Divorce: New York

Divorce: New York

Husband Compelled to File Joint Tax Return?

Posted in Tax Matters, Temporary (Pendente Lite) Relief

Spouses can be compelled to file joint tax returns. Such was among the rulings made by Essex County Supreme Court Justice Robert J. Muller on a motion for pendente lite (temporary) relief made in his May 20, 2014 decision in the divorce action, S.Z. v. C.Z. (N.Y.L.J. June 9, 2014).

The parties had been married for 25 years, when this divorce action was filed in March, 2014. They own 6 parcels of realty including the marital residence on which there is a farm. The wife left the marital residence in December, 2013 with 3 of the parties’ 9 children. 6 of the children are under the age of 21: the 3 who live with the wife, 2 live with husband, and apparently the 6th began living on his own.

Prior to reaching the tax  issue, Justice Muller made rulings on:

  • temporary maintenance for the wife (in which he denied the husband’s request that such be paid in the form of produce, meat, eggs, vegetables, etc., from the family farm);
  • child support for the under-21 6 children;
  • health insurance and expenses;
  • appraisal and counsel fees;
  • access by the wife to personal property left by her at the marital residence; and
  • access to a home equity line that apparently did not exist.

Then, Justice Muller addressed the wife’s request for an order directing the parties to cooperate in the timely filing of a joint income tax return for 2013. Granting that relief, the Court stated:

While the April 15 deadline for filing has now come and gone, defendant indicates that the parties’ accountant has filed an extension for them. This aspect of the motion is therefore granted to the extent that the parties are directed to cooperate in the filing of their 2013 income tax return prior to October 15, 2014.

Comment: It would appear that this aspect of the decision was contrary to law. In Teich v. Teich, 240 A.D.2d 258, 658 N.Y.S.2d 599 (1st Dept. 1997), it was held that compelling a spouse to file a joint tax return is “contrary to Federal tax law, which gives each spouse unqualified freedom to decide whether or not to file a joint return, and beyond the trial court’s equitable powers.” However, the First Department did note that any adverse financial consequences of a spouse’s refusal to sign joint and/or amended returns can be taken into account in distributing the marital property.

Debra A. Whitson, Whitson Law, of Elizabethtown represented the wife. The husband represented himself.

Invalidity of Licenseless Mexican Marriage Calls For Dismissal of New York Divorce Action

Posted in Defenses, Divorce, Statutes, Tax Matters

New York’s Domestic Relations Law §25, enacted in 1907, provides that a marriage is valid, even in the absence of a marriage license, if it was properly solemnized. However, New York County Supreme Court Justice Matthew F. Cooper, in his May 29, 2014 decision in Ponorovskaya v. Stecklow held that D.R.L. §25 could not be used to validate a marriage ceremony that failed to meet the  legal requirements of Mexico where the ceremony was performed. While so holding, Justice Cooper called for the statute to be amended or repealed, and joined the debate on whether Universal Life Church “ministers” could “properly solemnize” marriages.

Justice Cooper’s recitation of the facts merits quotation:

[Ms. Ponorovskaya], who is a clothing designer and business owner in Manhattan, and [Mr. Stecklow], a lawyer, began their relationship in 2004. While in Mexico for a 2009 New Year’s celebration, [Mr. Stecklow] proposed to [Ms. Ponorovskaya] overlooking the Mayan ruins in Tulum. The parties subsequently planned a Mexican destination wedding at the Dreams Tulum Resort & Spa. . . . On February 18th, the couple had a wedding ceremony on the resort’s beach. The ceremony was performed under a chuppah, a canopy under which a couple stands during a Jewish wedding. Certain Hebrew prayers were recited, vows were exchanged, and there was a glass-breaking ritual, as is customary at Jewish weddings.

Despite these traditions, the ceremony was not performed by a rabbi. Instead it was conducted by [Mr. Stecklow]’s cousin, Dr. Keith Arbeitman, a dentist who lives in New York. In 2003, in order to perform a marriage for friends, he became an ordained minister of the Universal Life Church (“ULC”), a distinction easily achieved by paying a fee on the ULC’s website. . . . [A]t oral argument on the motion, [Ms. Ponorovskaya]’s counsel produced a certificate that he printed off the internet certifying that Dr. Arbeitman is indeed a minister in good standing with the ULC. Likewise, during the ceremony Dr. Arbeitman told the audience, “I am an ordained minister — this will be a legal union.”

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Filing Tax Returns as “Single” May Not Estop Claim to Be Decedent’s Widow

Posted in Defenses, Evidence, Tax Matters

Filing income tax returns as “single” for the 11 years before a decedent’s death, did not, as a matter of law, estop a woman from claiming to be the decedent’s surviving spouse in contested estate proceedings. So held New York County Surrogate Nora S. Anderson in the May 22, 2014 decision in Estate of Tran (pdf).

Sang Kim Nguyen filed a petition to be appointed Administratrix of the Estate of Truong Dinh Tran. Ms. Nguyen claimed to be Mr. Truong’s widow under the common law of Vietnam. Separate cross-petitions for appointment were filed Mr. Truong’s alleged son, duaghter’s and grandson, who all sought summary dismissal of Ms. Nguyen’s petition.

Mr. Truong died at the age of 80 on May 6, 2012, leaving an estate that has been estimated to be worth more than $100 million.

According to Wikipedia, Truong was the principal owner of the Vishipco Line, the largest shipping company in South Vietnam in the 1970s. As a shipowner, he earned millions of dollars hauling cargo for the United States military. Truong left Vietnam on April 30, 1975, the day that Saigon fell to the communists. Truong boarded one of his eleven ships and traveled to the United States with two suitcases of gold.

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IRS To Increase Audits of Alimony Deductions and Income

Posted in Tax Matters

The IRS is enhancing processes to address the discrepancies between the deductions taken by alimony payers and the income reported by alimony recipients. This is in response to a report of the Treasury Inspector General for Tax Administration issued March 31, 2014 (TIGTA #2014-40-022).

Alimony is a payment to or for the benefit of a spouse or former spouse under a divorce or separation instrument, including decrees and certain agreements. If classified as alimony under the Internal Revenue Code, the amount is entitled to be deducted by the payor and the same amount must be included in the income of the recipient.

For 2010, a total of 567,887 taxpayers claimed alimony deductions totaling more than $10 billion. For that same year, with 266,190 (47%) of those alimony payors’ tax returns, there was either no alimony income reported, or there was a different amount of income reported on the returns filed by the corresponding alimony recipients. Bottom line: $2.3 billion in total alimony deductions had not been reported as income by the recipients.

The report also noted that IRS processes do not ensure that the taxpayers taking an alimony deduction report the social security number (Taxpayer Identification Number [TIN]) of the recipient. Moreover, the IRS failed to assess penalties totaling $324,900 on alimony payors who did not provide the recipients’ tax identification numbers.

IRS has responded that it has enhanced its examinations. Filters have been improved and the IRS will continue to review and improve its strategy to reduce the compliance gap. In addition, the IRS has revised its procedures to ensure the penalties are assessed when appropriate.

Automatic Orders, Violated During Divorce Action, Cannot Be Enforced After Pre-Judgment Death

Posted in Enforcement of Support and Orders, Insurance, Statutes, Temporary (Pendente Lite) Relief

A spouse’s pre-divorce judgment death results in the unenforceablitity of divorce action orders, including the automatic orders mandated by Domestic Relations Law §236(B)(2)(b). As a result, Westchester County Supreme Court Justice Paul I. Marx held in his April 17, 2014 decision in A.V.B. v. D.B. that a husband was without a remedy for his wife removing the husband as a beneficiary of her retirment account and life insurance policy.

After 13 years of marriage and two children, the wife commenced this divorce action on September 12, 2012. Pursuant to stipulated Preliminary Conference Orders, it was agreed that the wife would be awarded the divorce on the grounds of irretrievable breakdown, an Attorney for the Child was appointed and the pre-trial schedule was fixed.

On April 22, 2013, the wife committed suicide. During the administration of her Estate, it was learned that on February 14, 2013, while the divorce action was pending, the wife had changed the named beneficiaries on her ING 403(b) account from her husband as her sole beneficiary to the parties’ two children as 50% primary beneficiaries. It was further discovered that on or about March 10, 2013, the wife changed her designation of the husband as the sole named beneficiary on her Prudential life insurance policy to the husband as a 1% primary beneficiary, the parties’ daughter K. as a 49% beneficiary and daughter R. as a 50% beneficiary.

The husband’s counsel then submitted a letter to Justice Marx with a proposed order directing that the named beneficiaries on the wife’s ING account and Prudential life insurance policy revert back to the date of the commencement of the action and directing ING and Prudential to pay out the balance in the wife’s annuity and the “death benefit” under her life insurance policy to the named beneficiaries that existed before the changes were made. At that time, the husband’s lawyer also submitted the supporting affirmation of the attorney for wife’s Estate, declaring that the Estate consented to the proposed order.

Justice Marx declined to sign the proposed order. Instead, the Court scheduled a conference at which the Court directed defense counsel to move by Order to Show Cause. Although no papers were submitted in response to that motion, Justice Marx nevertheless denied it. The relief sought in the motion was not warranted by the law, nor by a good faith extension of the law.

While it is regrettable that Plaintiff violated the automatic orders and seems to have reached beyond the grave to thwart Defendant’s efforts to recover his share of her assets, this Court is unable to remedy the violation in this proceeding.

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Crediting Voluntary Payments Against Retroactive Support Awards

Posted in Maintenance

For what expenses will a support payor (here, the husband) receive credit against the retroactive support award made incident to the final divorce determination?

The Second Department clarified the rules in its May 14, 2014 decision in McKay v. Groesbeck.

Six years earlier (!), on a prior appeal (Groesbeck v. Groesbeck, 51 A.D.3d 722, 858 N.Y.S.2d 707 [2008]), the Second Department modified the portions of the parties’ judgment of divorce to make the child support and maintenance awards retroactive to the date the Summons (with notice) requesting such relief was filed. The Court sent the case back to the Supreme Court to calculate the amount of retroactive child support and maintenance, less any amount of maintenance and child support already paid.

Rockland County Supreme Court Acting Justice Victor J. Alfieri, Jr., determined that the husband was not entitled to any credits for any voluntary payments (not made pursuant to a court order). Justice Alfieri directed the husband to pay $28,500 for maintenance arrears and $37,902 for child support arrears.

The Second Department here modified that determination. Once again, the appellate court noted a party’s maintenance and child support obligations are retroactive to the date of the application therefor; here, the Summons with Notice. Any retroactive award must take into account any amount of temporary maintenance or child support which has been paid.

Generally, voluntary payments made by a parent for the benefit of his or her children may not be credited against retroactive awards. Further, a party is not entitled to a credit for payments made to satisfy that party’s own legal obligations that were not made pursuant to a pendente lite order of support.

However, a party is entitled to a credit for payments made to satisfy the other spouse’s legal obligations. Here, the husband should have received a credit towards arrears for any payments he made toward the wife’s car payments and insurance. The husband also should have received credit for one half of the payments he made toward the mortgage and carrying charges on the marital home, as those payments were made to satisfy the plaintiff’s legal obligations.

The matter was once again sent back to Supreme Court for calculations.

Counseling a party as to what payments to make and how, and whether or not to seek a temporary order concerning such payments, is difficult. It is not an exact science, and often involves a balancing of interests and judgment calls.

Randy J. Perlmutter, of Kantrowitz, Goldhamer & Graifman, P.C., of Chestnut Ridge, represented the husband. Julia Masch, of Masch, Coffey & Associates, LLP, of New City, represented the wife.

Both Same-Sex Spouses are the Parents of a Child Born During the Marriage

Posted in Custody and Visitation

The non-biological spouse in a same-sex marriage is a parent of the child under New York law as much as the birth-mother. So held Monroe County Supreme Court Acting Justice Richard A. Dollinger, in his May 7, 2014 opinion in Wendy G-M v. Erin G-M.

The birth mother and her spouse were married in a civil ceremony in Connecticut, before New York enacted its Marriage Equality Act (“MEA”). The couple decided to have a child and in October 2011, they both signed a consent form agreeing to artificial insemination procedures. In the consent form, the birth-mother authorized the physician to perform artificial insemination on her, and the spouse requested the doctor to perform the procedure, declaring “any child or children born as a result of “ pregnancy following artificial insemination shall be accepted as the legal issue of our marriage.”

The document was signed by the birth-mother, the spouse, and the physician, but there was no acknowledgment to the signatures before a notary (as required by D.R.L. §73). Both parties underwent artificial insemination for almost two years, until the procedure succeeded on the birth-mother; the spouse then discontinued her treatments. Both the birth-mother and the spouse were both involved in appointments. The spouse attended the pre-birth classes, including breast feeding, baby care, and CPR classes. The spouse participated in the baby showers. The birth-mother celebrated the impending birth of “our” daughter through a Facebook posting.  

The spouse was present at the birth of the child and the couple jointly decided the name of the child. When the hospital officials asked for information on the parents, both participated in the discussions and the birth mother acknowledged that the spouse was the parent of the child. The child was given a hyphenated surname of the two women, with the spouse’s name listed first. The birth certificate for the child lists both as the parents of the child.

After the birth of the child, citing marital trouble, the spouse left the household, in her words, to “not cause undue stress or potential other problems.” The child only lived in the same household with the two women for one week before they established separate households.

The action for divorce was commenced by the birth-mother in December 2013, less than then three months after the birth of the child. Before and after commencement, the birth-mother would not permit her spouse to visit with the child. The spouse then filed the instant request for a variety of relief, including access to the child, maintenance, and attorney fees.

Justice Dollinger was called upon to determine whether the spouse who did not give birth to the child (the non-biological spouse), is a parent of the child under New York’s longstanding presumption that a married couple are both parents of a child born during their marriage.

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Alimony Not Deductible If Terminable On Child-Related Event

Posted in Tax Matters

In an April 14, 2014 decision of the United States Tax Court, Judge Ronald L. Buch upheld the disallowance of an alimony deduction where the payments were terminable, among other events, upon the high school graduation of the taxpayer’s youngest child.

After more than 15 years of marriage and 3 minor children, Allen Johnson and his wife were divorced in 2006. Pursuant to their divorce decree, Mr. Johnson made “spousal maintenance” payments to his ex-wife and claimed an alimony deduction on his 2008 Federal income tax return.

Apparently incorporating a settlement agreement, the spousal maintenance payments were subject to a child-related contingency. Specifically, Mr. Johnson’s maintenance obligation would terminate upon the occurrence of any one of the following events:

  • the graduation from high school of the youngest child;
  • the remarriage of Mr. Johnson’s ex-wife, or
  • the death of either Mr. Johnson or his ex-wife.

The divorce decree, itself, stated that the spousal maintenance should be deductible to Mr. Johnson under under Internal Revenue Code §215 and includible in his ex-wife’s gross income under I.R.C. §71.

The divorce decree also obligated Mr. Johnson to pay $500 per month, adjusted for cost of living, for the support of his minor children until any one of a series of events occurs (including graduation from high school).

On his 2008 Income Tax Return, Mr. Johnson deducted his spousal maintenance payments as alimony. A certified public accountant prepared the original return based on the divorce decree. Mr. Johnson’s ex-wife reported all of the spousal support payments received from Mr. Johnson as taxable income on her return.

However, the Internal Revenue Service disallowed the alimony deduction and determined a tax deficiency. The I.R.S. also imposed an accuracy-related penalty under I.R.C. §6662(a). Mr. Johnson filed a petition disputing the adjustment and the accuracy-related penalty.

Ruling in Johnson v. Commisioner of Internal Revenue, T.C. Memo-2014-67, 2014 Tax Ct. LEXIS 63, Judge Buch upheld the I.R.S.’s refusal to allow the alimony deduction. However, the Court held that Mr. Johnson would not be liable for the §6662(a) penalty as he acted reasonably and in good faith.

Judge Buch noted that I.R.C. §215(a) allows a deduction to the payor for an amount equal to the alimony paid during the taxable year to the extent it is includible in the recipient spouse’s gross income under §71(a).

Whether a payment constitutes alimony is determined by reference to §71(b)(1), which defines “alimony” as any cash payment if:

  1. the payment is received by a spouse under a divorce or separation instrument;
  2. the divorce or separation instrument does not state that the payment is neither includible in gross income nor allowable as a deduction;
  3. the payor and payee spouses are not members of the same household when the payment is made; and
  4. the payment obligation terminates at the death of the payee spouse and there is no liability to make either a cash or a property payment as a substitute for the payment after the death of the payee spouse.

Section 71(c)(2), however, provides that the amount of any payment that is subject to “contingencies involving child” must be considered payment made for the support of the child. The Code specifically lists a child leaving school as an example of such a contingency.

Even if there are separately allocated child support payments, payments denominated in a decree as alimony (maintenance) will still be viewed as child support if the decree contains an explicit contingency related to a child. Here, as the divorce decree clearly stated that the support payments would terminate upon the graduation of the youngest child, the Court was compelled to characterize the payments as child support.The fact that the decree specified that the payments were to be deducted by Mr. Johnson was not controlling. The intent of the parties was not controlling.

Appraiser’s Testimony By Skype Allowed At Divorce Trial

Posted in Trial

At a divorce trial, testimony by Skype will be allowed for the appraiser of an Oslo apartment. So held New York County Supreme Court Special Referee Louis Crespo in his April 3, 2014 decision in Steineger v. Perkins.

Among other discovery-related applications after the matter had been placed on the trial calendar, Referee Crespo, upon the husband’s request, authorized updated appraisals. These included the parties’ Oslo apartment that had been purchased in or about 2011 for $1,400,000. The Referee noted that the appropriate value should be the most recent date, “as distribution of the marital assets based on older values can result in a windfall profit for one of the parties over the other.”

The Referee also ruled that the husband will be allowed to call the real estate appraiser of the Oslo apartment viz-a-viz [sic; vis-à-vis literally meaning face-to-face] Skype conditioned on the following:

  1. the appraiser speaks the English language without the need of a Norwegian interpreter;
  2. his attorney provides the computer laptop to access Skype by way of the internet;
  3. the appraiser shall be examined in an office without outside interference; and
  4. and that the appraiser consents to the jurisdiction to the Court although testifying outside of New York.

The Court finds that calling a non-party witness, although retained by a party, by way of Skype is reasonable given the time constraints and expense to fly in a witness from Norway for the limited purpose of providing an opinion as to the value of the apartment. In addition, with the use of live, two-way video via Skype, the witness will be subject to cross-examination before the Special Referee and attorneys for the parties, making the testimony reliable. 

As the fact finder, the Referee ruled, measuring credibility will not be compromised because the method to measure the same can be had by way of two-way video via Skype. Finally, the opinion testimony will not involve materially disputed facts, such as observations of an event, and will avoid the unnecessary costs of flying in a witness to testify about the value of the Oslo apartment. Referee Crepo noted that this was not a criminal case where a liberty interest is at stake. He found that the Skype protocol in this instance would allow for live witness testimony presented through real-time. Effective cross examination as well as the assessment of the witness’ credibility would not be hampered.

Quoting from Jessica M. Natale, Exploring Virtual Legal Presence: The Present and the Promise, 1 J. High Tech. L. 157, 167 [2002], Referee Crespo noted “The court system has recognized the benefits and validity of being virtually present as opposed to physically present. Virtual presence presents witnesses with an inexpensive alternative to testifying over the Internet via video and audio technology.”

Finally, the Referee stated the Skype protocol was vastly superior to testimony by speaker phone which had been permitted in another case (Superior Sales & Salvage v. Time Release Sciences, 227 A.D.2d 987, 643 N.Y.S.2d 291 [4th Dept. 1996; trial court did not err in permitting defendant's witness to go on vacation and to conclude his cross-examination testimony by speaker phone]).

Although not cited by the Referee, testimony by Skype was also allowed by Sullivan County Court Judge Frank J. Labuda in People v. Novak, 41 Misc. 3d 733, 971 N.Y.S.2d 197 (2013). The defendant, charged with murder, requested that Skype be used as his desired witness would be unable to appear due to work constraints. Judge Labuda noted that the witness would be subject to cross-examination before a jury, and concerns regarding constitutional Confrontation Clause issues were minimized.

Split or Shared Decision-Making: the Balance of Parental Power

Posted in Custody and Visitation

Increasingly, courts have closely examined the specific decision-making roles of each parent, whether or not the parties share joint custody or one parent is awarded sole custody.

The general rule is that joint or shared custody, requiring both parents to agree on decisions, is inappropriate where parents have demonstrated an inability or unwillingness to cooperate in making decisions concerning their children.

In its April 23, 2014 decision in Thorpe v. Hamoet, the Second Department affirmed the determination of Kings County Family Court Judge Anthony Cannataro to award a mother sole medical and educational decision-making authority, and to otherwise award both parents joint decision-making authority with respect to all other custodial matters outside the spheres of medical and educational needs.

Although it was evident to the appellate court that there was some antagonism between the parties, it was also apparent that both parties generally behaved appropriately with their child and in a relatively civilized fashion toward each other. Furthermore, there was no evidence that the parents were so hostile or antagonistic toward each other that they would be unable to put aside their differences for the good of the child.

Sometimes defining sole or joint custody differently, courts have found ways to erode all-or-nothing awards even when parents are antagonistic towards each other. Judges seem comfortable splitting decision-making into distinct areas; giving parents separate “zones” or “spheres” of responsibility.

Thus, in addition to education and medical areas, Courts have granted one parent decision-making authority in the spheres of religion, hygiene, mental health, dentistry, summer activities, extra-curricular activities, weekend activities, social events and finances.

In this fashion, both parents may remain more actively involved in their children’s lives. Still further, if both parents must live within this balance of power, détente between the parents is encouraged. Indeed (continuing the political metaphor), each parent may develop a policy of openness (glasnost), promoting consultation, compromise, and more meaningful exchange of information.

In all events, it would seem that the parents, themselves, are in the best position to allocate the particular subjects as to which there will be required consultation, or required agreement, or specifically-allocated final authority.

Litigation would not seem the best-suited forum for reaching an agreement on these matters. Alternate Dispute Resolution (ADR), whether through mediation or the Collaborative Divorce Process, seems a far better choice.

In Thorpe, Meredith A. Lusthaus, Coffinas & Lusthaus, P.C., of Brooklyn, represented the mother. Francine Shraga, of Brooklyn, represented the father.