April | 2013 | Fairfax VA Divorce Mediator

Providing for Custody & Visitation With Teens

April 30, 2013

Raising teens is never easy, but it becomes even more complicated when they are involved in a two-household family. Teens are going through a lot of changes, and having to navigate two completely separate households often adds stress to their already too-busy and somewhat volatile emotional lives. Teenagers usually prefer that their families blend into the background while they do their teen-thing. But, when a kid is going back and forth between houses, due to a divorce, the family and “family time” often becomes a focal point of the teenager’s life (like it or not!). Of course, that is not all bad. There are plenty of people who will tell you that their divorce is what made them finally realize the fleeting nature of their children’s youth and was, in fact, the impetus for ensuring that they spent time with their children before it got to be too late.

It is important for parents of teenagers to remember that, just because your child doesn’t see you much — due to everyone’s busyness — that doesn’t mean that your teenager will want to hang out with you when he or she does not have a scheduled activity. Teenagers want to be with their friends, usually, and any parent who makes it a point of getting in the way of that for “visitation time”, might be asking for trouble. The older they get, the tougher it is to maintain a regular schedule of time with your kids – but they are always happy to have you drive . . . and pay! But, it is often those drives, after all, when you will at least get to know your children’s friends and that is, many parents find, a delight! Try and keep a balance between making sure you and your children spend time together and allowing your teen to have a social life that is not over-prescribed by your and your ex’s divorce situation.

John Hartson, PhD. And Brenda Payne, PhD recommend, in their book Creating Effective Parenting Plans: A Developmental Approach for Lawyers and Divorce Professionals, that people working on parenting plans for families with teenagers be mindful of teenagers’ differing needs at the various stages of adolescence. For example, with 12-13 year olds, Hartson and Payne note that there are many physiological changes going on during this time, in addition to the big move-up to middle school. Often times, they assert, it is best to leave the custodial care schedule as it is and not add any more changes to the mix, unless there are serious problems.

For older teens, those entering high school and later, it is often wise to include them in discussions regarding where they will be/want to be spending their time. At this point, for many teenagers, it tends to be more about “where” than about “with whom” they will be spending time. For example, some teens express strong desires to spend greater amounts of time in one home over the other, not because they desire to be with one parent more than the other, but their choice is often greatly influenced by which home has greater proximity to friends, activities, and the convenience of having all of their stuff in one spot.

Remember that teens, like children of all ages, are still watching everything that you do. You are still their role model in many ways, as is their other parent. They need to see you and your ex function in everyday life so that they can learn what is important in your family culture, how you “get it all done”, what are your priorities, how your values effect your choices, etc. This is your last shot at parenting, for the most part, and you want to try and get it right. That will mean that you have to find a way to both spend time with your teenager, while keeping a healthy awareness of his or her need for some level of independence.

Your teenager will be gone before you know it. Enjoy your time together. Listen to your teen. Try and accommodate his or her needs and desires, but don’t cave in to every whim. Watch for classic divorce manipulation between you and your ex. Let your teenager know how much you love him or her every day. Cross your fingers . . . and be confident that you are doing the best that you can, which is all anyone can really ask of a mom and a dad.

Posted by Kristina Duncan Hoeges, Freelance Paralegal and 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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The IRS’s “Child Contingency Rule” Could Cost you a Bundle of Money If You Fail to Plan Appropriately

April 23, 2013

Q: What is the IRS’s “Child Contingency Rule”?

A: The IRS’s Child Contingency Rule states that when alimony payments end on or around the same time as a child-related event (e.g. graduating from high school) all alimony payments leading up to that child-related event may be reclassified, by the IRS, as child (not spousal) support. Further, the Child Contingency Rule states that any tax benefits received by the payer of support, and any taxes paid by the receiver of alimony (which is later reclassified as child support) are to be returned – the payer will owe the IRS money and the receiver will receive a refund of taxes previously paid on alimony received.

Q: What triggers the Child Contingency Rule?

A: Support payments that would otherwise qualify as alimony may be treated as child support, by the IRS, to the extent that the payment is reduced or eliminated either:

On the happening of a contingency relating to your child (e.g., graduation from high school, turning 18); or
At a time that can be clearly associated with the contingency.

However, you can overcome those presumptions by showing that the determination of the time at which the payments are to be reduced/eliminated was determined independently of any contingencies relating to your children. In other words, that the timing was mere coincidence. For example, if you can show that the period of alimony payments is customary in your local jurisdiction (such as the “rule of thumb” in Northern Virginia that the alimony duration is often equal to one-half the length of the marriage) you may be able to overcome the presumption and, therefore, overcome the harsh IRS penalties for tying alimony to a child-related event.

Q: What sorts of other “child-related” events is the IRS looking for?

A: Per the IRS, a contingency relates to your child if it depends on any event relating to that child. It does not matter whether the event is certain or likely to occur. Events relating to your child include the child’s:

Reaching a specified age or income level;
Graduating high school;
Becoming employed;
Dying;
Leaving the household;
Leaving school; or
Marrying.

Q: What are the time parameters for the Child Contingency Rule?

A: The IRS may automatically reclassify your alimony payments as child support payments, pursuant to the Child Contingency Rule, in the following situations

The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority (18, in Virginia)
The payments are to be reduced on two or more occasions (only in families where there are 2 or more children) that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24 (the IRS defines “a certain age” as the age of your first child at the time of your first stepped down reduction in alimony). This certain age must be the same for each child, but need not be a whole number of years.

Much of the information for this article comes from IRS Publication 504, online

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

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Alimony Recapture Rule

April 16, 2013

Tug o’ war

“Alimony Recapture” is a tricky and often misunderstood IRS rule (Internal Revenue Code (IRC) §71) that is designed to prevent front loading of alimony payments which, the IRS presumes, are actually a property distribution “disguised” as alimony to save on taxes due. Of course, not everyone who is vulnerable to the recapture rule is trying to disguise a distribution of property as alimony, but the rule is supposed to be applied uniformly, regardless of motivation.

Alimony Recapture applies, in certain cases, where there is an award of alimony[1] from one ex-spouse to the other ex-spouse, that decreases in amount during the first three post separation years[2]. “Recapture” refers to the IRS’s right to force the payer of alimony to pay back, to the IRS, all tax benefits received as a result of alimony payments made to his or her former spouse during those first three years. (After the third full year, the concept of recapture becomes irrelevant.)

This would be, for many ex-spouses, a tax tragedy. Recapture aside, alimony is a very generous tax deduction that is almost always of primary importance when negotiating a divorce settlement wherein support of an ex-spouse is appropriate and feasible. Specifically, 100% of the alimony paid is allowed to be deducted from the payer’s gross income, thereby reducing his adjusted gross (taxable) income, dollar-for-dollar, in the amount of the alimony paid for that year. The ex-spouse who receives alimony, however, must pay taxes (also dollar for dollar) on those alimony payments received.

The rules of recapture are not overly complicated. They are, however, like so many IRS promulgated dictums, befuddling for most people because they are written in such a convoluted manner and sound, pretty much, like gobbledygook. In a nutshell, the tax benefits of paying alimony will be recaptured by the IRS if, in the 3^rd year after your alimony payments commence, you pay greater than $15,000 less in alimony than you paid in the 2^nd year. Or, if, during the 2^nd and 3^rd years, you pay “significantly less” in alimony than you paid in the 1^st year. The term “significantly less” is the IRS’s word, not mine, and it is not defined in the statute. Luckily, the IRS has provided a recapture worksheet that makes trying to figure out what they mean by “significant” a nullity. In other words, if you run your numbers through the worksheet and they show that you fall under the recapture rule, you do. Period. (“Significant” of not!)

The worksheet and further explanation of the recapture rule can be found in IRS Publication 504 Divorced and Separated Individuals. That publication forth a nice example that most people find helpful when trying to understand the concept of recapture. Below is the IRS’s example and their worksheet, straight from Pub 504:

IRS Example: You pay your former spouse $50,000 alimony the first year, $39,000 the second year, and $28,000 the third year. Using these numbers, you report $1,500 as income on your Individual Income Tax Return (Form 1040, line 11). Your former spouse, on the other hand, reports on her Income Tax Return (Form 1040 line 31a), a $1,500 deduction. See worksheet, below:

Worksheet 1. Recapture of Alimony—Illustrated

Note. Do not enter less than -0- on any line.
1.	Alimony paid in 2nd year			1.	$39,000
2.	Alimony paid in 3rd year	2.	28,000
3.	Floor	3.	$15,000
4.	Add lines 2 and 3			4.	43,000
5.	Subtract line 4 from line 1					5.	-0-
6.	Alimony paid in 1st year			6.	50,000
7.	Adjusted alimony paid in 2nd year (line 1 minus line 5)	7.	39,000
8.	Alimony paid in 3rd year	8.	28,000
9.	Add lines 7 and 8	9.	67,000
10.	Divide line 9 by 2	10.	33,500
11.	Floor	11.	$15,000
12.	Add lines 10 and 11			12.	48,500
13.	Subtract line 12 from line 6					13.	1,500
14.	Recaptured alimony. Add lines 5 and 13					*14.	1,500
* If you deducted alimony paid, report this amount as income on Form 1040, line 11. If you reported alimony received, deduct this amount on Form 1040, line 31a.

So, what facts and circumstances usully exactly triggers the IRS’s Alimony Recapture rule? Typically, it is triggered by a reduction or termination of alimony payments caused by one or more of the following:

a. A lump sump payment scenario;
b. A settlement agreement/divorce decree in which alimony payments are decreased over that first three year post separation period;
c. A settlement agreement/divorce decree that allows for alimony payments to cease prior to the end of the first three years post separation;
d. A change made to your separation or divorce agreement, by the court or by agreement, due to the recipient’s decreased need, or the payer’s decreased ability to pay, that ignores the recapture rule; or
e. The payer’s failure to make alimony payments on time, or at all.

You will note that, even if you do everything “right”, for purposes of legal enforceability (i.e., you consult an attorney, who puts the agreed-upon changes in writing, and you execute the document with the same formality as the original agreement, etc.), you still cannot assume that you will be free from the punishing effects of the Alimony Recapture Rule. It’s the old “knew or should have known” scenario.

Are there exceptions? Yes. There is no Alimony Recapture if:

you made alimony payments over the three year post- separation period that varied because they were a fixed part of your income from a business, property, employment-compensation, or self-employment compensation[3]; or
your alimony payments decreased as a result of your ex-spouse’s death; or
because the spouse receiving alimony got remarried before the end of the 3^rd year post separation period.

Caveat: There are rare cases when a party might still be better off working to get his or her alimony payments reduced and taking the lumps from the IRS in terms of recapture. Such a decision will depend on your individual financial circumstances. Run the numbers, do the worksheet, and talk with you CPA and divorce attorney before making such a decision.

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

[1] The Virginia Divorce Code refers to alimony as “spousal support”. For this article, however, I will be referring to monetary support payments (that are not child support), from one ex spouse to the other, as “alimony” because that is the term used by the IRS.

[2] The three-year period, in which the payer is vulnerable to the recapture rule, begins the first calendar year during which he or she makes an alimony payment under a divorce decree, order for separate maintenance, or written and signed separation agreement, as long as all the other criteria for alimony are met. The 2^nd and 3^rd years are the next two calendar years, whether or not any payments are made during those years. Please know that alimony payments made under a temporary support order do not count as part of the 3 years for purposes of alimony recapture.

[3] Alimony payments are sometimes set to correlate with a party’s business earnings, rents received, etc. such as in a case where the parties agree that the former spouse will receive X% of the payer’s gross or net profits from his or her business/real estate income earned for a set period of time post divorce.

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Who is eligible for a Virginia divorce?

April 9, 2013

1. What are the jurisdictional requirements?

You or your spouse must be residents of Virginia for at least 6 months preceding the filing of your divorce papers with the court.

AND

With no children, you must have been living separate and apart, without cohabitation, for at least six months and have completed and signed a property settlement agreement

With children, you must have been living separate and apart, without cohabitation, for at least one year and have no contested spousal or child support, child custody or division of property issues to litigate, or have resolved all such issues by a signed property settlement agreement. At that one year mark, however, you may file for divorce as a contested matter, thereby beginning the process, whether or not your disputes have been settled.

2. How long do I need to be separated before I can get a divorce?

With minor children, you must have been separated for one year. If you do not have minor children with your spouse, and you have both signed a property settlement agreement, you only need to be separated for six months to qualify for a Virginia divorce. Parties must not cohabit during their period of separation.

“Cohabitation” includes all manner of acts conducted by married people to manage their household, including such matters as grocery shopping, child rearing, home maintenance, laundry, paying bills, etc. Not cohabitating also assumes that the parties are not sharing a bedroom or having intimate relations.

3. What does Virginia consider “living separate and apart”, especially if my spouse and I are still living under the same roof?

This is a grey area of the law. Some attorneys will not even file a complaint for divorce when the parties are living under the same roof. Also, the individual judges and courthouse that handles your case will vary in their interpretation of “living separate and apart”. Parties get divorced everyday in Virginia while they are both living in the marital residence, but there are no guarantees this will satisfy the six month/ one year mandate. See my previous blog article Living Separate and Apart – What does that Mean? (November 14, 2011).