General NEWS/BLOGS ARCHIVE


BUSINESS OWNERS AND DIVORCE: Valuing a Business in Divorce

August 1, 2018 by Kathryn Lazar

CONTROLLING COST AND CONTENTION AROUND EXPERT APPRAISALS

When your divorce involves a business owned by you or your spouse, or you and your spouse, the value of the business will most likely figure in the divorce. If you and your spouse disagree on the value of the business (which is often the case when one of you is buying the other out or when one spouse is to be paid a portion of the business’s value), the disputed value may be resolved by engaging a third party expert to calculate what the business is worth. This is called appraisal. Appraisal methods are several; these alternatives are themselves the subjects of many articles (Google “different ways to value a business”). This post focuses not on appraisal methodologies, but on ways divorcing parties can commission a fair appraisal in a way that is economical.

A scenario to be avoided is “expert opinion versus expert opinion,” where each of the parties in a litigated divorce hires an appraiser, the resulting appraisals are materially discrepant, and each appraiser must testify to explain his/her calculation. This can be avoided by hiring one appraiser who meets with both spouses to understand the perspective of each. Critical in this approach is to oblige the appraiser to be neutral, not favoring either party. This reduces conflict, stress and expense.

Another way divorcing parties can control expense is by choosing the type of report they want from the appraiser. Oral reports typically cost less than written reports.

Before starting work, the appraiser should be available to sit down with the parties and their lawyers to discuss any concerns they may have. Such concerns might include the valuation method to be used — one method might be more appropriate than another for a particular business — and any special considerations that might affect value.

The above approach can be implemented in a litigated divorce but is more common in a collaborative or mediated divorce, where the parties’ objective is to find a mutually acceptable result. What is more, appraisers generally charge less for their work in a collaborative or mediated divorce because they know that they will not be called upon to testify in court, which is very time consuming.

 

DON’T BELIEVE RADIO ADVERTISING: Divorce Mediation Faster, Safe, Costs Less than Litigation

July 15, 2018 by Kathryn Lazar

Some lawyers, trying to secure more divorce clients, trash mediation in their radio ads. Contrary to these advertisement’s claims, mediation frequently results in a better understanding of dispute issues and legally binding agreements, at less emotional and financial cost than litigation.

Mediation uses an impartial third-party to help people discuss their disputes, decide next steps and come up with solutions. Mediation is increasingly considered the appropriate dispute resolution process due to its cost-effectiveness, efficiency and ability to help people make decisions while resolving conflict constructively.  Individual mediation clients can confer with a lawyer to get any individual legal advice they feel they need, while they are going through the mediation process.

In our divorce mediation cases, we find that over 90% of the couples are able to come to a mutually acceptable agreement, spending less than half the time and money  they would have spent if they hired separate lawyers to negotiate or fight it out.  Consider it as a possibility.

If you are interested, you and your spouse would meet with one of our divorce mediators in a consultation to learn more and decide whether this is the right course of action for you to take.  If you are interested, call us at 845-896-9651 to set up a mediation consultation.

 

 

CUSTODY: Trying to work out parenting plan works in your favor

May 10, 2018 by Kathryn Lazar

CUSTODY ARRANGEMENTS:  BEING ACCOMMODATING WHEN CHOOSING YOUR PARENTING PLAN DOESN’T PREJUDICE YOUR RIGHTS IN LITIGATION

 

A mediation colleague recently blogged about the advantages of  mediation over litigated divorce in working out the right parenting plan for your child or children. One advantage of mediation (which advantage is also present in collaborative divorce cases) is that couples can test tentative parenting plans –  meaning, they can try out one arrangement, see how it works, and tweak it to best meet the needs of their children.  Because, in mediation, the couple controls the process, they can space out their meetings to allow for this testing, and then adjust the agreement accordingly.   The author also points out that, should spouses end up in litigation rather than at the mediation table, they don’t prejudice their rights in litigation by having been accommodating and working together amicably on their parenting plan. http://www.susan-ingram.com/2016/01/finding-the-parenting-plan-that-is-the-right-fit/

This might surprise people who haven’t been in the court:  Judges respect parents who are willing to support the relationship between the other parent and the child.  There are many court decisions in which the accommodating parent has an advantage over the more difficult parent.  The Court’s perspective is fairly child-focussed; the Judges often state that the children are entitled to the love and affection of both parents, and take into consideration any acts in which either parent is interfering with the child’s connection with the other parent.  In fact, most custody cases are won because of the positive attributes of one parent over the other, not the negative things people say about the other. If you are concerned about custody and visitation issues,  please raise all your concerns with your lawyer — we have a lot of experience dealing with these kinds of cases, and can help you understand the best approach to protecting your children’s interests. 

 

Free Divorce Options Presentation Begin July 2018

May 1, 2018 by Kathryn Lazar

What happens if I get divorced?  How does the divorce process work?  Will I have enough money to support myself and my children?  Will I get to be with my children?  How does custody and visitation work?  What will happen to my house if we get divorced?  What will happen to my business in divorce?  Retirement?  Stock?  Stock Options?

We know that people need a lot of information before deciding whether to leave their marriage and how to go about it.  While there is no substitute for a personal consultation that is focused on your particular situation, if you are looking for general information, the lawyers in our office provide an informational program in odd numbered  months on the second Thursday at 4 pm – 5 pm.    The program is entitled “Divorce Options”, and consists of a general presentation by one of the attorneys in the office on the way divorce and separation works.

If you or  anyone you know  could benefit from understanding the  choices – kitchen table, mediation, collaboration and litigation, please join us.   Coming to one of our workshops does NOT constitute a consultation, and individual legal questions cannot be addressed, but we will explain all of your choices and answer general questions.  We will also be available to set up a private consultation at a later time, if that seems appropriate.

Call us at 845-896-9651 if you would like to attend or if you want an individual consultation.  Our 2018 events are scheduled for July 12, September 13, and November 8 at our office, 280 Route 82, Hopewell Junction, New York, located on Route 82 half way between Fishkill and Hopewell Junction.

 

Spousal Maintenance & Child Support Calculator

May 1, 2018 by Kathryn Lazar

New York has developed formulas for both child support and spousal support.  Although these formulas are “presumptive” — meaning that the Court is supposed to order these amounts in most cases, the law also provides that the Court can make exceptions to the general rule if persuaded that it would be appropriate to do so.

You can easily figure out what the presumptive support is in your situation, if you have the most recently filed tax returns.  Two good websites for getting this information are:

https://www.nycourts.gov/divorce/MaintenanceChildSupportTools.shtml

and http://www.joyrosenthal.com/new-york-maintenance-child-support-calculator/

By inserting you and your partner’s income and the number of children you have, you can find out how much child support and how much spousal support (called maintenance) the Court would presumptively award to you.

For more information about how the child support and spousal support laws might affect you, make an appointment for a consultation with one of our lawyers by calling 845-896-9651.

 

Tax Treatment of Spousal Maintenance – How Will the New Tax Laws Impact on my Divorce?

April 1, 2018 by Brett Jones

DEDUCTIBLE FOR THE PAYOR, TAXABLE FOR THE PAYEE — FOR HOW LONG?

 

Alimony, now known in New York as maintenance, has as its premise in the idea that the so-called “monied spouse” in a divorce should make payments to the non-monied spouse in order to allow the non-monied spouse time to become self-supporting. Back in the day, maintenance awards were often forever. Now that is much less frequent, the concept being not only to give the non-monied spouse a “soft landing” in terms of lifestyle, but also to get on her/his feet economically, perhaps completing an academic degree or other job-qualifying training. For federal tax purposes, maintenance payments have been deductible for the spouse who pays and taxable as income for the spouse who receives the payments.  But not for long.

The sweeping tax overhaul passed in 2018  stands this on its head. Starting with cases that are resolved after December 31, 2018, maintenance (also called alimony or spousal support) will be paid with after-tax dollars, not deducted from taxable income, and would be tax-free to the recipient. For the spouse receiving maintenance, this makes sense, because the legislative rationale is economic rehabilitation. But for the spouse who pays, it’s more like an incentive to stay married. Maybe this is a good thing, socially speaking; after all, the divorce rate is approaching 50%. But where’s the social benefit from staying in a bad marriage? Does that help anyone? The spouses? The children?

Most seasoned family law attorneys I know are of the view that eliminating a tax deduction for high-income earners who make alimony payments will have unintended consequences not contemplated when the NYS legislature enacted the most recent legislation governing the calculation and payment of maintenance effective in 2016.  One of the reasons is because the current tax deduction for alimony payers creates an incentive for high-earning spouses to pay larger alimony payments than they would under the new law.  This means that if you do not reach an agreement or get divorced in 2018, the new law will change the negotiations of any divorce where spousal support is an issue.

Why did Congress  make this change?  The real reason is most likely that they needed to make it look like the tax law changes would not reduce revenue to the federal government, and eliminating the ability to switch who pays taxes on spousal support means that the monies are taxed at a higher rate, generating more federal tax dollars.  This change in the law will increase taxes paid to the US government by $8.3 billion over ten years!   But it also makes things easier for the IRS, which previously had to  determine the deductibility of maintenance payments by checking  to confirm they meet the following requirements, among others: the payment must be made pursuant to a written divorce or separation agreement; must be made to or on behalf of the ex-spouse; the obligation to make the payment must cease if the ex-spouse dies (failure to meet this requirement is probably the most common cause of lost alimony deductions); the payment must be in cash or cash equivalent; the payment cannot be considered child support, plus a couple of other requirements. With a 50% divorce rate, checking compliance is a big job!

Interestingly, the legal headstand  returns federal law on this point to what it was in 1917, when the US Supreme Court ruled that alimony was not taxable to the spouse receiving it. That was the rule until 1942, when Congress overruled the 1917 case, passing the Revenue Tax Act of 1942. Except for gender-neutralizing language, federal law on the point hasn’t much changed since then. An interesting short article about this history is available here.

Given that this tax legislation passed, it is effective for agreements executed after December 31, 2018.  This and potentially other changes in the tax code will need to be closely considered going forward in divorce negotiations.

If you are divorcing or contemplating divorce, please speak with your accountant and your attorney to help you navigate through it.

 

Searching On-Line For Top Divorce Attorneys in Dutchess County- Buyers Beware!

February 22, 2018 by Kathryn Lazar

By:  Kathryn S. Lazar, Esq. and Brett E. Jones, Esq.

We recently ran a number of on-line searches for divorce attorneys in Dutchess County, New York using a number of different word searches.   The results were frightening!  These searches lead uninformed people seeking divorce lawyers to some of the worst divorce attorneys in our community.

 

Why did we take the time to search?  Partially because we were examining our own marketing practices, but mostly because we see that these irresponsible attorneys are getting lots of clients.  We are concerned by the number of clients we have whose spouse ends up with one of these bad attorneys and because some of our clients start off with one of these bad attorneys and then realize after spending some time with these lawyers that something is definitely not right about the attorney they hired, and then they are referred to us.  The involvement of these bad attorneys in our cases are detrimental and at times completely destructive in so many ways to present and future of the parties and their family.

 

When we characterize these attorneys as “bad” or “the worst attorneys,” what does that mean?  It includes:

– attorneys who do not educate their clients on the various options to get divorced including all of the process options to stay out of court;

– attorneys who just take people’s money but do not do any work for their client, and then won’t give any of the money back to the client when requested;

– attorneys who do not pay attention to their client or the client’s case;

– attorneys who do not return telephone calls to their client or to the opposing attorney;

– attorneys who either do not show up at court appearances or who show up late;

– attorneys who are unwilling to settle the case in an efficient, cost-effective, and productive manner;

– attorneys who want to bill their clients for as much money as they can without doing any work;

– attorneys who give their clients completely false and unrealistic expectations,  which makes it very difficult to settle a case and causes substantial unnecessary expense; and

– attorneys who violate the rules of professional responsibility and the professional ethics code in how they treat their clients and opposing counsel.

 

Unfortunately, what many people do not realize is that attorneys pay a lot of money in order to show up on the first few pages of these on-line searches, to repeatedly run television and radio advertising spots, and to be “rated” by on-line legal service providers/marketers.  The fact that they can pay the money to advertise in any of these mediums means nothing about their competence – it just means they are willing to pay to advertise.   Showing up in an online search or on the radio should not be considered as any indicator of their reputation, experience,  or ability to effectively practice matrimonial and family law.   In fact, highly experienced attorneys with very good reputations, including our firm, get most of their clients from a referral network of professionals, including accountants, financial advisors, medical professionals, mental health professionals, other attorneys, business owners, and religious leaders,  as well as from former and current clients.  These referral sources know and have experience with how a particular attorney or firm manages their cases, works with their clients, helps their clients, and gets good results for their clients. Recommendations from experienced professionals and satisfied clients are the main sources people should use when searching for an experienced and competent divorce attorney.

 

We understand the circumstances that people must be going through when they are searching for a divorce attorney- they are either considering divorce or are thrust into a divorce situation by their spouse.  Emotions run wild during that time in a person’s life – and the tornado of feelings can interfere with making good choices.  But we want to strongly caution people against hiring any attorney they find in an on-line search that only exists because the attorney paid money for it.  We encourage people to find out more about an attorney and a person’s actual experience with that attorney before consulting with them and retaining them.

 

What Happens When I File a Divorce Action?

February 20, 2018 by Melissa Rutkoske

Court Procedure in Divorce Cases

 

We hear a lot about the emotional aspects of divorce; feelings are not just a salient feature, but for many are the dominant feature of the process. But what, exactly, is the process? It may feel like a mess while it’s happening, but in procedural terms it’s actually pretty orderly.

 

In New York, the case (called an “action”) is commenced by giving legal papers named the Summons and Complaint to the other party, to let them know an action is pending against them and they must respond. This is called service of process. If you initiate the case, you are the Plaintiff and serve the other party; if the other party initiates the case, you are the Defendant and they serve you. The papers are also filed with the court, and the date of filing is called the “Commencement Date.”

 

The Commencement Date is an important date. Certain things change on that date:

  • Items acquired after that are, not always but often, each party’s separate property rather than being part of the aggregate “marital estate.” This can be important because the marital estate is subject to equitable distribution between the parties, but separate property is not.
  • Money earned by each party after the Commencement Date is each party’s separate property.
  • The Commencement Date is the date of valuation for most marital assets.
  • Future court orders, such as those determining spousal support and child support, may be retroactive to this date.
  • From the Commencement Date, neither spouse may obligate the other monetarily.

No judge is assigned when the action is filed; that happens later.

 

Service of process does not mean you have to appear in court right away. Instead, at this stage both parties prepare statements of net worth and other information about the case. If a net worth statement is inconsistent with what the other party knows or thinks they know, the party whose net worth is being questioned may be asked to produce documents to demonstrate the accuracy of the statement.

 

Also at this stage there can be exchanges of information and maybe negotiations to resolve the case on terms satisfactory to both parties, rather than letting the case be decided by a judge. This type of negotiated resolution is called “settlement.” If settlement negotiations are undertaken and then break down, either party may file a Request for Judicial Intervention (“RJI”), at which time a judge will be assigned. You will have to appear in court within 45 days of filing of the RJI.

 

Once at court, the parties complete and sign a Preliminary Conference Order, which sets dates for exchange of all financial information. The court will want to know which issues have been resolved and which still remain, such as child support, custody, retirement assets, marital home, etc. If children are involved, the children will be assigned an attorney.

 

During the weeks of implementation of the Conference Order, settlement negotiations may continue if the parties wish. If the case is not consensually settled, the court will schedule a trial, during which settlement negotiations may still continue. In fact, among cases that reach the trial stage, most are settled during trial.

 

The above is general and true in most cases, but there are still instances where a party commences an action for divorce and files the RJI at the same time, along with a motion for temporary relief, such as child support, attorneys fees, or spousal support.  If this happens, the other party must respond and appear in court on the date specified in the motion papers.

 

When you file an action for divorce, you have 120 days to serve the other party.  There are sometimes reasons to file the action and not immediately serve the Summons and Complaint.  In this and other strategic aspects of your case, consultation with an experienced attorney such as those at Lazar & Schwartz can add real value in deciding how to proceed.

 

Tax Treatment of Spousal Maintenance II

January 23, 2018 by Brett Jones

Will the new federal tax law alter application of New York’s spousal maintenance formula?

 

Last month when we posted about the tax treatment of alimony (called “maintenance” in New York), the new federal tax bill had not yet passed in both houses of Congress. Now it is signed into law. Good news and bad news.

 

Good news first. When we wrote December’s post, any change in tax treatment of maintenance would have been effective January 1, 2018. However, that is not what happened. This month, the law is passed and its provisions on this subject are not effective until January of 2019. So we have a year during which at least this can be expected to happen: those who are helped by the new tax treatment will  be trying to delay their divorces and those who are hurt y the new tax treatment will be trying to accelerate their divorces.  

 

The bad news is the same as the good news. 2018 will be a year of struggle to speed up and slow down divorce negotiations: spouses who are served by the new law will want to delay their divorces and those who are served by the present law will want to finalize them. So which of these parties are you, a delayer or an accelerator?

 

Let’s look at how this works. A writer named Ethan Wolff-Mann wrote an article (which you can read here) identifying some of the variables that will be in play during 2018. He gives an example of  a soon-to-be ex spouse who will be paying $100,000 a year in maintenance under the old law. This “monied spouse” will get a deduction off the top so that, in the highest tax bracket of 40%, he or she is only out $60,000. On the other hand, the person receiving that $100,000 pays tax on it, so assuming a 15% tax rate, nets about $85,000.  

 

Now take the same example in 2019. If the paying spouse has the same out-of-pocket cost of $60,000, that would mean the receiving spouse gets the $60,000. Period. On that basis who loses and who wins? It is certainly possible to argue both spouses lose. Because of the non-deductibility and the decreased income, can it be argued the government wins? As we discussed last month, maybe the IRS.

Wolff-Mann goes farther, pointing out that states like New York that use formulas to calculate alimony may or may not change them to comport with the new federal law. New York’s formula is relatively new, having come into effect only two years ago. This leaves any adjustments to the courts for the time being. New York courts can deviate from the formula if its application produces results that are “unjust and inappropriate.” This invites courts to deviate from the formula and set payments that take into account the increases in cost to the paying  party and the net income to the receiver.

 

Will New York courts respond to that invitation? Wolff-Mann quotes a New York lawyer who says  that some will and some won’t. If this happens, two couples could be divorcing in the same court under different judges and get different results, even if, hypothetically, they agree to the very same settlement terms. This does nothing for consistency in the law (but it does make 2018 a year in which the self-determination available to parties who choose divorce mediation or collaborative divorce is even more attractive than usual, but that’s another point).  

 

Time will tell the impact of the new federal law on New York divorces. While the dust settles, advice of counsel will be even more important than usual  because, at the very least, this aspect of divorce is less predictable than previously.

 

MEDIATION – Can I also have my own attorney?

January 5, 2018 by Brett Jones

The title of the children’s book It Takes a Village could apply just as easily to divorce. Psychologists, social workers and financial advisors all have perspectives that may be useful to divorcing spouses, and many practitioners in these disciplines have successful businesses as divorce coaches. However, one profession that’s often overlooked when choosing a coach is lawyers.

 

Most people think of lawyers as adversarial only. If a divorce is acrimonious, it’s common to want the “meanest matrimonial lawyer, one who eats raw meat for breakfast.” This is a stereotype, one that’s largely outdated and often ineffective. Increasingly, divorcing spouses are looking for better process options to divorce, including mediation.  Can a spouse in mediation also have their own attorney?  Does the attorney participate in the mediation?  How would this work?

 

We are often asked to coach parties through mediation which they’ve chosen as their divorce process.   This may help a spouse to feel more “protected”, and provides a spouse with their own attorney to provide legal advice and guide them through each step of the mediation process.  For example, the couple has reached agreement on a parenting plan, division of their household goods and who will pay for medical insurance coverage, but they’re stuck on division of a pension or a 401k. They’re not stuck because they disagree; they’re stuck because they don’t know if what they’re asking for is reasonable. They may experience diminished trust in each other and may be concerned they’ll be taken advantage of. Mediation has enabled them to agree on many things but progress has slowed because one or both parties, feeling uncertain, find themselves hesitant to discuss a few remaining issues. A lawyer as coach can jar these situations loose by providing knowledge and perspective.

 

To optimize a lawyer as your divorce coach, it works best to have the lawyer on board during all or most of the mediation. This does not mean your lawyer/coach needs to accompany you to every mediation session, although s/he can. Most times, lawyer/coaches are consulted between mediation sessions if a divorcing spouse has a legal question. Good mediators encourage this (though many mediators are lawyers, they would be ethically compromised by giving legal advice to either party in mediation). Therefore, if a legal question arises in the course of mediation, one or both parties may wish to check with their respective lawyer/coach between sessions. If you do not engage a lawyer/coach for the duration of the mediation, you can bring one into the process at any time.

 

One or both parties in divorce mediation may be coached by a lawyer. Lawyers who excel in this role are collaborative without being overly concessive, and have a grasp of the overall settlement picture. Experience in the role also counts for a lot. Lawyers whose experience is exclusively as an adversary or litigator may not adjust readily to representing or coaching clients who choose mediation for their divorce. A lawyer/coach must recognize that a client may be well satisfied without cleaning the spouse’s clock, so to speak; divorce settlement need not be punishing to work well.

 

We have coached a number of parties who’ve chosen mediation. Not only has it been helpful in expediting divorce, it’s also more economical and less adversarial. The experience has been not only effective but satisfying for lawyer/coach and client/coachee.