Divorce | The Better Chancery Practice Blog

Child Dependency and Taxes

July 29, 2013 § Leave a comment

Randy Wallace has some useful info on his blog in a post entitled Who Gets to Claim the Child on Taxes?

It’s a subject you need to be on top of, because quite often you are called upon to include such a provision in your clients’ property settlement agreements. You want to make sure that the language you choose will do exactly what your client expects it to do with the IRS.

Remember always to include language that requires both parties to execute and deliver the proper forms in a timely fashion that are needed to carry out the terms of the agreement.

A Not-so-Separate Peace

July 2, 2013 § Leave a comment

Christopher and Tammy Clausell purchased a jointly-titled home in 2003, using a cahsier’s check for $60,000 that was derived from settlement of a personal-injury claim that Christopher had before the marriage, but that he received post-marriage.

In 2005, after Hurricane Katrina, the parties received a joint grant of $98,000, of which they devoted around $78,000 to remodelling the home.

The parties lived together in the home until 2008, when they separated, and, after Christopher filed for a divorce, he was awarded temporary occupancy of it.

In the course of the divorce, the parties entered into a consent, leaving it to the chancellor to decide the equitable distribution of their personal and real property.

In 2011, the chancellor classified the home as marital property. The judge ruled that the facts that the home was the primary marital residence for most of the ten-year marriage, and that it was jointly titled, and that the grant money was invested in it, all supported a finding that it was a marital asset. After applying the Ferguson factors, she ordered that it be sold, with the net profit divided equally between Christopher and Tammy.

Christopher appealed, taking the position that the chancellor was in error in classifying the home as marital property subject to division, since the entire purchase price was paid out of his personal-injury settlement.

In Clausell v. Clausell, decided June 25, 2013, the COA affirmed. Judge Fair, for the majority, explained:

¶9. To equitably divide property, the chancellor must: (1) classify the parties’ assets as marital or separate, (2) value those assets, and (3) equitably divide the marital assets. Hemsley [v. Hemsley], 639 So. 2d at 914; Ferguson [v. Ferguson], 639 So. 2d at 928. Here, the only dispute by either party of the chancellor’s classification of assets as marital or separate and the division of those assets is the classification and division of their jointly titled house. In Johnson v. Johnson, 650 So. 2d 1281, 1287 (Miss. 1994), our supreme court stated that all marital assets are subject to possible equitable distribution in accordance with the factors provided in Ferguson. Marital property is “any and all property acquired or accumulated during the marriage . . . and [is] subject to an equitable distribution by the chancellor.” Hemsley, 639 So. 2d at 915. Further, such marital “[a]ssets acquired or accumulated during the course of a marriage are subject to equitable division unless it can be shown by proof that such assets are attributable to one of the parties’ separate estates prior to the marriage or outside of the marriage.” Id. at 914.

¶10. Christopher mistakenly asserts that the home cannot be marital property because it was purchased with money from his personal-injury settlement from litigation filed before marriage on a cause of action that accrued to him prior to marriage. However, Christopher was married to Tammy when he received the settlement check, and he was married to Tammy when they purchased the home. Further, “nonmarital assets . . . may be converted to marital assets if they are commingled with marital assets or used for familial purposes. Such converted assets are then subject to equitable distribution.” Heigle v. Heigle, 654 So. 2d 895, 897 (Miss. 1995). “The burden is upon one claiming assets to be non-marital to demonstrate to the court their non-marital character.” A & L, Inc. v. Grantham, 747 So. 2d 832, 839 (¶23) (Miss. 1999) (citing Hemsley, 639 So. 2d at 915). “This burden goes beyond a mere demonstration that the asset was acquired prior to marriage.” Id.

¶11. Reversal is warranted “only where the failure to make sufficient findings of fact and conclusions of law constitute manifest error.” Selman v. Selman, 722 So. 2d 547, 554 (¶29) (Miss. 1998). In this case, the chancellor set out her considerations in classifying the home as marital under Hemsley and conducted a detailed analysis of all the Ferguson factors in distributing the marital estate. We cannot say that the chancellor abused her discretion in classifying the home as marital and dividing proceeds of its sale equally. Accordingly, we affirm the judgment of the chancellor.

Understand that if you represent the party seeking to keep an asset separate, you have a substantial burden that “goes beyond a mere demonstration that the asset was acquired prior to the marriage.” You will have to show how the asset retained its separate character, or how it can easily be traced out and re-separated. And your proof must be in the record. If you just dump that on the judge to do and do not make the record, you are planting potent reversible error.

My sense is that it is getting harder and harder to convince the appellate courts that an asset is in any way separate (1) if it has been used in any form or fashion for family use, or (2) if marital money was invested in it, or (3) if there is no pre-marital agreement that it be treated separately despite (1) and/or (2).

As a lawyer, you are in a position to advise clients in advance how to avoid these judicially-created traps. The downside is that, 99% of the time, you are invited to get involved long after the deed is done (no pun intended).

Equitable Distribution of Hidden Assets

June 26, 2013 § 2 Comments

What do you do when one party hides assets she claims are separate, and refuses to divulge their whereabouts? You divide them anyway. At least that is what happened in Wilson v. Wilson, decided June 11, 2013, by the COA.

Penny and Gregory Wilson had the kind of financial arrangement that one sees from time to time in a divorce case. Penny made most of the income, apparently, and the parties maintained completely separate banking and finances. Gregory paid Penny a sum that they agreed was one-half of the household expenses, and some extra money when he worked odd jobs or when Penny wanted to go on vacation. One might say that Gregory was renting his marriage.

Penny was quite the financial wizard. She had managed to accumulate more than $200,000 in a credit union account, but she withdrew the money before trial and, according to the COA opinion, she ” … declined to reveal where she had placed the funds from that account” (¶ 4). She also managed to squirrel away some cash in several CD’s, but she cashed those in also, and when asked where the cash was, she ” … refused to reveal its location to the chancery court” (¶ 6).

Now, let’s stop right there.

What exactly is any self-respecting chancellor to do when confronted with a party who blatantly and wantonly refuses to comply with the express dictates of UCCR 8.05?

Rule 8.05(a) requires these disclosures:

A detailed written statement of actual income and expenses and assets and liabilities, such statement to be on the forms attached hereto as Exhibit “A”, copies of the preceding year’s Federal and State Income Tax returns, in full form as filed, or copies of W-2s if the return has not yet been filed; and, a general statement of the providing party describing employment history and earnings from the inception of the marriage or from the date of divorce, whichever is applicable …

There is no exception for separate property, or what one claims to be separate, or any other financial information. The rule specifically requires disclosure of actual income and expenses, as well as assets and liabilities, without exception.

The rule also states that:

The failure to observe this rule, without just cause, shall constitute contempt of Court for which the Court shall impose appropriate sanctions and penalties.

What the chancellor chose to do here was to divide the assets between Penny and Gregory, over Penny’s protestation that Gregory had not contributed to their accumulation, and that they were separate. In affirming the chancellor’s ruling, the COA pointed out that the burden was on Penny to prove the non-marital character of the assets (¶ 14), which she failed to do.

I guess that the chancellor decided that Penny had, in fact, disclosed the assets as required in UCCR 8.05, to the extent that she subjected them to adjudication, and her attempt to conceal them would not shield them from execution. Still, I find it troubling that a party could take the stand and expressly refuse to be candid and forthright about her assets, for a couple of reasons:

There already exists a “fudge factor” in most financial statements. It’s not uncommon for parties to overestimate their expenses, overlook overtime and bonuses, and minimize self-employment income. When a party takes the stand and professes to be hiding assets, that kicks it up to an entirely different level.
When one hides assets, no one knows for sure exactly how much money or value we are dealing with. Penny disclosed that there was $217,000 in the credit union account, but if she divulged the institution and account number, discovery might have found the real balance to be more like $300,000. And there is nothing in the COA opinion to show that Penny ever told the balance that had been in the CD’s.

I can’t say that I would have overlooked Penny’s intransigence.

I also don’t understand how Gregory’s lawyer did not raise cane before trial over the secretion of more than $200,000 in cash and CD’s. Gregory had a substantial stake in establishing their true value. The chancellor awarded him 40% of the credit union money. There is a big difference between 40% of 200,000 and 40% of $300,000.

“FAMILY USE DOCTRINE” HITS A WALL

June 13, 2013 § 1 Comment

I confess that I am no fan of the so-called “Family Use Doctrine.” That’s the concept that, simply because a separate asset was used by the household, its character changes from separate to marital, in whole or in part. I’ve voiced my concern about it here before.

In its latest manifestation, the COA reversed the chancellor’s ruling that Ceicle Palmer was entitled to one-half of the marital estate, which the chancellor adjudged to include a home separately owned prior to the marriage by her husband, Roland. The parties had lived in the home together, and Ceicle had invested some $2,000 in it. The effect of the judge’s ruling, then, was to award Ceicle half of the home equity, which amounted to more than $30,000. Roland appealed.

In the case of Palmer v. Palmer, decided May 7, 2013, the COA reversed and remanded. At ¶ 9 the opinion by Judge Irving states that, “We agree with the chancellor’s finding that the home is marital property.” That’s the “Family Use Doctrine” clicking into place. The court went on to say, however:

¶10. We have held that “[e]quitable distribution does not mean equal distribution,” and there is no requirement that each spouse must receive half of an interest in the property. Jenkins v. Jenkins, 67 So. 3d 5, 11 (¶13) (Miss. Ct. App. 2011) (quoting Seymour v. Seymour, 960 So. 2d 513, 519 (¶15) (Miss. Ct. App. 2006)). “[E]quitable distribution [is] a fair division of marital property based on the facts of each case.” Seymour, 960 So. 2d at 519 (¶15). We point out that the chancellor did not specifically award Ceicle a fifty percent interest in the marital home. Rather, he awarded her a fifty percent interest in the marital estate. However, the effect of awarding her fifty percent of the marital estate was to award her a fifty percent interest in the marital home. In reaching his decision, the chancellor noted that there was no evidence that the home had appreciated in value during the course of the marriage and that Ceicle’s only financial contribution to the home was $2,000 for putting in some carpet and tiling the kitchen floor. At one point, the chancellor stated that there was no evidence that the carpet and tile had resulted in an appreciation in the value of the home. However, the chancellor later said that Ceicle had made $2,000 worth of improvements.

¶11. We acknowledge the clarity in our law—that equitable distribution is committed to the sound discretion of the chancellor. However, we, as an appellate court, have oversight responsibility, and if we could never reverse a chancellor’s decision regarding equitable distribution, our oversight responsibility would be reduced to the ministerial act of simply rubber-stamping a chancellor’s decision. While Ceicle did pay $2,000 for new flooring, it is difficult to conclude that her meager financial contribution, along with her domestic contributions to the relationship, warrants a fifty percent interest in the marital home. The house was already paid for before Ceicle and Roland married. The record reflects that Roland also made domestic contributions to the relationship in addition to providing the home, without any compensation or contribution from Ceicle. The record also reflects that Roland has no money from any source other than his meager Social Security check. He would be forced to sell the home in order to pay Ceicle the $31,502.50 that the chancellor awarded her. At that point, he would be homeless or would have to incur additional expenses for lodging. Even the chancellor recognized this fact, as he specifically found [as much].

The court went on to consider the parties’ relative financial conditions and health, concluding that the equities should be adjusted to give Roland the greater part of the marital estate.

There was a dissent critical of the majority opinion, which was addressed by the majority as follows:

¶13. The dissent apparently misreads the focus of our finding that the chancellor erred in dividing the marital estate, as the dissent states, in paragraph 21, that “Mississippi law does not require a spouse to have made a direct economic contribution to an asset to be awarded an interest.” Nothing in our opinion suggests that our law requires such. We do not find error with the chancellor’s judgment because it awarded Ceicle what is tantamount to a fifty percent interest in an asset that she made no contribution to acquiring. We have discussed the facts surrounding the acquisition of the marital home because those facts are relevant to the greater issue of whether there is substantial evidence to support the chancellor’s finding that a fifty-fifty division of the marital estate is equitable. It is only one piece of the overall equation, but an important piece because the marital home constitutes more than fifty percent of the total value of the marital estate. To be clear, our decision rests upon a consideration of the totality of the factual circumstances, including Roland’s health versus Ceicle’s, Roland’s post-divorce financial situation, and especially the chancellor’s finding and recognition that:

If this court were to direct that Roland Palmer sell the marital home, he would net some cash, but would be forced to either rent or buy and would rapidly deplete any funds realized from the sale of the home. Based upon his current income, he would be unable to afford to either rent or buy.

Despite this finding, the chancellor, in effect, concluded that it was equitable to thrust Roland into the very situation that he specifically found was inequitable and which would leave Roland in dire straits.

It’s hard to reconcile this case with Rhodes v. Rhodes, the family-use case I whined about in that prior post. In Rhodes, the COA held that, among several other factors, the household use of a beach condo a few weeks a year for the several years of the brief marriage converted it to marital poperty. That was viewed as equitable by the COA.

I have joked that our jursisprudence is reaching biblical proportions, meaning that one can now find authority to support nearly every possible position, and even several cases on each opposite side of an issue.

Is this Palmer case an anomaly, an outlier? We’ll see.

ANOTHER REVENANT CASE

June 5, 2013 § 1 Comment

The COA case of Gordon v. Gordon, decided May 21, 2013, is the latest in that ever-growing body of jurisprudence that I refer to as “Zombie Law” (hereinafter “ZL”). These are cases that appear to have been laid to their final rest by the chancellor’s ruling, often with the full agreement of both parties, only to have them rise from their grave later via post-judgment issues and appeals.

Wanda and Charles Gordon entered into a statutory consent to divorce agreeing that the one issue for adjudication by the court was, “Whether or not [Charles] is entitled to receive money from [Wanda].” The COA opinion also states that the crux of the dispute was whether Wanda had misappropriated some $46,000 of marital funds, although it is unclear from the opinion whether that issue was expressly set out in the consent.

The chancellor heard the testimony on November 8, 2004, and concluded that there was inadequate information upon which to base an adjudication regarding the contested issue. On December 17, 2004, he entered a judgment that the trial be continued to a later date for more substantial evidence on the contested issue, and he said that he would ” … go ahead and grant the divorce …, just so that [Charles and Wanda] can get that out of the way.” The judgment stated that the chancellor would retain “jurisdiction to adjudicate those matters pertaining to the division of property and support and maintenance of the one remaining minor child of the parties” [Emphasis added]. The latter language was not included in the original consent.

On January 31, 2005, Wanda filed a motion to set aside the divorce judgment. The hearing on the motion was not held until November 16, 2010. The chancellor did set aside the divorce, and, in response to Charles’s motion to reinstate it, said that he would if Charles would withdraw his claim for the $46,000, which he did, at which point the chancellor entered his judgment of divorce nunc pro tunc to December 17, 2004.

Wanda appealed, claiming that the chancellor erred by not dividing the marital estate, including military retirement, and adjudicating child support and custody. The COA affirmed.

Here are a few points from the opinion:

Wanda’s argument rests heavily on the language of the consent statute, MCA 93-5-2, which states that “No divorce shall be granted … until all matters involving custody and maintenance of any child of that marriage and property rights between the parties raised by the pleadings have been adjudicated by the court …” She took the position that the chancellor had to address those statutory issues before adjudicating the divorce. The COA did not buy her argument. Notice the language of the statute, ” … raised by the pleadings …” In context, that would appear to apply to the consent, since the consent supplants the original pleadings. But be aware that the MSSC in McNeese v. McNeese, handed down April 25, 2013, held in yet another ZL case that, “The consent agreement at issue is not a motion, pleading, or a consent judgment …” Not sure how those two principles fit together, but in this case the COA did not agree with Wanda’s position.
The chancellor was right to set aside the divorce. The statute clearly states that no divorce may be granted until all of the contested issues have been adjudicated.
Wanda also claimed that the chancellor was in error in not ordering Charles to pay child support for her great-nephew, of whom she had custody per a S. Carolina judgment. Three guesses how that turned out.
I applaud the chancellor for refusing to go ahead and adjudicate the contested issue on scant, insufficient evidence.

If you want the chancellor to address a particular issue via consent, be sure that the statement of the contested issue clearly states what the judge is expected to decide. I am not convinced that the language, “Whether or not [Charles] is entitled to receive money from [Wanda]” does the job.

And a final lesson from this latest ZL case: It’s never over any more until it’s over, and even then it may not yet be over. The days of parties and lawyers sticking to their agreements and being held bound by them is sadly past, now merely a quaint reminder of the past like buggy whips and quill pens.

ESSENTIAL INGREDIENTS OF THE CONSENT TO DIVORCE

May 30, 2013 § 4 Comments

Kenton McNeese filed a pro se appeal raising the issue, among numerous others, whether the consent for an irreconcilable differences that he and his wife, Katye, had executed and presented to the trial court for adjudication was valid or not. He took the position that it was invalid, thereby depriving the chancellor of authority to grant the divorce. His appeal raised two issues for the MSSC to address regarding validity of the consent:

Whether or not the consent was in compliance with the statute; and
Whether the chancellor properly overruled Kenton’s motion to “expunge” or withdraw his consent.

In the case of McNeese v. McNeese, handed down April 25, 2013, Justice Coleman, writing for a unanimous court, summed it up about as well as it can be said:

¶13. Kenton claims that the parties’ consent agreement to an irreconcilable differences divorce was invalid because it was not properly notarized and because the agreement was not signed by counsel. On that basis, he argues the chancellor erred in granting the divorce on the ground of irreconcilable differences. Katye claims that the consent agreement is not subject to appellate review, but if this Court reviews it, it met the statutory requirements for validity.

¶14. Mississippi Code Section 93-5-2 pertains to consent agreements for irreconcilable differences divorces and provides the following:

(3) If the parties are unable to agree upon adequate and sufficient provisions for the custody and maintenance of any children of that marriage or any property rights between them, they may consent to a divorce on the ground of irreconcilable differences and permit the court to decide the issues upon which they cannot agree. Such consent must be in writing, signed by both parties personally, must state that the parties voluntarily consent to permit the court to decide such issues, which shall be specifically set forth in such consent, and that the parties understand that the decision of the court shall be a binding and lawful judgment. Such consent may not be withdrawn by a party without leave of the court after the court has commenced any proceeding, including the hearing of any motion or other matter pertaining thereto. . . .

Miss. Code Ann. § 93-5-2(3) (Rev. 2004). According to Section 93-5-2, a consent agreement for an irreconcilable differences divorce must (1) be in writing, (2) be signed by both parties, (3) state that the parties voluntarily consent to have the court decide issues upon which they cannot agree, (4) specifically set forth those issues upon which the parties cannot agree, and (5) state that the parties understand that the court’s decision will be binding. Id. See also Cassibry v. Cassibry, 742 So. 2d 1121, 1124 (¶ 9) (Miss. 1999). The consent agreement in question was in writing, signed by both parties, and contained the required statements that the parties voluntarily consented to have the court determine the issues listed therein and that the parties understood that the court’s decision would be a “binding and lawful judgment.” Kenton’s claim that the document is invalid because it was not notarized properly [FN1] and not signed by the attorneys is without merit, because Section 93-5-2 does not require the consent agreement to be notarized or signed by an attorney.

[FN1] Regardless, the notary and seal used were sufficient, because chancery clerks are by statute ex-offico notaries public and are permitted to use the seal of their office to notarize documents. Miss. Code Ann. § 25-33-17 (Rev. 2010).

¶15. Kenton asserts that the attorneys were required to sign the consent agreement in accordance with Mississippi Rule of Civil Procedure 11(a) and Uniform Chancery Court Rule 5.03. Rule 11(a) applies to motions and pleadings and requires the signature of the attorney filing the document. Miss. R. Civ. P. 11(a). Rule 5.03 requires counsel for all parties to approve and sign a “consent judgment” before presenting it to the chancellor. [Fn2] Unif. Chancery Court R. 5.03. The consent agreement at issue is not a motion, pleading, or a consent judgment; therefore, the rules Kenton cited are not applicable, and an attorney’s signature was not required. The consent agreement complied with the requirements of Section 93-5-2 and was valid.

[Fn2] A consent judgment is a final judgment, more like an agreed order, which “must be approved and signed by counsel for all parties . . . before being presented to the Chancellor for his signature.” Unif. Chancery Court R. 5.03. A consent agreement is like a stipulation of facts, by which the parties indicate how they wish to proceed on certain issues, but leave other issues to the chancellor and await his final judgment.

¶16. If Kenton wanted to withdraw or expunge the agreement, according to Section 93-5-2(3), he was required to obtain leave of court to do so. Miss. Code Ann. § 93-5-2(3) (Rev. 2004). See also McDuffie v. McDuffie, 21 So. 3d 685, 689 (¶ 7) (Miss. Ct. App. 2009). The agreement itself also included language requiring the parties to obtain leave of court to withdraw the agreement. Kenton did not file a motion for leave of court as required; he waited until after the amended final judgment had been entered to file a motion to expunge the consent agreement. Kenton’s attempt to withdraw or expunge the consent agreement after the divorce decree had been entered did not invalidate the agreement. See Jernigan v. Young, 61 So. 3d 233, 236 (¶ 14) (Miss. Ct. App. 2011). “[W]avering on whether a divorce should be entered may often occur and does not invalidate the divorce. . . . What is important is that agreement be validly expressed on the day that the chancellor is considering the issue.” Id. (quoting Sanford v. Sanford, 749 So. 2d 353, 356 (¶ 11) (Miss. Ct. App. 1999)). The chancellor did not err in granting the divorce on irreconcilable differences because the consent agreement was valid on the day the order of divorce was entered.

It might be a good idea to look over the form you’ve been using for ID divorce consents to make sure it includes all of the required elements. Just because you’ve used it a hundred times does not mean that it complies with the statute.

Why is it important to be in line with the staturte? Well, there has been a trend over the past few years where people agree to one thing in court and then, either on their own or with the aid of new counsel, attack their very agreement through a barrage of post-trial motions and on appeal, picking at every conceivable legal nit in an effort to have the agreement declared invalid. You wouldn’t want that to cause the demise of a case you thought had been settled and done.

WHAT YOUR UNCONTESTED PROOF NEEDS TO INCLUDE

May 28, 2013 § Leave a comment

I’ve posted here before about the inadequate proof that most attorneys offer when presenting an uncontested divorce or child custody case.

I’m not talking here about corroboration and substantial evidence of the grounds in a divorce case. I’m talking about addressing all of the applicable factors that pertain to your particular case. For instance … After establishing that your client is entitled to a divorce, he says he wants the house and all the equity. Is that good enough? Or your client testifies that she wants custody and has had the child with her for the past 18 months. Is that all you need?

The answer in both scenarios is “No.” You need to give the judge enough evidence to enable findings on all of the Ferguson factors for the judge to award that equity, and you need to address the Albright factors for the judge to make sufficient findings to award custody. And so on with all of the type cases that involve factors.

That is what the MSSC held in Lee v. Lee, 78 So.3d 326 (Miss. 2012).

I usually sign will sign the judgment based on a modicum of proof. If, however, a proper post-trial motion is filed, I will set aside that part of the judgment that is not supported with findings on the applicable factors as required by case law. As the court said in Lee, at 329:

¶13. By failing to appear at the hearing, [the appellant] forfeited his right to present evidence and prosecute his divorce complaint. But he did not forfeit the right to challenge the sufficiency of the evidence or the judgment. And whether absent or present at the trial, the appropriate time to challenge a judgment is after it has been entered. [Appellant] did so in his Rule 59 motion and at the hearing following it. The fact that [he] failed to attend the divorce trial does not relieve the chancellor of his duty to base his decision on the evidence, regardless of by whom presented, nor did it nullify this Court’s mandate in Ferguson.

It’s so simple to take the few extra minutes to put on the evidence that will support the required findings. Then, you incorporate them into your judgment and the judge will gladly sign it. Only, don’t expect the judge to sign it if she did not hear testimony on point.

If your judgment has the necessary findings, it should withstand any post-trial attack based on that reason. Your client will appreciate that. After all, that’s what you were paid to do.

BRIGHT LINE? WHAT BRIGHT LINE?

May 14, 2013 § 2 Comments

The line of demarcation — also referred to in the cases and in legal circles as “the valuation date” — is an important concept in divorce law. It’s something we’ve addressed here in prior posts.

Under the Ferguson case, the trial court must first identify which assets are marital, then value them, and then divide them equitably. The date that the court picks to establish the values of marital assets is crucial, since appreciation and depreciation mean that the value on one particular date may be sugnificantly different from that on another date.

Some lawyers argue that there is a “bright line” rule that the entry of a temporary order in a divorce or separate maintenance case cuts off all further accumulation of marital interests, and, indeed, some case law would seem to indicate that.

But the MSSC, in the case of Collins v. Collins, handed down May 9, 2013, makes it clear that there is no bright line rule. Here’s what Justice Coleman’s opinion says on the point:

[¶9] … The law in Mississippi is that the date on which assets cease to be marital and become separate assets – what we refer to herein as the point of demarcation – can be “either the date of separation (at the earliest) or the date of divorce (at the latest).” Lowrey v. Lowrey, 25 So. 3d 274, 285 (¶ 27) (Miss. 2009).

¶10. In Selman v. Selman, 722 So. 2d 547 (Miss. 1998), the wife had a retirement fund, and the chancellor awarded the husband half its value even though the fund did not begin to accrue until after the husband had vacated the marital home. Id. at 553 (¶ 22). When including the fund in the marital assets, “the chancellor stated only that ‘[t]he law says that until they are divorced, everything is on the table.’” Id. Applying the well-settled manifest error standard of review, id. at 551 (¶ 12), the Selman Court reversed the chancellor’s ruling and wrote, “while the marriage had not legally terminated, the relationship out of which equitable distribution arises had ended some months earlier.” Id. at 553 (¶ 25).

¶11. A temporary order may [emphasis in original] be considered by the chancellor to be a line of demarcation between marital and separate property, Cuccia v. Cuccia, 90 So. 3d 1228, 1233 (¶ 8) (Miss. 2012); see also Wheat v. Wheat, 37 So. 3d 632, 637-38 (¶¶ 16-18) (Miss. 2010) (recognizing, in dicta, that a temporary support order can indicate the demarcation point), but we have never held that it must. However, in Pittman v. Pittman, 791 So. 2d 857 (Miss. Ct. App. 2001), the Mississippi Court of Appeals held, “[T]he temporary support order serves the same purposes as a separate maintenance order and that property accumulated thereafter is separate property.” Id. at 864 (¶ 19). In so writing, the Pittman Court created the impression that Mississippi now has established a rule that temporary orders always and in every case provide the mark of demarcation. Temporary support orders vary. They may include issues such as which spouse controls the marital home, automobiles, and bank accounts, or they may simply, as in the case sub judice, provide only for temporary custody and support of a minor child. Because of the degree of variance in temporary orders and the particularities of every marital dissolution, we reaffirm our holding in Lowrey and hold that it is necessary that a chancellor maintain discretion to decide in each instance whether a temporary order is the proper line of demarcation. To the extent that the Pittman opinion can be read to create a rule that a temporary support order necessarily and always indicates the point of demarcation, we overrule it.

¶12. In the case sub judice, the chancellor did not explicitly state what date she chose as the date of demarcation, but from the substance of the opinion, it is clear she chose the date of the divorce. In their briefs, the parties accept that the chancellor used the date of the divorce as the point of demarcation. The temporary support order in the instant case dealt only with child custody and temporary child support. It did not go so far toward separating the parties’ several jointly-held assets that we would hold the chancellor abused her discretion in not finding it to be the point of demarcation.

¶13. However, the Cuccia Court noted that the chancellor must set out the specific date used as the line of demarcation and remanded the case partly for the chancellor’s failure to do so. Cuccia, 90 So. 3d at 1233 (¶ 11). The chancellor did not do so here, but, as noted above, the parties do not dispute the issue. We take the instant opportunity to write that had the issue been disputed, or had the chancellor’s order been ambiguous as to the demarcation date used, we would have remanded the case as did the Cuccio [sic] Court. We reiterate here that chancellors should indicate in the record what date they choose for the point of demarcation and why they choose it.

That should settle the debate once and for all that the demarcation date is at the discretion of the chancellor, who must always identify the date chosen and explain why that particular date was selected.

The downside to this is that when your client asks you about whether it would be wise to acquire any new assets between separation and the date of the divorce, your answer now will be an unqualified, “I don’t have any idea.”

As a trial practice matter, I seldom hear any evidence or argument as to what the valuation date should be. If you have a case where one valuation date is advantageous to your client as opposed to another, you should be zealous about informing the judge what date should be selected, and why it should be selected. For instance, if your client acquired a home after the separation, and has accumulated wealth after the separation, you want a valuation date near that separation date, not at the date of the divorce. If you don’t make that clear in the record, the judge might choose a date that’s not so nifty for your client, and you’ll have to ask the COA to fix it.

THE MISCHIEF OF “FAMILY SUPPORT”

April 4, 2013 § 3 Comments

I’ve spoken here before about the mischief that can arise when one uses the ambiguous term “family support” instead of terms of art such as “child support,” “alimony,” and “property division” that are familiar to our courts. As I said in a previous post, the repercussions can be quite unexpected and unpleasant for your client.

In a decision handed down March 11, 2013, the US Tax Court in the case of DeLong v. Commissioner of Internal Revenue, ruled that the term “family support” creates an alimony obligation, and not a child support obligation.

You can read the decision for yourself, but it essentially turns on the point that since the obligation is not specifically denominated as child support the IRS will not consider it such.

This case arises out of a California divorce judgment. Note that the opinion states that the tax court will look to state law for how the state would treat the obligation. If this were a Mississippi case, the tax court would, to the best of my knowledge, find no helpful authority because the term “family support” is unknown under our law.

There are some serious side-effects from a case such as this. Child support is not deductible by the payer, and it is not income to the payee. Alimony is, however, deductible by the payer, and it most definitely is income to the payee. So, in this case, Mr. Delong got to deduct the payments under the divorce judgment, and the former Mrs. D. gets a bill for income taxes on the payments. If you had negotiated the settlement for Mrs. Delong and that is what she expected as an outcome, then you’re in good shape. If, on the other hand, she was not expecting a tax bill, you’d better look out.

And if the judge, in a comatose moment, injects that kind of language into a judgment, protect your client by filing a timely MRCP 59 motion to get the judge to correct the ambiguity.

In Mississippi, payments are either alimony, or child support, or property division. Denominate them as such, allocating the specific amounts under each. Never use combined language like “Husband shall pay to wife the sum of $2,500 each month as alimony and child support.” And never use ambiguous, non-legal language like “family support” when there are perfectly suitable, meaningful terms like “child support,” “alimony” and “property division” that do the job quite well.

Thanks to Justin Cobb, Esq.

SOME SAGE DIVORCE ADVICE

March 27, 2013 § Leave a comment

WordPress has a feature for us bloggers that shows the search terms that brought readers to our sites. Randy Wallace of Clinton used the search terms he collected on his blog as a platform for a Q&A for divorces.

Here’s a link to his post from March 22, 2013 Search terms……….Ask Randy, which I think any family law practitioner would find to be spot on.

While you’re at it, Randy’s post from June of last year 40 Things …… make that 41 NOT to do during your divorce is a masterpiece.

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