A COSTLY LESSON IN PSA DRAFTSMANSHIP
July 21, 2011 § 3 Comments
What does this fairly commonplace paragraph from a PSA mean:
School and Extracurricular Expenses. Husband and Wife shall each be responsible for one-half (1/2) of all school and extra-curricular expenses incurred by the minor child including but not limited to the cost of books, activity fees, lab fees, school uniforms, tuition, and sports equipment.
Does that provision refer to private elementary and/or high school? Or does it refer to college? Is the language ambiguous?
In McLeod v. McLeod, decided July 19, 2011, by the COA, those questions were presented squarely to the appellate court.
Judge Griffis wrote the opinion that held the language above to encompass all levels of education, and rejected both the arguments that the language was ambiguous and that private elementary and high school expenses are usually included in child support as the court had held in Southerland v. Southerland, 816 So.2d 1004 (Miss. 2002), and Moses v. Moses, 879 So.2d 1043 (Miss. App. 2004). The opinion distinguished the two cases from the facts in this case. The COA decision is worth a read, and I will not rehash it further here.
The point I want to make is how important it is to be aware of precision in your draftsmanship. It would have been a simple matter for the husband’s attorney to clarify the language to specify that it pertained to college, if that was, in fact, the agreement.
Some PSA’s lack clarity. The meaning is hidden behind a cloud of words. That was not the problem in this COA case, but it’s a common problem nonetheless. You can read some ideas for clearer draftsmanship here.
Mostly, though, it seems that we sometimes get in too much of a hurry. The client may be pressing or you put off tending to it until you had no more time to spare. Haste is the enemy of precision.
Make time to set aside what you have drafted for at least a few hours or a couple of days. Then pick it back up and look at it through fresh eyes. Put yourself in the role of a judge who is reviewing it. You know what you meant to say, but will that judge looking through different eyes see it the same way? Are there more precise words that could be used? Is what you have written susceptible to more than one interpretation? Is there something there that can come back and bite your client?
You want your PSA’s — and everything you draft, including pleadings, contracts, briefs — to say exactly what you mean to say and to promote the best interest of your client. Take your time on draftsmanship. Haste is the enemy of precision.
THE DISAPPEARANCE OF MARRIAGE
July 7, 2011 § 1 Comment
In its issue of June 25, 2011, The Economist offers some arresting insights into the state of marriage in our nation that bear reflection by lawyers and judges who deal with family issues. Some of the article’s points:
- Married couples, for the first time, now make up less than half (45%) of all households.
- In every state the numbers of unmarried couples, childless households and single-person households are growing faster than those comprised of married people with children, according to the 2010 census. Married couples with children comprised 43% of households in 1950; they now account for just 20%.
- Traditional marriage has evolved over the past 50 years from a near-universal rite to a luxury for the educated and affluent. In 1960, only four percentage points separated the wedded ways of college and high-school graduates (76% versus 72%). The gap has since widened to 16 percentage points, according to the Pew Research Center. A Census Bureau analysis released this spring found that brides are significantly more likely to have a college degree than they were in the mid-1990s.
- The divorce rate has been declining as the marriage rate has been declining. The National Marriage Project at the University of Virginia in Charlottesville has studied the phenomena and concluded that both declines are due to the fact that marriages are becoming more and more selective. The project also found that divorce rates for couples with college degrees are only a third as high as for those with a high-school education.
- Americans with a high-school diploma or less (who account for 58% of the population) tell researchers they would like to marry, but do not believe they can afford it. Instead, they raise children out of wedlock.
- Only 6% of children born to college-educated mothers were born outside marriage, according to the National Marriage Project. That compares with 44% of babies born to mothers whose education ended with high school. “Less marriage means less income and more poverty,” reckons Isabel Sawhill, a senior fellow at the Brookings Institution. She and other researchers have linked as much as half of the income inequality in America to changes in family composition: single-parent families (mostly those with a high-school degree or less) are getting poorer while married couples (with educations and dual incomes) are increasingly well-off. “This is a striking gap that is not well understood by the public,” she says.
There are implications here that reach far beyond mere economic considerations. Are we witnessing the degeneration of the American Middle Class, with its credal optimism grounded in family, economic opportunity, improvement, education and hard work? The American mantra at least since the 1930’s has been that the next generation will be better off than this one, and so on and on to infinity; the data suggests that principle is dead or dying.
Single parents have less income at their disposal than do married couples living together. Single mothers often live at or near poverty level. Children raised in poverty or near poverty have fewer opportunities to better themselves, and are more likely to pass their accustomed way of life on to their children.
The negative impact on children of being fatherless has been well documented.
The sociology behind these developments is beyond the scope of this blog. It’s important, however, for us to be aware of the forces that affect the lives of those who pass through our courts.
WHAT, ME WORRY?
June 30, 2011 § 6 Comments
Newman
It was the philosopher Alfred E. Newman who coined the epigram, “What, me Worry?” I suspect he also came up with the fallacious thought that “What you don’t know can’t hurt you,” which as any lawyer can tell you, is tragically and dangerously untrue.
Take as a case in point Ivison v. Ivison, 762 So.2d 219 (Miss. 2000). Mrs. Ivison got the former marital residence in the divorce, and the ex-husband paid the mortgage notes. The husband deducted the payments because he was advised that payments made to a third party on behalf of another are treated as alimony and are deductible, if they are mandated in a divorce judgment or property settlement agreement and meet the other criteria for alimony. Mr. Ivison took the deduction, and Mrs. Ivison got a nice, but businesslike letter from the IRS explaining that they wanted her to pony up the income taxes, which were in an amount significant enough to give Mrs. Ivison a bad case of hiccups and send her scurrying to court.
Mrs. Ivison complained to the chancellor that she had not been advised by her attorney at the time that the payments were going to be treated as income, and that she would never have agreed to the divorce settlement had she known. She convinced the sympathetic chancellor that the ex-husband, and not she, should have to pay the taxes. She got her modification.
On appeal, the MSSC reversed and rendered. The opinion pointed out that the applicable tax law had been in effect at the time of the divorce, so the situation did not constitute a material change in circumstances. The court also held that ignorance of the law, and particularly in this case tax law, is not a reason to modify.
I do not know what happened to the attorney who did not advise Mrs. Ivison. I hope he or she had enough malpractice insurance coverage to weather the storm. This was truly a case where what you don’t know can indeed hurt you. And to put it even more pointedly: What your client does not know that you should have advised her about can indeed hurt you.
FIVE MORE SUGGESTIONS FOR PROPERTY SETTLEMENT AGREEMENTS
June 21, 2011 § 3 Comments
- Sometimes the parties want the property settlement part of the PSA to be a final, binding contract regardless whether there is any contest. If you don’t include that provision unequivocally stated, the law is clear that the court can not enforce the contract piecemeal.
- If a payment is to be made, such as child support, specify the first payment date and the regular monthly date for payment.
- If something is to be done, specify the date by which it is to be done. In the alternative, include a stock provision in all your PSA’s to the effect that “If no specific date is stated by which an action in this Agreement is to be accomplished then it shall be done and completed not later than thirty days from the date of this agreement.
- If something is to be done, specify whose responsibility it is to do it. For instance, the provision that “All child support payments due hereunder shall be made pursuant to the Bank Plan,” was held by Judge Mason not to be clear enough that it was the payor’s responsibility to enroll in and make payments under the plan where he had been unrepresented in the divorce. Better to say something like “Husband shall be solely responsible to do all acts and things necessary to enroll in and make all child support payments due on and after August 11, 2011, through the Bank Payment Plan.”
- Section 71(b)(1)(B) of the Internal Revenue Code allows the parties to agree that alimony will be neither taxable nor deductible.
FIVE SUGGESTIONS FOR PROPERTY SETTLEMENT AGREEMENTS
June 15, 2011 § 5 Comments
I’ve had these suggestions on the stockpile for a little while, waiting for an opportune time to post them. Considering Randy Wallace’s post about a less-than-perfect PSA yesterday, I thought now was a good time to float these. I’ll have more later.
- If you don’t address allocation of the tax exemptions for the children as dependents, the IRS takes the position that it remains with the custodial parent. If the non-custodial parent will get the exemption, or it will be split, you should include language that the parties agree that they will promptly complete and timely execute and deliver IRS Form 8332 in order to give effect to the provision. That form is the one that the IRS requires to claim the exemption.
- Stick with the traditional terms. The IRS understands the terms periodic alimony, lump sum alimony, rehabilitative periodic alimony, and child support. If you try to disguise those terms as spousal support or family/spousal support, or family maintenance, or something similar, you are likely sending your client off onto a collision course with the IRS. William Wright, an attorney in Jackson, told of a case he had where opposing counsel insisted on applying the term family support to a substantial payment that William’s doctor-client was having to pay each month. William complied, and his client later took the position with IRS that the payments met all the requirements for alimony, so that he should be able to deduct it, and it should be alimony to the recipient. IRS agreed, costing the recipient a whopping tax bill, and no doubt improving William’s standing in his client’s estimation. Had the payments been allocated between child support, which is not taxable, and alimony, which is, the result would have been far different for the recipient spouse.
- If the other party is not represented, have you made it clear in the agreement which party you do represent, and have you added language to the effect that the other party acknowledges that you have not given him or her any legal advice?
- Name the children in the agreement. It affects them directly. I have read agreements that refer only to “the minor children,” without identifying them, or stating their ages or birthdates, or even how many there are.
- Have you bothered to read the agreement? Does it make any sense? Here’s an actual sentence from a property settlement agreement I was presented: “Husband to have his title and car, and wife hers. Each to pay and hold harmless.” I think I know what that means. But that doesn’t make it an enforceable contract.
HIDDEN COSTS OF DIVORCE
June 13, 2011 § 4 Comments
John and Marsha have decided that they are tired of living in their own, personal soap opera, and they have agreed to an irreconcilable differences divorce. It looks pretty simple:
Marsha will get the former marital residence. It’s paid for and Marsha intends to stay there. The house sustained some damage in a wind storm a couple of years ago, and the parties got $10,000 for repairs from insurance, but they spent it on a Hawaiian vacation, with a few days in Vegas on the way out, in an unsuccessful attempt at refreshing their marriage. Marsha says she can get the repairs done or not because they don’t affect its habitability. The roof needs replacing, but it’s been patched and doesn’t leak. She says she’ll fix it if and when it leaks or when she sells the house, but she does not have the $6,000 it will cost right now.
The parties own two adjoining commercial lots worth about $15,000 each. Marsha has agreed to take the lot they purchased in John’s name in 1990 for $1,500 before Wal-Mart located down the street. John will get the jointly-titled lot they purchased for $12,500 several years ago. A car lot is expanding and has expressed an interest. Marsha would like to settle the divorce as soon as possible so as to cash in. Marsha owes $14,000 on her credit cards, and she’s behind in her payments, so she needs as much cash as she can get out of sale of the lot.
The parties will split the 1,000 shares of Wal-Mart stock that they accumulated through the years. Marsha really doesn’t know much about stock, so John has generously agreed to divide the shares.
Marsha has enjoyed driving the 2008 Jaguar that John bought her several years ago in an attempt to make up after she caught him in a questionable situation with a waitress from the Waffle House. The car is paid for, and Marsha loves it because she has never had a nice car before. She will get it in the divorce.
John has agreed to pay Marsha $1,000 a month in rehabilitative alimony for 36 months. Even with the alimony, it will be a tight squeeze financially for Marsha, so she doesn’t need any unpleasant financial surprises after the divorce is final.
Marsha is in a hurry. She wants you to do up the papers and she will pick them up to go over with John tomorrow, so she can get them filed right away.
It’ll be a snap to prep the PSA, and you are tempted to just hand the notes over to your secretary so they can be done while you hit the golf course.
Before you jump on this, though, ask yourself whether Marsha will really be getting what she thinks she is bargaining for. Consider:
- The divorce will be a transaction effecting a change of ownership in the former marital residence, triggering a re-rating of the homeowner’s insurance. Because the hurricane repairs have never been done and approved by the insurance company, Marsha’s homeowner’s insurance premium is likely to skyrocket. Not only that, but there are other factors that can adversely affect Marsha’s insurance premium, including her credit rating, which is questionable due to the credit cards. In order to get her homeowner’s insurance premium back with a reasonable range, she will have to spend that $6,000 on the roof and complete the other repairs. How can she find out in advance whether she will have a problem? Marsha can get a free insurance C.L.U.E. (Comprehensive Loss Underwriting Exchange) report by writing CLUE, Inc. Consumer Disclosure Center, P. O. Box 105295, Atlanta, GA, 30348-5295, or by calling 1-866-312-8076. An insurance agent can help her decipher the report. And, as you probably know, she can get a free credit report once a year.
- When the commercial lots are sold, Marsha will be paying capital gains taxes, currenty 15%, on $13,500. John will be paying capital gains on just $2,500. Marsha’s tax bite will be $2,025, leaving her $12,975. John’s taxes will be a mere $375, allowing him to pocket $14,625, or $1,650 more than Marsha.
- Also, has Marsha gotten a title opinion on the commercial lot titled in John’s name? It would be a bitter pill indeed to discover when she goes to sell it that John borrowed money against it without her knowledge.
- The stock has the same pitfall as the commercial lots. Stock purchased for $25 a share years ago will carry a much heftier capital gains burden than will the shares purchased for $65 a few years ago. Moreover, John can allocate himself the shares that have sustained losses in the recent downturn. Yet the parties are treating all the shares the same, and, to make it worse, John will call the shots.
- As for her ride, Marsha needs to look at it as a cash drain. How much is she willing to let it drain her? The insurance alone is more than $1,500 a year, and this year’s tag, which is now due, is $862. Not only that, it uses exclusively premium gas, and has never gotten the 21 miles to the gallon that the dealer promised. Yes, it is paid for, but would she do better selling it and taking the cash to buy something more economical? Can she even afford this car?
- Finally, the alimony is taxable income to Marsha unless the parties agree that it will not be taxable. John will not likely agree due to the fact that he will get to claim it as a deduction. Is Marsha aware of this? Can you negotiate an extra $300 or so a month for Marsha to use to pay her income taxes?
You can do the papers exactly as Marsha dictated, or you can sit her down and bring all these matters to her attention. It’s the difference between acting as Marsha’s clerk-typist and acting as her lawyer. You get to decide.
UPDATED CHECKLIST OF CHECKLISTS
May 27, 2011 § 5 Comments
Proving your case by proving certain factors is a fact of legal life in Mississippi. I’ve referred to it as trial by checklist. If you’re not putting on proof of the factors when they apply in your case, you are wasting your and the court’s time, as well as your client’s money, and you are committing malpractice to boot.
Many lawyers have told me that they print out these checklists and use them at trial. I encourage you to copy these checklists and use them in your trial notebooks. And while you’re at it, you’re free to copy any post for your own personal use, but not for commercial use. Lawyers have told me that they are building notebooks tabbed with various subjects and inserting copies of my posts (along with other useful material, I imagine). Good. If it improves practice and makes your (and my) job easier and more effective, I’m all for it.
Here is an updated list of links to the checklists I’ve posted:
Doing an accounting in a probate matter.
Income tax dependency exemption.
Modification of child support.
A POTPOURRI OF POINTS
April 21, 2011 § 2 Comments
Every now and then a case comes tumbling down from the appellate stratosphere that is remarkable not so much for the law of that particular case, but rather for the cascade of legal nuggets it unearths that one can mine and tuck away for future profitable use. Such is Jernigan v. Young, handed down by the COA on April 19, 2011.
Samuel Jernigan and his wife Mae Bell were married in 1997. Two years later, Samuel conveyed a .38-acre tract of land to Mae Bell by quitclaim deed. He had filed for disability and was under the mistaken belief that if the land were no longer in his name his chances of a favorable ruling would improve. Samuel claims that he and Mae Bell had an oral agreement that she would convey the property back to him. There was no writing evidencing the alleged agreement.
In 1998, Mae Bell conveyed the property to her daughter Amy. It is not disclosed in the record whether Samuel was aware of the transaction.
In 1999, Samuel and Mae Bell decided to get a divorce on the sole ground of irreconcilable differences. They proceeded pro se using fill-in-the-blank forms. In one of the blanks designated to identify what property would belong to each party appeared the handwritten notation “none.”
Four days after the divorce judgment was entered, Samuel filed a document styled “Withdrawal of Consent” and asked that the divorce be set aside. He also filed a Complaint for Divorce and a pleading asking that the deed to Amy be set aisde, all of which were consolidated. The case sat idle for seven years until Amy filed for summary judgment. The chancellor granted summary judgment, which the COA affirmed.
Here are the nuggets from Judge Griffis’ opinion:
- “[W]avering on whether a divorce should be entered may often occur and does not invalidate the divorce … What is important is that the agreement be validly expressed on the day that the chancellor is considering the issue.” Sanford v. Sanford, 749 So.2d 353, 356 (Miss. App. 1999); Harvey v. Harvey, 918 So.2d 837, 839 (Miss. App. 2005).
- Relief under MRCP 60(b) requires a showing of “exceptional circumstances.” In re Dissolution of Marriage of De St. Germain, 977 So.2d 412, 416 (Miss. App. 2008).
- No hearing or testimony is required to validate a divorce on the ground of irreconcilable differences. MCA § 93-5-24(4). In an irreconcilable differences divorce the parties “bargain on the premise that reaching an agreement will avoid the necessity of presenting proof at trial.” Perkins v. Perkins, 737 So.2d 1256, 1263 (Miss. App. 2001).
- Although MCA § 93-5-2(2) requires the chancellor to determine whether the parties’ agreement in an irreconcilable differences divorce is “adequate and sufficient,” that is not a “magic phrase,” and its absence in the divorce judgment approving the agreement is not a ground for reversal. Cobb v. Cobb, 29 So.3d 145, 149 (Miss. App. 2010).
- It is not in and of itself reversible error for the chancellor not to require financial disclosure via UCCR 8.05 financial statements in an irreconcilable differences divorce. St. Germain at 417-418. Where the lack of disclosure allowed a spouse to conceal major assets, however, it could amount to reversible error. Kalman v. Kalman, 905 So.2d 760, 764 (Miss. App. 2004).
- An inter vivos deed of gift need not be supported by separate consideration. Holmes v. O’Bryant, 741 So.2d 366, 370 (Miss. App. 1999). “A man of sound mind may execute a will or deed from any sort of motive satisfactory to him, whether that motive be love, affection, gratitude, partiality, prejudice, or even whim or caprice.” Herrington v. Herrington, 232 Miss. 244. 250-251, 98 So. 2d 646, 649 (1957).
- MCA § 91-9-1 requires that any trust in land must be in writing signed by the person declaring or creating the trust, or it is void. The court may impose a constructive or resulting trust on land in the absence of a written agreement, provided that certain criteria are present. Simmons v. Simmons, 724 So.2d 1054, 1057 (Miss. App. 1998).
And the most important point of all: You get exactly what you pay for when you get a do-it-yourself divorce without benefit of legal counsel.
UNCONTESTED DIVORCE: ON OR OFF THE RECORD?
April 13, 2011 § 4 Comments
Should you make a record when presenting an uncontested divorce? I usually leave it up to the lawyer. If you’re making that decision, you should consider the COA decision in Simmons v. Simmons, rendered March 29, 2011.
In that case, the appellant failed to appear or defend, and his ex-wife went ahead and presented the case as an uncontested divorce. The chancellor entered a judgment granting his ex-wife not only a divorce, but also the entire marital estate and attorney’s fees. Joey presented several issues on appeal, one of them that his ex had failed to make a record, and as a result there is no evidence to support the chancellor’s award.
The COA opinion, written by Judge Roberts, cited Luse v. Luse, 992 So.2d 659, 661 (Miss. App. 2008) for the proposition that there is nothing in MCA 93-5-17(1) that requires transcription of an uncontested divorce hearing, and there is a presumption that there is sufficient evidence to sustain a decree if one is entered by the chancellor.
It’s still up to you whether or not to make a record, but it may just be counterproductive to have one. if you make a record, it seems that you are creating something for the other side to use as a target, and they just might hit the jackpot on a lucky Tuesday with the COA. On the other hand, if you make a perfect record, in a child custody case, for example, you might seal off any attack. What do you think?
PROVING THE VALUES OF VEHICLES
March 15, 2011 § Leave a comment
You’re the judge. Which values do you think will have more credibility:
- Financial statement 1 has the family vehicles valued by the party at $800 (the car he wants) and $35,000 (the car that he wants the other party to have), unsupported by any authority; and
- Financial statement 2 that has Kelly Blue Book or NADA printouts from the internet showing values of $12,000 and $16,500?
Financial statement 2 will win the credibility battle every time.
When you are doing your responses to discovery, go to the Kelly Blue Book site or the N.A.D.A. site and enter the make, year model, mileage, condition and options for your client’s car. Use the “Used Car – Private Sale” figures, and print out the results. Include the printout with your discovery response as an attachment to the Rule 8.05 financial statement or in any other appropriate place. Then, when you are preparing for trial, make sure the printout is attached to the financial statement you are going to offer into evidence.
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