Missouri Divorce and Family Law Blog : Kansas City Divorce Lawyer & Attorney : Wortman Law Firm

The Kansas Missouri Lawyers Blog had a great post recently discussing a recent Missouri ruling regarding the termination of maintenance (Alimony) payments when a former spouse remarries.  The complete article is as follows:

The Missouri Court of Appeals recently held that absent an express agreement otherwise maintenance (alimony) payments terminate upon the recipient’s remarriage. The Court went on to hold that the use of the word “only” was insufficient to show this express agreement. See the opinion here.

In this case, husband and wife divorced in October of 2003. The judgment included a provision requiring the husband to pay his former wife periodic, modifiable maintenance of $500 per month. This maintenance arrangement was later amended by the parties. As part of this stipulation, the parties stated that “The maintenance obligation herein should terminate upon [the wife's] death.” The lower court’s modified judgment setting forth the stipulation stated, “Said maintenance obligation shall only terminate upon the death of [the wife] or September 30, 20011, which occurs first.” (emphasis added).

The wife remarried thereafter, and husband filed a motion to terminate his maintenance obligation. The Court noted that Section 452.370.3 provides in relevant part, “Unless otherwise agreed in writing or expressly provided in the judgment, the obligation to pay future statutory maintenance is terminated upon the death or either party or the remarriage of the party receiving maintenance.” Based on its interpretation and judicial precedent, the Court held, “[I]n order to rebut the statutory presumption that maintenance terminates upon the receiving spouse’s remarriage, a dissolution decree must expressly refer to the receiving spouse’s possible future remarriage, and must expressly provide that maintenance payments shall continue beyond that contingency.”

Thus, at least in Missouri, parties to a divorce, working with their attorneys, must carefully draft separation and maintenance agreements to capture the parties’ wishes. In particular, if the parties wish that maintenance payments will continue indefinitely or for sometime after the recipient’s remarriage, the parties must state this fact by expressly referencing remarriage and describing its consequences.

Thanks again to the Kansas Missouri Lawyer's Blog, a great legal resource for people in the Kansas City area, for this case law update.

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I can’t think of how many times that I have had a client tell me, regardless of what the issue is that is in dispute, that the opposing party is “just worried about money” or that it is “all about the money” for him or her, and that is their sole motivation in the case. Or maybe it is the other way around. My usual response is “isn’t it always?” There are so many financial aspects of divorce that have to be balanced that if parties aren’t careful, they can end up in a big money mess. Here are a few of the big ones:

1.       2 households instead of one: Before a couple or family divorces, they live in one residence with one set of bills and expenses, paid by however much money the couple/parents bring in. Upon divorce, the same level of income still exists, but now there are two mortgages/rent, two sets of utilities, two sets of grocery bills, two car payments, relocation expenses, first and last month’s rent, and so on. Basically, double or so the expenses on the same income.  It is not hard to see how difficult this is in and of itself.

2.       Debts. These days, many families are just a paycheck or two away from real trouble with credit cards and other unsecured debts, and if there are significant debts involved in the divorce, a real challenge exists. Sure the court can divide the debts and assign liability to each spouse, but it doesn’t do much good if the net marital estate is significantly reduced or eliminated by the debt. A divorce is a separation of financial livelihoods, and when possible, it is a good idea to use assets in the marital estate to reduce or eliminate debt before dividing assets. The less debt after the divorce the better for both parties, even if on paper one spouse is supposed to be responsible for it. It is a future fight or bankruptcy filing waiting to happen.

3.       Child Support: Quite simply, nobody is happy with it. If you have to pay it, it is going to be perceived to be too much, and if you are receiving it, it is perceived to not be enough.  In Missouri child support is largely a mathematical calculation based on incomes and other expenses, and to some degree it is what it is.   But regardless, it another factor affecting the same level of income pre-divorce, and it will never make a party “whole” or maintain a pre-divorce standard of living.

4.       Maintenance: Although there is no mathematical formula the same holds true as does for child support, it is probably both too much and not enough,  and it is still going to have to come out of the same pot of money.  Unless the parties are very well off financially to begin with, to expect the same standard of living pre-divorce is usually unrealistic. Although appropriate in some cases of long marriage, large disparities in income, or other factors, maintenance in Missouri is awarded in a small percentage of cases.

5.       Health Insurance: Regardless of your politics on the issue, health insurance is expensive and upon divorce usually a former spouse cannot remain on the other spouse’s health insurance. So, unless both parties can get affordable health insurance, if such a thing exists, then this can be a big financial factor that likely may only have a handful of undesirable solutions.

6.       Attorney fees and case costs: On top of all of this, the divorce is a direct expense in terms of attorney fees and costs associated with the case. If the case is contested, then the total cost on the family is the sum of both spouses total investment in the case. Attorney fees are not usually awarded, which is all the more reason to try to approach the case in an informed and rational way, and try to keep costs and conflict down. The higher the conflict, the higher the cost every single time.

There are of course, other issues particular to certain cases, but regardless of how extensive the list may be, the bottom line is that divorcing spouses need to be smart and rational about how to separate financially and view their situation in a realistic way. Otherwise,  financial disaster in one form or another, certainly awaits.

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In a recent ruling by the Missouri Court of Appeals, the court upheld a trial court ruling where marital assets were divided unequally between the spouses, the division included money spent by a spouse after separation, and spousal maintenance was awarded even though the spouse receiving the maintenance also received the larger portion of the marital property.

On the issue of division and the characterization of the property, the court held that the question of whether property is marital property is, among other things, one of credibility. The trial court is given due regard to the determination of credibility of witnesses and the trial judge is free to believe all, part, or none of the testimony of any witness. The trial judge may disbelieve testimony adduced by a witness even if the testimony is not contradicted.  In this recent case, even though the Husband testified that he thought the property in question was a non-marital asset, all other evidence indicated that it was jointly owned by the parties as marital property.

 

On the issue of marital assets spent by one spouse after separation but before the dissolution of marriage, the court held that the “spending party” can be ordered to reimburse the other spouse through disproportionate property division. In this case, the issue was one or more retirement accounts that the Husband claimed that he “lived on” during the separation, although his salary was sufficient to cover all of his living expenses. The court held that the trial court does not have to specifically find that it believes monies have actually been secreted or squandered in anticipation of divorce, because its actions can imply such a conclusion where sufficient evidence exists to support that conclusion. The court also, even after the reimbursement of the “spent” money and attorney fees, upheld the award of maintenance.   The court said that, even though there was an award of substantial marital assets that the Husband claimed could support the wife, the wife was not required to deplete, or “live off” of those of marital assets before maintenance can be awarded or take effect.

 

 

The full text of the opinion can be read here. 

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An issue that I have seen a few times, and that was recently before the Court of Appeals for the Southern District, involves the incorporation of maintenance (alimony) provisions into a Marital Settlement Agreement, where the agreement provides that the terms are not subject to modification.   

Extreme care should be used when drafting such a document, as many times these agreements have  "boilerplate" language either at the beginning or end of the document, which says that the agreement  is the entire agreement and it is not subject to modification or change. That is all well and good for a contract, and the parties would want that in there for most purposes. Legally that language is not effective for child custody, visitation, or support orders, but it would be necessary for the division or property provisions. 

The problem is with maintenance.  If the parties agree to a certain amount and schedule for maintenance, that would normally be modifiable unless stated otherwise.  However, if the "non-modifiable" language is buried elsewhere in the document, usually at the end, that would be effective to make the maintenance non-modifiable, which would put the paying spouse on the hook indefinitely.  Obviously this could be a very expensive, unintended mistake.

So, the parties should make very clear, in the same paragraph, the type and duration of the maintenance, as well as whether or not it is modifiable.  Also, they should make sure that the provisions for non-modification of the settlement agreement, which could be anywhere in the document, do not apply to maintenance, unless that is the intent of the parties.  Also, each party should just thoroughly read and understand the agreement before signing it, even the "legalease".

For a recent case dealing with this issue, click here

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In a divorce proceeding, a personal injury settlement can be a major asset that will have to be divided between the parties. Missouri uses the "analytical" approach to determine whether the settlement proceeds are marital, non-marital, or both.

In a marriage dissolution proceeding, the trial court uses a two-step process for dividing property. The trial court must first set aside non-marital property before it divides marital property “in such proportions as [it] deems just.” Property acquired during the marriage is presumed to be marital, but the presumption may be overcome. A settlement for a personal injury claim occurring during the marriage may be both marital and non-marital.

To determine whether funds from a personal injury settlement are marital or non-marital, Missouri uses the “analytical” approach. Under this approach, also known as “replacement analysis,” the settlement award is classified by what it is meant to replace. To determine the intent of a settlement, a court may look to what the parties would have received if the claims had been adjudicated.  If the award is to compensate for separate, non-marital losses, it is non-marital property; to the extent it compensates for marital losses, it is marital property.

Under the analytical approach, compensation for loss of future, post-dissolution wages is non-marital property, while compensation for wages lost during the marriage is marital. Similarly, compensation for post-dissolution medical expenses is generally considered non-marital, while compensation for medical expenses during the marriage is generally marital.. Compensation for non-economic damages, such as “pain, suffering, disfigurement, disability, and loss of ability to lead a normal life” is generally considered the separate property of the injured spouse.

The Court of Appeals recently held that the trial court did not err in determining that post-dissolution payments due under the settlement agreement were properly characterized as non-marital property. To see the opinion, click here.

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With so many people facing bankruptcy in the current climate, it may be good news to know (depending on which side you are on, of course) that the bankruptcy does not allow a person owing a domestic support obligation to use bankruptcy as a way to avoid payment of the debt. In fact, virtually any obligation that is domestic in nature cannot be discharged in bankruptcy. Here are a few facts:

• A domestic support obligation is not dischargeable in a Chapter 7 or Chapter 13 consumer bankruptcy proceeding. 
• “Domestic Support Obligation” is a debt that is owed to or recoverable by a spouse, ex-spouse, or child of the debtor or their guardian or representative, or a governmental unit (such as the Children’s division or the Court). This includes alimony, maintenance, child support, state assistance, even if the debt is not titled exactly in that manner. Also included is a debt arising out of a separation agreement, divorce decree, or property settlement agreement.
• Also non-dischargeable in a Chapter 7 is any debt to a spouse, former spouse, or child not described above that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree, or other order of a court of record. Any debt that falling under this section may be dischargeable in a Chapter 13 debt adjustment, however.
• Domestic Support Obligations receive the number 1 priority for repayment in a Chapter 13 plan or when funds are available in a Chapter 7 bankruptcy estate.
• To summarize, if it is domestic in nature, it is going to have to be paid. This includes not only child support or maintenance, but also property and debt divisions, such as: marital estate equalization payments, payments in settlement, qualified domestic relations orders, contempt payments, divisions of debts, vehicle debts, mortgages, credit cards, lines of credit, personal loans, medical insurance, costs for non-covered medical care, retirement plan divisions, military retirement divisions, attorney fee awards, and the kitchen sink.
• No special language is necessary in the divorce settlement or decree to make these provisions apply, although it may be a good idea just to drive the point home.

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Case Summary:
Past standard of living is not the standard for setting maintenance, but Wife showed that she can not meet her reasonable needs by working presently or in the future because of poor health and limited education. Circuit Court awarded proper amount, but used wrong term, in awarding maintenance, so Court of Appeals amends judgment to use right term. Substantial evidence supports imputation of income to Husband and award of attorney fees against him.
In re the Marriage of Debbie Lynn Taylor and Willie James Taylor, Debbie Lynn Taylor, Petitioner-Respondent, v. Willie James Taylor, Respondent-Appellant. Missouri Court of Appeals Southern District

Missouri Law pertaining to Awards of Maintenance (Alimony)
The trial court can award maintenance only if it finds that the party seeking maintenance "(1) Lacks sufficient property, including marital property apportioned to him, to provide for his reasonable needs; and (2) Is unable to support himself through appropriate employment[.]" Section 452.335.1.This section requires the trial court to follow a two-part threshold test. The court must initially determine if the requesting party has sufficient property to meet his or her reasonable needs, and if they do not, then the court must examine whether or not the party's reasonable needs can be met through appropriate employment.  Childers v. Childers,26 S.W.3d 851, 854 (Mo.App.W.D. 2000). The spouse seeking maintenance has the burden of establishing the threshold requirements. Comninellis v. Comninellis, 147 S.W.3d 102, 106 (Mo.App.W.D. 2004). After the court finds the threshold test has been satisfied, then the court may consider the statutory factors under Section 452.335.2 with respect to amounts and duration. Monsees v. Monsees, 908 S.W.2d 812, 817 (Mo.App.W.D. 1995).

In this case, Wife established that (1) she lacked sufficient property, including marital property apportioned to her during the dissolution, to meet her reasonable needs; and (2) that she is unable to support herself through appropriate employment.

Under Section 452.335.2, the court, in determining the amount and duration of a maintenance award, may consider all relevant factors including:

The financial resources of the party seeking maintenance, including marital property apportioned to him, and his ability to meet his needs independently[;]
The time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment;
The comparative earning capacity of each spouse;
The standard of living established during the marriage;
The obligations and assets, including the marital property apportioned to him and the separate property of each party;
The duration of the marriage;
The age, and the physical and emotional condition of the spouse seeking maintenance;
The ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance;
The conduct of the parties during the marriage; and
(10) Any other relevant factors.

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Wife Concedes Ambiguous Term In Agreement; Prevails On Appeal
Separation agreement provided non-modifiable maintenance to Wife, and Circuit Court found no basis for modification, so it had no power to modify maintenance. Husband's points, all related to manner of modification, are therefore moot. Ambiguity remains in terms of agreement, but Wife's concession of the point allows Court of Appeals to issue judgment Circuit Court should have.
Tracy Lynn Boden, Respondent/Cross-Appellant v. Thomas Robert Boden, Appellant/Cross-Respondent. Missouri Court of Appeals Eastern District

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Conduct During Marriage Influences Judgment
Wife's inability to support herself due to health problems and lack of skills supports award of maintenance. Evidence of Wife's resources, from later hearing on attorney fees, is no basis for reversing Circuit Court's award of maintenance. Husband's use of resources, including extramarital affair, supports division of property and allocation of debt to him, and does not bar an award of attorney fees to Wife.
Pamela J. Russum, Respondent, v. Gerald E. Russum, Jr., Appellant. Missouri Court of Appeals Western District

No Prejudice Need Be Shown On Departure From Statutes
Circuit Court accepted into evidence an amended social report from Children's Division to replace that filed originally with the petition. But Circuit Court never met with Juvenile Officer after filing of petition to assign report. Failure to strictly comply with statutes on termination of parental rights is reversible error, and "a parent facing termination bears [no] burden of establishing prejudice."
K.L.W., S.F.W., and L.S.W., In the Interest of. Missouri Court of Appeals Eastern District

Source for Post:  The Missouri Bar

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The following are some infomative and useful tips on the sale of a residence in divorce from divorcehq.com

For many people going through a divorce their biggest asset is their home or in legal speak, the marital residence. Deciding what to do about the marital residence is often a major issue in a divorce. There are a few different options when it comes to splitting the marital residence.

One option is for one spouse to keep the house and buy out the other spouse's share. Another option is for one spouse to be granted exclusive use for a specified period of time, usually when the youngest child turns 18, after which the house will be sold. Finally, the house can be sold outright with the profits being allocated to each spouse.

Should you sell your house? Hard as it may be this is a decision that needs to be made devoid of emotions. As a practical matter take into consideration whether or not it is financially beneficial to keep the home. If not and you do decide to sell here are a few tips to help you through the process.

Time is money: Put your home on the market as far in advance as possible of purchasing a new one. Remember that when people buy and sell a home there usually is a domino effect. Closing and moving dates have to be coordinated, and the more firmly everyone commits to a window of dates and sticks to them, the better for all involved. Put all agreements about dates in writing, and protect yourself by negotiating financial penalties for failure to live up to the agreement.

Continue Reading...

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Separation Agreement gave Amway distributorship to Wife for monthly payments to Husband. That payment was considered support because nothing else provided maintenance, the payment was in installments, it was subject to modification based on Amway profits, and it terminated on death of Husband. Trial Court erred in characterizing Wife's debt to Husband as a property settlement, dischargeable in bankruptcy, rather than nondischargeable support.

Author’s caveat: This case was decided under the bankruptcy law as it was before October 17, 2005. Under the new bankruptcy law, all domestic support obligations, which include alimony, child support, and property division, are generally non-dischargeable in bankruptcy.

To read further: Alticor, Inc., and Quixtar, Inc., Plaintiffs, v. Harold W. Grissum, Defendant-Appellant, and Joyce C. Soldi, Defendant-Respondent. Missouri Court of Appeals Southern District

Source for Post:  The Missouri Bar

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Attorney's fees for professional services by a divorce attorney can be deductible, but not in their entirety.  Fees attributed to a dissolution of marriage are not deductible, which includes pleadings, court appearances, and non-tax related negotiations, custody, visitation, and child support fees.  You can only deduct for services performed in connection with actual tax advice and/or advice that gives rise to taxable income. Only fees attributable to alimony, which is taxable to the recipient, qualifies for the production of taxable income.  The alimony must be paid 1) in cash, 2) to or on behalf of the recipient, 3)pursuant to a decree or agreement, 4)as not designated as non-taxable, 5) for parties whose status of marriage changes and they live in separate households, 6) for a term ending with the death of the payee, 7) as not fixed as child support, and8) for parties who file separate returns. 

Fees for collecting delinquent taxable alimony are deductible, as are fees for seeking an upward modification in alimony, but not downward.  Fees for collection of child support are not deductible and neither are fees for obtaining or protecting income producing property.

Fees that are deductible can only be deducted as part of miscellaneous itemized deductions, and they must be aggregated with other miscellaneous itemized deductions, only to the extent that they exceed two percent of the taxpayer's AGI (adjusted Gross Income).  If the itemized deductions do not meet this threshold, then nothing is deductible. 

Furthermore, in addition to the itemized deduction limitation, if AGI exceeds a particular thresh hold, the amount of itemized deduction allowed is reduced by 3% of the excess of AGI over the thresh hold or 80% of the amount of the itemized deductions allowable for the tax year.

If you wish to attempt to deduct fees for your divorce case, consult with a tax expert and ask your attorney for an itemized listing of the deductible and non-deductible fees charged for your case.

Source for Post - Family Advocate Vol 27 No. 3

 

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