This weekend brought a report from an outlet called BGR Media about the child tax credits that are due to start hitting bank accounts in the next few weeks.  This child tax credit, unlike all its predecessors, is being paid to eligible recipients in advance; typically, at the rate of $250-$300 a month depending upon the age of the child.  Rivers of electronic ink have been spilled over this and as we wrote on May 18, 2021, it is creating business for lawyers because it’s a new thing for divorced couples to fight over.  We warned then and now that it may be the lawyers and the accountants who profit most from this subsidy “intended” to help lesser income earners.

Well, as with all “free lunches” the meal is starting to smell like it was left out too long.  According to BGR’s experts, your monthly tax credit only works if you have income tax due at the end of the year to take the credit against.  Many people who earn modest incomes often use their federal tax withholding to build up a small surplus; triggering a tax refund when they file the next year. Those people may find that unless they have federal tax due on April 15, 2022, their credit will need to be repaid to the government.  How about rolling it forward to the following tax year?  That’s not how its structured now.

In practical terms, here’s the rub.  Beginning in July, the IRS is sending you $250-$300 a month. So, your bank account will receive $1500-$1800 by years’ end on December 31.  It is designed to help people pay their bills and most people will employ it that way.  But wait.  Let’s assume that historically you estimate your taxes due and calibrate your withholding to land right at -0- each tax year.  You owe the IRS nothing.  You have no refund due.  Based on current interpretations of the tax law, you owe the government $1500-$1800 when you file. To put another way, the IRS is effectively loaning you money until next April.  If you owe the government $1500-$1800 on April 15, your tax credit will wipe out your “owe”.  But otherwise, your loan is due, and you will need to pay back the stimulus.

What’s the solution?  Perhaps stay away from the program all together or if you already signed up, keep your monthly stipend in the bank so that it can be repaid. Like so many other tax policies enacted in the last few years, Congress seems to pay little attention to what they are doing while Washington trumpets that it is answering the call of people adversely affected by the 2020 pandemic.  This appears to be a pretty pathetic answer and one which may cause more economic stress than benefit.

We note that the Common Pleas Court of Berks County has ruled that stimulus payments under the CARES Act (that’s the first stimulus passed in March 2020) is not income for purposes of calculating support.  The case is Amos v. Riversa, 113 Berks 107 (12/16/2020).

Click here for the IRS link to assess your eligibility, but realize that Step 1 may involve engaging your accountant to advise you whether this program is going to be a problem for you.

As we have all witnessed, ours is an age when grandparent duties transcend “Saturday” night. Historically, Saturday was grandparent night when parents would have their night out.  Sadly, the explosion in substance abuse among young and middle age adults has forced many older couples to choose between taking their grandchildren in or seeing them placed in a foster care system.

The tensions of resuming the duties of full-time parents during what were supposed to be the “golden years” has taxed many marriages.  A couple recent appellate cases speak to what happens when grandma and grandpa decide that they either don’t like each other or the relationship otherwise snaps because a second generation of child rearing was not part of the marital bargain.

The most recent case is unpublished.  It was “unpublished” on June 15 and may be cited as J.B.S v. J.L.S., Jr..  In this case the mother of the child disappeared into the mist and the father brought the kids home to live with his parents (these litigants) in 2009.  In 2010 the father murdered another child leaving his parents to assume the role as sole parents of two children, then ages 1 and 4.  In the wake of this tragedy the Court awarded the children to the grandparents with the consent of the now missing mother.  Mother was ordered to pay child support but did not.

In 2018 Grandpa filed for divorce and sought primary custody of the children.  That issue was litigated, and the Court awarded Grandma primary physical custody.  Grandpa was then earning roughly $90,000 a year to Grandma’s $33,000 so Grandma filed an action for child support.  In Spring 2019 the Court awarded spousal support of $300 and $141 in monthly child support.  A de novo hearing was sought and after two days of hearings a York County trial judge vacated the child support order based upon a published decision from December 2019 called S.R.G. v. D.D.G., 2019 (Pa. Super. 355).

The 2019 case has similar facts except this time it is mother’s parents who have their grandchild.  Mother has a history of mental illness.  Father is in jail.  Grandfather filed for divorce prompting grandmother to move to Florida with the child.  The child summers with grandpa while living primarily with grandma in Florida.  The opinion suggests that grandma may have been prompted to seek support in response to extensive custody litigation brought by grandpa.  The panel decision expresses sympathy for her plight but concludes there is “no explicit statutory requirement that a grandparent has any duty to support a grandchild.”

But, wait…. what about the Latin name for the insect that looks like a grasshopper?  You know, en loco parentis[1].  Grandmother notes that both she and her husband had assumed custody and taken (undefined) “proactive steps” to be the grandchild’s parents.  They were undeniably acting in the place (loco) of the parents (parentis).

Here the published decision relies on a 1985 Superior Court case; Commonwealth ex rel McNutt v. McNutt, 496 A.2d 816, 817 (1985).  There the Court ruled that as a matter of public policy it was not equitable for a grandparent who acted out of generosity to take in a child to be held liable for support of that child.  It acknowledges grandmother’s reference to a 2015 Pennsylvania Supreme Court case; A.S. v. I.S., 130 A.3d 763.  We reported on this case when it was published. It held that where a step-parent decided to prosecute a custody action seeking both legal and physical custody of a child, his actions bespoke an intention to assume all the rights of parental authority and, as such, exposed him to a legal support obligation in doing so.  The Superior Court contrasted the grandparents in this case who had accepted the child into their household as an act of kindness knowing that father was not available and their daughter (mother) was incapable of performing the duties of a full-time parent.

The published decision in S.R.G. v. D.D.G. was acknowledged to be a close one by President Judge Jack Panella.  After all, grandfather had been regularly pursuing legal custodial rights to his grandchild, albeit against grandmother rather than the natural parents.  However, the Panella court affirmed trial court holding that no child support obligation could be imposed, notwithstanding the Supreme Court’s 2015 ruling in the stepparent case.

Circling back to the decision of earlier this week, the Court in J.B.S. ruled that the entry of a temporary support order which was contested and properly excepted to, does not make the determination of support res judicata.  None of the orders for child support had been made final before the trial court decided that child support was not due and vacated the prior temporary order.  On a different subject, grandmother in the 2020 decision sought to assert that her husband had made more direct assertions of parental control than in the 2019 case.  The Superior Court held that, while custody had been assumed by the grandparents in both cases, none had taken action to terminate the rights of the birth parents.

This is a topic which is likely to be the subject of more litigation.  The constellation of people raising minor children grows by the day.  In some cases, the task is thrust upon the person acting in loco parentis.  In A.S. v. I.S. we observed a stepparent positively asserting legal rights against a natural parent.  So, we can see a line of support responsibility emerging, but it is a fragmented one.  By way of example:

Natural parents voluntarily place their children with grandparents but later revoke that consent and demand the children back.  Grandparents counterclaim for custody and natural parents prevail.  Do grandparents have a support obligation by reason of their counterclaim?

In A.S. v. I.S., if the stepparent loses interest in seeing the child or a court decides that continued contact is not in the child’s best interest, does the support obligation cease as well?

The most recent case seems to turn on the fact that no effort was made to extinguish the rights of the natural parents.  But in the case, it is fairly clear that there is custody litigation between the two grandparents that is quite serious and demonstrates that each aspires to act as parents.  Isn’t the termination question a distinction without a substantive difference?  Suppose both natural parents were long term incarcerated.  It would then be clear that the grandparents are the only “parents” left standing.  They assumed that obligation together.  Isn’t grandma doubly prejudiced because she must employ resources to support the children and defend grandpa’s lawsuits.  To this writer the analogy is closer to L.S.K. v. H.A.N., 813 A.2d 872 (Pa.Super. 2002) where a same sex couple agreed to start a family together using a surrogate.  The Court more or less implied a contract to provide support as condition of that agreement.

In his S.R.G. v. D.D.G. opinion, P.J. Panella suggests this may benefit from a legislative solution.  It is a tough one to define from a bill drafting standpoint, but both lawyers and other third parties who live with children not their own, would benefit from some clarity as a matter not just of support, but standing to pursue custodial rights.

J.B.S. v. J.L.S. Jr., 1188 MDA 2020 (6/15/20) Opinion by Judge Pellegrini.

 

[1] The correct answer is praying mantis or mantis regliosa.

There is hope that the plague is behind us.  Pestilence is on its way either in the form of a lantern fly or the return of the cicada after 17 years of peace.  For the divorce lawyer and his friend in crime, the accountant, there is another crisis emerging.  It’s the war over who gets the tax credits for the children.  Chances are the true winners will be the lawyers and the accountants, because in many instances the fight will consume the dollars in controversy.

Once upon a time, in fact for most of time, if you had primary physical custody of a child under 19 or under 24 if a student, you could deduct what was essentially $2,000 for yourself, your spouse and those dependent kids who qualified.  The statute was and remains Section 152 of the Internal Revenue Code.  In 1984 Congress allowed parties to agree upon an allocation of the deduction so long as that agreement was embodied in IRS Form 8332.  Life was simple but for the fact that the Congress decided to inflation adjust the dependence exemption amount.

In 1997 Congress decided to fiddle some more.  They passed a small ($400) child tax credit.  A credit is a different animal than a deduction.  If you are in a 22% tax bracket a $2,000 tax deduction is subtracted from income.  It thus saves you $440.  A tax credit is a dollar for dollar reduction of your tax liability.

Fast forward to 2017.  We had a late year tax reform bill that changed everything.  Dependency exemption; gone; at least until 2025.  Tax rates completely revised for all tax classifications from single to married joint.  And the tax credit got juiced.  Before 2018 for households with more than $110,000 the tax credit was beyond the pale.  The 2018 bill did not phase out the tax credit until $200,000 for single households and $400,000 for married/joint returns.  And the credit itself was increased to $2,000 per child.  The other big news was that in some circumstances you could get a payment for the tax credit even if you owed no income tax.  So effectively it was a negative income tax, subsidizing families with tax dollars.

In 2020 we saw the economy stagger when the pandemic of influenza began to lay grip to the economy.  Congress decided it needed to pump money into the economy via loans to business and money to households.  The latter was done, in part, through the American Rescue Plan Act of 2021.  The tax credit is now $3,000 per child under 17 and $3,600 per child under age 6.  Half of the benefit is payable in the second half of 2021 by deposit from the Treasury Department.  Read any news collection source out there and articles are appearing daily about who qualifies and how to get the money.

So, the sharks are in the water and they can smell stimulus.  Meanwhile, the problem with all new law is that the devil in the details and the Treasury Department is stuck administering those details.

In this vein, we report on two cases.  The first is Donnelly v. Donnelly, a May 17,2021 non precedential decision by the Superior Court.  In quieter times, the Donnelly’s separated and reached a sensible agreement not uncommon to all of us.  They would alternate taking the dependency exemption for their children from year to year.  This actually worked until Congress decided to meddle by eliminating the exemption effective in 2018.  Tax Year 2019 was dad’s year, so he wandered into his local H&R Block and had them cook up his return.  When they fed it into the computer, it choked first because there was no exemption to claim.  Not to worry, he would be content with the newly re-written tax credit.  But the computer at the IRS choked a second time because mother had already filed a return claiming the child tax credit for the children.

Dad was not a happy taxpayer.  So, he went to see his local judge in Bucks County and demanded that his ex be held in contempt for appropriating his dependency exemption.  Alas, the court noted that there was no exemption because Congress took it away.  But, not to worry, the Court “interpreted” the tax law change as one justifying modification of the support so that dad got a $1,200 reduction in support that mirrored the tax credit that mom had purloined.  No contempt was found because what mom did was not willful, and a tax credit is a different thing than a dependency exemption.

Mom appealed.  She didn’t change the tax scheme, Congress did, and it gave the tax credit to a person who qualified by having primary physical custody.  The revised childcare credit was a matter between her and the government.  And this was not money being taken from dad’s pocket to line hers.  After all, the whole tax scheme had changed, and rates were generally lowered.  The agreement in 2014 related to dependency exemptions under Section 152.  What she claimed and got was a tax credit under Section 24 of the Code.

The Superior Court came down on dad’s side and said this needed to be treated as a petition for modification and that the law had changed circumstances.  The order was not modified itself.  Instead, mom was ordered to repay dad the tax credit he couldn’t process because she had already filed a return and claimed it.  The Superior Court saw no harm in this result even though no modification appears to have been requested and it appears the only issue addressed was dad’s “lost” tax credit money.

The opinion cites Pa.R.C.P. 1910.16(f) a rule stating that it is within the power of a trial court to award the child tax credit.  The same provision then goes on to talk about the dependency exemption even though they are two statutorily different animals.  Meanwhile IRS Form 8332, which is the definitive document involving “exemptions” for dependents says the release when signed includes all forms of child tax credits when it is properly signed and submitted.

In Donnelly, the trial court fixed the problem by amending the order so that dad got the tax credit for 2019.  But a recent tax court case reminds us that the IRS is rather finicky about how dependent children are to be claimed for purposes of head of household or child tax credits where the non-primary custodian is doing the claiming. In DeMar v. Commissioner, the Tax Court upheld a longstanding policy that Form 8332 is the exclusive means by which the non-custodial parent can claim head of household or tax credits.  In other words, the IRS doesn’t want to see agreements, court orders or any other form of indicia of an agreement.  You either produce a signed Form 8332 or lose the battle. T.C. Memo 2019-91.  You can get a court to force the custodial parent to sign.  You can get the court to modify the order to get your money back.  But it appears that even a court order allocating the dependency or tax credit does not move the IRS computer in West Virginia to accept the claim.  It’s pretty much a signed Form 8332 or bust.  In DeMar, the father even got the form signed.  But because the custodial parent did not amend her return to allow dad to claim the kid, the IRS said no to the amended return.

The IRS regulations governing this aspect of the law are found at 26 C.F.R. Sec. 1.152-4(e)(1)(ii).  It is a labyrinth of rules which reflect a real effort to get things right.  But as many taxpayers know all too well, he or she who files first may get the last laugh unless you join Mr. Donnelly and take the matter to court.  Indeed, Mr. Donnelly did get his $1,297 back but one must wonder at what price?  With the tax credit now greater and more accessible we may be destined for more of these fights.  It is not clear once the dust settles who will be the winner.

 

 

 

 

Today’s economic news seems undeniably strong.  Despite the crisis in India, our own health officials believe that we may be emerging from the darkest hours of the pandemic.  Pennsylvania has announced it will be open for business in less than a month.  The Dow has taken us from 30,000 on New Years’ to 34,500.  A few days ago, I wrote about pricing silver coins in $1,000 increments and when I looked today those same coins are worth $3,000 more than they were three weeks ago.  I also did a piece on the crazy escalation in bitcoin values on April 21, 2021.  Cryptocurrencies are garnering everyone’s attention.  Something called a Dogecoin, which is a poor man’s bitcoin, has almost doubled in value since April 21.

So, let me pause here.  Do you think there are sound economic reasons for our nation’s industrial average to grow 15% in four months?  Better yet, do you think our economy is 19% stronger than it was as 2020 started and no one seemed ill?  Can some illusive cryptocurrency that was dismissed as a hoax and traded for 8 cents thirteen months ago really be worth 7x that amount today?  What made the coins my grandmother set aside for me in 1965 increase in value by 19% in three weeks?  Tell me that silver coins prevent COVID or can recharge my Tesla and I might understand.

On my drive to work every day I drive through an old town that had a steel mill until 1984.  Young people are flocking to these places today because homes are cheap, and the towns are walkable.  In 2017 new townhouses started to pop up on lots that had long sat vacant.  In late 2017 these new 2,200 square foot townhomes were selling for $280,000.  A little more than three years later, they are selling for $350,000.  Thus, real estate prices appear to be rising 7% a year.

While lawyers are crummy investment advisers, we do hear clients talk every day about investments and opportunities.  What I am noticing is that clients actually agree with my theory that this market is too brisk.  But they also cannot overcome the temptation to grab an investment without really evaluating it.  After all, this fellow who started a crypto exchange in 2012 called Coinbase took it public last month for $100 billion.  That’s a good bit more valuable than General Motors is worth and GM sold almost seven million cars last year, despite 10% of our population being afflicted with a pandemic disease.

My point: economics and physics share a common theme.  What goes up, must come down.  In 2008 the Dow fell by almost 50% in five months.  Last year it fell 35% in about five weeks.  In 1987, 23% in a single day.  All of that in our lifetimes.

So, caution is worth considering.  While pursuing herd immunity we may find ourselves overrun with herd mentality.  It is undeniable that a lot of money has come out of the wings since last March when the Dow closed below 19,000.  Bargain hunters came out and brought us back to 29,000 by mid-November 2020.  And, lest we forget, the Treasury has juiced the economy with just under $5,000,000,000 (that’s trillion) in stimulus.  That money had to go somewhere after it paid rents and put food on tables.

If you are younger than 40, you may be able to lose it all and make it back later.  But, as we counsel clients over 40, your age and your health need to be respected.  Yes, Warren Buffet is still working at 90.  The rest of us may not be so fortunate, leaving us prey to accidents, illness, and the more recent malady, “downsizing.”  While it is exciting to seek fortunes, the wise person makes certain that financial security does not fall prey to the pursuit of riches.

In our last article, we wrote about hiding assets the old-fashioned way.  For much of this writer’s career, the game was “cash”.  The pizzeria, the auto body shop, the produce vendor.  They lived in 3,500 square foot houses and drove luxury cars.  Nevertheless, the tax returns showed a mere $30,000 in income, a remarkable achievement.

In the last 20 years, the cash world has measurably changed.  I have worked alongside fellow lawyers who told me that I could turn them upside down and empty their wallets without finding more than $20 in cash.  When I stand in line at the convenience store today people in front of me are buying cigarettes and a sandwich with a debit or credit card.  The dry cleaner and yes, even my local pizzeria will take plastic for any transaction over $5.00.  So cash is dead, right?

Well, not so fast.  When we first wrote about bitcoin and its companion cryptocurrencies in 2014, it appeared that these would be assets accessible to the rich.  In January 2017, a bitcoin commanded $900 and there were very few places to trade or exchange it.  A year later, it had catapulted to $17,000.  Then it collapsed.  In January 2019, it was worth $3,800.  The beginning of 2020 brought it back up to $7,400, still half of the value two years earlier.  So, bitcoin had two problems.  It was not easily accessible to trade and it was highly volatile; two sound reasons to stay away even if your goal was to hide assets from a spouse.  After all, if you had $17,000 you wanted to hide in January 2018 you could buy bitcoin and hope no one figured it out. However, a year later, your crummy coin had lost 75% of its value, worse than disclosing and sharing the asset with your unworthy spouse.

2020 changed everything. If you bought a “coin” early in 2020, you paid $7,400. A year later, your coin was worth $32,000. Last week it was commanding $63,000. Your dollar investment was now worth $9.00. Then there was last Saturday night, when your bitcoin lost 10% of its value while you were in bed sleeping.

A few months ago, I engaged a contractor to fix some things around my house.  As I signed his proposal, he asked if I had any bitcoin.  I confessed that I was wary.  His response was his whole family had investments in bitcoin.  As he left, I mused where his family would have access to acquire virtual coins at $18,000 a pop.

A week ago, I found my answer.  I was in the supermarket and as I departed I saw a currency machine at the front of the store where you bring your change or buy ice or umbrellas.  “Bitcoin sold here.”  So now I can hit the grocery store for $20 in groceries and take $100 cash back.  I then wander over and put my $100 in the bitcoin machine. That will get me 0.00159 of a bitcoin assuming no one is going to ding me for a 10% commission to buy.  My spouse will never know because my bitcoin machine and I have a confidential relationship, right?

My grocery store visit prompted me to wonder whether this was an aberration.  So I looked at a site to search for places that sold cryptocurrencies. It is https://coinatmradar.com/bitcoin-atm-near-me/.  My office is 35 miles northwest of Philadelphia in an affluent Chester County suburb. My search turned up 20 cryptocurrency vending machines within fifteen miles.  All but one was in a gas station or a convenience store.  Perhaps American investors have shifted from brokerages to petrol stations.  My suspicion is that these investors are in fact lottery ticket buyers who decided that at least all is not lost when the winning ticket is drawn.

So, I smell a cryptocurrency bubble emerging.  However, this is not an investment blog.  What concerns me is the temptation to use a vending machine to hide assets when it’s right there in the grocery store or gas station.  Unhappy spouses who don’t want to share their marital assets may be “parking” wealth at the bitcoin machine.

What’s the solution in a divorce setting?  It can be dubbed “Forensics at home.” Gather a year of bank statements. Prepare a chart of cash withdrawals. If you see a regular pattern of large cash withdrawals from particular places, go look at the location and see if there are cryptocurrency machines. We have just asked a client to do this and to his surprise, his spouse had $32,000 in cash withdrawals over 18 months. Certainly, we all need cash but when was the last time you spent an average of $60 a day in actual Federal Reserve currency every single day for 545 consecutive days. That was in addition to $9,000 in groceries, $9,000 in clothing and $9,000 in personal care expenses that showed as withdrawals for those purchases. The clear message is that money is being palmed. It used to be in the cigar box, or a shoebox in the closet. Now the shoebox is at the gas station and the grocery store.

This decision issued on a non-precedential basis on April 13, 2021, represents every divorce litigator’s nightmare.  Unfortunately, the decision on appeal to remand the case offers the litigants a chance to relive what happened in the 1993 Bill Murray movie “Groundhog Day”.

The Laights were married forever before they separated.  For much of their marriage Mrs. Laight worked at the local bank as a teller where she would study coin deposits made by customers and set aside the coins minted before 1965.  Pre 1965 coins other than pennies were 90% silver back then and have value based upon their weight and silver content.

So when the Laights split up they started down the master’s road toward an equitable distribution.  Mr. Laight tells his lawyer about the coins.  The typical questions are asked and the answers coming back from Mrs. Laight are quite concerning for their inconsistency.  There weren’t any coins kept on top of the hutch in the dining room and if there ever were any coins, they were given at unspecified times to their two adult daughters.

We have all been there.  Typically it is money in a safe or a safe deposit box.  In this case, Mr. Laight offers testimony that he believes the coins had a value of $50-60,000, but no one has seen the coins of “Laight.”  Mrs. Laight comes back with an estimate that the nonexistent and/or gifted coins have a face value of $2,000.  The testimony then drifts toward what the daughters might have gotten and what became of any “missing” coins.  As far as this writer can see, no one joined the daughters as parties nor was their testimony concerning these assets ever taken.

Needless to say, the master is in a bind.  He punts, issuing a recommendation that “both daughters return all of the coins to husband’s counsel in fourteen days.”  The next recommendation is that the other marital assets be distributed 55% to wife and 45% to husband except for the unspecified coin collection, which is awarded 65% to husband and 35% to wife because of her “breach of fiduciary duty” and her lack of credibility.

Husband filed exceptions complaining the estate should be equally divided and that wife’s duplicity should result in his retention to all of the marital coins.  The trial court granted both exceptions and accepted husband’s testimony that they were worth $60,000.  No appeal was taken from that order although nowhere in the opinion is there a reference to that procedural formality called a “final divorce decree.”

Either nine or fifteen months later (even the Superior Court can’t decipher the dockets) husband filed a petition for special relief asserting you know what.  Wife didn’t provide all the coins and the ones he got were worth only $13,000, which is $47,000 less than what the trial court found them to be.

At this point, the trial court expressed its frustration by denying the petition instantly.  The court found that husband had offered no allegation that wife’s actions “prevented him from receiving the full value of the coins.”  Rather, the court found, without a hearing, that the coins were provided.  If husband was unhappy with the coin collection wife produced he needed to preserve a record by forcing wife to produce more coins (???) or otherwise secure a continuance of the trial (???).  But, hadn’t the trial ended when the master produced his recommendation?  Further, hadn’t the court order disposing of the exceptions and adopting husband’s value of $60,000 been the finale of this controversy?  The Trial Court’s opinion even says it awarded him the full value he placed on the coins and gave him 100% of the collection.

Husband appealed from the denial of his special relief petition.  Again, the appellate opinion makes no reference to when a divorce decree was issued but one has to assume that husband’s petition was actually one to “enforce” the order disposing of the master’s recommendation.  On appeal husband accurately recounts that the court found the coins were worth $60,000 and this was awarded to him.

The appellate decision issued this week informs us that wife did not refute the allegation that she shorted him on the coin collection.  These facts must have been gleaned from her brief as there is no evidence she ever was required to answer the petition.  Rather she says husband did not meet his burden of proof.  That’s probably true because the trial court dismissed the husband’s petition the day he filed it.  She also musters the chutzpah to argue that husband should have secured the coins she said did not exist and had them valued before the master’s hearing.

Messy enough?  Well, the Superior Court vacated the order dismissing husband’s petition and remanded the case for a hearing where husband can show that wife failed to present the full coin collection.  Now, this hearing is probably not going to go well for either side.  Husband will do the same whining he did at the settlement conference three months before the equitable distribution hearing.  His  wife is “hiding” a large portion of the coins that did not exist or were given away.  Wife, will rebut this when she has already been found guilty of such chicanery as to lose any interest in the coins?  The parties separated in 2012 and this writer suspects that the coins may have taken flight about that time.  So the Common Pleas Court will have to trace their travels over nine years, assuming they existed in the first place.

In the 1993 flick “Groundhog Day” the weatherman Phil offers this advice, “There is no way that this winter is ever going to end as long as this groundhog keeps seeing his shadow.  I don’t see any other way out.  He’s got to be stopped.  And I have to stop him.”

Ironically, in the Laight case, the groundhog was stopped.  He was valued at $60,000 in a final order and he was awarded to husband.  It is not clear when the $13,000 in coins were delivered to husband’s attorney (thus making him a witness).  But, no one needed to go there.  The order said the coins were worth $60,000 and belonged to the “Mister.”  If the “Missus” didn’t like that order her appeal was over after 30 days assuming someone entered a divorce decree.  In this case the trial court should have directed a judgment for $60,000 per its earlier finding and told wife that she could have a hearing to show the value of coins that she had tendered as an offset.  Game over.  Groundhog vanquished.  Alas, another hearing lets the groundhog survive to live other days.

N.B.    The Wall Street.  Journal publishes silver prices on a daily basis including the trade value of $1,000 of pre 1965 silver coins.  When the parties separated, silver was trading at $30-35 an ounce.  For most of the history of the Laight case prices bounce between $15 and 20.  Today $25/oz. and $1,000 worth of coin trades at about 18x the face value.

Laight v. Laight, 550 WDA 2020; Non-Precedential Decision entered April 13, 2021

In the last few days, I have worked with another attorney to try to bring a peaceful end to a very brief marriage.  In the space of a couple weeks, we identified what was left of the “ties that bind” and how to painlessly sever things like joint leases, joint debts and dividing the wedding presents.

The clients are not wealthy and cost is a consideration.  Because this would or should be a quick divorce and the financials seemed under control by the agreement we crafted, I thought it might make sense for the client to use a low price divorce “mill” to file the divorce complaint and secure the decree ending the marriage.

In my home county, a simple one count divorce complaint costs just over $200 in filing fees. Each county gets to impose its own fees and the disparity can be fairly big.  There are two rural Pennsylvania counties: Cameron and Potter that have made quick divorce a kind of cottage industry.  In most counties, there are two marriages for each divorce.  In 2019, Cameron and Potter Counties each had 53 divorces for each marriage celebrated.  Even Las Vegas would blush.

Back to the cost.  The instant I looked to see what was available for in terms of low cost divorces, my computer exploded with advertisements.  A day later, I can’t go onto the web without being dogged by lawyers and “services” offering me a divorce for as little at $121.00.

Potter County will take $88 to file a divorce.  They will even send you a divorce packet, which I suspect contains their approved forms for $6.50.  Understand that there can be “complications” that can make the otherwise simple process into a mess.  A consent to divorce needs to be filed within 30 days of the date it is signed.  A divorce complaint technically “expires” if not served within thirty days from the date of filing.  So, “do it yourself” can be more trouble than the savings are worth.

If you have no marital property and no marital debt, the $121 divorce may actually work.  Nevertheless, even if your relationship is not working out, it may be worthwhile to pay a real lawyer to actually spend an hour and run the paces with you.  Your spouse may work for an employer who provides incentives that don’t appear on the paystub but are quite valuable nonetheless.  If you are married to a spouse for a decade, you may be able to claim on that spouse’s social security record even though you later divorced.  However, if you are divorced after 9 years and 11 months you have no social security entitlement. As we have said in prior articles, get yourself a credit report to make certain that there is no joint debt.  If you own a house or lease a home jointly, that needs to be “unwound.”  If you filed joint tax returns, you are liable if your spouse failed to pay tax or report income.

So, $121.00 may be a path forward, but it may also be a trap.  Moreover, if problems should erupt understand that your judicial remedy may be in Emporium or Coudersport, places not easily found on the map.

For those of us who get the Wall Street Journal on Saturday, it is a newspaper of respite.  Yes, all of Friday’s news is there but the features are sections on what books to read and what piece of 16th century art or literature merits a second look.  It’s WSJ light, best evidenced by the change in the masthead from THE WALL STREET JOURNAL to WSJ.

The April 3-4 edition’s front page had an article titled: “Custody Fight Plus QAnon Turns Deadly.”  Long, long ago, I was interviewed by the Journal for an article about an adoption proceeding.  They don’t often stray into the family law field.  However, Saturday’s story was harrowing.

Last fall, a woman named Neely Petrie-Blanchard was in a custody battle concerning her daughter.  She had the kind of history not uncommon today.  High school graduate known for being impetuous, she became pregnant by a boyfriend who seems to have shared those characteristics and she lost custody of their child to her boyfriend’s mother.  Feeling that she had been wronged by the judicial system, Ms. Petrie-Blanchard kidnapped her child and was jailed for the offense.  According to friends and family, once released she became obsessed with a system that could do this to a mother and she found people online who suggested that this was the product of a deep state conspiracy.  In the meantime, she had two more children and married another man who is father to none of the three.  When she was jailed for kidnapping her eldest, Ms. Petrie-Blanchard lost custody of her two youngest children to her own mother.  She became obsessed with recovering her children and wanting them to succeed.

In 2017, the internet introduced Ms. Petrie-Blanchard to a 46-year-old man name Christopher Hallett.  Although not formally trained in the law, psychology or social work, Hallett claimed that he would assist her in getting her eldest child back.  Hallett fed this woman, whom he liked to consider a client, just what she wanted to hear.  Judges and lawyers were conspiring with others to take away children from ordinary people like Ms. Petrie-Blanchard.  Through an online business, people hired Hallett to assist in recovering children they had lost.  It would appear Hallett was a Janus like figure.  He told his friends and family that many of his “clients” were crazy.  Meanwhile, he grooved on the adulation and the money he received for supporting these conspiracy theories.  Hallett would post instructional videos supporting his theories, many of which tracked those found on QAnon websites.  He sold mugs and clothing on his website promoting his theories.

Hallett began to buy deeper into his own shtick, actually appointing Petrie-Blanchard as some kind of agent for his services and appearing in court on behalf of people using an identification number he secured from the American Bar Association.  The ABA does not license people to practice law.  By 2018, Hallett had conference calls with clients including Petrie-Blanchard to map strategy in their individual custody cases.  The reader is left with the sense that his mission was leading women in what all participants saw as a righteous cause.

By 2020, Ms. Petrie-Blanchard’s frustration resulted in her kidnapping her two youngest from her mother following a visit with the children.  It seems that Hallett and his adherents abetted this act.  A person associated with Hallett posted her bail after her arrest on new kidnapping charges.  As the election season came into full swing in 2020, Hallett indicated to Petrie-Blanchard that he had been in touch with the White House about its possible intervention in the case and “reformation” of the U.S. Justice Department to abate these miscarriages of parental rights.

As Hallett’s representations became more and more grandiose, some of his adherents began whispering that he was not effective and might even be conspiring with the government.  Ms. Petrie-Blanchard heard these stories and fell prey to them.  On the evening of November 15, 2020, Petrie-Blanchard met with Hallett at his home in Ocala, Florida.  During that meeting she drew a gun and shot him first in the shoulder and then in the head, professing to police that he had joined the government’s cabal of child stealers.  She is now in prison charged with murder.

There are crazy people everywhere.  Crazy people are not a new phenomenon.  But a couple things coming from this story are new.  The internet has provided crazy people with a new place to find and associate with other people of like mind.  In addition, just as disturbing, is the existence of people like Christopher Hallett who abet craziness and in some instances prey upon it for power or money.  Mr. Hallett paid for this with his life.  Three young children will probably be effectively orphaned once their mother is convicted or adjudicated as insane.

This story might be treated as a “one off”; something more likely published in the National Enquirer or The Star rather than the Wall Street Journal.  I would be of that mind had I not recently been involved in cases where QAnon and other conspiracy theories are blended into otherwise ordinary custody disputes.  This has included people who subscribe to theories that vaccines are administered not to stop pandemic disease but to advance other goals.  We like to dismiss these people as uneducated at best, fools at worst.  But these people are not as far below the surface of our society as one might think.  What resonated with me about the Journal’s article was the reference to the fact that Ms. Petrie-Blanchard was glued to the internet for many of her waking hours.  If you devote dozens of hours to that source each week and you get to choose where on the internet you go for information, you can lose touch with the larger world and fall prey to people who want you to follow their lead.

In 1968, a neoconservative Edward Luttwak published a book titled Coup d’état: A Practical Handbook.  Back then, Luttwak suggested that anyone wishing to control the minds of the people, get control of the media immediately after overthrowing the government.  A half century later I am concerned that many people in our society are more than willing to have their thoughts controlled by people who profess to agree with them.  No guns required.

It’s always been there.  Debt.  Even though the Pennsylvania Divorce Code does not really mention it by name.  If you speak to the hearing officers who draw the assignment of effecting equitable distribution, they respond that debt is the most nettlesome thing to deal with.  In some cases, it is the only thing they deal with because none of the assets had “equity”.

We found some interesting data on the topic in Experian’s recent analysis of 2019 debt.  Some of it is not very useful.  When you see a statistic that tells you the average 18-23 year old has $142,000 in mortgage debt, you have to ask how many people 23 and under actually have a mortgage.  However, there is useful information as well.  This writer grew up in the 1960s.  A world when auto and mortgage debt were about the only debt available.  Back then; even credit cards were actually “charge cards” where the balance was supposed to be paid off monthly.  It was the age of the 20-year mortgage.  You bought a house at age 30 and “burned” the mortgage when you paid it off at age 50.  The residence was now your “nest egg.”

The world has changed and the data show it.  Mortgage balances for folks in my baby boomer bracket average just under a quarter million dollars.  That value gets closer to $300,000 if we consider HELOC (home equity) debt.  In 1986, the entire student loan portfolio in the U.S. totaled $10 billion.  Thirty-five years later that total is $1.7 trillion.  Note that those defined by actuaries as “elderly” (over 55) are averaging $40,000, which suggests to me that this is not boomer debt, rather, a debt they took on for their kids.  In addition, despite a robust economy from 2015-2019, every class of Americans except the Gen X ers witnessed marked increases in debt.

  Baby Boomers (56-74) Generation X (40-55) Millennials (24-39) Generation Z (18/23)
Average Debt 2019 $135,841 $96,984 $78,396 $9,593
2015-2019% Change In Debt 10% (7.5) 58% 22%
Average Credit Card Balance $8,215 $6,949 $4,889 $2,230
Average Mortgage Balance $238,344 $175,865 $224,500 $142,600
Average Auto Loan Balance $21,570 $18,759 $18,201 $14,272
Average Personal Loan Balance $17,175 $19,253 $11,819 $4,526
Average Student Loan Balance $39,981 $34,957 $34,795 $12,495
Average HELOC Balance $49,221 $45,006 $41,239 $32,854

IF there is good news to be found in this block of data, it is related to interest rates on mortgage and HELOC indebtedness.  Thirty-year mortgage rates were about 6% on average in 2008 and have only twice bubbled up above 4% in the ensuing years.  Unfortunately, personal debt, especially credit card debt, has been sticky with minimum rates in the 14-15% range and 23-24% as the average maximum rate.  Those rates can cripple a household in a financial sense and make real savings almost impossible to attain.

The days of the HELOCs where the interest component was deductible are now behind us, but we still see many people who eschew these loans for that reason.  Truth is that a nondeductible HELOC rates at 3-4% still beat the pants off nondeductible credit card debt at 14-24%, or pulling money out of retirement as either a loan or a distribution.  The same is true for automotive debt, although our experience has been that the price of cars today is often tied tightly to the lending arrangement.

Divorce lawyers today and in the future are going to have to devise plans that address debt in constructive ways.  We are living through a period where many clients need our services in what is dubbed “The Golden Years.”  The Experian chart suggests that all generations are coping with increasing debt and that the “gold” may be more plated, than real.

Father adopted a child with mother.  Mother died two year later.  Father remarried the stepmother in 2012, with whom this litigation took place.  Stepmother adopted the child a year later.  The marriage lasted less than a year. A custody agreement was formed.  In June 2015, father filed for primary custody and mother counterclaimed for the same.  An Interim Custody Order in September 2015 was followed by adoptive mother’s PFA alleging father committed sexual abuse of the child.  This begot a Temporary Order-restricting father’s access to the child.

The PFA trial consumed 5 days and was dismissed but father’s contact was supervised.  In February 2016, mother filed a second PFA.  This was also denied.  A few months later in May 2016, the parties began what would be a 23-day custody trial.  It concluded in November and culminated in an Order issued three weeks later, which granted father sole legal and physical custody.  Mother was to have no contact for a period of 90 days.  The trial court opinion expressly rejected the sexual abuse allegations related to the then 10-year-old child, discrediting the child’s own in court allegations.  These allegations had arisen shortly after the custody proceedings were initiated and father’s time had been expanded.  The Court rejected the assertion that the child lied.  Rather, the Court found the allegations unsubstantiated, relying in part on expert testimony from mental health experts.  The Court also found that mother had engaged in a pattern of isolating and alienating the child from father.

The Superior Court affirmed the Trial Court and the Supreme Court denied an appeal in February 2018. 182 A.3d 430 (Pa. 2018).  Just before the Supreme Court declined to take the case, mother’s attorney held a press conference on a video platform -YouTube.  The apparent purpose of this was to air the allegations of sexual abuse.  The child was not expressly referenced in this video but the record in the case was.  Mother’s identity was disclosed.  The story was picked up by the Pittsburgh City Paper.  Here, again, the child name’s was omitted but witnesses were identified as were other facts from which identities could be deduced.  The article also depicted in detail the nature of the abuse as alleged.

Father responded by seeking an order asking the court to restrain public speaking about the facts of the case, imposing financial sanctions and directing redaction of information that had been publicly posted.  Within 10 days the Court denied the sanctions on the basis that no seal order had been violated, however, relief was granted barring mother or her attorneys from speaking publicly about the case in any print or electronic media.  They were also banned from posting evidence arising from the case.  This Order expressly permitted testimony before legislative bodies devoted to passing laws on the subject matter but prevented disclosure of information about the child in such fora.  Mother requested a stay of this Order.  It was denied.  The clear import of the Order appears to be that, while the subject of child abuse could be communicated, facts, which could identify the 10 year old were to remain private.  The Court indicated its goal was to avoid invasion of the child’s privacy.

The Trial Court opinion noted implications of the First Amendment and Article I, Section 7 of Pennsylvania’s Constitution.  It also observed that the publications of mother and her counsel were “thoughtless, toxic and misleading,” bordering upon professional misconduct in the case of the lawyers.

A second appeal of the gag order also met with an affirmance. 201 A.3d 774 (Pa.S. 2018).  Acknowledging the strict scrutiny standard, the Court opined that the gag order contained “restrictions …narrowly tailored to serve a compelling state interest” consistent with Republican Party of Minn. v. White, 536 U.S. 765,775 (2002).  It added, however, that where government imposes content neutral regulation of expressive conduct it is governed by an intermediate standard of scrutiny.  This standard is expressed in U.S. v. O’Brien, 391 U.S. 367 (1968).  The standard has the following elements:

  1. The regulation is within the constitutional power of the government;
  2. The regulation promotes an important/substantial government interest;
  3. The interest is not intended to suppress free expression; and,
  4. The regulation is no greater than essential to promote the government interest.

The Superior Court found that the Order could be sustained because it was regulating the target of the speech (the child) rather than the content.  Specifically, where parental action jeopardizes health and safety of the child or could cause other “social burdens” it may be regulated.  Shepp v. Shepp, 906 A.2d 1165, 1173 (Pa. 2006).  The Court also noted that a finding that there was no abuse added reason for the imposition of First Amendment limitations.

The Pennsylvania Supreme Court began its analysis by noting that First Amendment rights are not absolute.  The First Amendment must be applied with reference to the “special characteristics of the [relevant] environment…”  Tinker v. DesMoines Independent Community Sch. Dist., 393 U.S. 503,506 (1969).  The regulation does need to assiduously avoid “content preference,” Clark v. Community for Creative Non-Violence, 468 U.S. 288,293 (1984).

In the view of the majority, the Order permitted the Appellants to convey public speech and does not restrict the underlying message.  In fact, it expressly authorizes criticism of the presiding Judge and reference to the Order but mandated that those parts of the Order that would reveal the identity of the child or expose the child to publicity must be redacted.  As the majority sees it, the Appellant and counsel are permitted to express opinions about parental alienation, child sexual abuse and the perils of exposing children to such abuse.  “The only limitation on Appellant’s speech lies in the manner of communication …” They may be precluded from speech, which “exposes the child’s identity and exposes him to harm.”  The Appellant may engage in conduct intended to bring about policy or social change.  However, the Opinion seems to lay emphasis upon efforts to persuade government to change existing laws and procedures.  The Court concludes that these limitations are subject to intermediate scrutiny rather than strict when reviewed on appeal.

In an analysis of O’Brien’s intermediate scrutiny standard, the Court makes some important findings.  The majority explicitly holds that the child’s right to psychological and emotional well-being and privacy outweigh the rights of parents and counsel to speak freely. Seattle Times v. Rhinehart, 467 U.S. 20, 32, n 18. (1984). Protecting minors from harm is an important and often compelling state interest. Sable Communications of Cal.  492 U.S. 115, 126 (1989).  The state has a long-standing role as parens patriae.  D.P. v. G.J.P, 146 A.3d 204, 211 (Pa. 2016).  In Shepp the Court grappled with the right of a Mormon father to teach his child about polygamy; a crime in Pennsylvania.  It held that the right to free speech did not include the right to discourse on acts that would be criminal if perpetrated.  This was not only a danger to the child but to society as a whole given its prohibition.  In the present case, publication of the child’s testimony and a public discussion at a press conference of the child’s allegations were beyond legitimate needs to air the issue of abuse.

The reasoning of the majority in this case cannot be faulted.  Nevertheless, it remains problematic.  The Court states with merit that the limits on First Amendment rights need to be confined to “speech about the custody case communicated in a manner that would not identify the child.”  Unfortunately, children are not raised in vacuums.  Long ago, I was involved in a custody case where the father was convinced that mother was exposing their children to a satanic cult.  I thought my client’s assertions fantasy until he provided me with a Pennsylvania State Police publication about cults.  My client took the kids and went underground.  It turns out there is a community of people who subscribe to the existence of cults and are more than content to assist in other people in this process.  As a young attorney, I did not know what to believe.  Then my client appeared on television describing in great detail what he did and why he did it.  While he appeared credible in his television appearance, you could not help wondering how he could justify putting his children into the public arena.  As one might expect, an appearance on a national talk show produced his arrest within 48 hours.  Today, Shepp makes clear that you cannot counsel kids about activities that are patently illegal.  Less clear is whether you can instruct a parent that they may not teach that there are evil people out there drinking blood or conquering our planet.

If you have ever represented a person who believes their children are being physically or emotionally abused, you realize that court orders don’t have a lot of meaning for them.  They are caught in a world where they have convinced themselves that they sounded the tocsin of child abuse and the system (whether courts or the dependency system) ignored them.  Irrational behavior becomes the norm.  Moreover, many of these people are smart.  This Supreme Court Opinion pushes them in the direction of seeking legislative reform; but that kind of reform comes slowly and does little to remedy the immediate pain they believe is inflicted on their child.  Meanwhile, they can be sending out thousands of electronic messages or even appearing on talk radio or television.  Reading this Opinion carefully, so long as the parent preserves anonymity for the children affected, that speech may be protected.  If you are a child and your parent is devoting dozens of hours each week to promoting child abuse awareness, you have to think that speech is not detached from you even if your name or life experience are never uttered.

Sound as this decision is, for those submerged into cases with allegations of alienation or child abuse; there is no clear way out.  That includes the lawyers, the clients and the judicial officers involved.  Almost without exception, people making allegations of abuse are true believers in their cause.  You can smell the reality of that from the facts in this case.  An agreed custody order yields to a father’s petition for more time.  When that relief is granted, one senses that the gloves came off.  We see two abuse investigations with a five-day abuse trial and, 23 days of custody hearings.  As we all know, judges effectively control how many days of custody trial they will tolerate and if you have ever asked a judge for more than three days of custody trial time, you have probably witnessed the face of a judge wracked with conflict.  I suspect the trial judge in this case was dealing with a parent who truly believed abuse occurred and that the judge wanted to exhaust every angle of the case hoping that, either the abuse would be revealed or that the accuser came to realize that the facts did not add up.  Obviously, that never occurred, and while the decision in this case is well reasoned, there is no order that can palliate the effects of almost a month of trial where one of the litigants still thinks her child is being abused.

The takeaway of this case is that there is now a standard to measure the limits of gag orders in custody cases.  Unfortunately, we have no power to restrain the pernicious effects on a child brought about by a parent who believes with conviction (whether real or fantastic) that their son or daughter is being abused.

The case includes a lengthy dissent from Justice Wecht who contends that because it involves prior restraint of free speech, the strict scrutiny standard must be applied.  There is merit in what Wecht argues as well.  He does not quarrel with the findings that the adoptive mother’s views are creating issues for the child.  However, he suggests the solution is in the custody statute rather than embarrassing free speech rights.  In other words, “Mom, if your needs to express your views exceeds what the court perceives to be the best interests of the child, you may expect that the time afforded you with that child will be adversely affected.  That’s not punitive but palliative because where a court has found no sexual abuse, it cannot be healthy for a child to spend extensive time with a parent who insists that the courts are wrong and dad is evil.”  The words in quotes are the author’s interpretation of where Justice Wecht was headed.  The dissent is effectively the “playbook” for the attorney opposing another party’s request for a judicial gag order.

S.B. v. S.S.; Appeal of: S.S., et al – No. 39 WAP 2019