Michigan Military Divorce

Spousal support | Penalties for late payment dischargeable in bankruptcy

Support payments are not dischargeable in bankruptcy. But what about penalties imposed for failure to pay support? The 1st Circuit Court of Appeals held in a ruling released on November 12, 2009 that $50 per day penalties owed by the husband because his spousal support payments were late are not "in the nature of support." [Note the penalties had accumulated to some $75,000+ over a period of years.] Thus the former husband could discharge them in bankruptcy.

Spousal support | When? How much? How long? Conditions?

An article published in The Wall Street Journal on October 31, 2009 garnered over emotionally charged 170 online comments over the weekend.  The tenor of the article is set at the beginning: "Long viewed as payment for life, divorce settlements are facing strict new limits as some ex-spouses—primarily men—protest the endless support of a former partner. For richer, for poorer, forever?"

Inflation Calculator

How is inflation affecting your client? Is a reduction in support appropriate? Or should there be an increase in support? A picture is worth a thousand words and I've found a terrific way to show the Court the effect that the economy is having on a client.

Example: My client receives $250/month in spousal support under a 2003 Judgment of Divorce. The Judgment says that her spousal support is modifiable, and that it terminates upon her death or remarriage, but survives the death of the payor. Three weeks after the payor dies, a motion is filed by the estate (i.e., the greedy kids) to terminate Mom's support. A Consumer Price Index Calculator shows that it would take $293.06 in 2009 dollars to be equal the $250/month payment.

This calculator is found on the website of the United States Department of Labor, Bureau of Labor Statistics. The CPI inflation calculator uses the average Consumer Price Index for a given calendar year. This data represents changes in prices of all goods and services purchased for consumption by urban households. This index value has been calculated every year since 1913. For the current year, the latest monthly index value is used.

Modification of alimony / spousal support | The need for precise language

On March 26th, the court of appeals reversed a trial court's decision to enter a judgment of divorce that included conditions regarding termination that were not included in the settlement placed on the record. This case illustrates how important it is to fully state the parties' agreement on the record in open court and to avoid making assumptions that "what we usually expect" as conditions for termination of alimony will also belong in the judgment.

Spousal support | Modifiable or not?

In an appropriate case, spousal support may be ordered by a judge in a divorce case. Normally, court-ordered spousal support will be modifiable. Most cases settle before trial, though. Some divorcing parties may agree to spousal support. If their settlement agreement and/or divorce agreement doesn't specify that the spousal support is non-modifiable, then Michigan law provides that upon proof of changed circumstances, one of the parties can file a motion in court to raise or lower the amount, or to terminate the support altogether.

Parties have another option, which is to enter into an agreement for non-modifiable spousal support. In effect, they are contracting to bind themselves to pay or to receive a certain amount of money monthly or annually.

Judgment amended to correct error or omission

Michigan’s court of appeals decided in an unpublished opinion that the trial court committed error by not permitting Husband to amend a consent judgment of divorce to add language that the payments would terminate upon Wife’s death and would therefore qualify as deductible alimony.

In this case, as sometimes occurs, H was to make payments to W, taking advantage of Section 71(b) of the Internal Revenue Code. Often property settlements are paid out in installments, and it is advantageous to shift income from the party in a higher tax bracket to the party with a lower tax rate.

Depositions | Helpful tool in some divorces cases

James J. Harrington, III, an outstanding family lawyer from Novi, Michigan offers this valuable advice about discovery depositions in family law cases:

Depositions are certainly not required in every case or even most cases or even 70% of cases… however as to the remainder they are absolutely critical, mandated, and – arguably – the standard of practice requires them.

Before noticing a Deposition, I consider on a case by case basis the following:

Cohabitation - Finally, a test for trial courts to apply

On March 18, 2008, In Smith v Smith, decided (For Publication), the Michigan court of appeals adopted the test from an Ohio decision to determine what constitutes “cohabitation.” In Smith, the parties' consent judgment of divorce mandated termination of spousal support upon “cohabitation.” Mr. Smith filed a motion to terminate alimony, claiming that his ex-wife was cohabiting with another man. The trial court denied his motion, after carefully analyzing whether the ex-wife's conduct as described constituted "cohabitation." Mr. Smith appealed.

Alimony | Imputing income & impeachment

In Andrews v Andrews, decided by the Michigan court of appeals on March 11, 2008, Husband claimed that the trial court erred in not enforcing a prenuptial agreement that limited alimony to his net income as reflected by his federal tax returns. The trial court imputed income of $300,000/year to H after he transferred his interest in a partnership to his parents, allegedly to repay a $340,000 debt to them.

H wanted the trial court to believe that his transfer of the interest to his parents, which had been reduced to a sum certain in a default judgment, was not a voluntary or bad faith reduction in income that justified imputation. He also claimed that since Wife had not produced evidence directly impeaching his testimony, the trial court had to believe his testimony.

Treatment of "pre-inheritance transfer" of property in divorce

In Wells v Wells, Docket No 271465, decided on November 20, 2007, the COA upheld the Ottawa County Circuit Court where W challenged the T/C's distribution. 

W appealed the T/C's exclusion from the marital estate of H's partnership interest in a "Family Farm" that was owned and operated by H and his brothers. The COA characterized this property a pre-inheritance transfer from H's parents to their sons, which should be treated just as inheritances are by the T/C. The COA concluded that the T/C properly ruled that the partnership and his stock in the partnership formed with his brother was H's separate property and was properly excluded from the marital estate.