Category: Family Law

Pediatric Head Injury and Bicycles

There are few more memorable achievements for a child growing up than when they first learn to ride a bike. It’s a great moment. And while as a parent you can be proud of them, it’s natural to feel a little nervous. Especially if you look at injury statistics about children and bicycles. But the good news is that helmets make a big difference—research shows that helmets could have prevented 85% of all bicycle-related mortality.

Helmets Prevent Pediatric Head Injury

According to a study from Injury Epidemiology, younger children are at greater risk of bicycle injury than adults, yet their helmet use is low. Less than half of children age 14 and under usually wear a helmet when riding their bikes.

But if a child is wearing a helmet in an auto crash, it can save their life. In that same study, 226 bicyclists were treated for injuries caused by a moving vehicle. With a median age of 11, the helmeted cyclists were less likely to sustain a head injury than kids who weren’t wearing helmets. And the kids who were injured while wearing helmets were less likely to be diagnosed with a more severe head injury.

Without a doubt, when your child wears a bike helmet, they are less likely to receive head injuries. And if your child’s head does get injured when they’re wearing a helmet, it will likely be less severe.

Helmet Laws in New Jersey, New York, and Pennsylvania

State lawmakers have reacted to these statistics and enforced the use of helmets for children riding bicycles. In the state of New Jersey, children must wear helmets. The New Jersey Motor Vehicles and Traffic Regulation laws, under Title 39:4-10.1, state that “anyone under 17 years of age that rides a bicycle or is a passenger on a bicycle or is towed as a passenger by a bicycle must wear a safety helmet.” So whether your child is a passenger on your bicycle or riding their own, they must be wearing a helmet.

The rules are similar in the state of New York, where any child under the age of 14 must wear a helmet on a bike. Children from ages 1-4 must wear a certified bicycle helmet and sit in a specially designed child safety seat.

While the age is lower for required helmet use in the state of Pennsylvania, it’s still a law. Any child under the age of 12 must wear a helmet while riding their bicycle, riding as a passenger, or in an attached seat or trailer. Pennsylvania strongly recommends that every person wear a helmet, no matter their age.

New Jersey Bike Safety Programs

Starting in 2014, SHAPE America published Bikeology, a curriculum designed for physical education teachers to teach young children bike safety. Anyone can download and use the curriculum to teach their own children or kids in their neighborhood.

The Bikeology program works. It was created by consulting physical and bicycle education specialists, as well as injury prevention experts. The curriculum was put through vigorous testing. Nine teachers and 300 students pilot-tested the curriculum to ensure that it secured bike safety.

Tips to Keep Your Child Safe While Bicycling

The number one way to keep your child safe while bicycling is by wearing a helmet. On top of that, here are some other safety tips from the United States Department of Transportation:

  • Check that your child’s bike fits them properly

  • Before riding, inflate tires fully and test the brakes

  • Put your child in bright, fluorescent colors while riding so they are easily seen

  • Teach your children to ride their bikes with both hands on the handlebars

  • Have children look out for any obstacles in the road, like potholes or broken glass

Article By Domenic B. Sanginiti, Jr. of Stark & Stark

For more personal injury legal news, click here to visit the National Law Review.

COPYRIGHT © 2022, STARK & STARK

Estate Planning Considerations That Apply to Nearly Everyone

This article contains core information about the vital estate planning measures that almost all North Carolinians should have in place. 

Why You Need an Estate Plan

Estate planning is not just for affluent individuals.  While good estate planning can lead to desirable financial outcomes under the right circumstances, estate planning in its most basic form involves implementing the legal steps and directives that are necessary to ensure that your health and your assets are managed properly in the event of incapacity and death.

Everyone should consider:

  • Do you want to make sure that your family has the legal authority to direct and take part in your medical care if you become ill?
  • Do you care whether your assets will pass to your spouse, children, or other beneficiaries after your death?
  • Do you want to avoid a costly and uncertain court proceeding if you, your spouse, or your adult child becomes mentally incapacitated?
  • Do you have minor children or grandchildren, and specific desires about how they would be cared for in the event of your death?
  • Do you care about your finances and affairs becoming part of the public record when you die?

If your answer to any of the these questions is “yes,” then you likely need an estate plan.

Foundational Estate Planning Documentation

The following documents are the foundation of any good estate plan.

  • Last Will and Testament. A simple Will directs the disposition of a person’s assets and names someone to handle final affairs, in the event of death.  In the absence of a Last Will and Testament, the disposition of your assets may be controlled by state law, and the result may be much different from what you intended.
  • Revocable Trust. A revocable trust can help ensure that the management and disposition of your assets is more private and efficient during your lifetime and at death.
  • Durable Power of Attorney. A durable power of attorney typically names a spouse, adult child, or other individual(s) of your choosing to step in and handle your financial and legal affairs when you are unable due to incapacity or absence.
  • Health Care Power of Attorney. A health care power of attorney is a document that nominates a trusted person (usually a family member) to make health care decisions in the event of your incapacity.  Without this document, decisions about your medical treatment may be made by the attending physician or might involve petitioning the court for a guardianship – an expensive and cumbersome process.
  • Living Will. A living will addresses medical decisions and directives related to end-of-life care.
  • HIPAA Authorization. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) protects an adult’s private medical information from being released to third parties without the patient’s consent.  Without a valid HIPAA authorization on file, a doctor or medical provider legally cannot, and frequently will not, discuss the patient’s medical information with family members.

Ownership and Beneficiary Designations

An essential component to planning for death involves reviewing the way that your assets and accounts are structured.  Asset ownership and account-specific beneficiary designations can supersede and undermine even the most carefully-drafted estate planning documentation.  Unfortunately, these aspects are often overlooked, and unintended consequences ensue.  Having the advice of an attorney with significant experience in estate planning and administration is the best way to ensure that your assets and your estate plan will work hand in hand.

Changes in Circumstances

If you already have an estate plan in place, that’s great.  But in the vast majority of cases, an estate plan will need to be updated over the course of a person’s life.  If your estate plan no longer addresses your needs or accurately expresses your wishes, it’s time for an update.

The following are common reasons for updating one’s plan:

  • Children grow up and become able to manage a parent’s healthcare and estate matters.
  • Changes in financial circumstances.
  • Relocation to a new state.
  • Separation, divorce, or remarriage.
  • Changes to applicable law.
  • Birth, death, or marriage of a beneficiary.

Article By Peter B. von Stein of Ward and Smith, P.A.

For more estates and trusts legal news, click here to visit the National Law Review.

© 2022 Ward and Smith, P.A.. All Rights Reserved.

Joint Trusts: A Useful Tool for Some Married Couples

Though not a silver bullet for every situation, in appropriate circumstances, a Joint Revocable Living Trust (“Joint Trust”) can provide a married couple with significant benefits and simplify the administration of assets upon death or incapacity.

The Probate and Estate Administration Process

In order to illustrate the benefits that can be achieved with a Joint Trust, it’s helpful to first understand the typical probate and estate administration process that occurs when a person dies.

When a person dies with a Will, the designated Executor in the Will typically submits the original Will for probate in the Estates Division of the Clerk of Superior Court in the county where the decedent resided at the time of death.  “Probate” is the legal process by which the court validates the submitted document as the legal Will of the decedent.  When offering the Will for probate, the designated Executor typically also files an application with the court to be appointed as Executor of the estate and granted Letters Testamentary, which is the legal document confirming the Executor’s authority to act for the decedent’s estate.

If a person dies without a Will, the decedent’s spouse or nearest relative typically files an application with the court in the county where the decedent resided at the time of death seeking to be appointed as Administrator of the estate and granted Letters of Administration which is the legal document confirming the Administrator’s authority to act for the decedent’s estate.

Once the court appoints an Executor or Administrator of the estate, as the case may be, that person is referred to as the “Personal Representative” of the estate and is charged with several duties and obligations.  Actions required of the Personal Representative include:

  • Taking control of the decedent’s assets;
  • Filing an inventory with the court identifying the value of all of the decedent’s assets to the penny;
  • Publishing a notice to creditors giving them three months to file claims with the estate;
  • Satisfying any creditors’ claims;
  • Distributing all remaining assets to the decedent’s beneficiaries; and,
  • Filing an accounting with the court to report to the penny what occurred with all of the assets.

The court supervises the process at every step along the way and must ultimately approve all actions taken in the course of the estate administration before the Personal Representative will be relieved of their appointment.

Movement Away from Probate

Over the last few decades, a trend has developed in the estate planning community to attempt to structure a person’s affairs so that no assets will pass through a probate estate supervised by the court.  That trend has developed in response to a public perception that the court supervised process is not only unnecessary but also yields additional costs.  For instance, additional fees must be paid to attorneys and other advisors to prepare the inventory, accountings, and other documentation necessary to satisfy a court that the estate was properly administered.  Also, in North Carolina, the court charges a fee of $4 per $1,000 of value that passes through the estate, excluding the value of any real estate.  Currently, there is a cap on this fee in the amount of $6,000, which is reached when the value of the estate assets equals $1,500,000.

Additionally, all reporting made to the court about the administration of an estate is public record, meaning that anyone can access the information.  The public nature of the process is why news organizations often are able to publish articles soon after a celebrity’s death detailing what assets the celebrity-owned and who received them.  Such publicity causes concern for many people because they fear that their heirs will become targets for gold-diggers.  This has further strengthened the trend away from court supervised estate administration.

Several techniques are available to avoid the court supervised estate administration process.  These include:

  • Registering financial accounts as joint with rights of survivorship;
  • Adding beneficiary designations to life insurance or retirement accounts; and,
  • Adding pay-on-death or transfer-on-death designations on financial accounts.

However, because it is rarely possible to utilize those techniques to fully exempt a person’s assets from the court supervised estate administration process, the most commonly used avoidance device is the Revocable Living Trust.

The Revocable Living Trust

A Revocable Living Trust is essentially a substitute for a Will.  To create a Revocable Living Trust, a person typically transfers the person’s assets to himself or herself as trustee and signs a written trust document that contains instructions as to what the trustee is to do with those assets while the person is alive as well as upon death.  The trust document also identifies who should take over as successor trustee when the person is no longer able to serve due to death or incapacity.

During life, the person’s assets in the trust may be used in any way the person, as trustee, directs, and the person may change the instructions in the trust document in a similar manner as one can change a Will.  If the person becomes incapacitated, the successor trustee is instructed to use the trust assets for the person’s care.

At death, the successor trustee wraps up the person’s affairs by utilizing the trust assets to satisfy all of the person’s liabilities and distributes the remaining assets to the beneficiaries identified in the trust document.  No court supervises the process, so no court fees are incurred.  Moreover, advisors’ fees related to preparing court filings are avoided.  Also, the administration of the trust is a private matter with nothing becoming public record.  This process often results in a much better outcome for the person’s beneficiaries as compared to having the assets pass through the court supervised estate administration process.

The Joint Trust

Typically, when a married couple utilizes a Revocable Living Trust-based estate plan, each spouse creates and funds his or her own separate Revocable Living Trust.  This results in two trusts.  However, in the right circumstances, a married couple may be better served by creating a single Joint Trust.

A Joint Trust tends to work best when a couple has the following characteristics:

  • The couple has a long, stable relationship;
  • Divorce is not a concern for either spouse;
  • The couple is willing to identify all assets as being owned one-half by each of them;
  • No creditors’ claims exist, whether current or contingent, for which the creditor could seek to collect from only one spouse and not the other;
  • Neither spouse has children from a prior relationship;
  • Each spouse is comfortable with the surviving spouse having full control over all of the assets after the death of one of the spouses; and,
  • The value of the couple’s assets is less than the federal estate tax exemption amount.  For deaths occurring in 2022, this amount is $12.06 million (or $24.12 million per couple) reduced by any taxable gifts made during life.

A couple who meets these criteria could establish a Joint Trust by transferring their assets to themselves as co-trustees and signing a trust document to provide instructions as to what the co-trustees are to do with the assets.  Typically, while both spouses are alive and competent, they retain full control over the trust assets and can change the trust document at any time.  If one of the spouses becomes incapacitated, the other spouse continues to control the trust and can use the trust assets for the couple’s care.

After the death of one of the spouses, the Joint Trust will continue.  The surviving spouse would continue serving as trustee and have full control over the trust assets.  No transfers of assets are required at the first death because all assets are already in the Joint Trust.

Upon the death of the surviving spouse, the designated successor trustee wraps up the surviving spouse’s affairs by utilizing the Joint Trust assets to satisfy any liabilities and distributes the remaining assets as directed in the trust document.

The following are some of the benefits afforded by a Joint Trust:

  • Throughout this entire process, there is no court involvement.  This minimizes costs and promotes privacy.
  • The couple no longer has to worry about whether a particular asset is owned by one of the spouses or by one of the spouses’ separate Revocable Living Trusts.  All assets are simply owned by the Joint Trust.
  • Since only one trust is ever created, no transfers need to be made after the death of the first spouse to die.  This simplification in the administration process minimizes advisors’ fees and other costs and is a key advantage of using a Joint Trust.

A Joint Trust can possibly yield even more benefits in certain situations.  For instance, it may be possible to characterize some or all of the assets in a Joint Trust as community property.  The benefit of having assets characterized as community property is that such property will receive a full basis adjustment for income tax purposes (commonly referred to as a “step-up” in basis) at the death of the first spouse to die as opposed to only one-half of the property receiving such a basis step-up.

Additionally, it may be possible to include asset protection features in the Joint Trust so that any real property owned by the trust would be afforded the same protection as real property owned by a married couple as tenants by the entireties.  Such protection prevents a creditor of just one spouse from enforcing the liability against the real property owned by the couple.  Though the details of these benefits are beyond the scope of this article, they demonstrate that a Joint Trust potentially can provide additional advantages beyond those listed above.

Conclusion

In the right circumstances, utilizing an estate plan that involves a Joint Trust can simplify a married couple’s affairs and, as a result, make the administration process easier after death and ultimately lower costs.  Any couple interested in a Joint Trust should contact competent counsel to assist them in evaluating whether the technique is appropriate for them.

Article By Zachary F. Lamb of Ward and Smith, P.A.

For more family, estates and trusts legal news, click here to visit the National Law Review.

© 2022 Ward and Smith, P.A.. All Rights Reserved.

5 Questions You Should Be Asking About Succession Planning for Your Family Office

Succession planning for family offices is often a difficult process. It is emotional. It takes longer than it should. But succession planning that is deliberate, collaborative, and strategic can offer so much opportunity.

Katten recently hosted a conversation with Jane Flanagan, Director of Family Office Consulting at Northern Trust, who discussed a survey conducted with former family office CEOs to capture their experience with succession and succession planning. The results were illuminating, and the survey participants spoke loud and clear about two major points: 1.) they wished they had begun the process sooner, and 2.) they wished they’d known what questions to ask along the way.

We’ve pulled together a series of basic questions about succession planning to help you consider your own approach.

Why should I create a succession plan?

Like it or not, a succession will take place eventually. The last thing you or your family office want is the chaos, acrimony, and setbacks an unexpected succession can cause.

Putting a plan in place can give your current leadership peace of mind, ensure buy-in and collaboration throughout the family, and prepare potential internal successors or identify key attributes for external candidates.

When should I start?

Now! It’s never too early to begin planning, and there are some easy steps you can take right away to set you on the right path.

If you aren’t sure where to begin or what a planning process looks like, you’re in good company. According to Northern Trust’s recent survey, 64 percent of family office CEOs expect a succession event in the next three to five years.

What is included in a succession planning process?

The planning process will differ from family to family, but Northern Trust created a checklist to help you think through your own approach.

Taking on the entire process at once can be daunting. To build momentum (and buy-in), consider starting small by documenting the responsibilities of the current leadership.

Once you have a good sense of the current role’s responsibilities, think about the knowledge and relationships critical to the role’s success.

These should be top considerations throughout the succession planning process.

Where should I begin?

First, consider putting an emergency succession plan in place as soon as possible while you develop a long-term succession plan.

You want to give this process the time, attention, and consideration it deserves. An emergency plan will help immensely if an unexpected succession is needed, so focus first on getting that in place before you set out on a long-term planning process.

How do I find the right successor?

This is why the planning process is so important. These decisions can have a big impact, so you want to have a plan in place well before you need it.

Consider what works and what could be improved about the current role. Are there creative approaches or changes to consider? (Such as shifting to a CIO/CEO hybrid role, refocusing the role’s priorities, or even expanding into a multi-family office.)

Northern Trust’s survey participants were evenly split on their choices to hire an external successor or grow a successor from within. There are pros and cons to each approach, but so many of the factors to consider will be specific to your situation.

Article By Adam M. Damerow, Abby Feinman, and Saul E. Rudo of Katten

For more family law legal news, click here to visit the National Law Review.

©2022 Katten Muchin Rosenman LLP

CMS Removes All Nursing Home Visitation Restrictions as COVID-19 Cases Decrease

In order to continue addressing the impacts of COVID-19 on nursing home residents, the Centers for Medicare & Medicaid Services (CMS) recently issued a memo updating guidance for nursing home visitation. You can read the full memo here.

Early in the pandemic, CMS implemented visitation restrictions to mitigate the risk of visitors introducing COVID-19 to nursing homes. Now, CMS is updating its guidance and allowing visitation for residents at all times. CMS explained its decision to allow visitation is based upon data which shows approximately 86% of residents and 74% of staff are fully vaccinated, and the number of new COVID-19 cases each week in nursing homes has dramatically decreased.

Under the new guidance, nursing homes cannot limit the frequency and length of visits for residents, the number of visitors, or require advance scheduling of visits as mandated under the previous guidance. However, CMS is still directing nursing homes to follow infection-control policies and procedures. Visitors who have tested positive for COVID-19, have symptoms of COVID-19, or currently meet the criteria for quarantine, should not enter the facility. Nursing homes should still screen all visitors before entry.

Although not required, CMS is encouraging nursing homes in counties with substantial or high levels of community transmission to offer testing to visitors, if feasible. Nursing homes should also educate and encourage visitors to become vaccinated. Visitors should still wear face coverings and social distance at all times while in the nursing home. Nursing homes should stay diligent in their infection-control efforts.

Article By Sydney N. Pahren and Timothy Cahill of Dinsmore & Shohl LLP

© 2021 Dinsmore & Shohl LLP. All rights reserved.

Does It Matter if a Trust Is Revocable or Irrevocable? Yes, It Matters a Lot!

A recent decision issued by the Supreme Court of Alabama highlights the importance, for both creators and beneficiaries of trusts, of understanding whether a trust is Revocable or Irrevocable, and the consequences that flow from that distinction.

Revocable and Irrevocable Trusts

Any trust has three players: a Settlor, a Trustee, and a Beneficiary. The Settlor creates (or “settles”) the trust, and the Trustee manages the trust assets based on written instructions from the Settlor (typically in the form of a Trust Agreement) for the benefit of a Beneficiary. A trust can be created during the Settlor’s lifetime (a “Living Trust”), in which case the trust can be either revocable or irrevocable, or upon the Settlor’s death, usually under the provisions of a Will (a “Testamentary Trust”) which, because the Settlor is deceased, is always irrevocable.

An Irrevocable Trust generally cannot be revoked or modified, exactly as the name implies. However, in some states (including New Jersey and Alabama), either the Trustee or a Beneficiary (not the Settlor) of an Irrevocable Trust may bring an action in court to modify or terminate the trust, or an Irrevocable Trust can be modified or terminated upon consent of the Trustee and all Beneficiaries if the modification or termination is not inconsistent with a material purpose of the trust.

The Alabama Case

The Alabama case referenced above involved a Husband and Wife who in 2012 engaged in a common estate planning technique known as non-reciprocal SLATs, or Spousal Lifetime Access Trusts. Essentially, the Husband created a trust for the benefit of the Wife during her lifetime, and upon her death, the trust assets would pass to their three children; and the Wife created a trust for the benefit of the Husband during his lifetime, and upon his death, the trust assets would pass to the children.

The trusts were designed to utilize the couple’s Federal Estate Tax Exemptions before those Exemptions were to be substantially reduced beginning in 2013 (which, as it turns out, did not happen), while retaining access to the underlying trust assets through their interests as beneficiaries. However, the Wife died in 2017. Accordingly, the assets of the trust that the Husband created for her passed to the children, thereby ending his access to the assets of that trust.

The Husband brought an action in court to have the trust rescinded (in other words, revoked) and the assets returned to him, claiming that he did not understand that the trust assets would pass to his children if his Wife predeceased him. The court, relying on the testimony of his attorney, who stated that the trust worked exactly as designed and explained to his clients, held in favor of the children.

It Matters a Lot

The takeaway for Settlors of an Irrevocable Trust is that irrevocable means irrevocable; they cannot get back whatever money or property they transfer to the trust. The lesson for beneficiaries of those trusts is the same: if the Settlor has a change of heart after the trust is formed and funded, irrevocable means irrevocable.

This article was written by James J. Costello Jr.

For more articles regarding estate and trust law, please visit our Family, Estates and Trusts page.

Divorce Rates and COVID-19

With divorce rates spiking, some couples want to know their options for separating in 2020.

All relationships involve a degree of conflict—and it’s normal to argue more during stressful times. From worrying about your health and the health of your loved ones to facing increased financial uncertainty, all of the classic marital stressors have been amplified by the events of 2020.

For some couples, pandemic friction has involved a few more fights about the laundry or the savings account. For others, lockdown has exposed issues that run deeper and offered ample time for reflection, leaving them to wonder about their options for pursuing separation during the pandemic.

Covid’s Impact on Relationships

Relationship counselors consistently rank financial stress, boredom, disagreements about parenting, and arguing about household chores as the most common sources of relationship trouble.

With many couples stuck in the house, homeschooling children, and facing added financial uncertainty, it should come as no surprise that the coronavirus pandemic is placing additional strain on relationships that were already struggling.

Additionally, support systems have become more difficult to access. Venting to friends over coffee or spending a night out on the town just isn’t an option right now. If you’ve been using these outlets to manage stress—or, perhaps, to avoid dealing with deeper problems—-you may find yourself suddenly in the position of having to confront your difference head on.

It’s no surprise that given this, many marriages have reached their breaking point.

Although the recognition of real, substantive problems in a marriage can be a sobering moment, it is also a necessary and hopeful turning point on the road to a healthy future. One of the pandemic’s brighter spots may be that it may prompt a refocusing on values and on what really matters, clarifying when the healthiest and wisest path forward for two people involves separation.

The Pandemic and Divorce Rates

The evidence that the pandemic might lead to an uptick in divorce rates came early this year.

By April, the interest in divorce had already increased by 34% in the US, with newer couples being the most likely to file for divorce. In fact, a full 20% of couples who had been married for five months or less sought divorce during this time period, compared with only 11% in 2019.

Some predict a continuation of this trend, anticipating that divorce rates will increase between 10% and 25% in the second half of the year.

One way of understanding this timeline is through the collective disaster response curve, a model charting the phases through which a community moves in the wake of trauma. The curve shows increased energy and a sense of community cohesion in the period of time immediately following a disaster —it’s the “We’ll get through this together!” phase of disaster response. After a few weeks, the energy wears off, and disillusionment and depression can set in. During this period, couples may begin to struggle.

Experts also observe that when people are experiencing greater stress from sources external to a relationship, they struggle more to problem-solve within their relationships, and may inadvertently take out this stress on each other.

In the most serious cases, tensions can lead to violence, and 2020 saw a 9% increase in outreach to the National Domestic Violence Hotline compared to the same period last year. If you are experiencing domestic violence, there’s help just a phone call away with the National Domestic Violence Hotline here.

Can I still get divorced during the pandemic?

If you’re wondering whether or not you can still get divorced with everything going on, the answer is yes. Deciding to end a marriage is never easy, and with the pandemic altering the rhythms of life, it may feel particularly daunting. But there are many options to start the divorce process in 2020, and finding which path is best for you and your family is essential.

COPYRIGHT © 2020, STARK & STARK
For more articles on family law, visit the National Law Review Family Law / Divorce / Custody section.

Excessive Spending During Divorce

Once a divorce is looming, some people change their spending habits.  Some start excessive spending expending money on purchases that they never did before, while others start taking trips or signing up for classes. Is any of this spending appropriate during the time you are going through your divorce?

I often run into clients who have been counseled to spend a lot more, apparently to show what that person’s needs are and to validate the request for more money.  I think it is fair to say that this is an emotional time for everyone, and some people are not acting in the right way.  You shouldn’t be spending any differently during a divorce then you would typically  The law in Illinois-domestic relations division, wants everyone to maintain the status quo.  If you always spent $400 a month getting your hair done, then it is not a problem.  But if you never used to go and now you start, the court is going to look at the reasonableness of what the person is doing.

Spending in Ways Not Beneficial to Your Marriage?

If you believe that the excessive spending your spouse is doing is not beneficial to your marriage, you might have a claim for dissipation.  When the court divides the marital property in your divorce case, dissipation is something that is considered by the court.  What exactly is dissipation?

Is it the Dissipation of Marital Assets?

Dissipation is the spending of marital monies for the benefit of one spouse for purposes unrelated to the marriage while the marriage is undergoing an irreconcilable breakdown. The party alleging dissipation must first demonstrate that dissipation has occurred, and once that hurdle is met, the burden shifts to the other party to prove the money was used for a legitimate purpose.

Illinois law requires that you file a document, called a Notice of Intent to Claim Dissipation.  That document must be filed 30 days after discovery closes and no later than 60 days before the trial.  The notice has to tell the court when the breakdown in your marriage occurred.  This is an important element that many people overlook.  People are allowed to spend money however they like, and just because you did not like it that your spouse spent $45,000 on a race car, does not necessarily mean it is dissipation.

Is the Marriage Irretrievably Broken?

The first question you need to ask is whether your marriage has irretrievably broken down. Although you might not have been happy with the expenditure for the car, were you still a couple?  Were you still going out with friends or going out to dinner together?  I have had a couple of divorce trials that had to examine the sexual nature of the relationship.  Are you still engaging in marital relations?  Share the same bedroom?  These all need to be examined if your spouse indicates that you were still a couple and there was not a breakdown.  Without a break down in the marriage, an irretrievable breakdown, you cannot allege dissipation.

But let us say you can prove that your marriage underwent an irretrievable breakdown.  You can prove that your spouse has been living in the basement for a year, you never go out together, you take separate vacations and you have different friends.  Then you have made it through the first hurdle and an examination of the spouse’s expenses needs to be looked at.

One thing the court always asks is “how long has this been going on?”  I once had a case in trial where the wife claimed that the husband’s weekly bowling was dissipation.  My client testified that he had been bowling weekly for over ten years.  The continuation of his bowling habit continued while they were married and after they separated.  The judge did not find dissipation.

Spouse Commits a Criminal Act?

What about when a person has a spouse who commits a criminal act?  The spouse is arrested and spends money on a lawyer?  Loses his job?  The money the spouse spent on a lawyer could be considered dissipation.

Is There an Extramarital Affiar?

What about a claim for dissipation filed by the wife when she found out her husband had had an affair and was paying child support to the other woman?  Or if the wife found out that her husband had been cheating on her for the past 5 years?  If the family continued to go on vacation and act like a couple, and their marriage had not broken down, then no dissipation.

I remember when golf pro Tiger Woods was going through a divorce and his wife found out about his extramarital affairs and the money spent on them.  There could not be a claim for dissipation because her marriage had not broken down, but you have to wonder if it would have broken down a lot earlier if she knew.  We can speculate as to the answer and it seems unfair that if your spouse hides something from you, that it cannot be dissipation.  If you had known, you would likely have broken up.  But that is not the way our law works — you have to be irretrievably broken in order to claim dissipation.

I have had trials where the parties had been separated for 20 years, but neither had gotten around to filing for divorce. Each side made claims of dissipation going back 10 years or more.  These types of cases resulted in a change to our statute and now you have a time limit on the claim for dissipation.  No dissipation shall be deemed to have occurred prior to 3 years after the party claiming dissipation knew or should have known of the dissipation, but in no event prior to 5 years before the filing of the petition for dissolution of marriage.

Watch Your Marital Finances for Excessive Spending

Marriages require some trust between the two, so it is hard when your spouse ruins the trust you placed in them.  But if you do not pay attention to your finances, or what is on the credit card statements, you could be in a position where dissipation cannot be claimed by you for the excessive spending in the event of a divorce.

If you decide to go to trial on the issue, then you will need to establish which expenditures are dissipation.  Is paying the mortgage from the spouse’s retirement account dissipation?  Typically, you would not think so. But each case is fact-specific.

 

 

Anderson & Boback Copyright © 2020 All rights reserved.
This posting is for educational purposes only to give you general information and a general understanding of the law, not to provide specific legal advice. By using this website you understand that there is no attorney-client relationship between you and the National Law Review and/or the author, and the opinions stated herein are the sole opinions of the author and do not reflect the views or opinions of the National Law Review or any of its affiliates.

Could the COVID-19 Pandemic Impact Child Custody and Relocation?

As a result of the COVID-19 pandemic, many face uncertainty about their jobs and careers. The last week of March saw 6.6 million Americans applying for unemployment benefits, and many more experienced reduction in their compensation. The uncertainty could lead to more people choosing to relocate closer to family or take jobs that may require them to relocate for different economic opportunities. If you share physical custody of your children with their parent, what should you consider before making the decision to relocate?

Under Michigan law, a parent is prohibited from relocating a child, whose custody is governed by a court order, more than 100 miles from the child’s legal residence at the time of the original court order. As a result, parents who share custody of their child and want to relocate will need court permission. MCL 722.31. The court analyzes a parent’s request to move with a child in four steps. The first is to determine whether the relocating parent can support the move of the child by analyzing the following factors:

  1. Whether the legal residence change has the capacity to improve the quality of life for both the child and the relocating parent.
  2. The degree to which each parent has complied with and utilized his or her time under a court order governing parenting time with the child and whether the parent’s plan to change the child’s legal residence is inspired by that parent’s desire to defeat or frustrate the parenting time schedule.
  3. The degree to which the court is satisfied that, if the court permits the legal residence change, it is possible to order a modification of the parenting time schedule and other arrangements governing the child’s schedule in a manner that can provide an adequate basis for preserving and fostering the parental relationship between the child and each parent, as well as whether each parent is likely to comply with the modification.
  4. The extent to which the parent opposing the legal residence change is motivated by a desire to secure a financial advantage with respect to a support obligation.
  5. Domestic violence, regardless of whether the violence was directed against or witnessed by the child.

MCL 722.31

What impact, if any, does the COVID-19 pandemic have on a court’s analysis of the above factors? First of all, as far as the COVID-19 pandemic relates to the potential quality of life of a particular geographic region, as more and more data becomes available regarding the outbreak, certain regions of the country that found themselves more susceptible to COVID-19 may be less likely to increase the quality of life for a parent and child. Certain geographic areas may pose more of a health risk to families until the development of a vaccine. Second, many parents, although acting reasonably and in the best interests of their child, have informally agreed to modify their parenting time due to Gov. Whitmer’s Stay Home, Stay Safe order. Although it is difficult to imagine a court would criticize a parent for putting a child’s health first, lapses in parenting time and parental absence can dramatically impact a child’s relationship with a parent, which a court may be hard pressed to ignore, despite good intentions. At the end of the day, a parent’s desire to provide more stable financial and family support during this uncertain time may not necessarily result in a court approving the move.

© 2020 Varnum LLP

For more on family & other laws affected by COVID19, see the Coronavirus News section of the National Law Review.

Family Law and COVID-19: Alimony and Child Support

What do you do if the novel coronavirus has shut down your employer, caused a furlough or your termination, or has otherwise suddenly left you without income to pay child support and/or alimony? What do you do if you are the recipient of alimony or child support and now have to figure out how to pay bills and make ends meet without support from your child’s parent or ex-spouse?

A pandemic like this has far reaching economic consequences in these family law issues and can significantly strain both the payor and the payee.

In general, New Jersey law states that a temporary change in economic circumstances does not qualify for a change in the alimony or child support obligation of the payor, even temporarily.

However, given the worldwide attention and knowledge as to the widespread and unprecedented economic effect this pandemic has already shown, and the sudden closing of many offices and businesses through the state, a court of equity, such as the Family Court, may very well provide relief to the payor.

This is particularly likely if both the payor and the recipient of support are equally struggling. A look at the totality of each parties’ financial circumstances would be required.

Compromise may be appropriate, though you must take care to properly articulate the entire agreement to avoid interpretation or enforcement issues later, and legal counsel is strongly advised.

However, in cases where parents cannot reconcile their differences and find compromise, those parents may need to seek court intervention or some form of virtual alternate dispute resolution, and should also seek legal counsel immediately.

COPYRIGHT © 2020, STARK & STARK

For more on COVID-19 effects on Family Law & other sectors, see the dedicated National Law Review Coronavirus News section.