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

The Missouri Supreme Court has recently issued an order that, effective, January 1, 2012, increases the maximum allowable Form 14 child support overnight credit to 50%.  Specifically, on the Form 14, which is Missouri's child support calculation formula, the non-custodial (paying) parent is given a credit for the number of overnights that parent spends with the child.  The default amounts for periods of overnights totaling 109 or fewer annually remain unchanged, but for total overnights that exceed 109 per year, the allowable credit has been increased from the old maximum of 34% to a new maximum of 50%, but it is still at the discretion of the Court.  The new line 11 overnight credit amounts are as follows:

Annual overnights                 Credit

Less than 36                           0%

36-72                                       6%

73-91                                       9%

92-109                                    10%

110+                                       10-50% at the discretion of the Court

Note however that in order for the paying parent to be eligible for the overnight credit, the parent recieving the child support must meet minimuim income requirements.

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Value of a closely-held corporation must be as fair market value and application of a calculation of value via a buy-sell agreement not related to fair market value is error. Wood v. Wood, No. 96218 (Mo. App. W.D., November 29, 2011), Romines, J.

This was an appeal from a dissolution of marriage action. The Husband appealed the decision on several grounds, but it comes down to his challenge of the valuation of his 30% interest in a closely-held corporation. Both parties had an expert testify as to the value. Wife’s expert testified as to value based upon a buy-sell agreement formula that existed between the shareholders. Husband’s expert testified as to his opinion of the fair market value thereof. The trial court concluded that the Wife’s expert had properly assessed value $1.062 million versus $325,000 by Husband’s expert.

Held: Reversed. “Wife’s calculation failed to comply with [the rule that fair market value at time of trial is required because Wife’s expert] does not seek a fair market value or fair market value of [Husband’s interest in corporation.]”

“Furthermore, the formula does not even employ a current appraisal of [Husband’s interest in corporation.] As part of the calculation of present share value, and instead uses the historical value of company in 2007 at $3,000,000 as the starting point.”

“[W]here an expert’s testimony does not attempt to determine fair market value, the trial court simply cannot find it more persuasive and credible than another and rely on such testimony in valuing those shares.”

Dissent: The dissent is based upon the technical failure of the Husband’s point relied on to preserve the issue for review on the basis found to be dispositive by the majority opinion. Consequently, the dissent would deem the claimed error not reviewable.

Source For Post:  Missouri Bar December Edition of Courts Bulletin - Mobar.org

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Under Missouri Law, certain property is considered to be non-marital, and not part of the division of the marital estate in a divorce proceeding.  Non-marital property includes property:

1. Acquired before the marriage;
2. Acquired by gift or inheritance;
3. Acquired in exchange for property acquired by 1 and 2 above;
4. Acquired after a decree of legal separation;
5. excluded by written agreement (pre or post nup)

In the case of an increase in value of a non-marital asset described above, the general rule is that the increase in value is also non-marital.  The exception to the rule occurs when marital assets, including labor or marital income, contribute to the increase in value.  The Court of Appeals has said that marital effort, labor , or services, will entitle a spouse to a proportionate share of the increase in value of the separate property, but only after "comprehensive substantiation", including proof of:

1. a contribution of substantial services;
2. a direct correlation between those services and the increase in value;
3. the amount of the increase in value;
4. performance of services during the marriage; and
5. the value of the services, the lack of compensation, or inadequate compensation received.

There must more than just services provided, but a connection between valuable services provided and the increase in value of the asset.  Note that income received during the marriage by either spouse is considered a marital asset, so if any income of either spouse is contributed to the asset, it is considered a marital contribution.  Likewise, in terms of a non-marital business, employment or labor for no or reduced salary is also considered a marital contribution.

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There are many ways that the income tax dependency for children in divorce can be handled, although most of them are not supported by the law.  If the parties are in agreement, then nearly any method of claiming the children can be used, including alternating years, splitting the deductions between the parents (in the case of multiple children), allowing the non-custodial parent to claim the children provided that child support is current, a combination of these, or any other method that the parties can come up with.

However, under Missouri law,  the custodial parent is entitled to claim the children for tax purposes each and every year, period.  So unless there is an agreement otherwise, this is what the Court will order.  However, regardless of any agreement or Missouri court order, federal income tax law requires a child to reside with a parent at least 50% of the time to be claimed as a dependent. So, if the parties have agreed to something else, such as alternating years, and the non-custodial parent has the children less than 50% of the time, the Internal Revenue Service (or Department of Revenue) can reject the claimed dependency notwithstanding the court order, as Missouri family courts do not have jurisdiction over the IRS or the power to alter federal law.  The only remedy would then would be for the parties to return to state court to seek reimbursement for the dollar value of the claimed dependency from the other parent, which the Court may not even entertain. 

So the general rule would be that the custodial parent gets to claim the children each year, unless an agreement is reached otherwise. But the word of caution on agreements (particularly for the non-custodial parent), is that both parties have to follow it, or it can be rejected by the taxing authority with the only possible remedy being a return to state court.

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While Missouri courts normally follow the “American Rule” regarding legal fees – that each party is responsible for his or her own costs – Missouri dissolution of Marriage statutes give the court the discretion to order one party to contribute to the other party’s fees. Specifically, Section 452.355.1 provides:

Unless otherwise indicated, the court from time to time after considering all relevant factors including the financial resources of both parties, the merits of the case and the actions of the parties during the pendency of the action, may order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding pursuant to sections 452.300 to 452.415 and for attorney's fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding and after entry of a final judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in the attorney's name.

The court is always required to consider the financial resources of each party before deciding on a request for attorney’s fees.  While the court must consider the financial resources of each party, a spouse is not required to forego a claim for attorney's fees merely because assets on hand are available to make payment.

In most cases, attorney fees are not an issue, and usually judges are reluctant to award attorney fees. However, when the issue does arise, the conduct of the parties during the litigation and how the judge perceives the parties are usually just as important as financial resources in determining the award.

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In a recent decision by the Missouri Court of Appeals, clear, cogent and convincing evidence supported a finding of neglect in protecting the child, maintaining the household, and supervising the child.  "If a parent is unable to pay for all of a child's financial needs, he or she has a duty to provide as much as he or she reasonably can." A Father’s occasional support for child does not outweigh clear, cogent and convincing evidence of financial neglect through reluctance to work. The Circuit court’s determination of child’s best interests is subject to review for abuse of discretion. The Guardian ad Litem’s opinion is not controlling but merits “respectful consideration."

Missouri Court of Appeals, Southern District - SD30632

Source for Post:  Missouri Bar

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Similar to other states, Missouri is a modified no-fault divorce state. However, there is some misconception out there about what this actually means for divorcing parties in Missouri. Modified no-fault divorce means that a party does not have to prove that their spouse committed some kind of misconduct, such as adultery, abandonment, financial, etc., in order for the court to grant the divorce. All that has to be proven, with regards to grounds, is that there is “no reasonable likelihood that the marriage can be preserved, and that the marriage is irretrievably broken”, which is basically the familiar “irreconcilable differences”.  If that is proven, or as is often the case, agreed to in the filings, the court will grant the divorce (assuming jurisdictional and procedural requirements are also met). 

However, no fault does not mean that conduct is not relevant.  Although conduct does not need to be proven to actually get the divorce, conduct, or misconduct, can have a bearing on all aspects of the case.   Conduct can affect how the court divides the property, awards spousal maintenance, awards attorney’s fees, awards custody, parenting time, and to some extent child support. Although there is usually a preference for joint custody and equal property division, “no fault” does not mean that that will be the case, and “no-fault” does not mean that everything will end up equal.  The court has to look at other standards for each particular issue in the case, and will make orders accordingly as to those issues.

It is also not required that a spouse “grant” the other spouse the divorce, however it is possible that a party could try to prove that the marriage was not actually broken and could be preserved. My thought is that if spouses are actually to the point of litigating in court, the court is probably going to find that the marriage is broken. So, modified no fault may in reality mean actual no fault, but there is still that standard of proof in all cases.

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The Missouri statute that mandates the continuation of child support after age 18 if the child attends college was amended in 2007, and provisions were added that are somewhat contradictory. In a recent ruling by the Missouri Court of Appeals, the Court clarified the statute, as well what will cause a child to fail to meet the credit hour requirements of the statute.

Section 452.340.5 RSMo states: If when a child reaches eighteen, . . . [i]f the child is enrolled in an institution of vocational or higher education not later than October first following graduation from a secondary school . . . and so long as the child enrolls for and completes at least twelve hours of credit each semester, not including summer semester, at an institution of vocational or higher education and achieves grades sufficient to reenroll at such institution, the parental support obligation shall continue until the child completes his or her education, or until the child reaches the age of twenty-one, whichever first occurs. . . .  

The statute goes on to provide that "[w]hen enrolled in at least twelve credit hours, if the child receives failing grades in half or more of his or her courseload in any one semester, payment of child support may be terminated and shall not be eligible for reinstatement." 

The case law until the statute was amended clearly held that a child must enroll and actually complete 12 hours of credit, and failing grades in any class could cause the child not to meet the credit hour requirement as no credit is given for a failing grade. However, the court has now clarified that the prior case law, specifically the Lombardo line of cases, is effectively overruled and now, with the addition of “failing half or more of his or her courseload” language, a failing grade no longer triggers a failure to comply with the credit-hour requirement, provided that the child does not fail half or more of their classes (if enrolled in at least 12 hours). The Court stated:

“Where a student voluntarily withdraws from a class prior to its completion, he or she clearly fails to meet the requirements of the statute that the student complete the class [12 hour requirement]. On the other hand, where a child receives a failing grade in a course, provided the child does not fail half or more of his or her classes, the child is deemed to satisfy the requirements of § 452.340.5.3” 

Interestingly, in the recent case, the child actually withdrew from the class instead of failing, but the evidence showed that the child was withdrawn by the teacher and not the student himself as a “favor” to avoid receiving a failing grade, so the Court deemed that a failing grade and treated it as such under the statute.  Outside of this exception however, it seems that a typical withdrawal will fall under the “completion” requirement of the statute.

The entire opinion can be read here

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In a recent ruling by the Missouri Court of Appeals for the Southern District, a division of property and debt where the Wife received 93% of the assets and 27% of the debts, and the Husband received 7% of the assets and 73% of the debt was reversed and remanded to the trial court for further proceedings.

It is typical in a majority of cases for the trial court to divide property and debt equally. However, the Court is not required to follow a rigid formula for property division and is not required to divide the property equally. The division must be “fair and equitable” to the parties. This means that the court has a great deal of discretion when dividing property and debts, but there must be sufficient evidence to support a disproportionate division as being fair and equitable. In determining the property division, the court must consider the economic circumstances of the parties, contributions during the marriage, the value of non-marital property, conduct during the marriage, the custodial arrangement for the children, and other factors.

In the recent case, the Court looked primarily at the conduct during the marriage, and the trial court had found that physical abuse and verbal threats had occurred which supported the disproportionate division. However, there must be evidence to show the additional financial, emotional, or other burdens placed on the aggrieved spouse due to the conduct. It is not appropriate to “punish” a spouse’s marital conduct by way of disproportionate property division, and conduct is the only factor that must be considered.

In this case, there was evidence of the misconduct, but no evidence as to how it caused additional burdens or stress on the other spouse or the marriage, financial or otherwise to support the grossly disproportionate division. The case was remanded to the trial court for further proceedings to make those findings.

SD29991-  Missouri Court of Appeals for the Southern District of Missouri

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In today’s turbulent economic climate, where job losses or reductions in income are frequent, it is critical to immediately deal with a child support order upon any significant change in income. Failure to act quickly can lead to an even greater financial disaster.  Here’s why:

• In Missouri, a child support order, regardless of whether it is administrative (Family Support Division “FSD”) or judicial (through the Courts), remains in effect until modified. This means that even if income is reduced or lost, the obligor is liable for the child support under the order, regardless of income, until a formal modification proceeding takes place. 
• It is critical to file a motion to modify immediately upon an income change as the Court only has jurisdiction to go back and adjust child support back to the date of filing. Once it is filed, the obligor can then seek temporary immediate relief from the original order, and avoid the accumulation of child support arrearages.
• Failure to modify quickly can lead to the accumulation of child support arrearages that cannot be erased, which in turn can result in civil contempt, criminal non-support, suspension of driver licenses, interception of income tax refunds, additional payments to cover the past due child support, and other unpleasant results.
• It is not required that a person wait three years to modify the child support order, even if it is an administrative order. That is just the time interval in which the FSD may, on its own, review an order for modification. A child support order is modifiable at any time by either party.
•  It is always better to consult an attorney for a judicial modification rather than going to the FSD for an administrative modification. The court has power over the FSD and can modify any administrative or judicial order much more quickly, and can issue temporary orders for relief.
•  Once a judicial motion to modify is filed, even if the obligor stops paying child support or reduces the amount paid, the party will avoid contempt charges and administrative enforcement issues, and the Court can sort out what the new child support amount should be and adjust it accordingly back to the date the motion was filed. This may result in some child support arrearages, but nowhere near what there could be without the modification on file. At this stage of the game, damage control is crucial.
• The modification action can result in attorney fees and case costs, but those typically are minimal in comparison to the savings in child support, and are almost always a wise investment.
• Care should always be taken, however, before engaging in a child support modification, and it is not a good idea to do so without consulting an attorney. Modification cases can be full of possible land mines, so care and experience are required to keep a bad situation from getting worse.

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As a practicing family and bankruptcy attorney, I consistently run into cases where people are dealing with both a divorce (or other family law related matter), as well as a bankruptcy.  This is because, many times, one is the cause of the other (this works both ways), and the cases often go hand in hand. That is probably no surprise considering the current economic climate, and if this applies to you, believe me, you are far from alone. Check out the numbers:  

Bankruptcy filings in the federal courts rose 31.9 percent in calendar year 2009, according to data released by the Administrative Office of the U.S. Courts. The number of bankruptcies filed in the twelve-month period ending December 31, 2009, totaled 1,473,675, up from 1,117,641 bankruptcies filed in 2008.

Filings have grown steadily since 2006, when bankruptcy filings totaled 617,660, in the first full 12-month period after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect. An historic high in the number of bankruptcy filings was seen in 2005, when over 2 million bankruptcies were filed just before BAPCPA took effect.

Filings by Chapter
In 2009, filings rose under Chapters 7, 11, 12 and 13 of the U.S. bankruptcy code.

·       Chapter 7 filings totaled 1,050,832 up 41 percent from the 744,364, Chapter 7 filings reported in 2008.

·       Chapter 11 filings rose 50 percent to 15,189, up from the 10,147 filings in 2008.

·       Chapter 13 filings were 406,962, up 12 percent from the 362,705 filings in 2008.

·       Chapter 12 filings totaled 544, up 58 percent in 2009, compared to 345 Chapter 12 bankruptcy filings in CY 2008.

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In a recent termination of parental rights case, the Court stated that statutory grounds of abandonment, neglect, and unfitness require clear, cogent, and convincing evidence. The Incarcerated parent’s diligent efforts at maintaining contact with child refuted such allegations. The “Child may suffer from Father’s absence, but getting in trouble before he knew about Child is no proof that Father now wants no relationship with her.” Failure to send money from 28¢ per day wages was de minimis. Incarceration does not raise the presumption of unfitness. The child’s best interests require only preponderance of evidence, but the issue never arises until statutory grounds are established. 

The entire opinion can be read here.

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