutory basis.  Such awards are referenced in the divorce law. 23 Pa.C.S. 3702. Where there is a battle over custody jurisdiction, the statutes provides that counsel fees shall be awarded unless there is a finding that such an award is inappropriate. 23 Pa. C.S. 5452. In support cases Courts “may” award attorneys fees either to the oblige (the person securing support) or that person’s attorney. 23 Pa.C.S 4351 but a subsequent case interprets the statute to mean that the awards should not be a regular part of support proceedings but limited top extraordinary situations. Contempt of any kind of a divorce or alimony order invites a claim for counsel fees. 23 Pa. C.S. 3503(e)(7) and 3703(7). But this does not appear to be the case in a custody ( See Pa. R.C.P. 1915.12) or support case (See Pa. R.C.P. 1910.25) 

The statutes and rules say one thing, but courts remain chary of such awards.

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In recent years the numbers are so frightening, people tend to mention them only in a whisper or with the caution that “of course we are getting some scholarship money”.  But here is the data published by the College Board for 2008-2009 based upon its averages.

                                                Tuition & Fees      Room & Board

Public College                       6,585                      7,748       

assumes attendance in–state

Private                                       25,143                      8,989

So, the public school option will require just under $50,000 in after tax income while the high priced spread is going to be a little more than double at $136,528. See http://collegboard.org.

This author is embarrassed to report that his alma mater again garnered laurels as America’s most expensive private university with 2008-09 tuition of $40,437.  Housing ranges from $6-14,000 and food is another $2500-3500. This student graduated with annual costs of $4-5,000 a year in 1977.  In 2009 dollars that should yield an annual cost today of $14,500 to $18,000.  In real dollars, it means that the cost of college at this one institution is 3x the rate of inflation.  But then Washington today is a far different place than it was during the days for Ford & Carter.

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Almost twenty years ago I was asked to speak to the State Conference of Trial Judges about what then seemed to be a fairly arcane subject; whether adult children could be sued for support by their parents or by individuals or entities providing their parents with necessities.  Countless pages are written about the subject of parents and their duty to support minor children.  But did the duty run in the other direction?

It turned out then that there is such a responsibility. According to Blackstone, this principle comes from Athenian law. 1 Wm. Blackstone, Commentaries on the Laws of England p. 442 (1765).  As he described it just prior to the American Revolution, “….they who protected the weakness of our infancy, are entitled to our protection in the infirmity of their age; they who by sustenance and education have enabled their offspring to prosper, ought in return to be supported by that offspring, in case they stand in need of assistance.

The address to the judges on this concept seemed of little effect at the time as there was no recent litigation addressing this subject. But approximately two years ago I spoke with a fellow attorney from Bucks County, Maryjo Murphy, who said that nursing homes were starting to initiate suits against children for services rendered to their parents.

Monica Yan Kinney’s article in the July 12,2009 edition of the Philadelphia Inquirer at page B.1. gives life to the Athenian law as applied in 21^st century America.  The article tells the story of a Havertown resident, Don Grant who was sued by his mother’s nursing home for $8,000 for services supplied to her.  The ironic twist is that Mr. Grant’s mother does receive social security and a state pension but neither of these income streams is attachable by creditors. So, the nursing home sued Mr. Grant for his mother’s care. Mr. Grant professes that he is estranged from his mother and that he was raised by his grandparents.  But that does not appear to be a defense today just as it was not in Blackstone’s day.  In fact, as Judge Blackstone put it, the statute passed under Queen Elizabeth I provides that a child is “equally compellable, if of sufficient ability, to maintain and provide for a wicked and unnatural progenitor as for one who has shown the greatest tenderness and parental piety. 1 Blackstone p. 442 (citing Stat. Eliz. C.2.)

The Kinney article notes that Mr. Grant did not act promptly to appeal what was probably a district court judgment.  It thus became final.  But there is a Pennsylvania statute, 23 Pa. C.S. 4603 that provides spouses, children and parents of indigent persons have a duty to care for, maintain or provide financial assistance. Perhaps there is new law to be made here. The statute also states that the obligation is premised upon the payor’s financial ability and the obligation is not enforced where a child was abandoned by a parent for 10 or more years of the child’s minority. 23 Pa. C.S. 4603(a)(2).  But the doctrine of parental responsibility does appear today to be a two way street.  And the statute confers the right of suit on the indigent person and any other person or public agency having an interest in the care of the indigent person.

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Part of what makes the law fascinating is that there are certain legal issues that have no clear solutions. In many cases, both sides have equal merit. The matter of whether incarceration should reduce or eliminate a support obligation is one such question.

The Supreme Court of Pennsylvania ruled on this question in Yerkes v. Yerkes, 824 A.2d 1169 (Pa. Supreme 2003). In Yerkes, the court found that criminal conduct was a volitional act and that where one acts in a way that results in incarceration, that person should not be able to use his crime as a basis to avoid a support obligation.

Even though the Supreme Court is the state’s highest judicial authority, the controversy has not ended. In 2000, Melissa Plunkard gave birth to a child by John McConnell. She sought and obtained an order of $275 a month in child support. In 2003, Mr. McConnell was convicted of a crime and sentenced to 6-12 years. In February 2007, Mr. McConnell filed to terminate his support obligation premised upon the fact that his incarceration prevented his earning income. He also sought the elimination of support arrearages that had begun to accrue before his incarceration and continued after he was confined in prison. Under Yerkes, the law would have been clear. But, in 2006 the Supreme Court issued a Rule of Civil Procedure (1910.19) that gave courts the authority to modify or suspend support orders where it was found that the person owing the support had no income or ability to pay and that this condition would continue for the foreseeable future.

So what happened to Yerkes and the principles it espoused? In a word, it fell victim to federal laws regulating federal subsidies. As welfare costs skyrocketed in the 1970s and 1980s, the US government decided to get involved in the collection of child support. Beginning in 1984, the US government began to issue regulations to states. The regulations essentially dictated how state child support systems would operate. If the state failed to comply, federal welfare subsidies to the state would be reduced or eliminated.

To encourage states to collect child support, the system is now rigged with incentives for collection and disincentives for states that have large pools of unpaid support arrearages. Needless to say, from 2003 forward, Mr. McConnell’s support account was an expanding pool of unpaid child support. This caused problems for the state when McConnell’s arrearages, and those of the thousands of other Pennsylvania inmates, came under federal scrutiny. It was not enough to tell the US Department of Health and Human Services that these sums were presently uncollectible. Instead they had to be “written off”. Thus, in 2006 Pa. Rule of Civil Procedure 1910.19 was born and the principle of Yerkes (even parents in jail owe support to their children) was subordinated to the demands of the federal bureaucracy.

But wait. At the insistence of the federal government, Pennsylvania had passed another statute that would have “trumped” the 2006 rule in part. Mr. McConnell was jailed in 2003. He did not seek modification until 2007. The Support Law, 23 Pa. C.S. A. 4352(a) states that except where a child is emancipated, there can be no retroactive modification of arrears. The exceptions to this rule are very narrow. They include a physical or mental inability of the petitioner to file the petition; misrepresentation (e.g., failure to disclose facts required to the other party) or other compelling reason. The statute further says that the party seeking retroactive modification must act promptly once the disability is removed or the misrepresentation discovered.

In the McConnell decision, the Superior Court applied several different approaches. The arrears that accrued before McConnell was incarcerated were not remitted, even though it seems clear that he has no present ability to pay them. And even though the Court expressly finds that Father showed no compelling reason for his failure to seek the termination when first incarcerated, it remitted the arrears anyway. The premise for this decision appears to be the fact that the rule allowing termination was issued by the Supreme Court in May, 2006. How the Court had authority to vacate arrearages that accrued before the Supreme Court rule was changed is a question still lingering in this writer’s mind.

The appellate court also emphasizes a part of the 2006 rule that states that these orders are without prejudice. What does that mean in the real world? Can they later be reinstated and, if so, on what basis? All of this remains to be seen. In the meantime, if you find yourself encountering a petition of the kind Ms. Plunkard did, we would probably recommend that you promptly convert all existing arrearages to a judgment recorded with the Prothonotary.

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We are commonly asked how long child support lasts in Pennsylvania. This is a relatively easy question to answer but one with both a history and some varying results.  By statute and case law, the duty to support a child ends when the child has reached age 18 or graduated from high school, whichever comes later. 23 Pa. 4327 et seq.; Blue v. Blue, 616 A.2d 628 (Pa. Supreme 1992).

The history of this responsibility has some interesting twists.  Beginning in 1963, the Pennsylvania Superior Court embarked upon a series of decisions finding that, in certain cases, parents could be held responsible for the support of adult children attending college. Com ex. Rel. Ulmer v. Sommerville.  For the next three decades this law evolved in a variety of ways within the Superior Court.  In 1992, however, in Blue v. Blue the Pennsylvania Supreme Court challenged the very principle that the Superior Court had such power.  The Supreme Court ruled that the Superior Court was without legal authority to direct parents to contribute to pay post majority support except in circumstances where the child was incapable of supporting him or herself through employment.

The Blue case sent a shock through the judicial system, as tens of thousands of children were already getting support while in college.  In response, the General Assembly passed a bill expressly conferring upon courts the power to direct payment of post secondary educational expenses where the parents were separated or divorced.  In 1994, the Supreme Court of Pennsylvania challenged the bill and held that to discriminate between children of intact families in contrast to separated families was a violation of equal protection.  Therefore, the court found that the statute was unconstitutional and deemed it ineffective.  Curtis v. Kline, 666 A.2d 265 (1995)

So, once again, a child who entered college in 1992 with a college support order found himself stripped of any entitlement to college support.  Interestingly, Curtis v. Kline remains the law of the Commonwealth even though the statute books still contain 23 Pa. C.S. 4327 stating otherwise.

Parents may still contract to provide for post secondary support as part of their divorce and those agreement are enforceable. Where the support order requires payment through the judicial mechanism of Domestic Relations, however, support is supposed to terminate at age 18 unless the child continues to be enrolled in high school and is pursuing a diploma.  In recent years, the courts have become adept at terminating these orders, commonly sending notices to custodial parents of the intention to terminate an order on a child’s eighteenth birthday unless the custodial parents responds that the child is still in high school.  Despite the courts’ action in recent years, it is not wise to rely upon the courts to address this question. Parents should be aware that, until an order is entered terminating the support, the wage attachment will continue to be collected.  And, if the support is collected and disbursed, woe to the payor who asks the Domestic Relations Section to get that money back.  Typically, the payor is told to sue the payee in small claims court for the overpayment.  This is usually not a happy result.

If you have the good fortune to be the parent of a graduating student and there is ANY question of whether the order is terminating, file a petition to terminate and ask for a conference or hearing.  If the order is administratively terminated by the judicial system, your hearing may become unnecessary. Even if you made a contractual agreement to pay support after emancipation, those payments should not be made through the court or wage attached.

If you have a child who lives with you and cannot otherwise support himself or herself, then you, as the parent, have the burden of establishing the child’s dependence if you want support to continue. Com. Ex rel. Magaziner. V Magaziner, 419 A.2d 149 (Pa. Superior. 1980); Brown v. Brown, 471 A.2d 1168 (Pa. Super. 1984).  Support granted should be in accordance with the guidelines, but there is a likelihood that you will be asked what state or federal disability resources you have available to help support the child.  Also, bear in mind that any support petition you bring for an adult child must have the child’s written consent.

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Although our law firm has litigated several of the largest support cases decided in Pennsylvania the matter of how much support children need is one of endless controversy for those who have household net incomes exceeding $20,000 per month. We are often asked to offer second opinions or discuss those cases we have tried.  The fact is that while we have opinions about these larger cases, most of them settle because the range of possible outcomes is so wide even in cases where we believe we understand the approach taken by the judicial officials deciding the law.

Since 1984, Pennsylvania has operated under a Supreme Court ruling in Melzer v. Witsberger,   480 A.2d 991 (Pa. Supreme 1984).  The case created a multi-part formula beginning with an analysis of the income each parent’s available income and then assessing the “reasonable needs” of each parents for his or her own support and graduating to an assessment of the reasonable needs of the child or children in each parent’s household.  Based upon a subjective evaluation of these needs, the court allocates what contributions need to be made from one household to the other to cover the child’s reasonable needs. The process is complicated and rife with opportunity for “judgment” calls. Moreover, most members of the judiciary will candidly admit that a lifetime of common sense experience often leaves them unprepared to decide what is reasonable when wealth is enormous.  Does a one year old need a governess if the primary caretaker is already staying at home.  Does a reasonable vacation expense include first class seats?  Private plane?  747?  While Pennsylvania has not opined on these subjects, other states have had to.

It is rare for high income cases to be reported because they usually settle.  But in January of this year a Schuylkill County case, Rich v. Rich, was decided by the Superior Court based upon their review of a Melzer analysis. 967 A.2d 400 (Pa. Super. 2009)

The case involved support of four children at its beginning.  One was emancipated during the two years of litigation culminating in the final order.  The father was a CEO for several coal and co-generation companies.  Father’s gross income was $9-10 million per annum.  His net worth roughly four times that amount.  Mother was not employed.  Father’s home and contents occupied 150 acres and had an aggregate worth of $2-3 million.  Mother lived in a mortgage free $725,000 home. 

Mother presented expenses of roughly $180,000 a year for the four children.  The trial court accepted these expense and awarded $15,000 a month. Support was not reduced upon the eldest child’s emancipation, the Court finding that other expenses would have risen during the period involved.

Father appealed from the order.  His first complaint is that Ms. Rich failed to document her expenses.  The Rules of Civil Procedure were amended in 2006 to require documentation of expenses in cases decided under Melzer where net income of the family exceeds $20,000 per month Pa.R,C.P. 1910.27(c)(2)(a).  His particular complaint was a $50,000 item budgeted for credit cards charges without supporting data or delineation.  The Superior Court found that Father waived the argument when he agreed that the expenses presented for 2005 were reflective of actual post separation expenditures.

The second basis for the appeal was the trial court’s refusal to reduce support by 25% once the eldest child was emancipated. The appellate court properly noted the law to forbid arithmetic reductions not supported by testimony related to expense savings.  At the same time, it observed that it was also an abuse of discretion to infer that the cost of living increase was equal to the reductions in costs arising from a child’s emancipation.  The case was remanded to the trial court to consider what cost savings would result from the child’s emancipation.

Mother also appealed. T he core of her appeal was that the support was insufficient and she pointed to two cases litigated by Fox Rothschild (on behalf of plaintiff’s) where more support was awarded for children than Mr. Rich was required to pay even though his income was 2-4x greater than the payor spouses in Karp v. Karp, 686 A.2d 1352 (Pa. Super. 1996) and Mascaro v. Mascaro. 803 A.2d 1186 (Pa. Supreme 2002)

The Superior Court easily disposed of this . The support award made by the court was 100% of the budget presented by Ms. Rich even though she claimed that her needs were only 10% of the $15,000 in claimed monthly expenses. Where she pointed to the disparity in accommodations between her $725,000 home and father’s $2-3 million dollar residence, the Court pointed to Colonna v. Colonna, 855 A. 2d 648 (Pa. Supreme, 2004) where the Supreme Court of Pennsylvania held that “case law does not require that all the recreational benefits that the children enjoy when they are with Father must also be provided through support from Father when they are in Mother's custody.  In fact, Mother admitted that the children have continued to attend private schools and summer camps as they did before she established a separate residence.  Our review of the record in relation to Mother's first two issues reveals that the court's conclusions are not in error and no abuse of discretion was committed.”

So, in the 25^th year after Melzer became the law of the Commonwealth, we still do not have an appellate case that thoroughly analyzes what is a “reasonable” expense for a child or even how to allocate things such as auto insurance or propane bills between parent and child.  But we do know that $15,000 is not an abuse of discretion for four children and we are reminded that Mr. Rich’s access to vacation homes while the children are with him does not warrant support adequate to allow Ms. Rich to replicate that lifestyle while with the children.  The case also discusses how to dispose of huge accumulations of credits or arrearages emerging from lengthy proceedings and interim payments. But that will be for another day.

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Although our law firm has litigated several of the largest support cases decided in Pennsylvania the matter of how much support children need is one of endless controversy for those who have household net incomes exceeding $20,000 per month. We are often asked to offer second opinions or discuss those cases we have tried.  The fact is that while we have opinions about these larger cases, most of them settle because the range of possible outcomes is so wide even in cases where we believe we understand the approach taken by the judicial officials deciding the law.

Since 1984, Pennsylvania has operated under a Supreme Court ruling in Melzer v. Witsberger,   480 A.2d 991 (Pa. Supreme 1984).  The case created a multi-part formula beginning with an analysis of the income each parent’s available income and then assessing the “reasonable needs” of each parents for his or her own support and graduating to an assessment of the reasonable needs of the child or children in each parent’s household.  Based upon a subjective evaluation of these needs, the court allocates what contributions need to be made from one household to the other to cover the child’s reasonable needs. The process is complicated and rife with opportunity for “judgment” calls. Moreover, most members of the judiciary will candidly admit that a lifetime of common sense experience often leaves them unprepared to decide what is reasonable when wealth is enormous.  Does a one year old need a governess if the primary caretaker is already staying at home.  Does a reasonable vacation expense include first class seats?  Private plane?  747?  While Pennsylvania has not opined on these subjects, other states have had to.

It is rare for high income cases to be reported because they usually settle.  But in January of this year a Schuylkill County case, Rich v. Rich, was decided by the Superior Court based upon their review of a Melzer analysis. 967 A.2d 400 (Pa. Super. 2009)

The case involved support of four children at its beginning.  One was emancipated during the two years of litigation culminating in the final order.  The father was a CEO for several coal and co-generation companies.  Father’s gross income was $9-10 million per annum.  His net worth roughly four times that amount.  Mother was not employed.  Father’s home and contents occupied 150 acres and had an aggregate worth of $2-3 million.  Mother lived in a mortgage free $725,000 home. 

Mother presented expenses of roughly $180,000 a year for the four children.  The trial court accepted these expense and awarded $15,000 a month. Support was not reduced upon the eldest child’s emancipation, the Court finding that other expenses would have risen during the period involved.

Father appealed from the order.  His first complaint is that Ms. Rich failed to document her expenses.  The Rules of Civil Procedure were amended in 2006 to require documentation of expenses in cases decided under Melzer where net income of the family exceeds $20,000 per month Pa.R,C.P. 1910.27(c)(2)(a).  His particular complaint was a $50,000 item budgeted for credit cards charges without supporting data or delineation.  The Superior Court found that Father waived the argument when he agreed that the expenses presented for 2005 were reflective of actual post separation expenditures.

The second basis for the appeal was the trial court’s refusal to reduce support by 25% once the eldest child was emancipated. The appellate court properly noted the law to forbid arithmetic reductions not supported by testimony related to expense savings.  At the same time, it observed that it was also an abuse of discretion to infer that the cost of living increase was equal to the reductions in costs arising from a child’s emancipation.  The case was remanded to the trial court to consider what cost savings would result from the child’s emancipation.

Mother also appealed. T he core of her appeal was that the support was insufficient and she pointed to two cases litigated by Fox Rothschild (on behalf of plaintiff’s) where more support was awarded for children than Mr. Rich was required to pay even though his income was 2-4x greater than the payor spouses in Karp v. Karp, 686 A.2d 1352 (Pa. Super. 1996) and Mascaro v. Mascaro. 803 A.2d 1186 (Pa. Supreme 2002)

The Superior Court easily disposed of this . The support award made by the court was 100% of the budget presented by Ms. Rich even though she claimed that her needs were only 10% of the $15,000 in claimed monthly expenses. Where she pointed to the disparity in accommodations between her $725,000 home and father’s $2-3 million dollar residence, the Court pointed to Colonna v. Colonna, 855 A. 2d 648 (Pa. Supreme, 2004) where the Supreme Court of Pennsylvania held that “case law does not require that all the recreational benefits that the children enjoy when they are with Father must also be provided through support from Father when they are in Mother's custody.  In fact, Mother admitted that the children have continued to attend private schools and summer camps as they did before she established a separate residence.  Our review of the record in relation to Mother's first two issues reveals that the court's conclusions are not in error and no abuse of discretion was committed.”

So, in the 25^th year after Melzer became the law of the Commonwealth, we still do not have an appellate case that thoroughly analyzes what is a “reasonable” expense for a child or even how to allocate things such as auto insurance or propane bills between parent and child.  But we do know that $15,000 is not an abuse of discretion for four children and we are reminded that Mr. Rich’s access to vacation homes while the children are with him does not warrant support adequate to allow Ms. Rich to replicate that lifestyle while with the children.  The case also discusses how to dispose of huge accumulations of credits or arrearages emerging from lengthy proceedings and interim payments. But that will be for another day.

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For some segments of our society litigation is part of everyday life. Insurance adjusters make their living out of measuring damages and assessing the risk and cost of doing battle over insurance claims. As such, they make judgments every day as to whether a particular claim is something they want to fight over. In so doing, they take into consideration the damage the claimant incurred, the cost of contesting the claim and the likelihood they will prevail over the claimant (or otherwise reduce the claim recovery).

Businessmen are not as immersed in litigation as those in the insurance industry, but businesses deal with various kinds of legal claims every day. Employees sue for wage claims or discrimination claims. Developers battle municipal authorities over home many homes they can build on a parcel. Again, each of these matters involves assessment of risk and benefits associated with potential litigation.

Family law litigants, even those who assess commercial risks and rewards every day tend to lose sight of the fact that they have a role in deciding when to fight versus when to switch. Tell someone that a planned vacation with his/her children for the summer has been abruptly “cancelled” by a former spouse and many will tell you they do not care what it costs to enforce their rights as parents. That may be true until the bill comes in.

In family law, many clients tell us that they are fighting for principle. Principle does have its place and there are times when a matter must be litigated simply to “send the message” that a client takes his or her rights very seriously and will invest in the principle of the matter even when a dollar recovery is remote. But even in these cases, it is worthwhile to ask, how likely is it that the principle I am promoting will be validated by the Court. And what will I invest for that validation.

A classic example involves child support. Even in a world where there are support guidelines with explicit definitions there is still room for battle. Husband loses his job in the current economic environment. Wife says he quit. Husband says he was laid off. Wife wants to assert that support should be based not on his unemployment but his earning capacity. There is a triable issue of fact. But what is the likelihood that each side will prevail? And what is the cost of the hearing or trial.

Let us say that unemployment is $2,000 a month. Husband formerly earned $7,000 a month. Assume spousal support only is in issue. Further assume that Wife is working and making $2,000 a month. Husband’s best case is no support at all as wages are equal while he is unemployed. Wife’s best case scenario is that Husband owes her $2,000 a month in support based on his earning capacity. Now we have a range of outcomes. Let’s assume that Wife’s attorney estimates his chance of a total win at 50%. The value of the claim is no longer his best case of $2,000 a month but half of that amount. Now how long can he expect to collect the support if he prevails. If it is estimated at two years the value of the claim is 24 months multiplied by $1,000 representing the value of the claim. Now the question becomes what are the litigants willing to spend to enforce an outcome that centers around $24,000. If they try the case for a day before a judge or hearing officer they will each invest probably 30 hours between the various preliminary proceedings. At $300 an hour, each will invest $9,000. Now we see an $18,000 investment pursuing a probably $24,000 outcome. Now, bear in mind, each party will only be putting up half but most would agree that $9,000 is a fairly pricey expense where $24,000 is the probably value of the claim.

Take equitable distribution of a case involving $500,000 in assets. The best outcome for a dependent spouse is probably no greater than 60% or $300,000. The primary breadwinner argues that the spouse can make as much as he can and he proposes 50/50. That means Wife gets $250,000; a discount of $50,000 from her goal. The “spread” buys roughly 165 hours of legal time. That may seem like a lot but spread it over the 18-24 months that most divorces take in Pennsylvania and we are now looking at each side devoting 4 hours a month to preparation and litigation of the case.

The point is to use your attorney and pick your fights wisely. Remember that a $100,000 claim where you have an 80% chance of a win is only an $80,000 claim in reality. Meanwhile, the cost is certain to occur. Even when the most important of principles is involved; cost and likelihood of winning are two factors that cannot be sensibly ignored.

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Most of us do not spend our spare time reviewing recent amendments to the US Bankruptcy Code. But if you are contemplating or going through a divorce a bit of attention is warranted because the 2005 amendments to the law change the landscape of what occurs when bad times come about.

A little history tells the story.  Twenty years ago the prevailing bankruptcy law distinguished between equitable distribution and alimony obligations. An obligation to make a payment or asset transfer as part of an equitable distribution payment or order was dischargeable.  An alimony obligation could not be avoided because it was seen as a form of support.  In the mid-1990s the statute was amended which called for a balancing of the hardship of enforcing the order against the consequence to the spouse or family member.  This balancing test was applied to both alimony and property distribution obligations.

In 2005 the Bankruptcy Code was amended again with lots of pressure from the credit card industry to limit the power of consumers to avoid obligations of all kinds.  Congress was bitten by the bug and one of the collateral effects was amendment of Section 523 to provide that any form of Domestic Relations Obligation was no longer eligible for discharge.  Section 101 states that a Domestic Relations Obligation includes debts to spouses, former spouses or children in the nature of alimony or support.  Except in Chapter 13 cases any obligation contained in a Property Settlement Agreement may not be discharged. Chapter 13 cases are essentially personal “reorganization” cases. The new statute will allow discharge of a property settlement obligation so long as it is part of a reorganization plan and is not a support obligation.

Failure to pay support obligations can also thwart a bankruptcy.  The statute permits federal courts to dismiss Chapter 13 cases or to deny discharge from debt premised upon an obligor’s failure to comply with a support obligation. The spouse who is owed the money can even ask that your Chapter 13 plan (essentially a work-out of debt) be converted to a Chapter 7 (a forced liquidation of your assets to pay creditors) premised upon failure to pay support on a timely basis.

What does this mean in practical terms?  It means that you have to watch out what you sign up for. You can sign leases, promissory notes, guaranties and credit card agreements by the bushel. At the end of the day you can pretty much avoid those obligations by filing a Chapter 7 bankruptcy or establish a work out plan through Chapter 13.  But if your obligation is to a spouse or your kids, the rules are different and those obligations are going to survive your bankruptcy.  For high income individuals, there is a tendency to overcommit because the person has a long history of significant earnings.  We commonly have client’s tell us: “I know it’s a lot of money to pay but I have always been able to make money and I will find a way to do it this time. “  Historically, we have tried to structure these deals with a heavy emphasis that the obligation is a property based one and not support with the understanding that property based obligations could be eligible for bankruptcy protection.  Since October, 2005 that technique has lost its vitality. So let the promisor beware.

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No need to drive to hearings or hire high priced lawyers.  If you google PA Child Support Home Page or go to www.childsupport.state.pa.us you will travel to a website that allows you to calculate the amount of support due using Pennsylvania’s guidelines. You must agree to the disclaimer on the site but once there, the site’s left side column has a category called “General Information” and three up from the bottom of the menu is a “Support Estimator”.

We have not tested the site and there are many factors to be considered beyond what the calculator shows as reflected in the disclaimer.  But it is a good place to rough out how much you owe or should collect under the guideline system in Pennsylvania.

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We have had support guidelines in Pennsylvania since 1984.  The effort was part of a federal initiative to see that all families with similar levels of income paid comparable child support. A few years ago the Supreme Court of Pennsylvania modified the rules to give recognition to the fact that home mortgages represented a disproportionate amount of household expenses by creating what is called a high mortgage adjustment. If the mortgage including taxes and insurance exceeds 25% of household income after spousal and child support are included, the Courts have discretion to take the “excess” and add 50% of that excess onto the support order. Here’s how it works:

Husband and wife separate.  Husband has net income of $15,000 a month.  Wife has net income of $5,000 a month. Under the guidelines 2 children are entitled to $2,877 per month.  If they live with Wife, Husband pays 75% of the $2,877.  If they live with Husband, Wife will pay 25% of the $2,877.  Either way, wife is also entitled to support.  To calculate that one takes Husband’s net, subtracts Wife’s net AND the child support.  The difference is them multiplied by .3 to calculate the spousal support component.  Arithmetically, if the children live primarily with their mother, the calculation is expressed;

{15,000 – (($5,000 + (2877 x .75))} x .3 = $2,353 in spousal support.

With the high mortgage adjustment one next looks to the total household income of the spouse in the marital home and multiplies it by 0.25 to determine what mortgage is reasonable. So Wife’s income is her own net of $5,000 is added to child support of $2,158 and spousal support of $2,353 to equal $9,511.  By definition a reasonable mortgage is 25% of that amount or $2,378.  Any excess over that amount may be divided equally with the spouse out of the house paying that amount as the high mortgage adjustment.  So if the mortgage with taxes and insurance is $3,378 per month, the $1,000 excess would result in an additional $500 in support contributions.

A good idea on its face.  But, alas, the mortgage world we live in today is a different place. Folks who net $20,000 when living in the same household usually make gross income of $25,000 or more.  Even before the mortgage crisis of the past two years, a family which when residing together had $25,000 of gross monthly income could qualify for a mortgage of $7,500 a month.  Under the current rule, a $7,500 mortgage would warrant an excess mortgage payment of $2,561. The “excess” contribution would actually be greater than the child or the spousal support.  The combined obligation on the payor would be $7,072.

This is not itself a horrendous burden but it ignores the difficulty of the situation. The adjustment does recognize how tenuous the situation is.  Wife will have net income of $12,572 before looking at the taxes due on her spousal support. But fully 60% of that income buys nothing more than the mortgage itself.  It leaves precious little to pay “all other” household expenses. 

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Today was a support trial.  We represented the regular wage earner.  The wife was the owner of a small business. She was suing for support. The business had seen a 40% growth in revenue but wife contended that she could not make more than a $1,000 a month, less than half of what she was paying her only full time employee after five years of operations.  So, the numbers did not make sense.

Sometimes the numbers don’t add up. Many people start small businesses without any clue about how to make a living from what they do.  Many others don’t hesitate to conflate business with pleasure by using the business to pay personal expenses.

Rare is the instance where attorneys get to advise the client about how to handle the business records before they are sealed into reality by submission to taxing authorities or lenders. If we could, we would tell clients to sit down with their accountants and clean the books to reflect the economic reality of what really occurred.  Nothing is more painful to a trial lawyer than to watch opposing counsel take their client apart, like removing the wings from a fly, as each bogus transaction and accounting game is exposed in excruciating detail before the Court.

Almost as bad is the client who has no understanding of how his or her business records work. A businessperson who does not understand how his or her records work looks stupid or dishonest or both. As attorneys we commonly make the mistake of assuming that clients understand accounting and tax law when they are not conversant with either.  As a client, take a look at your tax returns and your financial statements as well as your books of original entry.  If you don’t understand what you are looking at, it’s time to insist that your accountant step in.

If you enlist the services of an accountant, insist that the accountant play devil’s advocate.  How will the other side look at the books? Is it time to cleanse the books rather than allow the opposing side to pick your books apart on their terms?  Sadly, this may also mean that amended returns may need to be filed. But an amended return is better than a “tip” to the service from a presiding judge.

Above all, if you own your own small business or have an investment in one, don’t just let matters rest.  Look at your books, your tax returns and your financial statements.  Ideally, learn what they are about.  You are the best advocate of their accuracy.  But, if accounting is not your game, let the professionals do it and let them tell you where questions will arise.

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During the last week of June, 2008 the Supreme Court’s Domestic Relations Procedural Rules Committee published for comment by the bar and the public at large new guidelines for support of children. The comment period is open until October 31, 2008 and comments are to be directed to the Committee’s counsel, Patricia Miles at 5035 Ritter Road, Suite 700, Mechanicsburg, PA or, via email to patricia.miles@pacourts.us.

The most significant change proposed is to take the guideline formula from a maximum of $20,000 a month net to $30,000. Even after that level the application of an expense based analysis under Melzer v. Witsberger, is avoided through application of a formula intended to yield consistent results.

Looking at the numbers, the most significant change is for families with more than one child. The proposed guidelines appear to conclude that the economies of scale from having multiple children was overstated in past revisions. Thus, while support for one child seems to scarcely change at most income levels, there are changes upward where 2-4 children are involved. We have not analyzed these changes for families with 5 or more children because we see very few cases of that kind in our practice.

We looked at the proposed guidelines and compared them with those adopted in the Fall, 2005. Our chart reflects the results

Children                1                2               3                4 

Income                 

$5,000                +1.7%        +7%       +11%       +11%

$10,000                 0%          +6.5%    +11%       +11%

$15,000              +2.5%        +11%     +15%       +15%

$20,000              (7.5%)       (4.0%)     +12%      +12%

[Editor's Note: Please excuse the form of the chart, as formatting is difficult in the blog.]

What makes these changes noteworthy is comparison with consumer price index data for urban consumers in the Northeast US (which includes PA). When the guidelines were last published in September, 2005 the CPI stood at 210.8. The CPI in May, 2008 is reported to be 230.1. This is an increase of 8.4% over 32 months or 3.15% per annum. What could be of especial concern is the fact that inflation in the past year rose 3.7% and thus far in 2008 it appears to be moving along at a 6% clip as energy and food prices gallop higher.

We must stress that these guideline are in circulation for comment only and are subject to revision by the Rules Committee and ultimately, the Pennsylvania Supreme Court. But the opportunity for public comment will end in October and we believe it provident to afford our friends and clients the opportunity to make their views known to Ms. Miles for circulation to the committee. Once adopted it can be expected that the ultimate product will presumptively govern child support decisions for the next four years.

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When parties separate, money inherently becomes a key issue because it is not possible to support two households at the same level with the same income that previously supported just one household.  And in most cases, one party files for child support. Practitioners must advise their clients that a child support obligation only begins on the date that the party files the complaint for child support, and not sooner.    

Once a complaint is filed, how do the courts determine each party’s income for child support purposes?  

The Pennsylvania Support Guidelines determine each party’s child support obligation based upon his or her net monthly income, and Pennsylvania law includes income from any source as income for child support purposes. 23 Pa.C.S.A. § 4302; Pa.R.C.P. 1910.16-2(a). 

To determine a party’s child support obligation, the court first calculates the party’s yearly gross income by totaling the person’s income from all sources without consideration of any deductions. The statute, (23 Pa.C.S.A. § 4302), lists many types of income including, but not limited to: 

1. wages, salaries, bonuses, fees and commissions;
2. net income from business or dealings in property;
3. interest, rents, royalties, and dividends;
4. pensions and all forms of retirement;
5. income from an interest in an estate or trust;
6. Social Security disability benefits, Social Security retirement benefits, temporary and permanent disability benefits, workers’ compensation and unemployment compensation;
7. alimony if, in the discretion of the trier of fact, inclusion of part or all of it is appropriate; and
8. other entitlements to money or lump sum awards, without regard to source, including lottery winnings, income tax refunds, insurance compensation or settlements; awards and verdicts; and any form of payment due to and collectible by an individual regardless of source. 

Then, the monthly gross income is determined based upon a six-month average of all the party’s income from any source. Pa.R.C.P. 1910.16-2(a). Finally, the court determines the party’s net monthly income pursuant to Pa.R.C.P. 1910.16-2(c)(1), which provides for only the following deductions: 

1. federal, state, and local income taxes;
2. F.I.C.A. payments and non-voluntary retirement payments;
3. union dues; and
4. alimony paid to the other party. 

Once the court has determined each party’s net monthly income, then the court uses a table to determine the support obligation. The basis support schedule can be found in the Pennsylvania Support Guidelines. The guidelines also provide the methodology for calculating support.

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The Pennsylvania Supreme court recently decided that under certain circumstances a sperm donor who is known to the mother may not have to provided child support for the child(ren) conceived through artificial insemination.

Although the facts of the case are fairly unique, the holding by the Court was written after looking at the increasingly-common area of assisted conception and the absence of PA laws on the topic.

In the Ferguson v. McKiernan case, sperm donor and mother had a past romantic relationship. However, mother promised sperm donor that he would never be responsible for any children if he donated his sperm through a fertility clinic. For 5 years mother kept this promise, but then sued him for child support for the twins born from this arrangement.

During the 5 years, father moved, married and had his own family. By agreement, his genetic link to the children was not revealed. Indeed , the Court found that Mother acted in numerous ways that were fraudulent, including, but not limited to, putting her estranged husband’s name on the birth certificate, telling the fertility doctor she was married, bringing along another man as her “husband” to circumvent the doctor’s refusal to implant single women, and misrepresenting her ability to conceive to the sperm donor.

The court looked at the spectrum of cases regarding child support obligations where the parties are not married. On one side, they affirmed that children born from a sexual relationship are always entitled to child support, and neither parent can give up the child’s right before or after birth. On the other side, anonymous sperm donors are absolved of child support obligations, because to do otherwise would mean that such arrangements would not occur. Here, the court found that the agreement between mother and sperm donor was enforceable because:

1. the existence of the agreement was what allowed the conception to occur; and
2. Mother’s fraudulent conduct, inconsistent testimony, and deliberate falsehoods were enough to show that sperm donor would not have donated his sperm without the agreement.

For practitioners or unmarried people contemplating assisted conception, it is important to have the circumstances of the arrangement carefully reviewed and to have an agreement in place which reflects the parties’ wishes before conception occurs.

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In Pennsylvania, parents have a duty to support their children until the children are emancipated.

Whether a child is emancipated depends on the facts of each particular case. In the vast majority of cases, once a child turns 18 and has graduated from high school, the child is emancipated. This is different from other states that require a parent to continue to pay support while a child is in college. 

Unlike other states, Pennsylvania’s law does not require that parents contribute toward college tuition or other higher education expenses after a child is emancipated.

In order to terminate a child support order,  a Petition to Vacate needs to be filed several weeks prior to the child’s eighteenth birthday or high school graduation, whichever event occurs later. The termination will not happen automatically.

The Pennsylvania Superior Court recently addressed a situation where a child did not become emancipated after she turned eighteen and graduated from high school.  In that case, the daughter suffered from epilepsy and debilitating headaches. The daughter is 19, enrolled in college full-time, dances in a theater group, and works a part-time job twenty hours per week. The father attempted to terminate his child support obligation for the daughter; however, the Superior Court found that the daughter’s migraines and the medication that she must take for them reduce her ability to support herself. As a result, the Superior Court determined that the daughter was not emancipated and the father was required to continue his support payments to the mother.

The Kotzbauer v. Kotzbauer case does not address how long the father’s support obligation will continue. Several factors would have an impact on this issue, including the child's marriage, moving away from home, a change in her employment, or her cohabiting.  These factor and others would likely impact how the court would decide the case in the future.

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Generally, Pennsylvania law provides that the parent who has primary physical custody of the child is entitled to claim the dependency exemption, and the child tax credit, on his or her income tax return.  If the parents share physical custody, the parent who earns more income is entitled to claim these tax benefits. However, this is negotiable in divorce and child support actions.

The ability to claim the child on your income tax return can benefit a parent by changing the filing status from “single” or “married filing separately” to “head of household”, a more beneficial filing status under the tax code.  This may decrease the amount of tax you owe.  However, the dependency exemption may be a greater benefit to the non-custodial parent and, therefore, may be worth negotiating in a divorce or support action.

For example, if claiming the child as a dependent will save the non-custodial parent $5,000.00 in tax, but will only save the custodial parent $1,000.00 in tax, then the non-custodial parent should claim the child as a dependent and pay the custodial parent the $1,000.00 she would otherwise would have saved.  The net savings to the non-custodial parent is $4,000.00. (And, a good lawyer could even negotiate sharing this $4,000.00 tax savings between the parties!)

A second benefit for the parent claiming the child is the Child Tax Credit.  The Child Tax Credit allows you to claim $1,000.00 for each qualifying child. So, in a family with three children, the credit is worth $3,000.00.  This credit also reduces the tax you owe.  However, the Child Tax Credit is phased out for certain higher income tax payers.  Specifically, the amount of the credit allowable is reduced by $50.00 for each $1,000.00 of modified adjusted gross income above a threshold amount.  That threshold amount is $110,00.00 on a joint return, $75,000.00 for single and head of household filers, and $55,000.00 for married individuals who file separate returns.  This means, for example, that a married couple filing jointly who have one qualifying child would be entitled to a credit of $950.00 if their modified adjusted gross income is more than $110,000.00, but not more than $111,000.00.  They lose the credit completely if their modified adjusted gross income is more than $129,000.00.

It is important to understand how the Filing Status, Dependency Exemption and Child Tax Credit can affect your personal income tax return.  It also is important to understand how they can affect the other parent’s income tax return. Your accountant and attorney should discuss these tax benefits and how they will affect your tax returns before you file your 2007 taxes, and in the foreseeable future.  There are very specific financial benefits that could be negotiated in your divorce and support actions, in a way that positively affects both you and your spouse or former spouse.  It always feels good to find a way to pay less taxes, even if it saves your "ex" some money too.

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For the first time, the Pennsylvania Supreme Court considered whether a sperm donor has to pay child support payments for the children resulting from his donation.  The case is Ferguson v. McKiernan, and the Court ruled that no child support is due.

Ordinarily, in Pennsylvania, parents have a duty to support their children until the children become emancipated.  A parent cannot contract to give up the right to receive child support because it is not the parent’s right to give away; it is the child’s.  Any contract attempted to waive the right to child support is void.

In Ferguson, the mother and the sperm donor orally agreed that the sperm donor would give up any custody rights and that he would not owe child support for any children.  The mother later conceived twins through in vitro fertilization and sued the sperm donor for child support.

The Supreme Court found that the oral contract was valid and that this sperm donor did not have to pay child support for the twins.  The Supreme Court found that this is different from a contract between two people who conceived the children through intercourse.  The contract was also different because it was entered into before conception.

In reaching its decision, the Court recognized the growing field of reproduction assistance for mothers.  Anonymous sperm donors do not pay child support.  If a mother selects a donor that she knows and respects, the donor is more likely to participate if he knows that he will not be required to support any resulting children.  Any other decision would subject sperm donors to liability for child support which could ultimately force all mothers to use anonymous donors.

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Most child support cases in Pennsylvania are decided based upon the Pennsylvania Support Guidelines ("Guidelines") found at Pa.R.C.P. 1910.16-3.  The Guidelines are utilized for any case in which the parents’ combined net monthly income is $20,000 or less.  The amount of support dictated by the Guidelines is subject to reduction if the parties have shared (50/50) physical custody or if the payor has substantial physical custody (at least 40% of overnights).  The reduction in the child support payments for shared or substantial physical custody ranges from 10% to 20% of the payor’s proportionate share of the total support obligation. See Pa.R.C.P. 1910.16-4.

Cases in which the parties’ combined net monthly income exceeds $20,000 are decided outside the Guidelines, based upon a formula set forth in the case of Melzer v. Witsberger, 480 A.2d 991 (Pa. 1984).  In these high income cases, a presumptive minimum amount of support is established based upon the Guidelines.  However, the actual support award may be higher, based, in large party, upon children’s reasonable expenses.

Although an automatic reduction in support is made in Guidelines cases based upon shared or substantial physical custody, the same reduction does not apply in high income support cases.  The Pennsylvania Superior Court recently held that shared physical custody does not affect a Melzer calculation.  

This recent Superior Court decision highlights the expense driven nature of cases decided under Melzer. Although case law instructs courts to be flexible in considering other factors in addition to expenses, under the shared physical custody arrangement in Bulgarelli, the court declined to deviate from the standard Melzer calculation.  The parties’ and children’s expenses are the paramount focus of any Melzer analysis, not the custody schedule. 

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How much support is enough when a child theoretically has everything?

An example would be the obligation of rap star, 50 cent.  According to articles in New York and Chicago newspapers, the rapper presently pays $25,000 per month for the support of his 10 year old son.  Now that he hit the jackpot as an investor in Coke's buy-out of the parent company of Vitamin Water (to the tune of $100 million dollars), the mother of the child wants more.  Could it be possible that $25,000 per month is not enough to raise the child????

In Pennsylvania, there is a 1993 Superior Court case out of Pittsburgh which addressed certain aspects of this issue, Branch v. Jackson, 629 A.2d 170 (1993).  In that case, the father of a child born out of wedlock, who was a professional football player, argued that since the child always had resided with Mother, in a modest lifestyle, her expenses should be the determining factor, not what he could afford.

The Superior Court did not agree, and held that where a father is wealthy, and although the mother may indirectly benefit, the child was entitled to support "commensurate with his Father's income and lifestyle".

That does not answer the original question of how much is enough, but the Branch case does offer guidance for lawyers and litigants in Pennsylvania courts.

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PASCES, the collection and enforcement agency for  support in Pennsylvania, has begun requiring that an obligor's first support payment be paid at the time of the initial conference if an interim or a final order is entered.  This applies to child support, spousal support and APL cases. 

Montgomery County instituted this requirement a few months ago.  Chester County recently has done so.  I'm sure others will be following suit.  If you are an attorney representing an obligor, make sure your client does not find out about this "surprise" at the end of the conference.

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The new client walks in the door, obviously nervous about his or her case being the subject of a public trial in the county courthouse.

The first thing I tell them is that most third parties are not interested in their divorce case.

The second thing I say is that most of the cases I handle resolve without the need for substantial litigation, although there may be a hearing or two along the way.

However, most recently I have found that I am trying a few more cases than usual, and I'm winning.  I'm not saying that so that readers will think: I've got to have Charlie Meyer as my lawyer.  My real point is that, while I have written in the past on the importance of professionalism and civility in the practice of law, especially in domestic relations practice, I now am finding that lawyers are taking positions they cannot possibly defend and upon which they cannot prevail.

I am reminded of the time when, as a young lawyer, I met with an "experienced" (read "older") lawyer in his storefront office to discuss a support matter.  It obviously was a case which would be decided under the Guidelines.  But to my surprise, his position was that "he didn't use 'those' guidelines".  Needless to say, we went to court, and the guidelines were applied.

This story is illustrative of what I am finding more and more in my practice.

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Pursuant to 23 Pa.C.S.A. Section 4308.1, proceeds from a "monetary reward", such as a Personal Injury Award, are subject to a lien for child support arrears.  Parties and their attorneys have obligations under the section of the Domestic Relations Code.  Basically, documentation must be provided by the party to the attorney, and the attorney must verify the information and then satisfy the lien before distributing any funds to the client.

In lieu of relying on information from the client, the attorney may utilize an approved judgment search company or an insurer which furnishes information and transmits funds under the child support enforcement lien program operated through a central reporting agency approved by the department.  By doing so, the attorney is immune civil, criminal and/or administrative penalties.

There is much more to the statute section, but attorneys certainly should be aware of their obligations in this regard.

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Here is a factual situation which is not atypical:

Mother pays child support to Father, based upon earnings of $100,000 per year.  Mother loses her job, and takes a lower paying job earning $50,000.   Then she files a Petition to Modify her Support Order.

What are the considerations in a case like this?  A recent Superior Court Opinion, Grigoruk v. Grigoruk, 912 A.2d 311(Pa. Super. 2006), sets forth a concise review of the considerations.  The Court's discussion includes the following queries which must be resolved:

• Under Pa.R.C.P. 1910.16-2(d), a party voluntarily accepting a lower paying job is not entitled to a reduction in support.  However, if a parent is fired for cause, the court should look to the party's attempt to mitigate the lost income in deciding if a reduction in support should be allowed.
• The court should look to the factual circumstances to determine if the subsequent job search was sufficient.
• The court should look at the party's employment immediately prior to the request for modification, and not the highest paying job the parent had 4 years ago.
• A higher earning capacity may be assigned if the court finds that the reduction in income was the result of a parent's misguided choice.
• A parent may accept a lower paying job where it was the only job offered after a reasonable search.
• A parent does not necessarily have an ongoing duty to mitigate the lost income by conducting an ongoing job search.  However, this also would be a determination based upon the facts.

In this case, the Superior Court relied upon several other cases to support its position, or to distinguish its position, including:

Ewing v. Ewing, 843 A.2d 1282 (Pa. Super. 2004)

Novinger v. Smith, 880 A.2d 1255 (Pa. Super. 2005)

Woskub v. Woskub, 843 A.2d 1247 (Pa. Super. 2004)

Dennis v. Whitney, 844 A.2d 1267 (Pa. Super. 2004)

Baehr v. Baehr, 889 A.2d 1240 (Pa. Super. 2005)

Samii v. Samii, 847 A.2d 691 (Pa. Super. 2004)

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We all know that there is a dependency exemption available for children who live with us.  But in a divorce situation, who gets to take the deduction?

Pursuant to the Internal Revenue Code Section 152, if one party has primary physical custody of the child(ren), such that the child lives with that parent for more than one-half of the year, that party is entitled to claim the exemption. 

Pennsylvania Rule of Civil Procedure 1910.16-2(f) authorizes the court to award the dependency exemption to the non-custodial party as "justice and fairness require", in an effort to maximize the total available income for support.  The Rule also permits the court to decide which party gets the exemption in a situation where custody is equally shared.

However, most recently the IRS has issued Notice 2006-86, which is entitled "'Tie-braking' Rule for Two or More Taxpayers Claiming a Child as a Qualifying Child".  The Notice provides information regarding IRC Section 152(c)(4)(B), which states, in substance, that where the parents share custody equally, such that the exemption could be claimed by either party, "the taxpayer with the highest adjusted gross income for that taxable year" gets to claim the exemption. 

This new rule answers a question which used to create problems on April 15 of each year for divorced parties and their lawyers.  Now, whether you agree with it or not, there is a rule on the issue.

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Section 4308.1 of Title 23 of the Pennsylvania Consolidated Statutes went into effect in September 2006.  It refers to any settlement paid as a lump sum and negotiated in lieu of, or subsequent to, the filing of a lawsuit of any civil judgment or civil arbitration award that is paid as a third party claim for bodily injury or death under property and/or casualty insurance, or paid as a workers’ compensation or occupational disease award under a workers’ compensation policy (including Property and Casualty Compensation or Occupational Disease Act Policies), in excess of Five Thousand Dollars ($5,000). 

When such an award is made, it cannot be paid to the plaintiff until the attorney, insurer or other paying agent either uses a private judgment search company approved by the Department of Child Support Enforcement Lien Program or the prevailing party/beneficiary of the funds provides a statement and written documentation to show that no arrears from the Pennsylvania Child Support Enforcement System exists. 

In English, what this means is that if you owe support, you won't get the proceeds of your suit until your support arrears are paid.  And if you are a support recipient, if arrears exist on the account, and you find out that the person who is paying you support is going to get a settlement, you should be getting some money soon.

Obviously, this does not apply to support which is not being paid through the court.

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Think about these scenarios:

1.  Parties have an infant child and separate. Mom was not working at the time of separation, and does not want to go back to work. How is child support to be calculated?

2.  Mom has two children from a prior relationship, remarries and has a new baby. With respect to her older children, she pays child support. Can she stay home with her new infant and, if so, does she still have to pay child support?

Obviously, these two are not the only scenarios to which the issue might arise as to whether a parent can stay home to care for a young child. Under Pennsylvania Law, there is a “Nurturing Parent Doctrine”, pursuant to which the mother in these scenarios may not have to continue to pay child support. The issues are very fact specific, but focus on several factors, including, but not limited to:

• the age and maturity of the child;
• the availability and adequacy of others who might assist the custodian-parent;
• the adequacy of available financial resources if the custodian-parent does remain in the home. 
• the mother’s perception that the welfare of the child is served by having a parent at home is to be accorded significant weight in the court’s calculation of its support order.
• the prior practice of the mother, i.e. what did she do when her older children were born?

There are several appellate cases on this issue, including the following:

Commonwealth ex rel. Wasiolek v. Wasiolek, 380 A.2d 400, 403 (Pa. Super. 1977).

Bender v. Bender, 444 A.2d 124, 125-26 (Pa. Super. 1982).

Atkinson v. Atkinson, 616 A.2d 22 (Pa. Super. 1992).

Kelly v. Kelly, 633 A.2d 218 (Pa. Super. 1993).

Depp v. Holland, 636 A.2d 204 (Pa. Super. 1994).

Frankenfield v. Feeser, 672 A.2d 1347 (Pa. Super. 1996).

McClain v. McClain, 872 A.2d 856 (Pa. Super. 2005).

Obviously, a parent looking at this issue should seek the advice of competent counsel since the issue is so fact specific.  

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