As everyone has heard by now, the 2017 Tax Cuts and Jobs Act was signed on December 22, 2017, and is now law.  While the name may be confusing, what it means for taxpayers is that many tax laws are changing.  Attorneys and accountants are still figuring out what the impact of the Act  will be, and more direction will be provided by the IRS in the coming months and years.  This is the first in a series of blogs designed to demystify the new tax laws that may impact those who are divorced or currently in the process of getting divorced.

Alimony has long been tax deductible to the payor (person paying alimony) and added to taxable income to the recipient (the person receiving alimony), as long as specific requirements set forth by the IRS are followed.  The result has been an income shift from the party that pays a higher tax rate to the party that pays a lower tax rate.  In the end, both parties under this scenario end up with more money than if alimony were not taxable or deductible.  This treatment has applied to spousal support, alimony pendente lite and alimony.

With the passage of the Tax Cuts and Jobs Act, such treatment of alimony will change, but not right away.   As of now, the change is only for tax years 2019 through 2025, and specifically will only apply to agreements signed after December 31, 2018.  It remains to be seen what will happen after 2025, or possibly before if there are additional changes to the tax code.  There is an exception made, however, for those who have already entered into an agreement on or before December 31, 2018.  The law changes for all agreements entered after December 31, 2018, so that the alimony will no longer be deductible for the payor, or count as income to the recipient.  It remains to be seen if there are any changes to how the amount of spousal support, alimony pendente lite or alimony are calculated given the change in the tax law.  If there are no changes to the calculations, the result will be a loss of tax advantage for the party paying support, while the party receiving support will receive the benefit.  If there are changes to the support calculations, I would anticipate that we will know by the end of this year.  Stay tuned.

Although the weather is just starting to change to cooler temperatures, the holiday season is fast approaching.  Holiday displays are up, holiday music is already playing and even the pre-Black Friday sales have started.   It seems that with the warmer temperatures well into the fall, the holidays have snuck up on us all.  While it is easy to get wrapped up in the spirit of the  season, if you have minor children and a custody agreement or order, it is time to take a look at your custody documents  and give some thought to what lies ahead in the next several weeks.
 
Before you make plans with your children, it is important to see what the holiday schedule is for this year.  Which days of the holidays are your children with you, what times are they with you, and who is responsible for transporting the children?  It is important that you know the answers to all of these questions.  Take out your custody agreement or order now and look through the schedule for Thanksgiving through New Year’s.  If you have questions, now is the time to ask your attorney, not on Thanksgiving morning.  We all know that a lot of advance planning occurs for the holidays, and family gatherings are scheduled.  If it is important to you that your children celebrate with you and your extended family, you want to be sure to make your plans around when you have physical custody of the children.  Knowing the details of the holiday schedule now will enable you to make plans based upon the custody schedule and keep everyone happy, which should result in a more peaceful holiday for you.    

Prior to Pennsylvania legally recognizing same-sex marriages, other states did offer same-sex marriages or civil unions. A problem for couples who entered into an out-of-state marriage or civil union was that if they later decided to divorce, they could not do so in the Pennsylvania family courts.  This was because Pennsylvania did not recognize those marriages or civil unions as legal.  In June 2013, in United States v. Windsor, the United States Supreme Court ruled that the Defense of Marriage Act’s (DOMA) defining marriage as between one man and one woman was unconstitutional, but the Court limited the impact of their decision.  In May 2014, the United States District Court for the Middle District of Pennsylvania ruled in Whitewood v. Wolf that Pennsylvania’s definition of marriage and refusal to recognize out-of-state same-sex marriages were unconstitutional.  Then, in June 2015, the United Stated Supreme Court in Obergefell v. Hodges ruled that same-sex couples must have the right to marry.  This decision applies to every state.

While these decisions expanded rights to same-sex couples, a lot of questions were left unanswered.  One of the big questions was whether civil unions entered into in other states prior to the legalization of same-sex marriage would be recognized by Pennsylvania.  If the civil unions were not recognized as legal marriages, then Pennsylvania courts did not have to grant divorces, divide the assets and liabilities through equitable distribution or address support issues There were potential child custody ramifications as well.  This left Pennsylvania same-sex couples who legally entered into out-of-state civil unions without the ability to divorce or deal with the economics related to their marriage through the family courts in their home state. 

On December 28, 2016, the Superior Court of Pennsylvania addressed this question in Neyman v. Buckley.  The Superior Court of Pennsylvania ruled “that a Vermont civil union creates the functional equivalent of marriage for the purposes of dissolution.”  In this case, the parties, Pennsylvania residents, entered into a Vermont civil union in 2002 and separated later that year.  From 2014 through 2015 the parties unsuccessfully sought a divorce in Pennsylvania and appealed their case to the Pennsylvania Superior Court arguing that the Pennsylvania family court should have jurisdiction to dissolve their Vermont civil union and that the Vermont civil union should be treated as a legal marriage in Pennsylvania.  It is important to note that Vermont intended same-sex couples that entered into civil unions to have the same rights and access to the family court system as those who were married.  The Superior Court of Pennsylvania used this reasoning to “conclude that the legal properties of a Vermont civil union weigh in favor of recognizing such unions as the legal equivalent of marriage for purposes of dissolution under the Divorce Code.”  This decision allows same-sex couples who entered into out-of-state civil unions the same rights as if the civil union were a marriage.  It also allows these couples access to Pennsylvania family courts to address those issues permitted under the Pennsylvania Divorce Code.

Most people believe that they have plenty of time before they have to start considering their 2016 taxes to be filed in 2017, and for most, the tax return process is not something they just can’t wait to get started.  That being said,  if you are separated or in the process of a divorce, now is the time to start thinking about your tax filing status for your 2016 income tax returns.  Some thoughtful planning and discussion now can go a long way in avoiding stressful emergency issues in the weeks leading up to April 15th, and instead provide adequate time to address and resolve any concerns.  If you are separated but not divorced by December 31, 2016, you have a few different options of how you can file your taxes: married filing jointly, married filing separately or perhaps even head of household.  You cannot file single if you are not divorced in 2016.

The reason to start thinking about your 2016 tax filing status now is that if you want to file as married filing jointly, your spouse must agree.  Now is the time to speak to your accountant to determine the most advantageous tax filing status.  You should also decide if there are any concerns that you have that would prevent you from choosing one of the options.  If you and your accountant determine that married filing jointly is the best option, and your spouse disagrees, you will have time to involve the attorneys and work towards an agreement as to tax filing status.  In many cases, an Agreement to File Joint Income Tax Returns/Tax Indemnification Agreement is the best way to proceed in order to set forth each spouses’ responsibilities in terms of preparing and filing the returns, addressing any taxes due or refunds that might be received, and to protect you from any potential tax liability related to your spouse.

You can set yourself up for a less stressful tax season in 2017 by starting the discussion now. 

On October 4, 2016, Governor Wolf signed into law new legislation that will change the separation requirement from a two year waiting period to one year.  The law goes into effect on December 3, 2016. Under current law, the Divorce Code provides that in cases where only one party desires a divorce, that party must wait two years from the date of separation before they can move the matter forward.  At that two year mark, the party who is seeking the divorce can move the matter forward without the non-consenting party’s agreement.  The longer waiting period  has often  led to cases dragging on for too much time, which can lead to more animosity between the parties.  For children involved in the separation, this has often had a negative impact.  As a result of the passage of this new law, the hope is that cases will resolve much more quickly.

It should be noted, however, that at the one year mark from the date of separation, the case is not resolved, but rather at that time the case is permitted to proceed.  It is by no means a guarantee that the process will not be lengthy from that point forward.

 Stay tuned for updates as we see how the law is applied by the courts.

Few experiences in life are as emotionally challenging as divorce.  It is not surprising that clients may focus on the issuance of the Divorce Decree as the end of a very painful chapter in their lives. After all, as of the signing of the Divorce Decree, the parties are divorced, and the work is over.  Unfortunately, in most cases, there is still important work to be accomplished even after the judge signs the Divorce Decree.  Family law clients will have an easier time accepting this reality if they know in advance that the Divorce Decree is not the last step in their case.

There are many important matters that may remain outstanding when a Divorce Decree is issued, and some of the key factors are discussed here.   Most divorce clients resolve the division of their assets by entering into a settlement agreement, or a judge issues an order resolving all claims related to the marriage.  Those assets are then typically divided after the Divorce Decree is issued.  Bank accounts are divided and closed.  If there are retirement accounts to be transferred, there are very specific and time consuming rules to follow to transfer the retirement assets from one spouse or ex-spouse to the other.  The retirement assets can take many months to divide which is understandably frustrating for clients.  Mortgages on real estate may have to be refinanced and deeds transferred.  While these procedures can be time consuming and frustrating to complete, clearly, they are critical to the future financial well-being of the parties involved, so perseverance and patience will pay off in the long run.

After those issues relating to marital property, claims and assets are resolved, there are still some items that we suggest clients accomplish after the Divorce Decree to ensure that they have all the legal documentation completed to address their needs post-divorce.  A spouse may want to retake her maiden name.  Also, we suggest that Wills and Powers of Attorney be updated so that the ex-spouse is no longer included in the Will or has Power of Attorney.  Beneficiary designations should be updated for life insurance policies, retirement accounts and other assets as well.  These are merely some of the items that may have to be accomplished post-Divorce Decree.

In order to have realistic expectations of the divorce process, it is important to understand from the start that everything is not finished when the judge signs the Divorce Decree.  There is usually more work to be accomplished before the case is completed.

By Elizabeth Fineman, Esquire

As a family law practitioner, I’d like to share some information that could help prepare potential clients for the kind of personal questions they will be asked when they make their first call to schedule a consultation.   Many people are taken aback by being asked for details about sensitive personal and financial details on their initial contact with a family law attorney’s office.  I want to reassure you that, while these initial interviews can be difficult,  there are good reasons why the questions need to be asked,  and  ultimately, you are better served if we gain a fuller picture of your issues before the first meeting with the attorney.

First things first.  The firm is ethically obligated to take names and identifying information related to all parties involved in the case before the attorney consults with the client.  We do this so that we can confirm that there are no conflicts.  A conflict check involves a review of prior cases that the firm and attorneys have handled to make sure that we have not previously represented the opposing party.  Once the firm confirms that there are no conflicts, a meeting with a domestic relations attorney can be scheduled. 

You should also expect to be asked some questions related to jobs, incomes, assets and liabilities.  This information is all provided to the attorney before you meet, enabling that attorney to walk into the initial consultation knowing what issues (divorce, child support, alimony pendente lite, spousal support, alimony and/or child custody) are pertinent to your case and time can be allotted accordingly so that all areas are covered in enough detail at the consultation.

While the first steps in a divorce or family law matter are, by their nature, very personal and fraught with emotion, knowing what to expect before you make that call can hopefully lessen the impact, and lead to a better and more productive exchange.

By: Elizabeth J. Fineman, Esquire

Social media use has become pervasive in modern culture.   More and more people regularly engage in social media activities across several platforms, including Facebook, LinkedIn, Twitter, SnapChat, Instagram and Google+.  Unfortunately, many people post to various social media sites without giving sufficient consideration to the possible consequences.  For those who are going through a divorce, engaged in a custody dispute or paying or receiving support, it is essential that you evaluate your social media habits and apply a higher level of discretion to your social media communications. 

Family Law cases are often tumultuous and there are a lot of emotions involved.  It is not uncommon for some to use social media as an outlet to vent their frustrations, conflicts, or interpersonal issues.  That is never a good idea.  Any time you post something to social media, you should ask yourself, "How would a court view this post?"  If this is not something that you would want raised at a future hearing, do not post.  For many, this kind of self-editing or “filtering” is difficult.  My strong advice to them is to take a break from social media, and develop some “rules” for posting before resuming social media activities.  A few good guidelines are; never post when you are angry or upset, give yourself a cool down period, don’t engage in a public debate or correction of others on the internet, stop and take a moment to think and re-read before posting. It’s important to remember, once you tweet, share or post, you have effectively put something out on the web that you can’t really take back.

For parents, if the other parent objects to the children's photographs being posted to social media sites, you should respect their wishes.  There are other ways to share photographs with family and friends other than social media which are much more secure.

It is important to understand that information posted on many of these sites can be obtained, even after posts are deleted.  Therefore, posting and later deleting may not be sufficient.  There have been too many instances where social media postings have negatively impacted results in domestic relations matters.  In custody, some people post photos and "check in" places during their periods of physical custody, making it clear the children are regularly left with a babysitter.  If seeking additional custodial time, this is never a good idea.  Some people involved in support litigation post information that makes it clear that their income is higher than they have disclosed.  These can all have a detrimental impact their results in court.

I hope the take away here is clear; you must use extreme discretion when utilizing social media when divorce, child custody and support are at issue. 

People are often surprised to find out from their domestic relations attorneys that there are two different types of custody that have to be addressed: physical custody and legal custody.

Physical custody is simply which parent the children are with at a given time.  This is generally addressed in a custody agreement or custody order based upon three time periods.  First, who has the children on a regular weekly basis.  This is for both days and nights.  Second, how much vacation time does each of the parents have with the children.  Third, who has the children on holidays.  The parents can decide which holidays are important for them to address, and usually not every holiday is considered.  Primary physical custody occurs when one parent has the child or children more than half of the overnights each year.  The other parent is then considered the partial physical custodian.  Even if there is a primary and partial physical custodian, this custodial arrangement is still considered a form of shared physical custody.  Equal physical custody occurs when the parents each have half of the overnights in a calendar year.

Legal custody relates to legal decisions that impact the children.  The major areas of legal custody are education, religion and healthcare decisions.  In the vast majority of custody cases, the parents will share legal custody and therefore make these decisions jointly.   Parents with younger children will have to make more legal custody decisions as compared to those with older children, for whom many of these determinations have already been made.

Custody schedules can be structured many different ways based upon what is in the best interest of the children, and what works for the parents.  Parents are highly encouraged by the court to work out custody schedules.  If they are not able to, the court will make a determination and issue a custody order.

Custody is often the most emotional aspect of a divorce or separation.   We strongly recommend that parents facing custody issues contact an attorney to be sure they understand the process, and their rights under the law.