On this episode of Legal Talk Maryland we do an overview of the legislative changes made in worker’s compensation over the last year. Joining us for the first time is Todd Schuler of Kahn Smith and Collins.

Hosts:

• Todd Schuler of Kahn, Smith & Collins P.A.
• Andy Spicer of Razegroup, LLC and Andy & Amy on Biz Small Business Podcast

Join Us on Twitter:

Kahn, Smith & Collins @KSCLaw

Andy Spicer @andyspicer and @andyamyonbiz

Razegroup @razegroup

Resources:

Episode #25 Transcription

That is the decision of Maryland’s Court of Special Appeals. In an unreported opinion dated December 27, 2011, the Court concluded that Teamsters Local 355 has a contractual right to arbitrate a dispute with the County concerning pay raises for Deputy Sheriffs. In 2009, the County had refused to arbitrate the dispute, despite clear language in the parties’ collective bargaining agreement. The Teamsters, through attorneys Keith Zimmerman and David Gray Wright of Kahn, Smith & Collins, P.A., took the County to court. The Circuit Court for Anne Arundel County ordered the County to arbitrate the dispute. The Court of Special Appeals affirmed the decision.

The dispute arose in 2009 when the County reneged on its agreement to provide certain wage and pay advancements to the Deputy Sheriffs. The County Executive specifically agreed not to attempt to circumvent the agreement. He then did just that. A dispute ensued and the Union filed a grievance. As was its right, the Union requested that the matter be referred to an independent arbitrator for resolution. The County refused to arbitrate the issue contending that it was not grievable. The Court of Special Appeals disagreed. It wrote: “the grievance was arbitrable and the arbitrator has jurisdiction to hear the dispute, as well as authority to grant the relief sought ….” The Court was clear: “Although an arbitrator cannot order the County Executive or County Council to exercise their budget and appropriation authority … an arbitrator can still award damages if it finds a breach of contract by a municipality or county.” These are the questions that will now be put to an arbitrator.

Keith Zimmerman argued the case on behalf of the Teamsters before both the Circuit Court and the Court of Special Appeals. David Gray Wright was on brief before the Court of Special Appeals.

Andy:     Welcome to Legal Talk Maryland, this is episode 24 and I’m joined again today by David Diggs of Kahn, Smith & Collins. David, this is going to be our last episode on family law and so we’ve covered really the full gamut of the beginning conversation about divorce, all the way through custody, child support, alimony, and property disbursement. This episode’s going to be a bit of a catch up on a bunch of different topics.

I’d like to start with the very first one, which is we’ve recommended a number of times throughout the episodes that people get a lawyer involved early so that they get good advice, and a lot of times it can grease the skids and make the process a lot smoother. What happens to the fees that get charged? Do we need two lawyers in a divorce scenario, does each spouse need one? If they do, who pays for them? Is one at a disadvantage if they can’t pay for their own upfront? How does that all work and what’s involved?

David:    In most cases attorney’s fees are charged based upon the attorney’s hourly rate. I would say in the Baltimore metropolitan area hourly rates for lawyers are going to range from $150 an hour, that’s really low, to $400 an hour. You really need two attorneys. If there are contested issues there have been attorneys who have been sanctioned for trying to represent both parties in a divorce. You owe your undivided loyalty to your client and if you’re representing two parties in a divorce you have a conflict of interest and you can’t have undivided loyalty to both folks.

It is a really tough issue when one party can’t afford an attorney. There are statutes in place that allow a financially dependent spouse to request contribution toward their attorney’s fees. If a spouse is looking for child support, alimony, or division of property, the law allows for awards of fees. But it’s difficult to prosecute a case against a promise of fees from a court down the road.

In some cases where you have one spouse who is financially superior and particularly enlightened, that spouse might voluntarily pay the other spouse’s fees, frankly because that spouse has an interest in making sure his soon-to-be ex-spouse gets good advice so that whatever agreement or arrangement they come to can stand a challenge later, so that it’s fair, so that there’s full disclosure, so that there’s no allegation of duress or anything like that.

Andy:     Does the cause issue that we talked about play into this at all? I’m the spouse, you cheated on me, you’ve got a girlfriend, I caught you and I’ve got pictures or whatever the scenario. I have to go to court now and spend all this money fighting you in a divorce. Can I recover that at all?

David:    It is a factor. I would say it’s probably not as big a factor as the spouse who’s caught their cheating spouse might wish. The law says we have to consider whether there was substantial justification in bringing the action or defending the action. But, the bottom line is if one spouse is very difficult, obstinate, just refuses to do the things that they’re required to do under the court rules, that spouse can be ordered to pay fees.

Andy:     Anything else on fees or hiring an attorney that we ought to cover before we move on from that?

David:    I don’t think so. Fees are very particular from case to case, it is possible to get divorced cheaply where children aren’t involved and there is no property. A real basic separation agreement can be prepared in an hour or two by a competent attorney, but the thing I see often is folks who get into big messes because they thought they could do it themselves. Then you end up spending more on an attorney to fix it when having legal advice early on would have prevented the mess in the first place.

Andy:     For most attorneys, and I guess you can speak for your firm as well, is the initial consultation something you do, is there a charge for it?

David:    The initial consultation on the phone is not charged. The initial consultation in person is charged at my hourly rate. I know there are certainly lawyers who give a free initial consultation in these cases. Frankly, I don’t think you get as much out of the consultation. My initial consultation takes at least an hour; it might take three hours depending upon the case. But we usually ask that that be paid.

Andy:     Because you’re actually working on the case at that point, not doing a sales pitch.

David:    That’s right, I don’t charge for the phone call.

Andy:     Moving on, you’d said in the last episode you wanted to talk about retirement accounts. Tell us about how that plays.

David:    I did because usually the retirement benefits for spouses are perhaps the most valuable asset in a marriage if not second to a house. Retirement benefits are unique in that a court can change title. If I have a 401K with 200,000 dollars in it and my spouse has no retirement benefits, she can ask a court for a QDRO, a qualified domestic relations order that awards her an equitable share, perhaps 100,000 dollars because even is equitable in this case.

Then that QDRO is prepared and it would require that the holder of my 401K pay that amount into a retirement vehicle, usually an IRA in that case, set up for the other spouse. It’s important to consider because while a 401K is easily valued, defined, benefit plans may not be easily valued. Yet you have to again get an expert involved to look at the defined benefit plans to make certain actuarial assumptions and then give a present value to these so that you can then look at a defined benefit plan that might pay wife 400 dollars a month when she retires at sixty-five, but she can retire early and take a little less. You have to put a present value on those. Again, we’re back to there can only be one monetary award, and a court adjusting equity. Usually you don’t have to get into a monetary award with a retirement because the court is allowed to transfer title.

Andy:     That’s fascinating. When you talked about some of the other benefits plans, you’re talking about things that would pay on a monthly basis rather than lump sum or any other types of medical benefits, that sort of thing?

David:    Medical benefits can also be addressed with something like a QDRO, a qualified medical support order. A defined benefit plan is sort of the old-fashioned pension plan. If your dad worked at General Motors he’s got a defined benefit plan that’s going to pay him when he retires. Those are becoming less common as more folks are involved in defined contribution plans, where they’re setting aside X amount of dollars in a 401K and maybe there’s a profit-sharing component. Those are easily valued. You at least know how much is in them by the statement. Defined benefit plan is not so easily valued.

Andy:     We have a lot of military service members in this area. Does military change any of this in terms of how those benefits play?

David:    Conceptually no, it’s still marital property. As a practical matter it’s just an added layer of complication because the military retirement benefits are so complicated and there are a lot of hoops to jump through to perfect a spouse’s interest in her military spouse’s retirement benefits and other benefits besides retirement.

Andy:     Let’s talk about the same-sex marriage, and it’s a big issue these days in terms of property rights and marital rights. I suppose it seems complicated when those folks want to get together. It’s probably even more complicated when they want to go apart, right, so what can you tell us about the state of things there?

David:    The state of things are in flux at this point, as it relates to same-sex marriage. I think six or seven states in the country are allowing same-sex marriage. A gay couple that gets married in Massachusetts or D.C. may certainly move to Maryland. Then the question is what happens if their marriage breaks up. It’s really no different than a heterosexual couple’s marriage breaking up. The issue is whether Maryland courts are going to allow these folks to divorce.

I understand that these cases are working their way through the circuit courts or the trial courts. I haven’t handled any but I’ve talked to colleagues who have. It seems as though the consensus is the courts are granting divorces to same-sex couples married elsewhere. In that respect it’s no different from a heterosexual couple divorcing.

I guess the question is what’s going to happen with same-sex marriage in Maryland and we’ll know more after the next legislative session the governor said he wants to make it a priority. We may have same-sex marriage in Maryland by then. In the interim there’s been an attorney general’s opinion, Doug Gansler the Attorney General has issued an opinion that says, and as I mentioned the trial courts seem to be following it, we honor the laws of other states. The full faith and credit clause of the United States
Constitution says that.

For example Maryland doesn’t have common-law marriage. Briefly, common-law marriage are folks who are together for a long period of time without the benefit of a ceremony. Common-law marriage is allowed in Pennsylvania, D.C., and other places. We allow divorce between those folks married by common law in Pennsylvania and D.C. and basically the attorney general’s opinion said we should also allow same-sex couples who’ve married elsewhere under the laws of those jurisdictions to get divorced in Maryland.

Andy:     That’s interesting and that will change as the same-sex marriage laws change, but maybe not in the divorce side because we’re already recognizing it as if it was normal.

David:    It seems to be, I don’t think any case has made its way to the appellate court. You have to understand cases get appealed when one party’s aggrieved or presumably the divorce [00:11:34.4] gay and lesbian couples at least agree on being divorced, and those cases are not likely to be appealed.

Andy:     You talked a bit about the common law and the fact that we don’t have it in Maryland. You were going to talk about people who are living together and have common property or there are other peripheral issues, right?

David:    There are lots of issues that relate to unmarried couples. Unmarried couples can have children, and their relationship may end and they don’t have the benefit of Maryland divorce law. They do have the benefit of Maryland custody law. The same analysis applies to unmarried couples and a court will look at what’s in the children’s best interests.

The real issue is grounded in some fear. I’ve talked to unmarried persons who are really concerned that there’s nothing in writing. What happens if my estranged partner leaves with my children and goes elsewhere; that’s a real problem, as it is in a married couple case and somebody relocating.

What an unmarried couple wants to do — first we have paternity cases. If the dad is not acknowledging that he’s a father, then a paternity action can be brought so that genetic testing is compelled and we ultimately determine who the dad is.

Andy:     Can that be compelled in the other direction? If the dad thinks he’s the dad but the mother won’t — does it go both ways?

David:    It can, it obviously happens less frequently but it can. There are cases where mom is married and has a relationship outside the marriage and the dad has compelled the mom to submit to genetic testing so that he can be determined to be the dad. There’s a very complicated analysis and it’s a case-by-case basis, but a court may or may not grant that. Again, depending upon what’s in the children’s best interest.

Andy:     Anything else on the paternity front or splitting of assets between couples that aren’t married?

David:    Again, couples that aren’t married who have property together don’t have the benefit of divorce law. They’re stuck with basic property law.

Andy:     They’re business partners, basically at that point.

David:    That’s an excellent analogy. We look at how property is titled. A lot of cohabiting folks might decide to title a property together. They think they’re protecting one another. If something happens to me I want my partner to have the property. Then what happens if that relationship goes sour? You’ve created this title — have you given the property away? Folks don’t think about these things. What’s your intent when you do that? Do you want your spouse to share evenly in the property if the relationship ends?

A lot of this can be remedied by contracts but most people don’t think of it. You might find yourself in a position where you’ve titled a property to your spouse. You might have owned it ten years before this relationship started and now the relationship five years later is deteriorating. That person has a joint interest in your property.

I have a case right now with similar facts where we’re trying to figure out how to determine what the other spouse’s interest in the house is. It’s not as easily done. These are complicated issues at best, and it’s further complicated if you don’t have divorce law to guide you.

Andy:     That was pretty good on that, is there anything else in the miscellaneous category we want to cover?

David:    I think we’ve hit mostly everything. I think that covers it Andy, thank you.

Andy:     Great, thank you David and we’re going to figure out what our next set of podcast episodes will be and we’ll let everyone know. Thank you for that great coverage on family law. Again, I think to reiterate the point; anybody that’s going through these issues should give you a call and the sooner and more often you get advice the easier some of these things are to get through.

David:    Thank you, yes.

Andy:     Thanks David.

As always, none of the content of this program should be considered legal advice. Please seek an attorney for specific legal guidance relating to your individual circumstances. This podcast does not create an attorney/client relationship between Kahn, Smith & Collins, and any individual.

On this episode of Legal Talk Maryland we revisit many of the discussed topics of divorce settlements, as well as some new ones, as a closure to family law. Joining us once again is David Diggs of Kahn Smith and Collins.

Hosts:

• David Diggs of Kahn, Smith & Collins P.A.
• Andy Spicer of Razegroup, LLC and Andy & Amy on Biz Small Business Podcast

Join Us on Twitter:

Kahn, Smith & Collins @KSCLaw

Andy Spicer @andyspicer and @andyamyonbiz

Razegroup @razegroup

Resources:

Episode #24 Transcription

KSC is proud to announce that the following KSC Attorney’s have been named to the 2012 Maryland Super Lawyers list:

Joel Smtih
FJ Collins
Andrew Kahn
Keith Zimmerman
David Diggs

KSC is also pleased to announce that Todd Schuler has been named a 2012 Rising Star.

The Super Lawyers will appear in Baltimore Magazine’s January 2012 issue. They also will appear online at www.superlawyers.com and in the Maryland Super Lawyers magazine, which will be mailed to Maryland attorneys and the ABA-accredited law school libraries.

Only 5 percent of Maryland attorneys are chosen annually for these lists. The selections for this esteemed list are made by the research team at Super Lawyers, which is a service of the Thomson Reuters, Legal division based in Eagan, MN. Each year, the research team at Super Lawyers undertakes a rigorous multi-phase selection process that includes a statewide survey of lawyers, independent evaluation of candidates by the attorney-led research staff, a peer review of candidates by practice area, and a good-standing and disciplinary check.

Andy:     This is Legal Talk Maryland Episode 23. I’m Andy Spicer of razegroup.com, and I’m joined again today by David Diggs of Kahn, Smith & Collins, our host for the podcast. David leads the family law practice at Kahn, Smith & Collins and this is our fifth episode in a series of six on family law.

David, we talked in the last episode about alimony and some of the payments and things, financial terms of a divorce. What we didn’t talk about was a distribution of property and how those things get split up. I know those are complex things and there are often controversial issues in a divorce. Why don’t you tell us a bit about what the state of the law is there and what things someone ought to be thinking about.

David:    Usually when I’m interviewing a client initially we get into property last, and I explain that marital property is anything acquired during the marriage. If you bought it with your earnings, or your spouse bought it with his or her earnings, it’s marital property. That of course begs the question of we’ve got premarital property, things acquired prior to the marriage are not marital property.

Also, excluded from marital property are those things that were acquired by gift of inheritance. Inevitably we end up with mixed property that may be part marital and part non-marital. To give you an example, I’ve represented lots of folks who might have had a property before they got married, they owned a townhouse in Baltimore, and they sold it and took 20,000 dollars and used it as a down payment of the house they bought with their spouse. That creates an issue of what’s marital and non-marital.

It used to be more complicated but a change in the law approximately five or six years ago said that any real property, any home, vacation home, or that sort of thing that’s titled jointly is going to be presumptively marital property. Once you title something jointly, you buy the home together and the deed is in both names, that property is marital property. You can still ask a court to consider that you took the 20,000 dollars from your premarital townhouse, but I would say in most cases a court is going to divide that evenly, if not equitably. That’s the area where it gets confusing.

Maryland law is designed to result in equitable distribution, equitable might mean evenly, but it doesn’t always mean evenly. A court is charged with what’s going to be fair in the case, and if you’re not litigating the case, if you’re not having a judge decide it, there are two lawyers negotiating and two sides negotiating over what’s going to be fair with respect to property. You can understand that the two sides of the divorce might have different ideas on what’s going to be fair when we’re talking about what’s going to happen to a pension, a house, or grandma’s china.

Andy:     I guess there are two categories of things that come to mind. The first is things that have monetary value, so you talk about investments and real property and that sort of thing. Then there are the 100 other little things that make up our lives that we own, that I just want the TV because I want the TV, or I want the dog. How do we figure those out if there’s not an agreement? What does the court do?

David:    That’s a good question. Let’s talk about the knickknacks and things about the house and we can even throw the dog in. Basically, we would start with what’s non-marital, which knickknacks did I bring to the marriage and those are going to be my knickknacks, and the knickknacks that my spouse brought to the marriage will be hers. Then it’s all the stuff that we acquired during the marriage.

Number one, I would suggest that 90% of the folks that are getting divorced are able to agree on how to divide the toasters, linens, and furniture. The reason for that is it makes more sense for them to divide it than to pay an attorney and go to court to fight over who’s going to get the toaster, the forks, and spoons.

If they can’t agree on what’s to be done with it, after we segregate out the non-marital property, most of the other stuff is marital property. The only thing a court can do with that is order it sold and the proceeds divided. That’s happened once in my 24 years. I told you if you’re at this point, one side is reasonable and the other side isn’t, or there might be two unreasonable sides. So your stuff is going to get sold and the proceeds will be divided evenly. Usually that doesn’t happen. There are lots of ways you can avoid that.

I had a case recently where the folks couldn’t agree on how to divide the property and they decided they would have a draft of their property. Husband would get first pick and we even negotiated his first pick would be the big screen TV. Wife would get second pick and they’d go through the house and pick everything that way. That is preferable to the court selling it all and dividing the proceeds, but 97% of the folks don’t even get to that point. What’s more difficult are the real financial assets, houses, retirement plans, and investment accounts.

Andy:     Do they not by default just get split down the middle?

David:    They do not by default get split down the middle. If they are titled jointly then by default they get split down the middle. You have to look at not only what’s marital and what’s non-marital but how it’s titled. If Mr. and Ms. Jones have a joint bank account with 1,000 dollars in it, the court is going to order that divided. That’s easy, but if the bank account is in Mr. Jones’ name only, then the question is what’s going to be equitable. You have to look at all the property.

The way that a court adjusts inequities is with a monetary award. At the end of the case and after having determined a title and value of everything, a court can then grant one monetary award to offset the inequities of title. The way that works, I’m going to take out the house and pensions because they’re treated differently, but if you have 100,000 dollars in assets titled to Mr. Smith and Ms. Smith doesn’t have anything for the sake of simplicity, Ms. Smith is probably asking for 50,000 dollars because that’s equitable. Mr. Smith may counter but she’s got lots of premarital things a court should consider and I worked my butt off to earn this, and by the way she was cheating on me.

Those are the factors a court can consider. Again I would say most cases equity will be equal in that situation, but not all. I segregated out the house and the pensions because they’re addressed differently. With a house, and if children are involved you’ve got to first figure out what’s happening to possession and use. Any time that a party’s awarded custody they have a right to ask the court for possession and use of the house for up to three years from the date of divorce. Remember, you’re going to be at least a year after separation to divorce, so this could be up to four years or even longer, depending upon how long it’s taking you to get to trial.

Andy:     The person that is entitled to that would be the person with majority custody?

David:    The statute’s unclear on that but that’s the way it happens. I think it is conceivable, although I’ve never seen it in practice, that a spouse with minority custody could ask for possession and use. I could envision a case where the majority custody spouse has another property available and the minority custody spouse does not. That’s a case where I think they could get possession use, but I’ve never seen it in practice.

Of course, the idea behind the statute is to ease the transition for kids, allow them to continue in school for a given period of time. I’ve even seen folks agree to longer periods of possession and use. The court can’t impose that but they certainly can agree to that.

After the period of possession and use ends, then in most cases a house is sold or subject to a buyout by the other spouse. A change in law three years ago allowed a court to allow a spouse to buy the other’s interest. Most folks are able to agree before a court gets involved. Until that changed three years ago, a really difficult spouse could force a sale of the house. Now a spouse who wants to buy a house from the other spouse can come in and say I have the ability to pay a fair amount, this is what it’s worth, this is what we owe on the mortgage, this is a fair amount. This is my witness, the real estate banker who will testify that I can qualify for a loan and they’ll allow me to buy the house. That was an important change about three years ago.

Andy:     Again you’ve got a joint mortgage you’ve got to get one spouse off of, so you have to really remortgage the house in the one spouse’s name, that’s a part of it.

David:    Again parties can agree to anything, you might have a spouse willing to stay on a mortgage for a period of time because they’re getting another benefit in the negotiation, but that’s frequently part of the bargain; how long before the other spouse either refinances, and if that doesn’t happen then in most cases the house is going to have to be sold.

Andy:     We’ve talked a lot about assets. What about the debt side? Unfortunately in today’s economy there are probably quite a few people who come to the divorce table with more debt than assets. We’ve got 50,000 dollars worth of debt between us in car payments and credit card bills or student loans. There’s no money to pay them and we’re both on them. How does the court deal with that?

David:    That is a very difficult and often misunderstood area of divorce law. Basically, “marital debt” has a very limited meaning under divorce law. Marital debt is debt associated with the acquisition of property, a mortgage is a standard example of a marital debt. The credit card bill for 3,000 dollars while certainly things may have been acquired, meals were bought and whatever, isn’t considered marital debt because it didn’t go to that acquisition.

The bottom line is courts are not going to get into dividing credit card debt. They will reduce the value of a home by a mortgage so that a 300,000 dollar home with 150,000 dollar mortgage is obviously valued at 150,000 at the time of divorce. A court can’t say that Mr. Jones has to pay the joint credit card to Bank of America because Bank of America has a contractual right to recover from whoever is on that debt. The bottom line is the court is not going to divide that debt, although if one spouse is paying an inordinate amount of joint debt that spouse can ask the court to consider that when it’s making its monetary award.

Andy:     Again, the reality is if there are two spouses and one is wanting to continue to pay the debt so as not to affect credit rating and that sort of thing, and the other doesn’t, there’s nothing they can do to compel them.

David:    The financially superior spouse is going to be most likely stuck with that debt. The credit card company knows he or she is the financially superior spouse, and they know who to come after if the credit card doesn’t get paid. As you said, that person wants to maintain a good credit rating so they’re paying it off.

Andy:     Maybe this is just more tabloid than real life, but what about the scenario where there’s assets either hidden or people are trying to conceal to some degree what they’re earning? I guess business owners can play some games. What are the implications to that and how does that usually go?

David:    That’s a difficult area. When we’re talking about a small business, you’ve got a fellow who runs a car detailing business, a lot of cash exchanging hands, perhaps the books aren’t as honest as they could be. You can prove what’s coming in, you can show that person’s standard of living is beyond the 20,000 dollars he or she claims to be making in the business, and judges tend to be able to smell those cases out.

The real problem is that takes money. The question is whether it’s worth hiring a forensic accountant to value that business to place the real value on it, to say his books might be saying he’s earning 20,000 but it’s clear for me he’s earning the equivalent of 80,000 dollars. If it’s done properly a court will accept that testimony.

There are also cases involving dissipation, where a really upset spouse may just start spending money, gambling, drinking or whatever. A court can determine that dissipation has reduced marital property and treats it as extant property or property that they’re still going to value. You spent 100,000 dollars on wine, women, and song. We’re going to treat that 100,000 dollars as dissipated property and we’re going to order 50,000 dollars from some other asset. There are often cases that are fought over this concept of dissipation.

Andy:     The idea of money being hidden places, does that come up often?

David:    It certainly is suspected often, and we’ve found money in lots of different places. The standard example is where you’ve got a cash business and you’re trying to show the worth of the business and the income is higher than reported. As far as the Cayman Islands account, I’ve never seen a Cayman Island account. I don’t know anyone with a Cayman Island account. There are investigative services out there that purport to be able to track those down for a sum. The question is whether you’re going to find more money than you’re going to spend on that tracking.

Andy:     That’s interesting. You mentioned small businesses, and that probably happens quite often. What happens to a small business that’s joint — a husband or wife start a business and they’ve run it for a couple of years successfully and then a divorce comes. They may have thought about a partnership agreement with any outside partners they have, but how does the divorce play out? Who owns it in the end and who gets to run it? What happens with those businesses?

David:    That’s a good question and has certainly come up in the practice. The first thing you have to ask is who owns the business. If nothing has been written down, we’re talking about a mom and pop shop, no articles of incorporation, no partnership agreement. I don’t know I’ve ever run across one of those, but they’re both working. What would it be worth and what’s it producing in income.

Andy:     Suppose it was a real business, it was a corporation and one of the spouses really was the primary person, and the other either worked there part time or didn’t at all. I ask the question because there are potentially other business partners and employees that are affected now by this divorce, so what happens?

David:    That is a very contested part of a divorce case where there’s a business involved. Again, you have to ask who owns the business. You could have a business where for real, valid, planning purposes even though one spouse works more and the other doesn’t, the business is titled jointly. In that case, a court can order that property disposed of or it can value that property and divide that evenly. I’ve seen that happen for valid business-planning purposes.

More often than not, the one who’s working in it fulltime is going to be the owner, perhaps with other owners. The other spouse is going to be working part time, helping with the books or whatever. In that case, that property is going to have to be valued and it’s going to be the part time working spouse who has the onus of doing that. That spouse is going to have the burden of proving that it’s marital property and what its value is. That becomes expensive. You can’t do that without a forensic accountant. You can’t do that without a lot of paperwork and opening up the books and getting a look.

The threat of that from the part time working spouse is often enough for the full owner spouse to be somewhat reasonable; the threat of opening it up, the threat of exposing it to all the scrutiny tends to make that spouse more cooperative in other areas.

Andy:     When you’ve been claiming 20,000 a year and it really is 80,000 there are other issues besides your divorce proceeding, I suppose.

David:    That’s right.

Andy:     That’s great. In our next episode we’re going there are a bunch of topics we’re going to wrap up. We’re going to talk about who pays for the legal bills and how that works out. We’re going to talk about same-sex marriages and property rights for unmarried couples.

David:    I’d also like to talk about retirement benefits as property.

Andy:     Great. We’ll do all the miscellaneous things that are left on divorce law on the next episode, thank you.

David:    Thank you.

As always, none of the content of this program should be considered legal advice. Please seek an attorney for specific legal guidance relating to your individual circumstances. This podcast does not create an attorney/client relationship between Kahn, Smith & Collins, and any individual.

On this episode of Legal Talk Maryland we talk about the laws and some common scenarios surrounding property division in a divorce settlement with David Diggs of Kahn Smith and Collins. David deals primarily with divorce settlements and family law, and provides good information for anybody that might be dealing with alimony.

Hosts:

• David Diggs of Kahn, Smith & Collins P.A.
• Andy Spicer of Razegroup, LLC and Andy & Amy on Biz

Join Us on Twitter:

Kahn, Smith & Collins @KSCLaw

Andy Spicer @andyspicer and @andyamyonbiz

Razegroup @razegroup

Resources:

Episode #23 Transcription

Andy:  This is Legal Talk Maryland Episode 22 and we’re continuing our conversation with David Diggs of Kahn, Smith & Collins. And David, we’re going to pick up where we left off last episode. We’re going to talk about alimony and property split and that sort of thing as it relates to a divorce.

The child support thing seemed pretty clear. There’s a formula, and everybody’s interest is in making sure the kids probably do well, and those are probably a bit easier. This is probably the place where this gets more sketchy, right?

David: I can tell you nobody likes to pay alimony. I’ve never met a single client who enjoyed the alimony aspect of their case. One thing to remember, to further complicate matters, is alimony has to be determined by a court before child support can be determined because alimony affects parties’ incomes. If husband is paying a thousand dollars a month to wife in alimony that reduces his income by a thousand dollars and increase wife’s income by the same thousand dollars, so then we can do the child support calculation.

I mentioned earlier that there is no formula in the law for alimony. I should’ve added there’s a bit of a twist to that. A fairly recent case, within about the last year and not to stray too much, but divorce law is made both by the Legislature and enacting statutes but also by the appellate courts that issue decisions that interpret the law. This was a decision in a case involving Mr. and Ms. Boemio where the Montgomery County Circuit Court said that Ms. Boemio was entitled to I think three thousand dollars a month in alimony.

The judge in that case used an alimony formula proposed by Ms. Boemio’s attorney that was based on a formula used by the American Academy of Matrimonial Lawyers. It’s a very simple formula that takes each party’s income, the duration of the marriage, and gives you an alimony figure.

Most Maryland divorce lawyers agree that the AAML guidelines result in a higher figure than you’re likely to get a court to order. There are lots of other alimony guidelines out there, none have been enacted in Maryland law, but this case stands for the proposition that you can use those calculations as long as the judge still considers the dozen or so factors in the alimony statute.

Andy:  So maybe talk us through what are the things that the judge considers and who’s eligible? Is there always alimony in every divorce case? Is it always the wife that gets it? How does that work?

David: There’s certainly not alimony in every divorce case, number one. Number two, it’s not just wives who receive alimony. The statute is gender neutral. There is no difference in the law between who’s entitled to alimony. As a practical matter far more wives receive alimony than husbands.

I mentioned that nobody likes to pay alimony. I can tell you that when I’ve represented women and alimony was a possibility, they were particularly displeased to hear that was a possibility. Frankly, that posture in the negotiation — it’s less likely that a man, even though he’s earning less than a woman, is going to ask for alimony, even though the statute is gender neutral. Those are some of the realities that develop.

Andy:  We were talking about alimony. The question is; what are the things that figure into how you get it and what the court’s going to look at?

David: I mentioned the dozen or so factors. I think in the last episode we talked about the most important being the one spouse’s ability to pay and the other spouse’s financial need. The other factors include the ages of the party. Alimony is more likely in a long-term marriage where the recipient spouse is older. Basically it boils down to how likely is the recipient spouse to become self supporting. If they become self supporting that’s great, alimony has done its rehabilitative job.

Alimony can be awarded indefinitely, if number one a spouse can’t be self supporting, whether it’s by the result of age or some sort of medical condition. But even if a spouse is self supporting, alimony can be continued indefinitely if the disparity between the parties’ incomes is unconscionable. It’s hard to predict what might be unconscionability. The case law is all over the place.

In one case you might have a spouse earning a 150 thousand dollars with a spouse earning 50 thousand and the court says that’s unconscionable and awarded indefinite alimony. You can have a higher gap in a shorter marriage and the court not find unconscionability. It really depends upon the case.

Andy:  Does this play into the whole idea of continuing a certain standard of living that you’ve become accustomed to? Is that the intent of it?

David: We often hear that. That’s sort of the cocktail party analysis of alimony. There’s nothing in the statute that says either spouse is entitled to the standard of living to which they’ve been accustomed, but that certainly is an overriding theme in a lot of negotiation and litigation. Frankly, divorce changes standards of living. It’s also quite true that statistically men’s standards of living tend to go up after a divorce, and a woman’s standard of living tends to decline after divorce. The argument might be made that not enough alimony is being awarded. Because the statute is so unpredictable, I would say that contributes to the fact that alimony is awarded in a minority of cases.

Andy:  You talked a bit about the length of time. How often is it indefinite or is there usually a shorter period it lasts for?

David: There’s usually a shorter period. Again, the indefinite alimony is awarded when a spouse can’t be self supporting, or when there’s this unconscionable disparity in earnings. Then it can be indefinite. Indefinite doesn’t mean forever, it means until a court changes it. If an indefinite alimony is awarded, certainly it’s like child support in that it can be changed at any time upon showing a change of circumstance.

If Dr. Jones is paying two thousand dollars a month in alimony for ten years and then he retires, that’s an opportunity to look at alimony. I would say that because it’s unpredictable on the recipient’s end, and because the possibility of indefinite alimony on the paying spouse’s end, it tends to bring folks together and they tend to agree on a more limited period of time. Again, nobody likes to pay alimony. It may lead one spouse to be more generous in property distribution in order to avoid an alimony payment.

Andy:  So I guess the other question about this, and this will play into child support I guess as well; we talk about change of circumstances. The person that’s paying alimony decides one day my life has changed to the point where I can’t afford to do this anymore, I can’t live anywhere near where I used to, and they decide I’m not paying that anymore. Or you have some sort of payment issue. What does the court do? Are people still put in jail for not paying that stuff? What are the ramifications?

David: In both a child support and alimony case, there’s a concept known as voluntary impoverishment. If the spouse that’s paying decides I don’t want to pay anymore, I’m quitting my job at Google or wherever, where I’m making a lot of money and I’m not paying it, I’m going to hike the Appalachian Trail, a court is likely to say you can’t quit your job. You voluntarily impoverished yourself. We’re going to require you continue to pay.

The more difficult case is where folks lose jobs through no fault of their own. That’s a kind of change in circumstance that can allow a court to recalculate child support or alimony.

The real difficult cases, the one in between those two where you’re not sure whether a spouse is doing all they can to be as fully employed as possible, in that case you’ll have the spouse who is seeking the change saying I got downgraded through no fault of my own and the spouse is seeking to maintain the status quo in the payments saying no, he took these steps in order to avoid his responsibility.

Andy:  What happens in the end when that person doesn’t pay? What recourse does the court have and what do they do?

David: There are usually two possible avenues of addressing that. If there’s a court order that says payment is to be made, failure to make payment can be addressed with a petition for contempt. In other words, Ms. Jones isn’t receiving her alimony payments anymore from Dr. Jones. He’s in contempt of the court order of January 5th of 2008 that required him to make those payments. Court, bring him in and have him show why he shouldn’t be held in contempt.

Usually the contempt is just a way to compel payment. You asked earlier whether folks still get incarcerated for these things. Usually not, but certainly in an extreme case where they just refuse to pay we do see folks jailed for limited periods of time. Usually they tend to come up with the money. If they don’t come up with the money at that point it shows they didn’t have it to begin with, and they’re usually not incarcerated very long at that point.

Andy:  I guess the other thing you used to hear, and I haven’t heard it as much lately, but maybe it’s I haven’t been paying attention. You used to hear about people leaving the state, moving, going to other places to avoid those responsibilities. How do things work interstate and what are the issues there?

David: It still happens. You may not hear about it as much because I think the states are working better together. Each state has an office of child support enforcement. Also in the modern age it’s harder to hide. It’s not only that a spouse might move to avoid a financial obligation, they might move with children and try to hide them. Those are really tough cases. I have an ongoing case now where I represent a wonderful gentleman who’s fighting in Trinidad because his wife took the children to Trinidad.

The courts in Maryland have given him custody but he’s trying to get Trinidad to recognize his parental rights. That’s a particularly difficult case when we’re talking international. There are laws that apply internationally; unfortunately the Hague Convention which addresses these situations doesn’t apply between Trinidad and the United States. It applies between the United States and most other nations, but not all. There are very difficult cases.

Back to the case where someone leaves state; a Maryland child support order, alimony order can be enrolled in the other state and the same collection procedure we talked about, whether it’s filing a petition for contempt, or even filing a breach of contract action if the parties had a separation agreement; those can all be used interstate as well as within Maryland.

Andy: I guess the last question on that is the enforcement actions and all of that, are they affected by like if someone files bankruptcy? Does that change any of this? How does that play into it?

David: Child support and alimony are not dischargeable in bankruptcy. You still have those obligations. The step to take is to have those obligations reduced if circumstances have changed.

Andy:  By the court.

David: Yes.

Andy:  I guess the other thing you hear with respect to alimony and child support payments is some linking of those payments to the parental visitation rights. Is there any right on the part of the parent who is receiving alimony and child support and hasn’t gotten it, to somehow terminate or cause problems with visitation? Or contrary to that, if the parent who is expecting visitation rights isn’t getting what they think is appropriate, can they withhold payments as a result of that?

David: Generally speaking no, they’re independent rights. The right to child support is independent of the right to visitation. As a practical matter, it certainly happens. You’re not getting to see Suzy unless you pay me the support, you dead beat. That happens in reality but it’s not endorsed under the law. I would tell a client that you should let him see the child and let’s go about collecting what you’re entitled to.

Or conversely, you should continue to pay it and if you’re being denied access you should address that in the courts. When folks take the law into their own hands in those circumstances, it can get messy quickly, and you’re probably not doing the children a service in that circumstance.

Andy:  Very good. We were going to talk about property but I think we’re at the end of this episode so we’ll make the next episode specifically about property and we’ll go into that in more depth. Thanks David.

As always, none of the content of this program should be considered legal advice. Please seek an attorney for specific legal guidance relating to your individual circumstances. This podcast does not create an attorney/client relationship between Kahn, Smith & Collins, and any individual.

On this episode of Legal Talk Maryland we take an in-depth look at the laws and statutes behind alimony in a divorce settlement with David Diggs of Kahn Smith and Collins. David deals primarily with divorce settlements and family law, and provides good information for anybody that might be dealing with alimony.

Hosts:

• David Diggs of Kahn, Smith & Collins P.A.
• Andy Spicer of Razegroup, LLC and Andy & Amy on Biz

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Episode #22 Transcription