We have still not seen a copy of the Senate bill although PBS Newshour reports that the final version adopted by the Senate was not circulated in the Senate until late Friday evening and about 5 hours before the vote.  However, it appears that the Senate bill does not change existing alimony rules.  As noted on Listserve last month, the House version does abandon alimony as a deduction effective January 1, 2018.  If you are negotiating an alimony provision you need to be carefully following this issue on behalf of clients.  The one thing which all reports appear to confirm is that tax reform is a freight train that will not be stopped.  The House is scheduled to go out of session on December 14.  The Senate one day later.  The House needs to pass a bill in that time and the Senate and House need to decide on a “common” bill for joint passage and transmission to the President.  The House is circulating a bill that would forestall next week’s government shutdown until December 22, 2017, which would signal that they plan to extend their session.  But, suffice to say, the next ten days should provide plenty of excitement.

Experts and their reports can be an expensive, but necessary, element to many types of cases. This is particularly true in divorce cases, whether they are personal or business divorces. In all cases, it is incumbent on the attorney, client, and expert to all have the same understanding of the scope of the work and expectations on expense. Sometimes, it is not possible to absolutely predict how much litigation will cost or account for every variable or obstacle to a project. Consequently, the costs of a case or preparation of an expert report can exceed the expectations of a client.

A recent Superior Court case dealing with an insurance report highlights the problem created by different understandings and expectations between an attorney and the expert he hired on behalf of his clients. More pointedly, it reaffirms the concept that the engagement letter between an attorney and expert (or client and expert) is an enforceable contract and that an oral estimate of costs will not serve to modify or supersede it.

In the case of MCMP v. Gelman, attorney Bruce Gelman hired Marsico Construction Services and their principal, Louis S. Marsico, to provide expert testimony and a report for an insurance coverage dispute Gelman’s clients had with their homeowner’s insurance carrier.  Marsico provided the report, which was submitted by Gelman to opposing counsel and the insurance company. However, when Marsico provided his invoice to Gelman, it had costs totaling about $30,000.00 – considerably above Gelman’s expectation based on Marsico’s rough estimate of the cost being between $7,500.00 to $10,000.00. Gelman refused to pay the cost and Marsico demanded that he not use the report in the insurance coverage dispute or at trial. Though not noted in the case, the report is considered hearsay unless otherwise stipulated to and if Marsico refused to testify, Gelman would have been unable to move the report into evidence. Once barred from using the report further, Gelman would later claim that by not having a report, the case settled for less than it could have.

Gelman’s appeal tried to assert that the oral estimate provided by Marsico constituted an enforceable, orally accepted express contract term between Gelman and Marsico’s company. The lynchpin of the case, however, is the engagement letter: Gelman agreed to pay Marsico an hourly rate and Marsico was awarded $20,000.00 after a two-day bench trial for breach of contract.

On appeal, the Superior Court rejected Gelman’s arguments and found that the hourly rate engagement was valid and that the estimate provided by Marsico was “off the cuff” and not an express contract term. That point was particularly true since a written engagement letter with specific terms for the firm’s consulting services followed the oral estimate.

The takeaway from the case applies to clients and attorneys: understand the terms of your engagement letter for professional services. Review them and ask questions about any term you do not understand. Addressing a misunderstanding on the precipice of trial leaves you with few options and may severely prejudice the client (another issue altogether). As seen in this case, the courts will not step in to fix your error or accept a modification to the contract that does not strictly conform the Pennsylvania law on express and oral contracts. You do not want to find yourself paying for a report that only collect dusts in the file.

Any American with a pulse knows that 2017 was to be the first overhaul of U.S. Tax Law since 1986.  Until this week, what was circulating through Washington was an 18 page executive summary.  That changed yesterday when the House Republican Tax Policy Committee circulated a draft bill that specified exactly what changes were being proposed.

The draft bill summary merits some review because parts of it will affect most of us.  But the divorce bar was shocked to see that among those tax “loopholes” on the chopping block is the alimony deduction.

Going back to the 16th Constitutional Amendment, which allowed a federal income tax, there has almost always been a deduction to the person paying alimony on the basis that the deduction would be a corresponding income item for the person receiving the payment.  This rule has been uniform.  But, it may be changing now.  Yesterday’s draft proposal has a Section 1309.  It repeals the alimony deduction for agreements and orders entered after December 31, 2017.  What could this mean for you?  You can still make your alimony deal now, but if this law passes and goes into effect, alimony after 2017 that comes out of new agreements or new court orders will not have any transferred tax effect.

Why would Congress care?  After all, payor’s deduction from income becomes payee’s reported income.  Revenue neutral right?  Well, not quite.  Most payors are in higher marginal tax brackets, 31%, 35% and 39.6%.  A dollar of alimony costs the payor 69 cents, 65 cents or 60.4 cents, depending on the bracket.  The payees are usually in 15% or 25% brackets, so the government loses revenue because the payee is reporting the same alimony but paying a lower rate than the payor.  The Republicans say this costs the Treasury about $830 million per annum.  Eliminate the deduction and reduce the deficit or at least help pay for other tax cuts.

In real world terms suppose I enter an agreement on December 31, 2017 and agree to pay $50,000 a year in alimony for five years.  If my tax bracket is 35%, it costs me $32,500.  If my ex-spouse is in a 25% bracket, she reports the $50,000 and gets to keep $37,500 after tax.  The government effectively subsidizes $5,000 of revenue it would otherwise get but for the present scheme.  Under the proposed bill if the agreement is signed on January 1, 2018, I have no deduction and my ex has no income to report.  The payee just got a 25% increase in support based upon the same facts.

Further complicating this is the fact that for more than twenty-five years the Pennsylvania support guidelines have “assumed” that spousal support and unallocated orders of spousal and child support are fully deductible.  The tax assumptions are said to be “cooked into” the guideline numbers themselves.  If the current bill passes, there is some uncooking that needs to be done because the assumptions have now been undone.

Why devote all of this energy to what is just a first draft bill?  After all, this will have to go through many iterations and may change or be eliminated.  True enough with one exception.  2018 is an election year.  Republicans in 2016 told the world that this Congress was going to reform health care and revise the tax laws.  So far, nothing has been accomplished and most legislators will not want to be campaigning this time next year on a “look what wasn’t accomplished” platform.  So, this bill has a good chance of moving very fast and a decade’s long tradition of alimony tax law may recede into the mists of time.  Stay tuned.

October is Domestic Violence Awareness month.  And, earlier this month the Administrative Office of the Pennsylvania Court (“AOPC”) issued its summary of statistics related to this form of action.

A note of history is in order.  Pennsylvania did not formally define “abuse” or provide a remedy for its commission until 1990.  Before that date, the only mechanism available to address it was in the criminal system, typically as an assault.  The statute has been amended several times and, at this writing, there are bills circulating in Harrisburg to expand the remedies even further.

It is a popular form of action.  In 2016, there were just over 39,000 requests for relief requested.  That is 100-150 per day depending on whether weekend days are counted.  Contrast this with 33,000 divorces in the same time period and 73,000 marriages.

Persons who seek protection under this statute need to allege facts that indicate they are in immediate danger of some physical form of harm from a household member, intimate partner or co-parent.  The Courts are charged with reviewing the allegations without a hearing and deciding whether immediate relief is to be granted before a hearing.  Because judges prefer to be safe rather than sorry eighty-eight percent (88%) of the actions filed resulted in a temporary order before a hearing took place.  These orders range from a prohibition against further abusive behavior to exclusive possession of a common residence.

The AOPC also looked at the ultimate disposition of these cases after a hearing was held.  These statistics are also somewhat harrowing.  Over a five year period twenty-nine percent (29%) of petitioners did not bother to show up for their hearings.  Another twenty percent (20%) withdrew their petition when the hearing was called into court.  There is the rub.  39,000 filings and yet only about half ever proceed.  Of those that do proceed 40% result in an agreement.  These agreements can also range from total exclusion from a common household to less restrictive stay away or minimal contact orders.  Thirty-two percent (32%) of the cases which actually are called for hearing result in the grant of an abuse order.  Eight percent (8%) proceed to trial and the court finds that relief is not merited and the case is dismissed.  The AOPC stats report that in nine percent (9%) of cases the temporary order granted before the hearing is dismissed.  This seems somewhat vague in that those cases either merited entry of a protection order or did not.  If dismissal of the temporary order equates with dismissal of the case, it means that for those cases that actually proceed to trial the odds are slightly better than fifty percent (50%) that a finding of abuse will be made and a remedy enforced.  http://www.pacourts.us/news-and-statistics/news?Article=950

The good news, if there can be any on this subject, is that the number of requests for relief has declined by seven percent (7%) over five years. This would tend to indicate that we have become less violent or that judges have started to ferret out spurious filings and the word has gotten out.  The bad news, more than 650 times each week Pennsylvanians are appearing at Courthouse doors with allegations that judges deem worthy of temporary emergent protection orders.

This is actually about executive compensation.  Not just any executive but senior, senior executives. If you have not noticed, we live in a brave new world where many public companies are seeing large blocks of their stock being acquired by private equity companies like Blackstone, Carlyle Group, KKR or Bain Capital.  To discourage these often hostile takeovers, many businesses have developed plans to make the takeover financially unattractive.

The one we have observed in recent years that should be evaluated in a divorce setting is an employment agreement that contains special “change in control provisions.”  Many large companies have various forms of equity and pseudo equity arrangements like stock options, restricted stock, performance stock and phantom stock awards.  The goal of these plans is to retain senior managers and incent them to drive profits and stock price higher in the hope that if they remain with the employer they will share in advances in stock price.  Most of these plans have graduated vesting of the incentive equity over three years. To ward off hostile investors bent on takeover, the employer writes into the agreement that, should there be a change in control of the company, all unvested grants vest automatically and must be paid out to the employee.  Thus, if a takeover target is “acquired”  the acquiring company has to cash out not only what is vested in employee equity but the unvested piece as well.  That can crimp the cash position of any business but in recent years private equity investors have not been much deterred by these disincentives.

So, many of us review employment agreements and often they contain obtuse references to things like “change in control.”  Don’t skip over those clauses too quickly, because you could find, as I have in two recent cases, that a buyout of the employer vests all options or other contingent arrangements and makes the employee eligible for an immediate payout of what was a form of deferred compensation.  Note as well, that some emoluments like pensions, non-qualified retirement plans and other forms of benefits may be “supersized” by the acquisition experience.  The pension that was $3,000 a month, might magically become $6,000 without the employee spouse doing more than being on payroll when the magical event occurs.  Even if these blessed events occur after separation, they commonly arise under the terms of agreements or awards made before separation.  They are enhancements coming about not because of post separation labor or contributions but simply, “because” the employer was targeted for a buyout.

So back to Roy Rogers and his famous steed.  A single “Trigger” acceleration occurs when one event triggers the acceleration of vesting, allowing an equity owner to receive the full or partial value of his or her stock.  Typically, they are related to the sale, merger or restructuring of a company.

These arrangements have evolved over time. In olden days, no business wanted to be “acquired.”  But over time some companies have not been so opposed to corporate courtship.  They realize that many employees would take the enhancements and walk out the door for other pastures and that this was a pronounced “negative” to potential corporate suitors.  So they developed the “double trigger” enhancement.  Double trigger requires two events before enhancements and automatic investing occur.  The first is the acquisition, just as before.  The second is the termination of the employee without “cause.”

Single trigger acceleration is unpopular with investors who generally want to position the company for acquisition.  One of the first things that acquirers review as part of their due diligence is vesting acceleration rights.  This is because they largely want to ensure continuity of the talent and operations that made the company prosperous in the first place.  If a key employee has a vesting acceleration right upon the company’s sale, then the buyer is at risk of losing the talent that built a successful organization.

For this reason, single trigger acceleration of vesting that’s conditioned on an ownership change is unpopular.  It means that if the new owners want to retain these employees, they’ll need to sweeten the pot to incentivize the original employees to continue with the new organization, driving up the cost of the transaction.  On the other hand, vesting acceleration clauses can lead to a lower acquisition price to offset buyout costs.  The result is diluted stock value for shareholders and investors.

A double acceleration clause requires two events to trigger vesting acceleration.  One event is the sale or merger of the company, and the other is usually termination of the employee without cause.  These are more attractive to potential buyers since they tend to promote mutual benefits to both the key employee with the acceleration rights, as well as the acquiring entity.  Rather than triggering automatic acceleration upon the event of a company’s acquisition, another event is required in order to trigger vesting acceleration; the employee’s termination. Many acquiring companies want to keep the acquired management and or sales force in place.  Those are the geese that laid the eggs the acquiring company wants to keep producing.  So the employment agreements for these individuals don’t make the special vesting occur until the employee is terminated.  The acquiring business would rather keep its powder dry to pay retention bonuses or provide other incentives as part of the acquisition.  These, alas, are probably post separation enhancements. But if the employee is released without cause within a defined period (typically 24 months) after closing on the merger or acquisition, that severed head is going to vest in many different forms of deferred compensation based on the original employment agreement.

Every case with an important executive merits a request for all agreements between employer and employee-spouse. Those agreements merit attention for the reasons we have specified above. Because many employees may someday be invited to waddle over to the Fixins bar for a heapin’ helpin’ of vested options and benefits.   A non-employee spouse or former spouse may be entitled to a share of the fixins.

The holidays are not upon us but they are not far away either.  If you are separated and your holiday plans for sharing custody are not, “set” it is well-nigh time to begin the discussion because November is not a good time to start Thanksgiving discussions and December is going to follow immediately.

If this has been your “separation” year for good or for bad, you need to understand that when it comes to old holiday traditions, all bets may be off.  Yes, your family has always spent Christmas Eve preparing the seven fishes at grandma’s house.  But this year, one of the fish is not being invited and that fish may put up a stink about it. Typically,  Courts divide holidays and alternate major ones so that both parents have a crack at Christmas morning or the first Seder.  One parent will get the odd years and another the even ones.

But, this short essay has another consideration too, and it is one courts do not customarily address.  If you separated this year, it is not unlikely that the separation brought a new person into the family picture.  Perhaps you were the one who fell in love with someone at the gym or on Facebook.  Perhaps, your spouse returned from his or her high school reunion with an old romance rekindled.  As most of us recall, new romance offers a special thrill.  For most, it is exhilarating. If you have ever been the person who was “dumped,” the feeling is not quite the same.

Typically, exhilaration prompts a desire for celebration.  Get a promotion at work and you want the whole family to celebrate, just as you would when a child completes an achievement, whether finishing kindergarten or graduating school.  But, romance is a lot trickier when family is “involved.”

Rarely do two spouses fall into new relationships at the same time.  So usually, when a separation occurs, one-person steps into a new relationship while another is left without any.  Imagine being a child, of any age, and encountering your first holiday with one parent ecstatic about his or her new love and another mourning the failure of a marriage.  One parent is telling you where they went and what they did with their new love interest, while the other is visibly in pain from the same separation.

If you are the parent in the “new” relationship, for the sake of your kids “Curb Your Enthusiasm.”  They are in an incredibly awkward position.  They will be celebrating the holidays with two parents, one wanting to fete a new relationship to a degree that becomes nauseating, the other mourning the loss of one.  For children of all ages, whether their parents had a good marriage or a bad one, it is the only marriage they knew growing up.  Separation signals the death of their parents’ relationship and that is a death that they are trying to cope with.  They may actually like your new best friend or perceive merit in your marital decision.  Even when parents separate based on common understandings, if one parent has a date on New Years’ Eve and the other does not, the one “without” will feel inferior and “judged”.

Oh, and lest the point be missed, do not assume that your children will share the same attraction to your new friend that you do.  They will often judge that person harshly as the catalyst of their family’s break up whether the fact is true or not.  They certainly will be curious to meet the new Mr. or Ms. Right, but they will also be suspicious.  Since the Middle Ages, we have lived in a world where marriage has been viewed as a “forever event”.  A lot has changed in the past century but even the most cynical of us view marriage as more important than who provides your cable contract or cleans your furnace. If you are happily separated, enjoy your joy quietly, and, don’t delude yourself into thinking that your joy is shared by your kids, no matter what their age.

The September 7 issue of TIME Magazine features our obsession with childhood sports.  The statistics tell the story.  In 2005, school age children played sports at a combined cost of about $8 billion per annum.  Today that number is about $15 billion, almost double. And, during this same period there was no increase in the population of American children.  About 73 million, then and now.  So, how about household income over the same period?  Nominally, it went from an average of $45,000 to $50,000, but if you adjust for inflation, it actually declined a little bit.

This writer’s conclusion?  Americans are spending money they don’t have on something they want and enjoy but do not need.  The cost of team sports for children is itself frightening.  Time reports these as average costs including enrollment, uniforms and lots of travel:

Lacrosse                $8,000

Ice Hockey            $7,000

Baseball/Softball  $4,000

Football                 $2,700

Soccer                    $1,500

Basketball              $1,150

This is not a sport economics blog but we see this every day in our divorce practices.  Parents fight over the logistics of these sport activities. They fight over who will pay.  They fight over whether the child belongs in the sport and, as we recently noted, whether the risk of injury exceeds the benefit.

As the cost of college rises, we also see many parents eyeing their children’s athletic skills as something they can capitalize upon in the form of athletic scholarships.  Putting money in a 529 plan is a tedious way to prepare for college.  But travel with the child’s team to Baltimore or Richmond to watch 72 hours of continuous soccer is now viewed as an “investment.”  Curiously, as time has passed, emphasis is now focusing on athletic performance at younger ages.  Time reports of colleges following “star” athletes at ages as young as 10.  Middle school is now where the talent is first evaluated.  This means, the sport and the child must be nurtured for seven years before the scholarship is awarded.  And, children are seeing repetitive motion injuries crop up more frequently because many of these sports are now scheduled “year round.”  A gifted basketball player cannot afford to risk his future by playing another sport where he could be injured, or worse-yet, his shooting and passing skills are allowed to wither.

In May, I testified before the Pennsylvania House of Representatives about some possible changes in support guidelines.  The witness before me was a Father who, together with his wife, invested heavily in a child’s future as a competitive snowboarder.  Much of this investment was borrowed using husband’s credit cards.  Shortly after it became clear that son’s snowboarding career did not have much promise, wife departed leaving husband with massive credit obligations.  Then she had the temerity to sue him for support.  He wanted relief from the support guidelines because a lot of his income was paying credit card debt associated with promoting their child’s sport.

I must confess, I did not have much sympathy for either parent.  But, as the Time article observes, modern day parents have difficulty saying “no” to their need driven kids.  What child would not want to go to Baltimore, stay in a hotel and hang with his friends while assembled to play back to back softball games on gorgeous college campuses?  Unfortunately, the psychological community is warning that in addition to premature serious sports injuries, many children and their families are starting to experience competitive sports burnout. Especially where scholarships are involved, many competitions and tournaments are mandatory because that’s where the college coaches and scouts are going to be found.  I spoke recently with a fellow lawyer whose child is still reeling from seeing that her son finished both college and his baseball driven career with nowhere to go.  His persona and all of his goals were erected around his athletic talent and now that talent no longer had value.

This is a bad cycle and one that often robs the children of their physical and emotional well-being while robbing their parents’ purse with little chance of return.  Each year about 400-500,000 high school kids play baseball, soccer and basketball.  Another 1.1 million play football.  The likelihood they will take this skill to the professional world is frighteningly small.  Baseball: 1 in 760; Football: 1 in 600; Soccer: 1 in 800; and, basketball: 1 in 1,860.  Sports have much merit. But all good things must come in moderation.

There is a world of information on the internet.  That includes a huge number of websites professing to advise you about divorce.  And among the topics often discussed on these sites is mediation.  Not a week passes without at least one client asking whether they should mediate one or more issues arising from separation and divorce.

Mediation is non-binding negotiation without lawyers.  What could be better?  Get the job done without the expense of the lawyers.  So, it naturally follows that lawyers must be inalterably opposed to mediation.  Right?

When clients ask us about mediating their particular case it does put us in a predicament.  If we advise them to mediate, the inference arises that we add no value to their cause by our representation.  If we advise against it, it appears that our interest in earning a fee has trumped their interest in avoiding unnecessary legal expenses.  So where lays the truth?  A monograph such as this can help because our advise is generic and does not apply to any one case.

In mediation the parties sit down with a neutral person, usually trained to mediate, who listens to each party and attempts to forge common understandings about what is in controversy and how each party’s interest can be accommodated.  It is quite different in approach from litigation, which often takes on a “winner takes all” approach.  Mediators are supposed to remain absolutely neutral through the mediation process.  They are not even supposed to suggest a solution that may appear evident to them because they are then interfering rather than expediting the mediation process.  Where agreement is reached, they usually will confine their roles to creating a memorandum delineating the understanding and ask the parties to have their respective lawyers prepare an agreement to be signed.  There is no question that when a mediator is talented and the parties are motivated to resolve matters, mediation can chop through many controversial issues in quick order.

To be effective, mediation requires three elements.  The first is that both parties are motivated to settle a matter.  Everyone likes to see themselves as motivated to avoid controversy but most of us come to a controversy with the idea that because we are right, we should get what we want.  Mediation has nothing to do with what is right or fair.  It is about compromising matters with an eye towards giving each party the most he or she can get from a negotiation.  But in just about every bilateral (two-way) negotiation, what I get comes at your loss and what you get comes at mine.

The second element required in a mediated negotiation is that each party comes equally well informed.  This is where folks often overestimate their knowledge of their own assets.  If I offer to swap $100,000 in money market assets for an $100,000 IRA, is that an equal division?  The answer is that it is not, but arguments can be made that either one of the assets is more valuable than the other depending upon the facts.  Of course, if I never tell you about an asset or I fail to tell you that a stock option will incur ordinary income tax rates when exercised, I have a decided advantage in the negotiation because I have superior information which I have failed to share.  Bear in mind, the mediator is not supposed to ferret the facts.  The mediator’s role is to moderate discussions directed toward compromise.

The third and final element necessary to mediate is emotional strength.  In divorce related mediation this can often be the fatal flaw.  More often than not, men are trained and temperamentally suited to be negotiators.  Negotiation is a game at which some win and some lose.  Women tend to be motivated to avoid conflict and promote compromise.  This often spells doom in a world where the combatant finds him or herself pitted against a party predisposed to settle.  This rule is by no means fixed in a sexually stereotypical sense.  Again, it is important to note that the mediator does not have the responsibility to level the playing field.

So, having made these observations and noted that there are no hard and fast rules, is there a common sense guideline as to when to mediate and when to avoid it?  Yes, but even these rules come with qualifications.

First, custody issues are probably the most productive area to mediate.  The reasons are several.  The facts are relatively well-known or easily ascertained.  Second, custody arrangements are rarely permanent.  An arrangement negotiated and making sense today could be useless and silly four months from now.  By law, any custody arrangement reached by parents can be discarded by a Court if it later finds that the agreement is not in the child’s interest.  Moreover, one can hope, naively perhaps, that each parent has the child’s interest at heart.

When mediating economic issues such as support and property, it is imperative that you feel that you are equally well-versed as the person you aspire to mediate with.  When dividing simple assets like bank and brokerage accounts the process can be fairly straightforward.  The key is current information and an understanding of how the assets work from a management and tax liability standpoint.  If you are not clear on these points, you could be giving away the store without even recognizing it.  Some issues, such as stock options, retirement plans and closely held businesses can be so complicated that mediation almost never makes sense.

The other factor which should be kept in mind is that in classic mediation, the mediator gives no thought whatsoever to “what a court would do.”  Pennsylvania, New York, New Jersey and Delaware are all equitable distribution states.  This means that assets are usually not divided equally, but based upon an imprecise formula that assays how long you were married, how much you can earn, what you contributed to creating the marital estate and other such issues.  The outcomes vary from case to case and state to state.  You could form what you perceive as a “fair agreement” in mediation to discover that you would have gotten a far different result if you relied upon a court to make the division.

So, should mediation be avoided?  Absolutely not.  But it is worth knowing the benefits and detriments to the process as it relates to your case before going into the process.  Once in mediation, you are not bound by your agreements unless you choose to affirm them outside mediation.  But you don’t want to invest in this intensive process only to find yourself abandoning the agreement you said you intended to make.  The prudent course is to discuss the process, its potential and peril before actually enrolling this exercise.

 

 

In most cases, there isn’t much to write on the subject of legal custody. In Pennsylvania, it is the right to make decisions affecting the child’s welfare; in contrast to physical custody which is where kids spend their time. It rarely comes up except when couples fight over school placements or foreign travel to “unsafe” places. Under a long-standing Pennsylvania Supreme Court decision, Zummo v. Zummo, courts stay out  of questions concerning religious worship unless the worship involves venomous snakes or other scary things.

But, things are changing. Beginning in 2000 scientific literature began to question the effects of concussions on the human brain. Five years later a physician performed an autopsy of the brain of former Pittsburgh center Mike Webster and asserted that the contact he experienced caused his brain to atrophy at an alarming rate.

In November 2015, 60 Minutes presented its analysis of the magnitude of the problem. This was a kind of watershed moment because parents began appearing in custody courts questioning whether sports with a propensity to cause injury were in the children’s’ best interests. This presented a true dilemma. In almost all instances, the children want to play. Football is iconic. How could the courts rule against children and football? To do so was un-American.

A new page has turned. This week the Journal of the American Medical Association published a study of more than 200 brains belonging to deceased football players. These included players whose careers ended in high school and college. The results were fairly stunning. 110 of 111 former NFL players were found to have evidence of Chronic Traumatic Encephalopathy (CTE). 90% of those who played football in college were also found to have CTE. And, even 21% of students who played only in high school were found to have been damaged.

This follows a 2011 study by the Center for Disease Control that elementary and high school football players had a 60% increased risk of suffering a traumatic brain injury.

The researchers in the current study note that their sample consisted of people who were both deceased and for whom there was evidence that playing high contact sports had caused some form of brain injury. So one cannot reasonably assert that 21% of high school football players will suffer CTE.

Nevertheless, that is little consolation for parents. Especially when one considers the actual amount of physical “play” in these modern sports. Data on this subject comes from professional sports and may not precisely correlate to what goes on at the local high school but if you are perceiving sports for the quality of the physical experience, here is what we can report.

Actual time of play          

Baseball               17 minutes

Football               11 minutes

Soccer                  57 minutes

Basketball            48 minutes

Hockey               60 minutes

Some judicial officers have responded that this is not a legal custody question. I cannot fault that reasoning but the Boston University study published this week may tip the ball in another direction.

 

If you have been reading the news lately, we have seen lots of electronic ink spilled over entitlement programs, especially Medicaid and its role in health care reform. Meanwhile, the report of the Trustees of the Social Security Fund issued a grim report earlier this month about the viability of the program upon which almost every American relies as an important piece of retirement income.

The short-term news is good. The Trustees see surpluses in the accounts (income exceeding benefit payments) for the next five years. But then the account starts to drain as benefit payments will exceed collections. The speed of the losses is such that by 2034 the current assets of $2.85 trillion will be exhausted unless revenue is increased.

There are two factors at work here. When the program began in 1935 a retiree who reached the age of 65 was expected to collect for 12 years. That same retiree today is expected to collect for 20 years. This was to some degree foreseeable. More troubling are the workforce statistics. In 1950 16 workers were “paying in” for each person collecting a benefit. Today, the ratio is 3.3:1 and headed toward 2:1 by the 2034 day of reckoning. 2034 sounds like a long way off but ask yourself how old you will be in 2034 and recognize as well that they can’t just let the system run to “zero” and announce to the folks now paying in: “Sorry, game over.”

As real wages are stagnant and the labor force is relatively static, the ability to balance the account with tax increases is limited. What can be done to help is to keep increasing the maximum contribution profile. That was done in 2017 as the max out for contributions rose from $117,000 to $127,000.

But, just as we have written previously about how we may someday see cuts in defined benefit retirement plans (the ones that pay monthly at retirement), future retirees may be prudent to ask if benefits will be cut or means tested, as well. These are not pleasant subjects to consider when planning retirement and especially planning a retirement after dividing the pie in divorce. Yet, they do need to be considered.