Wednesday, June 13, 2018

Reconciling in Virginia - The Law When You Work Things Out

As always, before reading this post, please review my disclaimer by clicking on the link above or by clicking on this link.  As always, an legal principles discussed in this post apply only to the Commonwealth of Virginia.

Introduction

What's the best thing I, as a family law attorney, can possibly hear from a divorce client?  Well, would you be surprised if I told you my favorite phone call from a divorce client is the one that starts with "Sam, stop working on my case, we've decided to reconcile"?

When I began practicing family law, I had big plans in mind for how I was always going to try to convince my clients to reconcile first, recommend counseling, anything to make it work.  It turned out, though, I had bought into the pop culture hype that people rush into divorces these days, when in reality they really don't (I dive into this a little further in my blog post discussing how the divorce rate is actually much lower than 50%).  As a result, by the time people come to me about a divorce, the odds are they've already tried most everything, and the marriage is already broken beyond repair.

Nonetheless, life happens, and while it's not nearly as often as I'd once hoped, the reality is I've had several cases over the years now that ended not with a Final Divorce Decree, but with the couple back in the same home, happily moving on with their lives together.  I even got an invitation once to the wedding of a couple whose divorce (from each other) I had handled a couple years earlier.

Now, you might look at this and say, "oh, well, there can't possibly be legal consequences from reconciling!  That's just a return to how things were - so everything resets, right?"  Well, it's actually not that simple.  The reality is, depending on how far along you were in your divorce process, what kinds of orders were entered, and whether or not you have kids, there are legal implications from a reconciliation, and actions that you have to take in order to protect yourself going forward.  In this post, I will discuss some of what happens under the law when you and your spouse begin the divorce process, but then ultimately work things out.

Simplest Case:  You've Separated, But That's It

So, the simplest case is that you separated from one another, but that was it.  No agreements were signed, no court orders were entered, no papers signed.  You just each lived apart for a while, then decided to get back together.  Here everything is simple - there really aren't legal steps you need to take.  Just resume living together.  If one of you was renting a place and are leaving that rental, make sure you talk to the landlord if you need to terminate your lease early.  But from a matrimonial law standpoint, you're set.

Slightly Tougher:  You Have a Signed Agreement

Now, let's go to the same scenario, but you've also already signed a separation or property settlement agreement and begun abiding by its terms.  However, let's assume still nothing's been filed in court, and then you reconcile.  There are a few things to know.  First, any transfers of property, changes of name on accounts or loans, etc., will survive your reconciliation.  So, if you want to get things back to how they were you will need to go through that process again.  This is particularly important for real estate, where you want to be able to take advantage of the benefits of being tenants by the entirety (a form of joint ownership only available to married couples).  Second, understand that by law a separation or property settlement agreement is terminated upon reconciliation, however, if your agreement has a reconciliation clause in it, it may survive your reconciliation.  In that case, you'll need to decide how, or if, you want the agreement to survive - particularly what happens to any support obligation while you are back together - and you should consider signing an amendment to put those changes into effect.

Remember that just because you worked things out now doesn't mean something won't go wrong again some day.  If, for example, your agreement obligates you to pay support of $1,000 a month, you reconcile and don't change anything, and then separate again in 5 years, it's possible your spouse will then come after you for 5 years of back payments ($60,000!).  You may have defenses to that claim, but they wouldn't be a guarantee - edit your agreement now, when you're on good terms.

What if Orders Have Been Entered?

Now, taking it to the next level, you might be asking what happens if custody, visitation, child support and/or spousal support orders have been entered before you reconcile?  Well, the first thing to do is figure out what kind of orders they were.  Were they pendente lite orders (orders entered after a short hearing just to determine what arrangements will be while your case is pending) or final orders?  If they were pendente lite orders, you can simply withdraw (or non-suit) the case in which those orders were entered, and by operation of law pendente lite orders terminate the moment their case terminates.  If they were final orders (say, from the J&DR Court), however, you will need to actively terminate the orders.  To do this, you will need to file a petition with the court that issued the order(s) (unless venue was transferred by the order(s)) seeking a modification based on a material change in circumstances, and then submit an agreed order terminating the order(s).

Again, the issue here, much like with agreements, is primarily protection if things go wrong down the line.  If you are reconciled for five years but then split again, you don't want to have to prove that you adequately supported your child while you were all living together to make up for your not directly paying the ordered child support.  You may be able to defend against the back support claim, but it's not a guarantee - and it could get very expensive in legal fees.  It's always safer to just not have a lingering order.

What if We Divorced?

Sometimes a reconciliation doesn't happen during the divorce process.  Sometimes it takes that time fully and completely away to realize that you've made a mistake, or that you've each grown.  So, yes, we do sometimes see reconciliations of couples that have already completed their divorce.

What you need to do in this event is going to be largely similar to the prior section, except that you almost assuredly only have final orders in place, not pendente lite orders.  Moreover, if you re-marry, any spousal support obligation would terminate at that point.  However, custody/visitation and child support orders would not, and still need to be taken care of.

There is an additional concern also at this point with property.  If you never transferred any real estate or similar property prior to your divorce, then upon your divorce you became tenants in common in any real property.  If you get re-married, this does not get automatically undone, you will need to actively re-title your property in order to become tenants by the entirety again.  Additionally, any accounts, retirement funds, life insurance policies, etc. in which you named your spouse as your beneficiary had those beneficiary designations automatically revoked at the time of your divorce.  Even if you never notified the companies of the change, you will need to re-filed your beneficiary designations in order for your spouse to again be your beneficiary.

Finally, when you divorce, if you divided any retirement accounts, it is likely that you had an Order or Orders entered to effectuate that division (frequently called Qualified Domestic Relations Orders, or QDROs).  For any defined contribution plans (401(k)'s, etc.) the division has likely already been completed, so you each now have your own accounts - it's fine to keep things that way.  For defined benefit plans (pensions, etc.), however, you will need to get an Order entered terminating the prior division Order, and get that new Order to the account administrator.  Otherwise, when you retire, you might be surprised to have money taken out and sent to your spouse.  While if you are still together at that point it may not matter, it would still be an inconvenience, and there can be administrative expenses involved - better to get that taken care of now.

Conclusion

The best news I can get as a divorce attorney is that my client and his or her spouse have found a way to work things out and have reconciled.  Nonetheless, my work does not end there, as I still need to ensure my client protects himself or herself and takes the legal steps necessary for the reconciliation to be smooth and complete.  As always, the smartest thing you can do if you are reconciling and aren't sure what your legal needs and obligations are as a result would be to consult an attorney.  If you have been going through a divorce (or are already divorced), are planning to reconcile, and want to know what you legally need to be doing, feel free to review our initial consultation policy above and then to shoot me an e-mail at SLeven@thebaldwinlawfirm.com or call (703)281-0134 to set up a consultation.  Our initial consultations are free for up to half an hour!

Monday, April 23, 2018

Relevant Changes in Virginia Law - 2018 Edition

As always, before reading this post, please review my disclaimer by clicking on the link above or by clicking on this link.  As always, any legal principles discussed apply only to the Commonwealth of Virginia.

Introduction

As I have done every April since I began this blog, today I will be giving a summary of new laws that impact or influence topics covered by this blog - particularly those that may impact posts I have previously made here.  This year it turns out had a pretty heavy dose of family law changes that relate to past blog posts - so I will cover those here.  There was also one big change to Landlord/Tenant Law that I also need to cover.  So, with that, here we go.

All laws listed here are effective as of July 1, 2018.

All Residential Leases the Same

Last year, I made a big deal about a law that made the VRLTA apply to almost all residential leases, and that greatly reduced the number of differences between VRLTA and common law/Chapter 13 leases.  Well, this year, the final act has come.  HB 857 passed and signed into law this year eliminates all remaining differences between the VRLTA and common law/Chapter 13 leases, such that all residential leases are now governed under effectively the same terms, whether under the VRLTA or not.  Perhaps most importantly - this includes the VRLTA's provision prohibiting lease provisions that waive any rights under the law.

Retirement a Material Change in Circumstances

Back in 2014, I put together a post about the dangers of retiring if you owe spousal support, and the tendency of courts to consider that a voluntary action such that spousal support will not get modified.  This year, SB 540 is changing that.  Under the new law, the payor of spousal support reaching full retirement age, as described by the federal Social Security Act, is automatically to be considered a material change in circumstances, and instead of outright dismissing motions to modify spousal support due to retirement, the Code now requires the Court to consider a new set of statutory factors when making this decision.  As a result, being an indefinite spousal support payor should no longer mean you never get to retire.

Agreed Spousal Support is Modifiable by Default

In 2016, I did a post listing the five biggest mistakes I see people make in their divorces when not represented by an attorney, and number one on that list was signing a Separation Agreement/Property Settlement Agreement that sets spousal support, but does not say if or how the support is modified.  Under current law, spousal support set by an agreement is only modifiable in the way described in the agreement, and if no way is described, the support can never be modified.  SB 614 will now flip that around.  For all Separation Agreements/Property Settlement Agreements entered into after July 1, 2018, spousal support in said agreement will, by default, be modifiable in the exact same way as if the Court had set that spousal support, unless specific language is included in the agreement making the spousal support non-modifiable (the language required to be used can be found in the new law).  This new law will provide substantial relief for people who try to do their divorce themselves, but don't think about every eventuality the way that a lawyer would.

Background Checks for Step-parent Adoptions

One of my favorite practices that I conduct is adoptions, and amongst my favorites types of adoption cases are step-parent adoptions.  In a step-parent adoption, the spouse of a child's parent decides that he or she is ready to have that child not just be "like" their own child, but actually be their own child, and legally adopts the child.  I did a blog post on step-parent adoptions back in March, 2014.  Unfortunately, however, as with many areas of law, some people use this process to abuse the system.  In recent years, several cases have arisen where convicted sex offenders or other criminals who would not be eligible to adopt a child have gotten around that prohibition by marrying a child's parent and using the permissive and largely passive step-parent adoption process to adopt the child.  Several cases, unfortunately, ended with the step-parent, now legally the child's parent, divorcing the parent, getting court ordered custody or visitation of the child, and abusing the child while in his or her care.  HB 227 will look to solve this problem.  This new law, effective July 1, 2018, authorizes step-parents pursuing a step-parent adoption to receive a formal criminal background check on themselves from the Virginia State Police, and then requires that step-parent to submit the background check to the court for review prior to the granting of a step-parent adoption.  It is sad that the General Assembly felt this step necessary, as this will now prolong and increasingly complicate the step-parent adoption process that had previously been intentionally simple, but unfortunately the lengths to which some abusers go to find victims has made some kind of reform necessary.  That being said, the General Assembly recognized the impact this may have on the process, and so the law is only experimental.  Unless a new law is passed extending it, HB 227 will expire on July 1, 2020.

Mixed Custody Child Support

In 2014, I did a post laying out how child support is calculated, and then I listed a series of complications.  Complication 4 in that post was when children have varying custody arrangements (sole vs. split vs. shared).  At the time, I noted that the Code was silent as to how these child support calculations were to be done, and instead you should try a few different approaches and come to court with the one that comes out best for you while prepared to argue why that's the right approach to take.  HB 1361 has now changed this.  The law now specifically addresses how to deal with cases where kids with shared custody have differing numbers of days with each parent, how to do the calculation when at least one kid is in a sole custody arrangement and at least another is in a shared custody arrangement, and when at least two kids are in a split custody arrangement and at least another is in a shared custody arrangement.  The new calculations are very complicated, but it is now one less area to potentially fight over in court.

Conclusion

While impossible to convey in a single post like this, the family law changes listed herein are, to some degree, game-changers in the field.  I'm very excited to integrate these new laws into my practice.

Wednesday, February 14, 2018

A Warning to Virginia's Same-Sex Parents

As always, before reading this post, please review my disclaimer by clicking the link above or by clicking on this link.  As always, any legal principles discussed apply only to the Commonwealth of Virginia.

Introduction

In October of 2014, the United States Supreme Court lifted a stay on a Fourth Circuit ruling that made same-sex marriage legal in Virginia.  Suddenly, same-sex couples across Virginia found themselves with the right to marry, and took advantage of it quickly.

Shortly after this ruling, I wrote a blog post laying out some practical considerations for same-sex couples in Virginia in the "new world" of legal marriage.  I pointed out that while the new ruling meant that same-sex couples can get married, it did not retroactively make same-sex couples married, and as such there were many legalities a same-sex couple needed to go through to take full advantage of their new legal rights.  One issue I did not discuss, however, was children, and a new ruling from the Virginia Court of Appeals makes clear that I should have.

Just yesterday, the Court of Appeals issued its published opinion in the case of Hawkins v. Grese.  The case involved two women who had been in a relationship from 2004 to 2014.  In 2007, the women decided to have a child, and so Grese gave birth to a child conceived through artificial insemination.  Due to Virginia's marriage and adoption laws at the time, Hawkins was unable to adopt the child, nor was she named on the child's birth certificate.

In 2014, before the change in the marriage law went into effect, the couple broke up - but their break up was amicable, and they shared custody of their child.

However, in 2016, they came into conflict, and Grese began withholding the child from Hawkins.  After protracted custody and visitation litigation, the Court of Appeals found that Hawkins is not a parent of the child, and subsequently Grese has all the protections of a parent against Hawkins in the custody and visitation context (see my post on third-party custody and visitation for an explanation of what that means for Hawkins).  As a result, the Court of Appeals found that Hawkins had not overcome the "parental presumption" and awarded sole custody to Grese (note that the appeal did not address the question of visitation).  The Court of Appeals further included in its order this little nugget: "we hold that where custody disputes are concerned, the term 'parent' is a relationship to a child only through either biological procreation or legal adoption."

So What Does This Mean?

The main thing it means is that if you weren't married at the time you and your partner had a child, you are not a legal parent of that child unless you've adopted that child or are the child's biological parent.  For a same-sex couple, this means that if you had a child any time before 2014 and it was your partner's biological child, you must adopt that child in order to have legal parental rights.  This is true for an opposite-sex couple as well.

If you don't adopt the child, it doesn't matter that you were not allowed to get married at the time - you don't retroactively get treated as though you were married, so you must adopt in order to have those parental rights even if you are married now.

What About for Same-Sex Parents Who Were Married When the Child Was Conceived/Born?

I included a little nugget in my introduction that should scare even married same-sex parents (and, heck, married opposite-sex parents who used a sperm or egg donor to conceive) - the part about "parent" only if the child is biologically yours or legally adopted.  I think this statement was more broad than the Court of Appeals meant it to be and that this only applies to a couple that was not married at the time the child was born.  This is because Virginia has a statutory scheme creating what's called "presumed" parents - wherein if you are married at the time you give birth, your spouse is automatically considered the other parent unless proven otherwise, and put on the birth certificate.  This rule originally only applied to husbands, but has now been extended to same-sex couples by another US Supreme Court case.

Moreover, Virginia's statutory scheme about artificial insemination specifically states that "the husband of the gestational mother of a child is the child's father."  While the language is obviously gendered still, it is pretty clear, to me at least, from current case law that this rule would be extended to same-sex spouses (although I'd note for same-sex male couples that the Virginia law regarding surrogacy has its own complications for same-sex male couples).  As a result, I believe that if you are married at the time the child is conceived and born, you will still be considered the child's other parent, notwithstanding the implications of the Court of Appeals' loose wording.  However, this somewhat loose language of the Court of Appeals might make you want to consider adopting the child anyways.

What Should We Do About This?

Well, the answer is clear - if you have any question at all in your same-sex relationship of whether or not you will be considered your child's parent in the unfortunate event your relationship ends, you should adopt your child immediately.  If you are married, the process is pretty simple (you can see my post on step-parent adoptions here), but even if you aren't, it's not too complicated.  Obviously, having an attorney assisting you can help.

Conclusion

If you have a child with your same-sex spouse or partner, the Virginia Court of Appeals decision yesterday in Hawkins v. Grese should give you some pause to make sure the law considers you that child's parent.  If you aren't, or even if you're unsure, it's time to adopt that child to protect your parental rights.  If you need help figuring out if you are a child's legal parent, or need help adopting your child with your same-sex spouse or partner (or even your opposite-sex spouse or partner), feel free to review our initial consult policy (link above or here) and to call (703)281-0134 or shoot me an e-mail at SLeven@thebaldwinlawfirm.com to set up an initial consultation.  Our initial consultations are free for up to half an hour!

Wednesday, January 31, 2018

Why the New Tax Law Makes 2018 the Year to Get Divorced!

As always, before reading this post, please review my disclaimer by following the link at the top of this page or by clicking on this link.  As always, any legal principles discussed apply only to the Commonwealth of Virginia.

UPDATE (4/27/18):  The proposed law in the General Assembly mentioned below did not pass in 2018.  As a result, as far as I know, there is currently no plan to review or revise the child support guidelines in Virginia as a result of the potential impact of the tax law on spousal support.  The General Assembly will likely consider this again in 2019.

Introduction

"In this world nothing can be said to be certain, except death and taxes."  Benjamin Franklin's wise words, written many years ago, seem to resonate even stronger these days.  Taxes impact a shockingly large percentage of what we do in life - everything from our charitable donations to housing decisions to career and business choices.  It should be no surprise, then, that taxes play an outsized role in divorce cases as well.  It also should not be too surprising that when the Republican tax bill was passed into law late last year, the far-reaching bill included provisions ready to wreak havoc on divorce law.

The most obvious way that the tax law impacts divorce is in the field of spousal support (alimony).  Prior to the new tax law, spousal support was considered taxable income to the payee and tax deductible to the payor, unless the parties agreed otherwise.  The new tax law changes this - spousal support will now become like child support, neither taxable to the payee nor deductible to the payor.  This change, however, is not as simple as it seems.  It will make divorce cases harder to settle, child support and property decisions more complicated, and will squeeze the financial resources of already resource-squeezed divorcing families.

However, there are two twists.  While most of the tax law went into effect beginning January 1, 2018, the change to spousal support does not go into effect until January 1, 2019.  This means we know this change is coming in advance.  The second, even more important twist, is that pre-determined spousal support is grandfathered.  This means all spousal support paid as a result of an order entered prior to January 1, 2019 will still be deductible to the payor and taxable to the payee after January 1, 2019.

In family law, we routinely try to discourage couples from moving too fast.  Divorce is a major life decision, and not one to be taken lightly.  But, we family lawyers would be doing a disservice to our potential clients if we did not make this abundantly clear - if you are contemplating a divorce, 2018 is the year in which to do it.  Beginning in 2019, divorces will be harder, more confusing, more financially draining, and less likely to settle.  If you're thinking of getting divorced - the time has probably come to make a decision.

"Grandfather" Clause

Rules and regulations about the new tax law are still being written, so read this with the caveat and understanding that some of this is still subject to change, but here's the basics.  All spousal support orders entered on or after January 1, 2019 (with the exception of modifications mentioned below) will be subject to the new rules - the support will not be taxable to the payee nor deductible to the payor.  These orders include not only new divorces, but modifications of existing spousal support orders (again with the exception of what is noted below).

So, all spousal support orders entered prior to January 1, 2019 will be subject to the old rules for so long as that order is in effect - meaning support resulting from those orders will still be taxable to the payee and deductible to the payor until the support is modified or ends.

All spousal support orders resulting from an agreement entered prior to January 1, 2019 will also be subject to the old rules for so long as that order is in effect - meaning support resulting from those orders will still be taxable to the payee and deductible to the payor until the support is modified or ends.

Finally, all modifications of spousal support agreements or orders that were entered prior to January 1, 2019 will be subject to the old ruled unless the modification order or agreement states otherwise.

So, the new rules will apply to all new spousal support orders and agreements entered after January 1, 2019 and all modifications to old agreements or orders that specifically state the new rules apply.

Beginning January 1, 2019, the old rules will still apply to all spousal support orders and agreements that were entered before and have not been modified since January 1, 2019, and to all modifications since January 1, 2019 to old spousal support agreements and orders that did not specify that the new rules apply.

Impact on Settlement

The old tax treatment of spousal support is a friend to many family law attorneys trying to settle cases.  This is because when parties cannot agree on how a piece of property is to be divided, it is quite common to turn to spousal support as the solution.  Instead of financially dividing the property directly, the higher earning spouse agrees to pay a certain amount of spousal support to the lower earning spouse in exchange for the lower earning spouse waiving his or her right to the property.  The higher earning spouse will frequently end up paying on net less than he or she would have for a straight property division while the lower earning spouse will frequently end up receiving on net more than he or she would have for a straight property division because the higher earning spouse's additional tax savings from the spousal support will be greater than the lower earning spouse's additional tax liability due to the varied tax brackets.

Moreover, the old tax laws made spousal support much easier to settle on its own.  Higher support amounts were always more palatable to a payor when he or she knew that they would be deducting that money from their taxes.  A payee may now not have to set aside funds for estimated taxes, but the lower spousal support amounts likely to result will often mean the payee will have to choose between accepting less money than he or she needs, or fighting it out in court.

Impact on Child Support

At first blush, a change to the tax treatment of spousal support does not seem like it should impact child support at all.  However, if you know how child support is determined, you quickly realize this isn't the case.  As you probably already know, in most cases child support is determined by a set of state-sanctioned guidelines.  One of the inputs for the guidelines is the income of each parent.  However, of relevance to us, the guidelines also consider spousal support - spousal support being deducted from the guidelines income of the payor, and added to the guidelines income of the payee.

There is a problem with this going forward, however.  The child support guidelines are based on gross income.  That is, income before taxes.  In a world where spousal support is deductible to the payor and taxable to the payee, the guidelines' treatment of spousal support makes perfect sense - spousal support in that world really is a change to the parties' gross income, so it should be treated accordingly.

In the new world, spousal support is instead a change to the parties' net income.  If it continues to be treated the same way by the child support guidelines, this will be unfair to the spousal support payor because the gross income impact of his or her spousal support payment is now a larger decrease than the support payment itself, but only the net income impact would be getting deducted from his or her income (and similarly, the payee gets a bit of a windfall, since the gross income impact of his or her spousal support payment is now a larger increase than the amount of support itself, but only the net amount is being added to their income).  If spousal support is removed from the child support guidelines altogether, this would be even more of a windfall to payees, unless the formula used in the guidelines were changed, which would then unfairly impact the families where there is no spousal support involved.

The most logical way to handle this, then, would seem to be for spousal support to continue to be handled the same way, except have it increased by a certain percentage when plugged into the guidelines.  Setting that percentage would be challenging, however.  The General Assembly seems to recognize this, and is currently considering HB 1331 which, if passed, will require the state's Child Support Guidelines Review Panel to conduct a review of the guidelines outside their usual every four year window.  The purpose of the review would be to propose any changes necessary to bring the guidelines into compliance with federal law, which mandates that the guidelines determine child support "appropriately."  However, the report on this review would not be due until November 1st, and any resulting legislation would likely not come into force until well into 2019.

What this all means is that, unfortunately, for some time going forward, more child support cases are going to likely have to get into deviations from the guidelines (deviations based on "tax consequences" are allowed by the Code), which, like in the previous section, likely means more costly litigation, and less settling.

Impact on Total Finances

Imagine a spouse who earns enough money to be in the 28% tax bracket and one who is in the 10% bracket.  The higher earning spouse pays $24,000 a year to the lower earning spouse in spousal support.  Under the old law, the higher earning spouse would save $6,720 in taxes because of spousal support, while the lower earning spouse would owe $2,400 in taxes because of spousal support.  This means that there was effectively an extra $4,320 available to the family unit because of tax law.

Under the new tax law, that $4,320 is gone.  The higher earner gets no savings from taxes.  In order to effectively pay the same amount, the spousal support would have to be reduced to $17,280 a year.  However, in order for the lower earner to effectively receive the same amount, spousal support would have to be $21,600 a year.  I've already discussed how this disparity is going to make cases harder to settle, but even after they do settle or resolve in court you've still got a problem - no matter what, under the new law, one or both former spouses will end up with less money than they would have under the old law.  When considering that divorcing families are already frequently in financial distress, this backdoor tax increase will create a real hardship for many divorcing families.

Why 2018 May be the Year to Get Divorced

All of this comes together to reach my ultimate point.  We know this change in law is coming, but there is a way to avoid the difficulties settling, the complicated child support calculations, and the loss of combined financial resources - get divorced in 2018.  Because of the grandfathering of the law, if you get divorced this year, you can still take advantage of the old law's tax benefits, before they disappear.

As I state in the intro, I never want to rush anyone into divorce.  But the reality is that if your goal is to keep as much money as possible within the family, avoid unnecessary litigation costs, and keep things simple - you're far better off divorcing in 2018 than in 2019.

Conclusion

The new tax law is set to make a major impact on divorces across the country.  No change is likely to have a greater impact on family law than the change in the tax treatment of spousal support.  Among other potential impacts, it will make settling cases harder, child support more complicated, and reduce the total amount of money available to divorcing family units.  Overall, it makes 2018 a financially superior year to get divorced than 2019 and beyond.  If you are thinking about a divorce, and the tax law has you ready to make your decision, feel free to read our initial consult policy, then call (703)281-0134 or shoot me an e-mail at SLeven@thebaldwinlawfirm.com to set up an initial consultation.  Our initial consultations are free for up to half an hour.

Friday, January 19, 2018

Classic Law is Your Friend: Support Payments During a Government Shutdown

In light of today's events going on in Congress, I thought it would be a good time for me to whip out this oldie but goodie I published during the last major government shutdown in 2013. It is targeted towards my readers who are federal employees or contractors who will not get paid during a shut down, or who are involved in a family law case with such a person. This post addresses what will happen to your spousal or child support payments (be it as an obligor or obligee) and some options to alleviate the pain from support if you are a support payor who suddenly does not know when your next paycheck will be coming.

"As always, please review my disclaimer before reading this post by following the link above or by clicking on this link.  As always, all legal principles discussed apply only to the Commonwealth of Virginia.

Introduction

As an attorney who practices in Northern Virginia, it's fairly unsurprising that many of my clients, opponents, potential clients, etc. are federal employees.  Federal employees face an unusual array of challenges when it comes to family law to begin with.  Consider, for example, an undercover intelligence official, who cannot submit his true paystubs to court, cannot explain to the court why he cannot submit his true paystubs, and cannot even tell his lawyer why he cannot submit his true paystubs.  Well, now federal employees are facing a whole different issue - what to do with those spousal and child support payments they might have coming due when they aren't getting paid, either because they are furloughed (meaning they cannot get a new job in the meantime, but have no guarantee of ever getting paid for their time off), or because they are working without pay (although they at least know they will get paid eventually).

The fact of the matter is, child and spousal support are a continuing obligation, and a temporary halt in your pay does not relieve you from your obligation to pay.  There are options available to you, however, and I hope to cover those in this blog post.

Option 1 - Agreement

Perhaps the simplest way to solve this problem would be an agreement with the other party.  If you are on good terms with your ex, this may be a viable option.  You should contact your ex immediately to discuss the issue.  A reasonable solution might be to suspend payments while you are going unpaid, with an agreement that if you do not get back pay, those payments will be wiped out, but if you do get back pay, you will then pay the amounts you didn't pay while your payment was suspended.

Please note, however, that if DCSE is involved in your case, this method will not be possible, as DCSE cannot agree to short-term changes without court involvement.

Option 2 - Court Order

A court ordering support is required by law to consider only your "current" situation.  If you are currently being unpaid, and it is not your fault, then a court has to consider your income at $0, and re-do your support accordingly.  Unfortunately, that's where the simplicity of this solution ends.  Consider, for example, that from filing until trial, it could easily be many months, even close to a year, and the shutdown will almost assuredly be over by the time your case is heard.  An alternative option would be to file for a modification, knowing it won't be granted, but then to file a motion for pendente lite relief to get your support reduced near immediately (a motion for pendente lite relief can usually be heard within a week or two of being filed, and sets your support pending the final hearing).  Once the shutdown ends, you can then withdraw your motion.

This is a complicated process, however, and the odds that you will make a mistake without representation are high.  If you do hire an attorney, you are likely to end up spending more on attorneys' fees than you save in support.

Option 3 - Suck it up and Pay

If the prior two options are not available to you, then you may just need to scrape the money together and pay, recognizing that it unlikely that the shutdown will last beyond one monthly payment (although given the current acrimony in Washington, that's certainly not a guarantee).  There's not really much more to say about this option, for the majority of people for whom option 1 is not available, my guess is this option will be your best bet.

Option 4 - Unilateral Non-payment

This is the most dangerous option.  If options one and two aren't available to you, and option three is actually impossible for you, then you may have to just not pay.  Maybe DCSE and/or your ex won't take any action, but there is a chance they will.  If they do, you will definitely be found to have an arrearage for the unpaid amount (which will accumulate interest), and there's a good chance you'll also be ordered to pay attorneys' fees.  You will also risk going to jail, although jail time on a first violation is unusual and it cannot be ordered if you are able to prove that you actually could not pay through no fault of your own.  There could be some negative long-term consequences to taking this option, but if it's your only choice, then it's your only choice.

Conclusion

The government shutdown presents a unique challenge to federal employees who owe support.  The presumed temporary nature of the shutdown narrows the options available, and just about every option has some undesirable component to it.  Nonetheless, there are options, and you should know them before you take action.  If you are a federal employee who is going unpaid through this shutdown and you would like to review what options are best for you, or if you are being paid support by a federal employee and want to know what actions to take to protect yourself, please feel free to call (703)281-0134 or e-mail sleven@thebaldwinlawfirm.com to set up a consultation.  Your initial consultation is free for up to half an hour!"

Friday, July 28, 2017

When Finding a Lawyer Be Careful What You Wish For

As always, before reading my post, please review my disclaimer by clicking on the link above or by clicking on this link.  As always, any legal principles discussed apply only to the Commonwealth of Virginia.

I know it has been some time since my last blog post, and as noted last October, you can expect my posts to be irregular and infrequent now, although I do strive to at least try to keep past blog posts up to date, and they are not going anywhere.  Today's blog post will be a little different than my standard format, in that instead of going into a broad principle, I am going to tell a story, and then bring about the point of it.  Nonetheless, I think this is something you should read if you are considering hiring an attorney for your legal needs.  Please note that some specific facts about the story I'm about to tell have been altered so as to shield the identities of those involved.

I have strived, I'm sure not always with success, throughout my career to provide an honest voice when a potential client comes to me about a case.  I try not to sugar-coat things, I try not to make promises I don't know for sure that I can keep, and I try to make sure the potential client has an honest and realistic assessment of his or her case.  I run through best case scenarios, sure, but I also run through worst case scenarios, and discuss what I consider to be the likelihood of each outcome. I'm painfully well aware that this approach to potential clients has cost me clients over the years - after all, I am routinely telling potential clients something other than what they want to hear. My favorite example of this is when potential clients come to me wanting to file an appeal to the Court of Appeals.  The first thing I will tell them, before I even hear a word of the details of their case, is "remember that by my estimate, 85% of appeals fail, so the odds are yours will too."  Nonetheless, I do believe I would rather have fewer clients, but ones who know what to expect, than more clients ready to be disappointed when I cannot deliver what they want.

The value of this approach came to the fore today, and what I saw bothered me so much that I felt compelled to write about it.  Normally this is something I might opine about for my friends on Facebook, but as I thought about it, I realized it more naturally belonged here, so here it is.

I had a consultation with a young woman whose husband had abandoned her a year or two earlier.  She desperately wanted to move on with her life, and came to me about getting a divorce.  I discussed the process with her, what I expected would happen, and the fact that her particular case had some procedural challenges.  She told me she thought my price was right, and that she wanted to hire me as I had come highly recommended to her by someone she trusts.  However, she asked if I could promise her that her divorce would be complete within a month.  Two months at most.  For various reasons, she felt she absolutely needed her divorce to be done within two months.

I told her that I could not make that promise.  That procedural anomalies with her case meant that it would require a minimum of three and a half months to complete, but that four or five months was more likely.  I told her I'd move as fast as I could, but I simply could not promise anything faster than five months, and even that assumed no bumps coming up along the way.  She thanked me, left my office and I never heard from her again.

Today, while I was at a routine filing trip to the courthouse, I happened upon her case file.  Turns out her divorce was finalized this week.  Her consultation with me was in June of 2015.  This struck me so much - that she had come to me desperate for a promise to be divorced within two months, yet here she was finally getting her divorce more than two years later - that I just had to investigate.  And what I found wasn't pretty.

Her divorce was finalized by her fourth attorney.  Her first three had all begun the process for her, then attempted to take various shortcuts around the procedural issues I had discussed with her at our consultation.  It was clear from reading the files that they had been trying to meet her timeline, and in the process, all three attempts failed to complete the divorce and greatly delayed the entire process.  Finally, the fourth attorney did exactly what I would have done, and sure enough, from beginning to end, it took him just over four months to complete the process.

I would note, the fourth attorney's actions did not surprise me.  This is an attorney I know well, and who is on my short list of family law attorneys in Northern Virginia that I myself will refer people to if, for whatever reason, my firm cannot represent them.  This should tell you how highly I think of this particular attorney (after all, referring potential clients is probably the highest praise one attorney can give another within our profession).  So, in that attorney's case, I was not surprised that attorney had done it the right way.  But sadly, I also wasn't all that surprised to see that three other attorneys were willing to make promises they could not keep just to get the client.

In the end, this woman spent over two years waiting to get a divorce she could have gotten in 4-5 months, and probably spent about 3-4 times the legal fees in the process.  And while her request, demand really, was unreasonable, as someone who is not an attorney, she had no way to really know that.  Add in to this that she has other attorneys willing to make these outlandish promises, and it's no real surprise that it took her so long to realize that what I was saying was right.  As attorneys, it should be our responsibility to make sure clients understand the process well enough to know what can or cannot be done.

So, the cautionary tale in all of this is simple.  If you have an attorney telling you nothing but things you want to hear, you should be ready to push back with questions.  If different attorneys are telling you different things, don't be afraid to tell them, directly, what was said by the other attorney.  Listen to their response.  If this woman had reached back out to me, told me what her attorney was planning to do in order to meet her timeline, and asked for my thoughts, I could have explained to her in under 5 minutes why it wasn't going to work.  I never got that chance.

So, if you are looking for an attorney, please be careful.  If you're speaking to an attorney ready to promise that everything you want will be yours, perhaps it is time to speak to someone else.

Monday, April 17, 2017

Relevant Changes in Virginia Law - 2017 Edition

As always, before reading this post, please review my disclaimer by following the link at the top of this page or by clicking on this link.  As always, any legal principles discussed apply only to the Commonwealth of Virginia.

Introduction

Now that I've stepped away from this blog in terms of my posting frequency, it will be a continuing challenge to keep it up to date.  As a result, at a minimum, I intend to continue my annual post-General Assembly session blog post of laws that are changing directly relating to this blog.  As I did in 2014, 2015, and 2016, today's blog post will talk about some changes to the law that are happening this year that directly affect topics posted on this blog.

All changes listed in this post take effect July 1, 2017.

VRLTA to Apply to Most Leases

One of the most important distinctions I've discussed on this blog may be on its way out - HB 2033 will be making nearly all residential leases in Virginia subject to the Virginia Residential Landlord and Tenant Act, limiting the applicability of Title 55, Chapter 13 of the Code to rentals from landlords who own two or fewer rental properties and whose leases specifically exempt the rental from the VRLTA.  All other residential leases will now fall under the VRLTA.  Moreover, Title 55, Chapter 13 itself has been heavily amended to include most of the provisions of the VRLTA.  While some important distinctions will remain (Title 55, Chapter 13 still won't have the VRLTA's non-waiver clause, for example), the first question I always ask landlord/tenant clients - which law does your lease fall under - may be on its way out the door.

"Parenting Time"

Over the years, a large number of parents have come to object to the term "visitation."  They feel, I believe reasonably, that it is a term that belittles the non-custodial parent's time with a child to a mere visit, not time as an actual parent.  To that end, HB 1456 will now allow courts, if the judge so chooses, to refer to visitation as "parenting time" in its court orders.  This seems a very small step in the direction of recognizing the important role non-custodial parents still play in their children's lives, but could be an important step nonetheless.

Tenancy in Case of Foreclosure

In the height of the 2008-2009 financial crisis, a problem arose across the country where landlords were having their properties foreclosed on, and tenants were being evicted through no fault of their own (at the time, a foreclosure automatically terminated any lease).  To that end, Congress passed the Protecting Tenants at Foreclosure Act which mandated new notice procedures and protections for tenants in that situation.  However, the Act expired at the end of 2014.  Nonetheless, the Virginia law complying with the Act stayed on the books after the Act's expiration, creating a good bit of confusion.  Now, HB 1623 has resolved this problem by repealing Virginia's statute complying with the Act, but instead of going back to how things had been before, introduces a new concept that a lease on a property that is foreclosed automatically converts into a month-to-month tenancy (meaning either party can terminate, but is required to give at least thirty days' notice to the other, and without notice the rental simply continues on that basis).

Child Support in ABLE Accounts

In 2014, Congress passed the Achieving a Better Life Experience (ABLE) Act, which allows parents or other individuals to set up a savings account that the individual owns, but is tax-deferred when used to pay for a disabled person's "qualifying disability costs" (such as medical expenses, equipment, etc.).  This works much like a 529 plan (in fact, it is Section 529A of the tax code), except for disability expenses instead of college expenses.  Moreover, the money saved in an ABLE account does not generally count towards a disabled person's asset limits on various government benefit programs, so it is a very advantageous account to have.

This year, the General Assembly passed HB 1492, which added a provision to Virginia's child support laws allowing the courts to order, on the request of either party (so the payor can request that this be done just as much as the payee can), to order child support be paid directly into an ABLE Account for the child's benefit.  As a result, parents who have a disabled child can now help ensure that child's future by using child support payments to contribute to an ABLE plan, and they can be confident the other parent won't find a way to mis-use the money.

Conclusion

All in all, the landlord-tenant change was this year's blockbuster in terms of impact on the topics covered by this blog, but these laws and many others are part of what makes the practice of law so fun.  If you have questions about how the new laws affect you, or if you need representation, please review my initial consultation policy, then feel free to call 703-281-0134 or e-mail me at SLeven@thebaldwinlawfirm.com to set up a consultation. Our initial consultations are free for up to half an hour!