MAKING SURE YOUR CLIENT GETS THE PROPER TAX TREATMENT OF ALIMONY
January 31, 2011 § Leave a comment
An important factor in determining whether to award alimony is the tax consequences of the court order. We all know that periodic alimony is income to the payee and deductible by the payer if it meets the IRS’s requirements.
So what does the IRS consider to be the essential ingredients of an alimony award, either by agreement or by adjudication? Section 71(b) of the Internal Revenue Code (IRC) provides that the following must apply:
- There must be cash payments to the recipient or third-party payments;
- Payments must be required by a written instrument;
- Instrument must not designate the payment as “not alimony” or as some other form of payment;
- The payer and payee must not be members of the same household;
- Payments may not be treated as child support;
- Payments must cease on death of the recipient;
- The parties may not file a joint tax return.
Payments that will not be treated as alimony by the IRS include: child support; noncash transfers; payments that are part of a spouse’s community property income; payments for use of property; and payments for maintainenance or upkeep of the payer’s property. Lump sum alimony, which is really an equalizing payment in equitable distribution, is not considered alimony by the IRS.
If you’re planning to use the form to prove the tax effects of alimony that I posted previously, you need to update it to conform to the latest version of IRC § 71(b).
It’s important to give some thought to these provisions regardless of which side you are on in an alimony dispute. If you represent the client trying to get some cash, you might consider proposing to the court or negotiating for it to be in the form of a property division; as such, it would not be considered income. Likewise, you can propose to the judge or negotiate for the payment to omit one of the ingredients above. If you represent the party who will have to pay, make sure you get all of the essential ingredients included so that your client’s payments will be deductible.
YOU’D BETTER FILE THOSE POST-TRIAL MOTIONS AFTER ALL
January 27, 2011 § 9 Comments
Back on November 16, 2010, I posted here that you don’t have to file a motion for a new trial in chancery non-jury trials to preserve error for an appeal. As I pointed out, it has never been the law in chancery court that such a motion was necessary, and MRCP 52(b) would appear to dispose of the issue. I do believe that was an accurate statement of the law in chancery court.
Until Tuesday, January 25, 2011.
On that date, the court of appeals handed down its decision in Robinson v. Brown, in which the appellant attempted to argue that it was error for the chancellor to assess her with child support because she claimed that he had failed to make the appropriate findings of fact. Justice Carlton’s opinion, to which there was no dissent, holds at ¶ 18 that the appellant:
” … failed to assert this alleged error post trial to the chancellor, and such failure waived her right to now complain as to this issue on appeal. Mississippi Rule of Civil Procedure 52 allows the court to amend its findings, or make additional findings, upon motion of a party filed not later than ten days after the entry of a judgment or entry of findings and conclusions of law. Watts v. State, 492 So.2d 1281, 1291 (Miss. 1986) (appellant was procedurally barred from raising an issue on appeal where he failed to raise it in his post-trial motion).”
The only case cited to support the point is a criminal case from circuit court, presumably from a jury trial.
The opinion does not mention MRCP 52(b), which specifically states:
When findings of fact are made in actions tried by the court without a jury, the question of the sufficiency of the evidence to support the findings may thereafter be raised regardless of whether the party raising the question has made in court an objection to such findings or has filed a motion to amend them or a motion for judgment or a motion for a new trial.
Would that exact language not apply in this case since the appellant was complaining that the trial court’s ruling was not supported by sufficient evidence? And, as with nearly all chancery court cases, this was a case “tried by the court without a jury.”
The lone justice with chancery experience on the court of appeals, Justice Myers, is listed as “not participating.”
Practice Tip: For chancery practitioners, I believe that this decision means that from now on you had better file a post-trial motion in every case if you have any thought of an appeal, and you’d better list every error you think might be in the record.
For chancellors, this will mean an abundance more work, on top of the lengthy opinions we are required to write to pass scrutiny of the appellate courts.
There’s a lot I could say about this, but I guess I’d better not. If you want my views, drop by my office and we’ll talk.
January 26, 2011 § 3 Comments
When a child commits a tort, can the parents be held responsible to pay the damages?
MCA § 93-13-2 sets out the rules for when the parents of a minor will be held liable for the acts of the minor, and the limits on that liability. Here are the principal points:
- The statute states that “Any property owner …” may recover damages. Does this limit the scope of the statute to actions for damage to property, or are personal injury claims included? It would seem that damage to property is what was contemplated, since subsection (1) specifically refers to any act of the minor that ” … damages or destroys property belonging to such owner.” Subsection (2) refers to ” … damages [not injuries] to [sic] which such minor or other person would otherwise be liable.
- The limit of recovery is $5,000, plus “necessary court costs.”
- The statute applies to minors under the age of 18 and over the age of 10.
- The act of the minor must have been malicious and willful. Purely negligent acts or mere carelessness are not included.
- The statute does not apply to a parent whose “parental custody and control” have been removed by court order or decree. Thus, where the child’s custody is awarded by court order to one parent, the non-custodial parent will not be subjected to liability. This raises an interesting point when the child commits a maliciously destructive act while on visitation with the non-custodial parent, since visitation time is tantamount to custodial time. Cox v. Moulds, 490 So.2d 866, 870 (Miss. 1986). The language of the statute appears to hinge on the parental control, so that the parent who should be in control of the child at the time of the damage is the parent who will face liability. When the child is placed by court order in the control of a non-parental guardian, that guardian will be the one to deal with the liability issue.
- The statute does not limit any other recovery under any other applicable provision of law.
- The purpose of the law is both to authorize recovery from parents in situations where they would not otherwise be liable, and to limit their liability.
The act is in derogation of the common law, and therefore must be strictly construed. I do not find any case law construing this statute or interpreting its applicability.
PUBLICATION TO CLOSE AN ESTATE: A STATUTE-RULES CONFLICT
January 25, 2011 § 2 Comments
MCA § 91-7-295 addresses summons or publication for a final account in an estate, conservatorship or guardianship. The entire statute reads as follows:
The final account so presented with the statement as to parties, shall remain on file, subject to the inspection of any person interested. Summons shall be issued or publication made for all parties interested, as in other suits in chancery court, to appear at a term of court, or before the chancellor in vacation, not less than thirty (30) days from the service of the summons or the completion of the publication, and show cause, if any they can, why the final account of the executor, administrator, or guardian should not be allowed and approved. [Emphasis added]
MRCP 4 (c) (4) (B), which governs procedure in “suits in chancery court,” states: “The defendant shall have thirty (30) days from the date of first publication to appear and defend.”
So which is it? Thirty days from completion of publication as the statute says? Or thirty days from first publication as the rule says?
The Order Adopting the Mississippi Rules of Civil Procedure issued by the Supreme Court on May 29, 1981, expressly states that ” … in the event of a conflict between these rules and any statute or court rule previously adopted these rules shall control.”
That language would seem to dispose of the matter, but for MRCP 81 (a) (8), which limits the applicability of the rules to matters under MCA Title 91. There is also the fact that the law of executors and administrators is entirely a creature of statute, which requires strict application.
What should you do? I would follow the statute. Doing so does not run afoul of MRCP 4, and actually allows more time for interested parties to act. I would also publish returnable to a day certain more than thirty days after the completion of publication, so there is no doubt on the part of those summoned as to the date by which they are required to act. If you do not follow the statute, you run the risk that a disgruntled party may file suit at a later point attacking your accounting on the ground that the court lacked jurisdiction to proceed.
Thanks to Chancellor Gene Fair for pointing this out.
ADMITTING A PHOTOGRAPH INTO EVIDENCE
January 24, 2011 § 2 Comments
One of the simplest tasks of a trial lawyer is to get a photograph admitted into evidence, but I have seen some painful exercises as lawyers strive mightily against repeated objections in their task.
Only two things are required to be shown:
- That the witness knows relevant facts about the scene or objects represented in the photo; and
- That he or she can say that it correctly and accurately portrays those facts (or, as many of us say, “It is a true and accurate depiction …”).
It is not necessary for the witness to establish the date when the photograph was taken because it does not matter what date it was taken if the condition is unchanged. It is not required that the witness describe how the camera mechanism was properly calibrated, or to establish a chain of custody or any other such thing, although I did have a chancellor years ago sustain objection after objection until I guessed that he was requiring me to ask the witness to identify who took the photos. But that judge was in error; who took the photos is not relevant to admissibility. All that is necessary is for the witness to establish knowledge of the matters depicted and to affirm that the photo does truly and accuractely depict the conditions he observed.
Q. Where is the field located where the body you described was found?
A. Adjacent to my farm house.
Q. Are you familiar with that field?
A. Yes, I am in and around that field every day.
Q. Did you observe the field on the day that the body was found, and in particular the area where it was found?
A. Yes, it was I who found the body while I was working in that field.
Q. Let me show you a photograph and ask you if you can tell me what it shows.
A. This is a picture of the field.
Q. Is this picture a true and accurate depiction of the condition of the field that you observed on that day?
Then offer it into evidence.
I hope this helps.
A FEW RANDOM THOUGHTS ABOUT JOINT CUSTODY
January 21, 2011 § 3 Comments
- An award of joint legal custody was reversed where the reason assigned by the trial judge was to allow the mother to participate in and keep up with the children’s activities. Joint legal custody requires the parties to confer in the joint decision-making about decisions affecting the children’s lives. Concern for access to information does not warrant award of joint legal custody. Lowrey v. Lowrey, 25 So.3d 274, 296 (Miss. 2009).
- The trial court is not required to consider the Albright factors in determining whether to award joint legal custody, since they apply only to physical custody. Palculict v. Palculict, 22 So.3d 293, 297 (Miss. App. 2009).
- MCA § 93-5-24(2) provides that the trial court in an irreconcilable differences divorce may award joint custody only “upon application of both parents,” but in all other cases the court may award joint custody “upon application of one (1) or both parents.” But where the parties have consented to an irreconcilable differences divorce and agreed for the trial court to adjudicate custody, the chancellor may award joint custody. Crider v. Crider, 904 So.2d 142, 148 (Miss. 2005).
- “There are … significant legal consequences attached to each form of custody. If parents accustomed to joint decision-making disagree, the parent with sole legal custody has authority to make unilateral decisions regarding the child. A move by one of two joint custodians triggers an Albright analysis to determine which parent should take sole physical custody. In contrast, when a parent with sole custody relocates, the relocation is not in itself a reason to modify custody.” Bell, Mississippi Family Law, § 5.04.
- Joint custdy is inappropriate where the parties are unable to communicate and cooperate. Lewis v. Lewis, 974 So.2d 265, 266 (Miss. App. 2008).
January 21, 2011 § Leave a comment
“‘Your money or your life.’ We know what to do when a burglar makes this demand of us, but not when God does.” — Mignon McLaughlin
“Money may be the husk of many things, but not the kernel. It brings you food, but not appetite; medicine, but not health; acquaintances, but not friends; servants, but not loyalty; days of joy, but not peace or happiness.” — Henrik Ibsen
“”When we truly discover love, capitalism will not be possible and Marxism will not be necessary.” — Will O’Brien
LSAT: CATCH YA ‘ROUND THE GRILL*?
January 20, 2011 § Leave a comment
The WSJ Law blog reports that the ABA is seriously considering doing away with the requirement that candidates for admission to law school pass the LSAT. The thinking is that law schools should decide their own entrance requirements, and that the ABA, in its accrediting role, should concern itself instead with whether or not graduates are qualified to practice law. Will the LSAT go the way of the dinosaur? Stay tuned.
In the paleolithic era when I decided to attend law school, there was no debate about the LSAT. One took it to complete the admission requirements, or one did not attend law school.
And so I showed up at Lamar Hall (later renamed Farley), which was then the Ole Miss law school building and now houses the School of Journalism, to undergo my LSAT on Saturday, October 17, 1970. The exact date is easy to pinpoint, as you will see.
We were collected in the large lecture room on the west end of the building on the main floor, around 40 of us. Among the crowd I recognized fellow students with whom I had shared undergraduate classes, and I picked my way to the back of the room where eventually four or five former Ole Miss football players were esconced nearby. I remember the room being quiet and subdued.
Notwithstanding the quiet atmosphere inside the lecture hall, things were popping outside. It was a campus football weekend, and no doubt most of us would have preferred being outside with the fans. The classroom windows were opened slightly to admit the crisp, fresh fall air, and we could hear some of the hubbub from outdoors. In those days tailgating at Ole Miss was markedly different from its current form. Vehicles back then were driven directly into the Grove for tailgating. There were no such things as SUV’s or even minivans. People pulled their cars, pickups and stationwagons (i.e., primitive SUV’s) into the Grove, opened the trunk or tailgate, and laid out their spread. On this Saturday the happy football fans, expectant of glorious victory over our accustomed whipping-boy to the south, were gathering, grilling, visiting, imbibing and back-slapping directly across the street from our lecture hall.
Professor Bill Champion, our proctor, entered the room and distributed the LSAT tests. He wrote the starting time on the blackboard and stayed for awhile before slipping out of the room. In the meantime we set at laboring over the exam.
Everything verbal on the LSAT was a snap for me. The reading comprehension was like English 101. The logic questions took a little thought, but I was doing fine. I began to get that exhiliration that comes from being on the upside of the challenge.
Outside, we could hear the cheering crowds as the afternoon crept past us. It was a heady day for football on campus. The Rebels had finished the previous season ranked 8th in the nation, and now we were ranked in the top 5, having won our first four in a row, crushing Memphis State, Alabama and Georgia, and managing to get by Kentucky. Archie Manning led the powerful Rebel squad. Our opponents this fine Saturday were the Southerners of Southern Miss, a team we had thrashed 69-7 the year before and to whom we had never lost. Confidence wafted through the air like barbecue smoke. The sports page of the Clarion-Ledger on Friday before the game carried a photo of Archie seated in front of his locker putting on his cleats, with the headline: “Does He Really Need to Dress Out for This One?” If the LSAT caused one to miss any football game this promising season, this minor skirmish with the hapless Hattiesburgers would be a good candidate.
And as if on cue, from beyond the Grove we could hear the roar of the crowd in the stadium as the game kicked off.
Meanwhile, I was zipping through the verbal and logic parts of the test and it was seeming like high school stuff.
Now, these were the days before computers, cable tv and cordless phones. There were no smartphones or FaceBook. There was no ESPN. No text messages. No wireless internet because there was no internet. None of the LSAT participants in that room would have expected a play-by-play report for the day’s events, but we had our updates regardless.
Professor Champion re-entered the room and wrote on the blackboard: “1st Quarter Score …” and it looked good for the home team. We were ahead by a touchdown, and with Archie at the wheel, one could assume that victory was assured.
The LSAT, however, had taken a nasty turn. I had departed the relative comfort of verbal and logic questions and found myself in the quagmire of some general knowledge questions that were part of the test back in those days. There were a few questions that posed geometrical problems, some algebra, and even chemistry. All of that might as well have been Greek to me, but I strove valiantly against it. Guesswork became my primary stratagem. The snap had become somewhat of a struggle.
I was not the only one struggling a little with the test. I noticed some of those football players in my vicinity showing some signs of distress. The test was too much for them. This one ran his hand over his forehead and then through his hair in exasperation. That one sighed mightily, put down his number two pencil and cracked his knuckles. Another slumped at his desk and rubbed his neck. The test was taking its toll.
But in the background we could hear roars from the stadium.
Champion entered again a while later and there was a grumble of consternation as he posted the half-time score with USM ahead. Still, no reason at this point for concern with Archie in command. Besides, we had this blankety-blank exam to complete.
As we kept at the test over time the roars from the stadium became noticeably fewer. Champion’s next update showed Southern with a decisive lead, and I noticed that the football boys were decidedly uncomfortable. Heck, I was decidedly uncomfortale.
When Champion chalked up the final score there was a unanimous gasp: USM 30 and Ole Miss 14.
Even with all that hoorah, most of us managed to limp to the end of the LSAT and turn in our score sheets. We were relieved to have come through the LSAT ordeal, but the relief did not outweigh the shock of losing to Southern.
We emerged from our LSAT cloister to learn that Southern had outrushed Ole Miss 205 yards to only 85, behind the electrifying Willie Heidelberg. Phenomenal USM punter Ray Guy had kept Archie Manning bottled up all day with booming punts that averaged 49 yards a pop. Archie had completed two TD passes in the first quarter to take a 14-7 lead, but Southern was too much in the next three quarters, including a 60-yard punt return for a TD that was the back-breaker.
It was the first time ever that Southern beat Ole Miss in football. Southern Miss coach P.W. “Bear” Underwood understated after the game: “We whipped their butt.” Indeed. The next week legendary Ole Miss coach John Vaught suffered the heart attack that ended his career except for an interim return later.
Despite all the distractions, I apparently did well enough on the LSAT to get admitted to law school. Thanks to USM, what would have been another unremarkable day in the grind of my academic career was transmuted into an unforgettable, if not happy, one.
* “Catch Ya ‘Round the Grill” was a ubiquitous saying among Ole Miss students in the 60’s and early 70’s until the new student union was built. The Grill was the students’ nickname for the then student union, which is now Weir Hall. Loosely translated the saying meant: “See ya later.” Some cynics morphed it into: “I hope I don’t see you again anytime soon.” Whichever, my opinion as far as the LSAT is concerned: “Catch ya ’round the grill.”
ATTORNEY’S FEES IN AN ESTATE
January 19, 2011 § 2 Comments
Every administrator or executor is required by Uniform Chancery Court Rule (UCCR) 6.10 to have an attorney to represent him or her in connection with administration of the estate.
The attorney’s fees of the administrator or executor are not the obligation of the estate, but are the personal obligation of the fiduciary, but they may be allowed by the court as part of the administration expenses. Scott v. Hollingsworth, 487 So.2d 811, 813 (Miss. 1986). In order to be properly allowed by the court as administration expense, the attorney’s fees must benefit the estate, and fees which do not benefit the estate are properly disallowed. Estate of Collins v. Collins, 742 So.2d 147, 149 (Miss. App. 1999).
In making his determination of an attorney fee award, the chancellor must weigh several factors:
“The factors which the chancery court considers in fixing the amount of reasonable compensation are varied. Among those factors, however, are the following: time, skill, the responsibility, the monetary value of the estate administered and its liquidity, the speedy disposition of the business, the services of the attorney, the practice of attorneys in that court and the charging of fees for similar services, the complexity of the issues, and the necessity of litigation concerning the estate business.” Scott at 814.
I disallowed a claim of more than $20,000 for attorney’s fees in an estate where no action had been taken in 18 months after the qualification of the fiduciary, the fiduciary and not the attorneys had done most of the work, the attorneys were charging more than $350 an hour, the reasonable hourly rate in this district is $185, the estate was fairly simple and should have been closed in less than a year, and a substantial portion of the fees were attributable to the fiduciary resisting the sole beneficiary’s efforts to have him ousted for inaction.
If you want to get paid for your services to the fiduciary, you had better become very familiar with UCCR 6.11 and 6.12.
This judge will require that an itemized statement of services rendered by filed in the court file and, preferably, be attached as an exhibit signed and sworn by the fiduciary. The old practice of filing a broad, general statement of services without showing the time expended, is no longer acceptable. The purpose of an itemized statement is to disclose to all interested parties what services were rendered for the benefit of the estate, and to allow them an opportunity to be heard, pro or con. The best practice in a final account is to attach the attorney fee statement as an exhibit to the petition to close so that all interested parties will have notice and opportunity to agree by joining in the petition or to contest it.
If the petition for fees is based on recovery of damages for wrongful death, UCCR 6.12 imposes some specific and stringent requirements. The fee allowed ” … will be fixed by the chancellor at such sum as will be reasonable compensation for the service rendered and expense incurred without being bound by any contract made with any unauthorized persons.” Any agreement for a contingent fee must be approved in advance by the chancellor. In other words, if you don not get your contract approved in advance, you will be working on a quantum meruit basis rather than on a contingency.