How to Exercise Your Way Through A Breakup

June 18, 2015

Going through a breakup is one of the most universal pains in this world. We have all been there, we have all dealt with it, and the good news is, we’re all still here. There’s a myriad of ways to get past the pain, but one of the most constructive is exercising. It can be a reason to get out of bed, a new motivation in life (even if that motivation is “Look as good as possible in case I see my ex again”), and one of the healthiest ways to move on.

Not only does exercise release endorphins, the “feel-good” neurotransmitters in your brain, but it can increase self-confidence and act as a form of meditation and reflection. So what kind of workout should you do? Well, it depends on where in the breakup you are.

For when you’re depressed and can’t get your mind to stop replaying it over and over:

Bicycling: Biking is not only fantastic, full-body exercise, but it demands your complete attention. You have to watch for potholes, whizzing cars, kids kicking their soccer balls into the street, and drivers opening their door into your lane at all times. This is not the time for, “Oh, if only I had said or done that…” because that distraction can get you into an accident. Your survival instincts will kick in, keep you focused on the road, and keep you from going down that destructive thought path of “What if…” Plus, biking has the added benefit of getting you fresh air and reminding you that there is a whole world out there, still revolving.

Yoga: Yoga is about being present and mindful. No matter what type of yoga you’re into, you can practice mindfulness. That can mean paying particular attention to your breath and your body’s alignment in various poses. It can also mean recognizing the derailing breakup thoughts, but letting them float past you. Unless you’re already an expert yogi, this can be a difficult thing to start. However, if you stick with it, you may find a peace and center that you were otherwise missing in this tumultuous time. This article can help you get started.

For when you’re so angry you just want to punch your ex:

Kickboxing: Literally go punch something! Many gyms offer these high-intensity classes which lets you sweat and punch and kick your aggression out, all while burning 300-600 calories per class. Don’t limit yourself to just American kickboxing classes, though. Lots of martial arts (like Muay Thai and Karate) have similar benefits of engaging cardio, discipline, and letting you work out your anger.

Running: Whether it’s on a treadmill or the sidewalk, there’s something immensely satisfying about slapping one foot down in front of the other as you run. Feeling particularly ragey? Throw in some sprints! Now is a great time to listen to some raucous and rocking tunes. Check out this list of 50 fast and empowering breakup songs for some playlist inspiration.

For when you’re starting to see the light on the other side:

Weight training: If you’ve gotten this far into your breakup, you may even be thinking about the possibility of someday dating again (yes, this will happen!). Lifting weights can help give you the confidence you’ll need to put on your perfect first date outfit–or give you the excuse to go shopping for a new one! Weight training is a great way to slim down and tone up. For women who are worried about “getting bulky,” just know that building muscle can help you burn fat all day long, whereas cardio only burns while you’re doing it. You won’t bulk up unless you specifically want to, which is why some men may want to look into their daily macros and supplements while they lift.

Group sports: Your city is probably teeming with recreational sports leagues for all different skill and interest levels. Just search “rec leagues + your city” or “intramural sports + your city” and dozens will pop up! It can be as active as flag-football or as goofy as cornhole. Leagues are great for meeting new people who already share a common interest, getting you out of the house and socializing again, all while still being active and healthy. Now, those happy hours your league sponsors probably aren’t all that healthy, but they sure are fun!

Woman walking cross country and trail in spring forest
Do none of these sound right for you? Well, good news–there are hundreds of ways to exercise the breakup blues away. Talk to friends for their recommendations, or just go for a long walk. It really is possible to heal your heart by starting with your body. The rest will follow.

Written by Jane Baber, Mediation Assistant

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


Child Custody In a Virgina Divorce: Legal Custody & Physical Custody Defined

June 9, 2015

child custodyWhen discussing various parenting arrangements with clients and prospective clients, I have learned that most people who are in the midst of a divorce/separation, or are contemplating such an event, make similar mistakes when it comes to Virginia “custody terminology”.

Such vocabulary faux pas are hardly indicative of a parent’s heartfelt desire to spend time with his or her child.  However, it is usually helpful to clients when they begin to get a handle on how the Commonwealth of Virginia goes about assigning labels in the context of divorce and co-parenting.  (Co-parenting refers to any situation when two parents are raising a child, in two separate households, whether or not those parents were ever married).

Of course, your mediator or divorce lawyer should certainly be able to figure out what you mean – no matter how you phrase it – when it comes to your desires for your child’s future parenting arrangements.  Not all mediators or divorce lawyers, however, do a good at explaining legal terminology.  The same goes for clients’ ability to absorb and process information in such a stressful and confusing time.

As a result, I have seen plenty of post decree (after divorce) situations where basic misunderstandings of the custody terms in the parties’ Final Order of Divorce (aka Divorce Decree) kept them fighting about their child several years after their separation and divorce.

To help alleviate this unfortunate and rampant misinformation about various custody terms in Virginia child custody cases, here is my “Virginia Custody Dictionary.”

Legal Custody:

Determines which parent has the right to make major decisions concerning their child.  Legal custody has nothing to do with where the child lives.

There are two types of Legal Custody:

    (1) Joint Legal Custody –  

        Major decisions must be agreed to by the parents.

    (2) Sole Legal Custody –

        Major decisions need only be made by the parent who is granted Sole Legal Custody.

  • The term “Legal Custody” is not intuitive to most people and problems often arise, down the road from when the settlement agreement is signed/Court order is entered, over the parents’ often diametrically opposite interpretation of the term “major decisions”.
  • Mediators encourage clients to jointly define the term “major decisions,” as part of the settlement of the custody issues in their particular case, to help save them from possible trouble down the road.
  • On the other hand, divorce lawyers tend not to focus on crafting an agreed client-interpretation of the term “major decisions”. Instead, they leave it up to the Courts to decide, should there be a problem in the future, whether a decision made, or to be made, by a parent is, in fact, “major”.  Ultimately, the Courts do have final decision-making power; but, a meeting of minds between parents is usually enough to end bitter battles before they start.
  • Examples of “Major Decisions” – Those decisions which are generally agreed by divorce lawyers and courts to be “major decisions”:
  1. Which school the child will attend;
  2. Whether the child will be required to undergo an elective medical procedure (e.g. plastic surgery on a scar);
  3. Whether braces will be placed on a child’s teeth for purely cosmetic reasons;
  4. Whether a child will be required to engage in psychotherapy;
  5. Who will be the child’s substitute caretaker necessary for the parents to earn a living (known as “work related childcare”, aka WRCC); and
  6. Choice of sleep-away camps.
  • Examples of “Gray Area Decisions” – Where decisions may or may not be considered “major”:
  1. Which week or two-week long camp a child will attend in the summer (not sleep-away camps);
  2. Which extracurricular activities a child will participate in during that parent’s custodial care time.
  3. Whether a child will participate in a specialized academic program during school hours (remedial or enhanced learning);
  4. Whether a child will participate in various in-school clubs, groups and activities;
  5. Choice of classes (middle school and high school);
  6. Choice of basic disciplinary techniques;
  7. Choice of how much to give a child for allowance/spending money; and
  8. Choice of vacation destinations with children (within reason);
  9. Choice of children’s playmates.

Physical Custody:

Determines where the child will live and the amount of time the child will spend with each parent.

Physical custody pertains to which parent (sometimes both, sometimes only one) has the primary responsibility for the care and control of the child on a given day.

  • Day to day decisions, of a routine nature, are made by the parent with whom the child is being cared for on that day.

 

Sole Physical Custody:

  • In Sole Physical Custody situations, that parent is granted all (or almost all) of the custodial care rights and responsibilities for the child.
  • The other parent is not usually involved in day-in-and-day-out responsibilities that come with raising a child.
  • The other parent is usually permitted “visitation” with his or her child (except in cases where that parent would present a danger to the child);
  • In Virginia, even in cases where one of the parents is granted Sole Physical Custody, the other parent still has the legal right to review the child’s medical and academic records (with exceptions);
  • To add to the confusion, when calculating Virginia Child Support Guideline Obligations, the “regular” calculation is called the “Sole Child Support Calculation”.  This poorly named calculation simply means that the non Primary Custodian cares for the children fewer than 91 days per year,2  even though the caretaking duties may clearly be shared between the parents.
  • Advocating for the denial of a parent to be involved in major decisions concerning his or her child is serious. It generally means that there is something very wrong with one or both of the parents’ ability to care for the child and/or use sound judgment when making decisions concerning the child.
  • In cases where one or both of the parents thinks that a child should have no or very little custodial care time with the other parent, it is often advisable that those parents litigate (hire a divorce attorney) and not mediate their cases.

Shared Physical Custody:

  • In Shared Physical Custody situations, it is presumed that both parents are involved, to a much greater extent than in a “Sole Custody” situation, in the day-in-and-day-out responsibilities that come with raising a child.
  • However, Shared Physical Custody does not, necessarily, mean 50/50.  It does, however, mean that there is a discernible sharing of parental caretaking duties for the child.
  • The term “Shared Physical Custody” is not clearly defined in Virginia law in terms of custody and parenting arrangements.
  • To add to the confusion, when calculating Virginia Child Support Guideline Obligations, there is a special calculation available for situations where a “non-primary custodian” cares for a child 91 or greater days per year.  That calculation is called the “Shared Child Support Calculation.” The Virginia Shared Child Support Calculation is able to accommodate various ratios of caretaking duties (e.g. 50/50 custody, 60/40 custody, etc.).

Primary Physical Custody:

  • The parent who is the “Primary Physical Custodian” is usually the parent who cares for the child greater than 50% of the time.
  • The term “Primary Physical Custodian,” however, is not well-defined in Virginia law.  There are situations where parents have less than a 50/50 custody share (exp. 60/40, 70/30), but where a settlement agreement/Court Order show that the custodial care plan is “Shared Custody” (even though there is, by most standards, a “primary parent”).
  • Some divorce attorneys are concerned that a judge may allow a parent, who is referred to as the “Primary Custodian,” in the settlement agreement/Court Order, to have more potential influence in possible future battles involving the child (e.g., moving away with the child).
  • If a parent is referred to in a settlement agreement/Court Order as the “primary custodian,” a school district may defer to that document when determining which school a child should attend.  (See previous Blog article: http://fairfaxdivorceblog.com/?s=prince+william )

In certain situations, and if there is no tax planning as part of the parties’ settlement, The IRS automatically awards certain child-related tax benefits to the “Custodial Parent”.  The IRS does not use the term “Primary Parent”.  The “Custodial Parent,” in terms of tax law, is the parent who cares for the child greater than 50% of the time during that tax year.  If the settlement agreement/Court Order conflicts with the actual caretaking schedule, this could present a problem if both parents wish to claim the child as their dependent exemption. This is not a problem, however, if parents insure that the settlement agreement/ Court Order matches their actual caretaking activities and if they make sure that tax planning is a part of their settlement (as it should be). (See previous Blog article http://fairfaxdivorceblog.com/?s=tax+custody )

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


Financial Investigation Tips for Second Marriages

June 2, 2015

INTRODUCTION by ROBIN GRAINE, JD, Virginia Supreme Court Certified Mediator

As a divorce mediator, I am keenly aware that many of my clients will enter into second (and sometimes third and fourth) marriages. In fact, the U.S. Census Bureau reports that, within five years of a divorce from a first spouse, a whopping one in five Americans says “I do” a second time.  A two marriage record is OK . . . but a two-time personal divorce statistic is really hard to deal with for most people.

Hopefully, whatever mistakes you made in your first marriage will not be repeated in your second attempt. If some of the problems in your first marriage had to do with money, this article will help you with essential and necessary ways of determining what you are getting into the second time around.

Though it may be uncomfortable to do the investigation necessary to ensure “financial bliss,” successful remarriages need to start with openness, trust, and a mutual value system. If you are concerned about your financial future with your new bride or groom, you may need to open up your tax files as big as you open up your heart . . .  it really should not be a problem.  If it is, there’s your first warning that things might not be as perfect between you as you had thought.

taxes_investmentwatch_bb

Graine Mediation’s guest blogger, Julian Block, who is a leading national tax professional and attorney, has this to say about protecting yourself financially before you say “yes” to a second marriage:

Tax Reminders for Couples Contemplating Tying the Knot—Again

As an attorney and author who has written and lectured extensively about the tax aspects of marriage and divorce, I frequently receive questions from couples contemplating marriage.

One of my standard recommendations is that they consider the tax consequences beforehand, especially when one of them or both of them are remarrying. My advice: Before they commit to a walk down the aisle, each should consider whether to ask the other for copies of tax returns. In my experience, it’s particularly important for women to do that.

To illustrate how I would advise them, let’s say it’s going to be a second or third marriage for both John and Marsha—something that’s not uncommon nowadays, judging from the SundayStyles Section of the New York Times.

Something else that’s no longer uncommon is that her holdings considerably exceed his. Possible reasons why she’s wealthier? Much-married and several-times-widowed Marsha inherited assets from her spouses; or a couple of divorces resulted in her receiving several sizable settlements; or she was one of the Facebook staffers who were enormously enriched by its IPO.

Both Marsha and John are old enough for membership in AARP. Their ages matter because the divorce rate is extremely high for people over age 50—particularly for those who remarry.

Mindful of those stats, Marsha had John assent to a prenuptial agreement (just as she did in advance of earlier marriages). What else might Marsha do? I counsel her to ask for copies of John’s federal and state returns. Depending on what they reveal, she might decide that it’s prudent to stay single or, if they do wed, to file separate returns.

Following are summaries of scenarios I created that, albeit unromantic, are based on actual events.

Fear of filing:  It turns out that John hasn’t filed returns, something that’s common across all levels of society. It’s vital that Marsha know his potential liability for back taxes, penalties and interest. Also, he must specify when he will file returns and arrange for installment payments that will square him with federal and state tax agencies.

My advice, should Marsha wed: She files separate returns and doesn’t mix her assets with his assets. Also, she asks John to fill her in on what other shoes might drop.

A less troubling scenario that’s nonetheless problematicWhile John has filed 1040s, he owes considerable amounts in back taxes, and interest charges continue to mount. Marsha’s tactics, assuming they wed: Again, file separately and not comingle assets until he has squared accounts with the IRS. There’s a snag if they file jointly and are due a refund; the IRS can apply the refund to his back taxes.

John has filed returns and owes no back taxes: Marsha should still scrutinize certain deductions and other items on his returns. Let’s focus on some of the easier ones.

 Alimony payments: John’s returns reveal that he makes alimony payments to his ex-wives that he didn’t mention to Marsha;

Dependency exemptions for children not living with John due to divorce or separation: A divorce settlement (or settlements) allows him as a noncustodial parent to claim such exemptions.  He never told Marsha about those children;

Gambling: John’s returns show substantial amounts of gambling winnings for “other income” on line 21 of the 1040 form. Those returns also show offsetting deductions for gambling losses on line 28 of Schedule A. Losses are deductible only up to the amount of winnings. Does he have nondeductible losses that far exceed winnings? Perhaps the amounts wagered indicate that John gambles compulsively;

Schedule C: John files a Schedule C for his dental practice. A cursory review of amounts entered for business receipts and expenses suggests he’s understating gross receipts and overstating expenses. Whereas dentists in his area typically claim expenses equal to about 50 percent of gross receipts, his expenses equal about 75 percent of gross receipts. A plausible explanation for the discrepancy is that John doesn’t deposit currency payments received from patients into the practice’s bank account, and he tells his accountant to use bank deposits to calculate gross receipts. Is John trying to pull one on the IRS?

Schedule A: Line 4 shows he claims hefty itemized deductions for medical expenses (allowable to most persons only for the part above 10 percent of adjusted gross income). Deductions could be easily explained as attributable to payments for insurance premiums and expenses usually not covered by insurance—for instance, dental work, hearing aids, glasses, medically required home improvements or private duty nurses. Or the reason for substantial write-offs might be that, like Tony Soprano, John sees a shrink several times a week. Not to imply that there’s anything wrong with those visits; still—like the restorative powers of chicken soup—it can’t hurt and might help for Marsha to determine how much John has in common with Tony or, worse yet, Norman Bates.

Donations: John’s a chintzy contributor, whereas Marsha is a generous giver. This may not be a deal breaker, but they should discuss charitable donations before marriage.

Withholding: Each year, John receives big refunds, deliberately as a form of forced savings or simply by neglecting to claim enough exemptions on his W-4. But interest-free loans to the IRS are anathema for someone like Marsha, who meticulously monitors her withholding from wages and outlays for estimated payments. Her returns may show small balances due. It’s preferable that they discuss before marriage how they’ll handle withholding.

In the midst of all these thorns, there are some roses. Assume John has a substantial capital loss carry forward and no unrealized capital gains. At $3,000 a year, it will take many years to use up John’s carry forward. She, however, has a substantial unrealized capital gain. Marriage means Marsha can realize the gain and offset it against John’s carry forward.

Similarly, suppose he operates a business that’s unprofitable. He has a hefty net operating loss carry forward; but not enough other income to absorb the carry forward. Marsha has sizable income. Marriage enables him to apply his carry forward against her income.    

—————————————————————————————————————–

Julian Block writes and practices law in Larchmont, N.Y. and was formerly with the IRS as a special agent (criminal investigator) and an attorney. He is frequently quoted in the New York Times, the Wall Street Journal, and the Washington Post, and has been cited as: “a leading tax professional” (New York Times); “an accomplished writer on taxes” (Wall Street Journal);and “an authority on tax planning” (Financial Planning Magazine). This article is excerpted from “Julian Block’s Tax Tips for Marriage and Divorce,” available as a Kindle at Amazon.com and as a print copy at julianblocktaxexpert.com. Law professor James E. Maule, a professor at Villanova University School of Law and Graduate Tax Program, praised the book as “An easy-to-read and well-organized explanation of the tax rules.”  The National Association of Personal Financial Advisers says it is “A terrific reference.”

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


Home Again? Better Known as “Failure to Launch”

May 19, 2015

Graine Mediation is pleased to introduce Terri R. Adams, MSW, LCSW, BCD, as our guest blogger this week. Ms. Adams is in private practice in Fairfax, Virginia with the Fairfax Counseling Group. http://fairfaxcounselinggroup.com Ms. Adams has helped many parents of young adults to successfully achieve a stronger relationship with their young adult children and recapture their own future.

INTRODUCTION by Robin Graine, JD: Many parents come into divorce mediation with a particular “problem” on their hands which does not, necessarily, have a legal solution: “What are we going to do with our adult child, who is living in the family home, once we separate?” This is an issue not easily resolved by Virginia divorce lawyers in the family court system. Nothing in the law supports “child support” for adult children (unless that child is disabled in some way that disallows independence). However, it is clear to the parents who provide a roof over these “20-something’s” heads that they are expensive to maintain. The broad question is then: Should parents be providing full support, both financial and otherwise, for these adult children? It is a big question in the divorce context and in our culture as a whole.

HERE IS WHAT OUR GUEST BLOGGER, TERRI R. ADAMS, MS, LSW, BCD, of FAIRFAX COUNSELING GROUP, HAS TO SAY . . .

failure-to-launch-509f70c708f73Have you seen the movie, “Failure to Launch”? Two desperate parents conspire and create a plan to entice their 35-year-old son to finally move out of the house. Hoping they can encourage him to become an upstanding citizen on his own two feet, they set him up with a lovely young woman, hoping that this will motivate him to become independent.

Does this seem familiar? Just when you had adjusted to being empty nesters, here comes your wayward offspring, home to roost. Maybe, your son or daughter went off to college and pursued partying rather than academics and is now home again. Maybe you experienced the joy of college graduation and with sincere anticipation allowed him or her to return to actively pursue a job hunt. But now, a year later, your young adult child is still with you, languishing, direction-less, unmotivated, enjoying all the comforts of home without contributing much to the domestic landscape. HELP!

So, let’s be real. What can you do? What are reasonable expectations? In the Washington, D.C. metro area, the cost of living is high, adding to a young person’s challenge in getting a job that can support him or her. And, that almost certainly won’t be in the style to which they were accustomed growing up. So, face it, home is better. And, frequently, it’s free. What could be better?

Whether the return to home was due to a slacking economy, a relationship bust up, poor employment prospects or college challenges, rectifying the situation begins at home. First, you need to know the scope of the issue. Can you determine what is going on? Is it avoidant behavior due to low self-esteem? Is it lack of drive? An inability to cope with stress? Drug use or alcohol abuse? Or, just a bad attitude? Once you can state the troublesome behaviors, you have something to work with.

Living at home, your young adult has responsibilities as part of the household. It is important to have clear, reasonable expectations that are communicated and that have natural consequences if they are not achieved. If needed, offer a coach who can be hired to help your young adult accomplish job goals, breaking each one down into manageable tasks (a resume, interview skills, etc). Regular family meetings can help set up the tasks to be achieved and the coach can handle the follow through with your son or daughter.

Young adults in their twenties should be creating a vision for their future, learning new skills, meeting new people, striking out on their own. Many of the young adults who return home do not have the drive or the vision. Instant gratification (think video games or smoking weed) trumps working on long-term goals and they avoid, relying on their parents to provide the basics. If there is a substance abuse issue, get help as soon as possible. Go to Al-Anon or engage a therapist to help you, if you are stuck. If you sense depression in your young adult, turn to the professionals. Based on research, the most successful treatment is psychotherapy combined with medication.

Ultimately, these “boomerang kids” need some extra support at home and beyond to develop their own desire for autonomy. Invite them to experience the world and utilize resources available to help launch them into a successful adulthood.

Terri R. Adams, MSW, LCSW, BCD is in private practice in Fairfax, Virginia. She has helped many parents of young adults to successfully achieve a stronger relationship with their young adult children and recapture their own future. http://fairfaxcounselinggroup.com/Fairfax_Counseling_Group/Welcome.html

 

COMMENTS by Robin Graine, JD:

“FAILURE TO LAUNCH” IN DIVORCE MEDIATION CONTEXT: Usually, in such a situation, the divorce mediator learns that only one, or sometimes neither, of the parents believes that the adult child actually needs parental caretaking. The mediator’s role, then, often moves into facilitating a plan of action for “launching” the adult child into independence. This is even more the case when the family home must be sold to accommodate the divorce. The divorce is often a catalyst for such action, which is not, if done with compassion, necessarily a bad thing for the adult child.

FUNDING THE MOVE TOWARD INDEPENDENCE: Unless the plan is to immediately “kick out” your “failure to thrive” adult child, helping to move him or her toward independence requires money. Decisions will need to be reached on the financial contributions of the parents toward the support of the adult child in terms of both amount of money and the period of time in which it will be paid. Adult children can be very expensive, too, if there are problems that need to be addressed prior to “launch”. This “funding” piece can get very complicated when there are other minor children in the home for whom an actual child support obligation is supposed to be used. Care needs to be taken in these situations to account for the needs of all members of the family.

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


What is a Property Settlement Agreement (PSA) in a Virginia Divorce?

December 9, 2014

marital-settlement-agreementTerms of a Property Settlement Agreement (PSA)

A Property Settlement Agreement (PSA) is a contract between a married couple that sets out the terms of how they will move forward in their lives, during separation and divorce, in the following areas:

  • Parenting Arrangements (also known as Custody & Visitation) – Sets forth the schedule of custodial care. This section also sets forth how child-related responsibilities will be shared. This includes both the decision-making and day-to-day care for the children.
  • Child Support – Sets forth the presumed statutory guideline monthly award (dollar amount) and the actual amount to be paid (which may differ, somewhat, from the presumed guideline amount). This section also clarifies how certain child-related expenses, over and above the monthly child support award, will be covered, e.g. out-of-pocket medical expenses, extracurricular activities, work-related childcare (daycare, nanny, babysitter), camps, tutoring and private school. Some parties also choose to set forth how college tuition and related expenses will be shared between the parties once the child support obligation ends (usually at high school graduation or 18 years of age, whichever comes later).
  • Spousal Support (aka Alimony) – Sets forth the dollar amount of spousal support to be paid (if any) and the duration for which it must be paid. This section also sets forth whether or not spousal support will be modifiable or non modifiable and, in some instances, the specifics of that modifiability. This section also sets forth, where necessary, waivers of the right to petition a court for spousal support at the time of divorce and/or in the future. The Spousal Support section of a PSA must include certain statutory language in order to be acceptable to the IRS. Because the payment of spousal support includes many important tax implications, depending on how the PSA is written, close scrutiny must be paid to this language.
  • Property & Debt Distribution – Sets forth the division and distribution of all marital property. Also clarifies property that has been determined by the parties to be separate (e.g. non-marital) and, as is usually the case, non-divisible. This section also clarifies how the parties’ debts will be handled during separation and post-divorce. In a divorce, the term “property” includes all assets: real estate, automobiles, bank accounts, investment accounts, stocks & bonds, businesses, antiques & collectibles, furniture, artwork, tools, etc. In Virginia, this is often referred to as the “E.D. Section”, which is short for “equitable distribution of property and debt”.

Other Key Components of a Property Settlement Agreement

Property Settlement Agreements in Virginia (and elsewhere) also include other very important information, such as:

  • Date of Separation – the date upon which the parties agree they began living “separate and apart”[1] (which may or may not be the date that one of the parties moved out of the marital residence);
  • No Fault Divorce – a clause that forbids either party to ever proceed with a divorce on contested grounds (e.g. desertion/abandonment, adultery, cruelty);
  • Waiver of Right to Discovery – a clarification (if appropriate) that the parties waived their right to discovery (the court-supervised process of gathering documents and information from “the other side” which is standard in most litigated divorces);
  • Taxes – a predetermination of how certain tax benefits and burdens will be divided between the parties (where appropriate, necessary and permitted by the IRS). Such items include: the dependency exemption for children, the child and dependent care credit, future filing status decisions while still married (e.g. married filing separately, married filing jointly), mortgage interest & real estate tax deductions, and future income tax refunds and liabilities.

There is No Such Thing as “Legal Separation” in Virginia – Property Settlement Agreements Resolve Some of the Resulting Confusion & Risk

In Virginia, there is no such as thing as “legal separation”. The closest that parties can come to legal separation is to actually live separate and apart (see footnote 1) and be in possession of a signed and notarized PSA.

Most attorneys advise their clients to never move out of the marital residence without the benefit of a PSA. The reason for this is two-fold:

  1. Risk – Setting Up Fault Ground of Desertion/Abandonment – Without a signed and notarized PSA, which clearly states that neither party is permitted to file a divorce on fault grounds, the party who leaves the marital residence is at risk of the other party proceeding with a divorce on the fault ground of desertion/abandonment. If the other party prevails, this could affect a judge’s ruling with regard to property and debt distribution. This risk is somewhat “academic”, however, according to many divorce professionals in the Northern Virginia Area, as long as the person who physically moves out of the marital residence continues to provide financial support “back home”. Also, and perhaps most concerning, fault-based divorces set in motion a defensive posture that ramps up the litigation and costs the parties dearly in terms of emotional strain and financial drain.
  2. Risk – Confusion in the Classification of Certain Property and Debt as Marital Property (divisible by a court) versus Separate Property (not divisible in court) – Virginia law states that all property and debt acquired post-separation is to be classified as separate property (non-marital, non-divisible by a court). It is usually best, therefore, for parties to clarify what they have, in terms of their property and debt, at the time of separation. To avoid often confusing, and sometimes very stressful situations later, parties are well-advised, once they have decided to separate, to determine, in detail, how and when their property and debt will be divided and distributed and what the values of their property, and balances on their debt instruments are, at the time of separation. It is also notable, however, that even though judges are required to classify post-separation assets and debts as separate (non-divisible) property, parties may choose to classify some or all of that post-separation property and debt as divisible marital property (as is the law in many other jurisdictions).

Property Settlement Agreements are Binding Contracts

            Once parties sign a PSA, they have entered into a binding contract that is not renegotiated at the time of divorce. The key agreements and pertinent sections of the PSA are incorporated into the Final Order of Divorce (e.g. the custodial care arrangements for the children, the amount of child support and spousal support to be paid, and the specifics of the division and distribution of property and debt). The signed and notarized PSA is filed with court, along with several other divorce documents (including the Final Order of Divorce, aka Divorce Decree). In essence, parties who have a signed PSA, during their period of separation, are operating under a contract; once those same parties are divorced, they are operating under both a contract and a court order (the Final Order of Divorce).

It is notable, however, that all matters related to children (custody, child support), are always modifiable if there is a material change in circumstances. Parties are not permitted to negotiate away this right.

Can a Property Settlement Agreement Ever Be Declared Invalid?

            Property Settlement Agreements, though usually upheld in court, may be declared void (i.e. “invalid”) and, therefore, unenforceable, under the same circumstances as are other contracts. Specifically:

  • No Capacity to Form a Contract – one or both parties lacked the capacity to form a contract (e.g. serious mental impairment);
  • Unconscionability – the contract is extremely unfair;
  • Too Much Pressure – one or both of the parties signed the contract under duress, as a result of coercion, and/or as a result of undue influence;
  • Factual Mistakes – there was a mutual mistake of fact(s)(unless it really doesn’t matter);
  • Illegal – the contract contains a violation of law or public policy; and/or
  • No Full Disclosure – there was a failure to provide all relevant factsthat would allow for informed decision-making with regard to the settlement terms (in a PSA, that usually means “financial facts“).

(Va. Code §8.01-581.26)

The last area is usually of the biggest concern in a Property Settlement Agreement – especially one that is signed without the benefit of formal discovery (the attorney-led and formalized process of collecting and reviewing documents and other information relevant to the case).  If it is determined that essential financial information, which would be necessary for one or both of the parties to make informed settlement decisions, was purposefully withheld, the Property Settlement Agreement will almost certainly be void (no good).

95% of Divorce Cases Settle Without Trial. Why Not Start With Settlement in Mind?

            The vast majority of cases — 95% being the most quoted statistic – never go to trial. That means that, after all the litigation strategy, motions, depositions, discovery, and very expensive legal wrangling, almost all divorcing couples end up settling their case without a trial.

Therefore, when all is said and done, if you are considering a divorce, or are in the process of getting a divorce, you might as well start with a settlement mentality and focus on reaching solutions to your divorce disputes that you both can live with before you engage in expensive and time-consuming litigation.

            The final result of your mutually agreeable solutions to your divorce-related issues will be in the form of an enforceable Property Settlement Agreement which, if written by a qualified lawyer-mediator, will be clear, enforceable, detailed, written in neutral language, and contain a minimum of “legalese”.

If you have any questions about what goes into drafting a Property Settlement Agreement and how Graine Mediation goes about settling divorce cases, call Robin Graine at 571-220-1998.

[1] In Virginia, parties with minor children must live “separate and apart”, without cohabitation (no marital relations) and without interruption, for 12 months before they are permitted to file for divorce. Va. Code §20-91. Without minor children, parties are permitted to get a divorce after only 6 months of separation as long as they have a signed Property Settlement Agreement. The term “separate and apart” is also interpreted, in Virginia, to mean that at least one of the parties intends that the separation be permanent. There is no actual law stating that the parties must live under separate roofs (though that is preferred by the Courts). This lack of clarity is bad enough on its own; but it compounded by the fact that Virginia law specifies that all property and debt acquired post-separation is separate property (aka non-marital and, as a result, is not divisible by a court).

Posted by Robin Graine, JD, Virginia Supreme Court Certified Mediator

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


Tax Effects of Spousal Support (Alimony)

December 2, 2014

tax-terms

ALIMONY IS TAX DEDUCTIBLE BY THE PAYER AND IS CONSIDERED TAXABLE INCOME TO THE RECIPIENT. Paying spousal support (aka alimony) is one of the best tax deals around for the payer.  According to Section 71 of the Internal Revenue Code (“IRC”) (26 U.S.C ¶71), ex-spouses who pay alimony are able to deduct those payments – dollar for dollar – from their adjusted gross income.  The recipient of alimony is, conversely, taxed on the alimony received just as if it were ordinary income (i.e. salary, wages).  (See Section 215 of the Internal Revenue Code, 26 U.S.C §215).

ALIMONY LOWERS THE PAYER’S ADJUSTED GROSS INCOME (TAXABLE INCOME) AND MAY CHANGE BOTH THE PAYER AND THE RECIPIENT’S TAX BRACKET: At the end of the tax year, a person who pays $2,000 per month in spousal support will have a whopping $24,000 shaved off his or her taxable gross income.  This could have a very favorable effect on an alimony payer’s tax burden, and an unfavorable effect on the recipient’s tax burden, in terms of:

  • the reduction in the taxpayer’s adjusted gross income (dollar-for-dollar in relationship to the alimony paid), which is what the payer will be taxed on; and
  • a change in the payer and/or recipient’s tax bracket.

Simplified Example for Payer Who Earns $100,000 Year in Wages:

$2,000/month alimony payments made

x 12 months/year

=

$24,000 alimony paid over course of 1 tax year

——————-

$100,000 gross income                                   = 28% Tax Bracket

$24,000 alimony paid

=

$76,000 adjusted gross income of alimony-payer = 25% Tax Bracket

 

    Simplified Example for Recipient Who Earns $30,000 Year in Wages

$2,000/month alimony payments received

x 12 months/year

=

$24,000 alimony received over course of 1 tax year

——————-

$30,000 gross income of alimony-payer                 = 15% Tax Bracket

+

24,000 alimony paid

=

$54,000 adjusted gross income of alimony-payer         =  25% Tax Bracket

Of course, we all know that preparing one’s taxes involves a lot more than calculating gross income less alimony paid, but you get the idea:  Alimony has very big tax implications.

CHILD SUPPORT IS NOT DEDUCTIBLE/TAXABLE: Child support, on the other hand, is a tax desert.  There is no tax benefit to the payer; and the recipient is not taxed on the child support received.  This is because the lawmakers determined, many years ago, that parents should be supporting their children whether it is in the form of “child support” or simply “supporting your children”.  Thus, no tax breaks for doing what you should be doing anyway. (Don’t start thinking too hard about all the other tax breaks that parents of dependent children are privy too that are off limits to other child-free Americans. Apparently there is a different story there!)

The disparity in the tax treatment of spousal versus child support explains why many cases are settled with the non primary parent paying a whopping amount of alimony, but just the bare minimum child support.

NON-DEDUCTIBLE ALIMONY: While it is fairly rare, the IRS does allow for the designation of alimony as non-deductible by the payer (and, therefore, non-taxable to the recipient). If this is the parties’ desire, it will need to be spelled out very clearly in the Property Settlement Agreement (PSA).  It is also best if the PSA states that the parties understand that the IRS default is the other way around (alimony is deductible by the payer; taxable to the recipient).

SPOUSAL SUPPORT PAYMENTS MUST BE MADE PURSUANT TO A “DIVORCE OR SEPARATION INSTRUMENT” TO QUALIFY AS ALIMONY: It is important to recognize that spousal support payments which are made prior to the signing of a PSA are not properly tax deductible by the payer (nor will they be taxable to the recipient).   The IRS states, in Section 71 of the IRC (26 U.S.C. ¶71), that there must be a “divorce or separation instrument” – which includes a property settlement agreement, court order, separate maintenance order, and final order of divorce/divorce decree – which sets forth the alimony obligation, before any spousal support payments will receive the default tax treatment afforded alimony payments. Spousal support payments made without such a formalized document are considered “voluntary” and, as such, are not treated as alimony by the IRS.

When a divorce case drags on for years, without a signed Property Settlement Agreement, the spouse who voluntarily supports the other spouse is denied the usual deduction for alimony paid (and the recipient is not taxed on the spousal support received).   A signed Divorce Settlement Agreement resolves this issue.

ALIMONY DEFINED: The IRS has fairly specific criteria for what it does and does not consider alimony. Section 71(b) of the IRC (26 U.S.C §71(b)) defines alimony as any cash (not services) payment that is:  

  1.  Received by a spouse or former spouse pursuant to a divorce or separation instrument;
  2. The divorce or separation instrument does not designate such payment as a payment which is not includible in gross income under Section 71(b) of the IRC;
  3. When the parties are legally separated pursuant to a decree of divorce or of separate maintenance, the payee and recipient spouse must not be members of the same household. However, note that this section does not specifically refer to a payer who pays alimony to his spouse, while living under the same roof, pursuant to a Property Settlement Agreement only; and
  4. The alimony must end upon the death of the payee.

BE CAREFUL! The IRS has 2 important peculiarities with regard to classifying “alimony” payments from one spouse/former spouse to the other. These peculiarities:

(1) The Alimony Recapture Rule; and

(2) The Child Contingency Rule.

THE ALIMONY RECAPTURE RULE: Under §71 of the IRC, the IRS has the right to take back alimony deductions if there is a violation of the “Alimony Recapture Rule”. In other words, the IRS can make the payer spouse/former spouse go back and pay taxes on the dollar amount of alimony deducted from the payer spouse’s gross income if the IRS determines, under its Alimony Recapture Rule, that those payments were wrongly deducted.  This can occur whether or not the payer (or his or her attorney) was aware of the Alimony Recapture rule or not.  (Ignorance is not a defense.)

The Alimony Recapture Rule applies when spousal support payments are “front-loaded” during the first 3 years from the first date that alimony is paid (as defined by the IRS, see “Alimony Defined” above).  The purpose of the Alimony Recapture Rule is to discourage divorcing spouses from improperly classifying property settlement payments (such as, for example, monthly payments to a former spouse as part of a  “buy out” deal on the marital residence) as alimony.   In other words, the IRS is trying to prevent “sham” deductions.

Alimony Recapture Worksheet: For most people who are concerned about the Alimony Recapture Rule, the best way to determine whether or not there will be an Alimony Recapture situation during the first 3 years of paying spousal support is by using a simple “Recapture of Alimony” Worksheet provided by the IRS in Publication 504. It is reproduced below:

  1. Alimony paid in 2nd year  _______
  2. Alimony paid in 3rd year   _______
  3. Floor                                       $15,000
  4. Add lines 2 and 3                 _______
  5. Subtract line 4 from line 1 _______
  6. Alimony paid in 1st year    _______
  7. Adjusted alimony paid in 2nd year

(line 1 less line 5)                       _______

  1. Alimony paid in 3rd year  _______
  2.  Add lines 7 and 8               _______
  3. Divide line 9 by 2

(the number 2, not line 2!)   _______

  1. Floor                                      $15,000
  2. Add line 10 and 11               _______
  3. Subtract line 12 from line 6 _______
  4. Recaptured alimony.

Add lines 5 and 13                  _______

 

The above calculation is actually factoring two computations, as follows, to determine if recapture is necessary.

(1) A taxpayer is subject to recapture of alimony payments made if, in the third-post separation year, the alimony paid decreases by more than $15,000 from the second post-separation year.  The excess over $15,000 is subject to recapture.

(2) A taxpayer is subject to recapture in the third year of making alimony payments if the payments made in the first post-separation year exceed the average of the payments in the second and third post-separation years by more than $15,000.

If both of these computations result in recapture, the amount recaptured under the first computation is subtracted from the second year payments for purposes of making the second computation.

THE CHILD CONTINGENCY RULE:  All deductions for alimony made under Section 215 of the IRC (26 U.S.C. §215) are at risk of being taken back by the IRS if the the cessation of those alimony payments are contingent upon any of the following child-related fact patterns:

(A) A child of the marriage obtaining a specified age, marrying, dying, leaving school or a similar contingency; or

(B) At a time which is clearly associated with a contingency of a kind specified in Paragraph (A), above (e.g. graduation from high school).

(26 U.S.C. 71(c)(2))

As clarified in the recent case of Johnson vs. Commissioner of the Internal Revenue Service (7th Circuit, 2014) (http://caselaw.findlaw.com/us-7th-circuit/1302834.html), even if the parties’ PSA clearly delineates which payments are for child support and which are for spousal support, the IRS still has the right to reclassify even agreed spousal support payments as child support if there is any contingency, involving a child, attached to that spousal support obligation.

If the IRS determine that a spousal support award was actually contingent upon a child-related event, it has the right to convert all payments made, from when the payer first commenced making spousal support payments to the recipient, into non-deductible child support.

Details about his fairly complex rule can be found by reading IRS Temporary Regulation 1.71-1T(c), Q&A 17 and 18 at:

http://www.law.cornell.edu/cfr/text/26/1.71-1T

PROFESSIONAL TAX SERVICES REQUIRED: As with all information provided in www.fairfaxdivorceblog.com, nothing in this article is intended to substitute for professional tax or legal advice.  The tax implications with respect to alimony are huge.  Anytime “alimony” or “spousal support” form part of a couple’s divorce settlement discussions, you can be assured that a visit to the CPA is well-advised and a good use of your time and divorce dollars.

Posted by Robin Graine, JD, Virginia Supreme Court Certified Mediator

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


How Does Spousal Support Work in Virginia?

November 25, 2014

Alimony is a creature of both State and Federal Law: Spousal support, also known as alimony, is governed by a combination of state and Federal law. In Virginia, the state law sets forth the criteria (the full statutory list can be found below, in this article) that judges must consider when determining whether or not to award spousal support in a particular case (§20.107.1 Virginia Code). The Federal Law governs the tax aspects of spousal support — which are many.  This article discusses Virginia Law. (More information on the tax aspects of alimony can be found throughout www.fairfaxdivorceblog.com by entering “alimony tax” in the search bar.)

alimony-main

Virginia Code: Virginia statutory law, which includes the laws you can easily see if you look at the Virginia Divorce Code (Title 20, Chapters 6 and 6.1 (§20-91 through 124.6 of the Virginia Code)), speaks generally of the “considerations” that a judge must ponder when deciding an alimony case. However, the listed criteria gives little guide to the courts when making a determination of “how much” and “for how long” spousal support should last. Those answers are often based in the “common law” (precedential cases decided in higher level courts) and the legal culture and practice in the area in which the clients live.

No Absolute Right to Alimony in Virginia: A key fact is that there is no right to spousal support in Virginia. The right to receive alimony is determined on a case-by-case basis.

Key Issues: Whether the alimony question is determined by a judge, or by the parties themselves, the following issues will always need to be determined:

  1. Whether or not there will be an award of alimony;
  2. How much that alimony award will be;
  3. What is the period of time that the alimony award will last; and
  4. Whether or not the alimony award will be modifiable in amount and/or duration.

Pendente Lite Spousal Support Calculation: In Fairfax County, the courts are very prone to award what is called the “pendente lite spousal support amount”. The “pendente lite” is a formulaic amount of spousal support which was originally designed as a way of quickly calculating spousal support in pre-trial, emergency situations, without having to go through a full blown “mini trial” on the issue of spousal support.

However, over time, many of the courts (Fairfax County in particular) have come to rely on the pendente lite formula as a fair barometer of what the spousal support amount should be. Of course, this is dependent on whether the case merits an award of spousal support in the first place (which is always the ultimate question).

 

The pendente lite formula, when there are minor children, follows:

28% payer’s gross monthly income – 58% recipient’s gross monthly income

= pendente lite spousal support calculation

 

The formula, when there are no minor children, follows:

30% payer’s gross monthly income – 50% recipient’s gross monthly income

= pendente lite spousal support calculation

 

Duration: In Virginia, the “rule of thumb” is that spousal support awards are usually set for 50% the length of the parties’ marriage (from the date of marriage to either the date of separation, the date the property settlement agreement is signed, or the date of divorce).   For marriages over 20 years, there is a possibility of permanent alimony. Oftentimes, however, even “permanent” alimony awards have a stop date that coincides with an educated guess as to when the payer will most likely retire.

Modifiability: It is important, when drafting a property settlement agreement, to clarify whether or not an award of spousal support is modifiable or not. If it is modifiable, the terms of modifiability may be spelled out in detail, or the basic statutory language can be used. The basic statutory language is:

The party seeking the modification is required to demonstrate to the court, by “clear and convincing evidence”, that there has been a “material change in the circumstances of the parties, that was not reasonably in the contemplation of the parties when the award was made, or that an event, which the court anticipated would occur at some stage during the pendency of the award, and which was significant in the making of the award, did not, in fact, occur through no fault of the party seeking the modification. (§20-109(B) of the Code of Virginia)

If a property settlement agreement is silent on the issue of modifiability, there is a presumption that the award is non-modifiable.

To the contrary, in instances where the court itself orders the spousal support award, but the court order is silent on the issue of modifiability, there is a presumption that the award is modifiable.

Spousal support award may be modifiable in amount, duration, or both.

Criteria that Virginia Judges Must Consider When Making a Spousal Support Determination: The following is a comprehensive list of all the criteria that must be considered, in Virginia, when a court is making an award of spousal support (pursuant to §20-107.1 of the Virginia Code). Though parties are not required to go through this same list when settling their alimony issues outside of court, it is a good list for most divorcing couples to ponder when making decisions on the issue of alimony:

(1) The obligations, needs and financial resources of the parties, including, but not limited to, income from all pension, profit sharing and retirement plans, of whatever nature;

(2) The standard of living established during the marriage;

(3) The duration of the marriage;

(4) The age, physical and mental condition of the parties and any special circumstances of the family;

(5) The contributions, monetary and non-monetary, of each party to the well-being of the family;

(6) The property interests of the parties, both real and personal, tangible and intangible;

(7) The provisions made with regard to the marital property;

(8) The earning capacity, including the skills, education and training of the parties, the present employment opportunities for persons possessing such earning capacity, and each parties’ current employment status; and

(9) The tax consequences to each party, as are necessary in order to consider the equities between the parties.

 

AUTOMATIC TERMINATION OF SPOUSAL SUPPORT: In Virginia, certain fact patterns revoke a parties’ right to receive spousal support, per statute (§20-109 of the Virginia Code). Those situations are:

(1) Remarriage by the recipient;

(2) Cohabitation of one year or more, by the recipient, with another person, in a relationship analogous to a marriage. This fact must be proved, however, by clear and convincing evidence by the payer before   spousal support will be terminated for “cohabitation”; and

(3) Death of either party.

Posted by Robin Graine, JD, Virginia Supreme Court Certified Mediator

This blog and its materials have been prepared by Graine Mediation for informational purposes only and are not intended to be, are not, and should not be regarded as, legal advice.  This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.  Internet subscribers and online readers should not act upon this information without seeking professional counsel.


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