Wednesday, October 16, 2013
Employer Benefits Count for Income in Calculating Child Support
1:49 PM
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Recently the Ohio Supreme Court issued a decision regarding the calculation of child support and concluded that employer benefits can be considered as income for child support purposes. The case is Morrow v Becker. The following is an excerpt of the decision as reported by Kathleen Maloney.
By Kathleen Maloney | October 16, 2013
Certain employer-paid benefits may be included as gross income fo...r the purpose of calculating child support payments, the Ohio Supreme Court ruled today.
The 6-1 decision, authored by Justice Paul E. Pfeifer, affirms the judgment of the Ninth District Court of Appeals that the trial court did not abuse its discretion when it included the value of several benefits provided by an employer in a decision whether to adjust a child-support obligation.
In this case, Jeffrey Morrow and Sherri Becker, the parents of two children, separated, and Morrow was ordered in 2006 to pay child support. A few years later, Morrow asked the Medina County Domestic Relations Court to reduce his child support payments because his salary had been significantly cut following the 2008-2009 economic recession.
The trial court concluded that Morrow wasn’t entitled to a reduction in his monthly child support obligation. In determining Morrow’s annual income, the court included $16,756 worth of non-cash benefits he received from his employer, including a company-owned car, company-paid car insurance, a company-paid cellular phone service, and company-paid season tickets to Ohio State University football games.
Morrow appealed. The Ninth District Court of Appeals, agreeing with the trial court, held that the value of the non-cash benefits should be included in Morrow’s gross income. The appeals court ruled that the trial court didn’t abuse its discretion, because Morrow would have otherwise had to pay for those benefits with his own money. The appeals court determined, however, that the OSU football tickets shouldn’t have been included in Morrow’s gross income because he didn’t receive the full value of the tickets, but the court found that error was harmless.
Morrow appealed the Ninth District’s decision to the Ohio Supreme Court. Morrow appealed the Ninth District’s decision to the Ohio Supreme Court. The Supreme Court accepted Morrow’s discretionary appeal and the Ninth District’s certified conflict question and consolidated the cases for oral arguments.
Morrow contended in his appeal to the court that the law only references company cars and other in-kind items in the context of “self-employment, proprietorship of a business, joint ownership of a partnership or closely held corporation.” Because he isn’t in one of those employment categories, Morrow asserted that the General Assembly intended to exclude such items from gross income when received outside those types of jobs. The Supreme Court today found that nothing in the statutes support that conclusion.
In his opinion, Justice Pfeifer also concluded that the definition of gross income is broad enough to encompass the benefits described in this case. Because Morrow had no car, car insurance, or phone other than the ones given to him by his employer, the court determined it was reasonable to include the value of these benefits in Morrow’s gross income.
“If his employer did not provide a car, Morrow would have had to purchase or lease one on his own, using his own funds,” Justice Pfeifer wrote. “[T]he person receiving the benefit effectively has a higher income. We reach the same conclusion with respect to the car insurance and cell phone.”
However, Justice Pfeifer stated that the employer gave Morrow the football tickets to use as perks for employees or gifts for business associates, so Morrow didn’t receive the full benefit of the tickets. But, because the value of the tickets amounted to only about one percent of Morrow’s gross income, Justice Pfeifer concluded that their inclusion in Morrow’s income was a harmless error.
The court’s majority opinion was joined by Chief Justice Maureen O’Connor and Justices Judith Ann Lanzinger, Sharon L. Kennedy, Judith L. French, and William M. O’Neill.
Justice Terrence O’Donnell wrote a dissent. In it, he stated that the majority fails to distinguish between the business use and personal use of the employer-provided benefits. “[A]nalysis of whether the value of employer-provided benefits should be included in gross income should consider the purpose for which the employer provided them as fringe benefits and the extent to which they are used for business purposes,” he concluded.
2012-1674 and 2012-1898. Morrow v. Becker, Slip Opinion No. 2013-Ohio-
By Kathleen Maloney | October 16, 2013
Certain employer-paid benefits may be included as gross income fo...r the purpose of calculating child support payments, the Ohio Supreme Court ruled today.
The 6-1 decision, authored by Justice Paul E. Pfeifer, affirms the judgment of the Ninth District Court of Appeals that the trial court did not abuse its discretion when it included the value of several benefits provided by an employer in a decision whether to adjust a child-support obligation.
In this case, Jeffrey Morrow and Sherri Becker, the parents of two children, separated, and Morrow was ordered in 2006 to pay child support. A few years later, Morrow asked the Medina County Domestic Relations Court to reduce his child support payments because his salary had been significantly cut following the 2008-2009 economic recession.
The trial court concluded that Morrow wasn’t entitled to a reduction in his monthly child support obligation. In determining Morrow’s annual income, the court included $16,756 worth of non-cash benefits he received from his employer, including a company-owned car, company-paid car insurance, a company-paid cellular phone service, and company-paid season tickets to Ohio State University football games.
Morrow appealed. The Ninth District Court of Appeals, agreeing with the trial court, held that the value of the non-cash benefits should be included in Morrow’s gross income. The appeals court ruled that the trial court didn’t abuse its discretion, because Morrow would have otherwise had to pay for those benefits with his own money. The appeals court determined, however, that the OSU football tickets shouldn’t have been included in Morrow’s gross income because he didn’t receive the full value of the tickets, but the court found that error was harmless.
Morrow appealed the Ninth District’s decision to the Ohio Supreme Court. Morrow appealed the Ninth District’s decision to the Ohio Supreme Court. The Supreme Court accepted Morrow’s discretionary appeal and the Ninth District’s certified conflict question and consolidated the cases for oral arguments.
Morrow contended in his appeal to the court that the law only references company cars and other in-kind items in the context of “self-employment, proprietorship of a business, joint ownership of a partnership or closely held corporation.” Because he isn’t in one of those employment categories, Morrow asserted that the General Assembly intended to exclude such items from gross income when received outside those types of jobs. The Supreme Court today found that nothing in the statutes support that conclusion.
In his opinion, Justice Pfeifer also concluded that the definition of gross income is broad enough to encompass the benefits described in this case. Because Morrow had no car, car insurance, or phone other than the ones given to him by his employer, the court determined it was reasonable to include the value of these benefits in Morrow’s gross income.
“If his employer did not provide a car, Morrow would have had to purchase or lease one on his own, using his own funds,” Justice Pfeifer wrote. “[T]he person receiving the benefit effectively has a higher income. We reach the same conclusion with respect to the car insurance and cell phone.”
However, Justice Pfeifer stated that the employer gave Morrow the football tickets to use as perks for employees or gifts for business associates, so Morrow didn’t receive the full benefit of the tickets. But, because the value of the tickets amounted to only about one percent of Morrow’s gross income, Justice Pfeifer concluded that their inclusion in Morrow’s income was a harmless error.
The court’s majority opinion was joined by Chief Justice Maureen O’Connor and Justices Judith Ann Lanzinger, Sharon L. Kennedy, Judith L. French, and William M. O’Neill.
Justice Terrence O’Donnell wrote a dissent. In it, he stated that the majority fails to distinguish between the business use and personal use of the employer-provided benefits. “[A]nalysis of whether the value of employer-provided benefits should be included in gross income should consider the purpose for which the employer provided them as fringe benefits and the extent to which they are used for business purposes,” he concluded.
2012-1674 and 2012-1898. Morrow v. Becker, Slip Opinion No. 2013-Ohio-
Thursday, September 19, 2013
8:17 AM
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SOCIAL SECURITY OFFSET IN DIVORCE AND DISSOLUTION MATTERS:
Recently I read an article which was published in QdroDesk.com. The article addresses the valuation of Social Security and It's divisibility in a divorce case. In light of Ohio Revised Code 3105. 171(F)(9) which allows a Court in deciding the equitable division of retirement benefits to take into consideration social security benefits for purposes of dividing a public pension. I have reprinted that article below.
________________________________________________________
QdroDesk.com - March 2013 QDRO Newsletter - Volume 2, Issue 2
View online at: http://www.qdrodesk.com/qdro/Social-Security-Offset-160.shtml
________________________________________________________
Definition - A Social Security offset is a consideration or reduction of a divorcing parties hypothetical or actual Social Security benefits in determining the equitable distribution of the parties property.
General Discussion - Many courts struggle with the question of how Social Security benefits should be treated in equitable distribution because by federal statute, these benefits are not subject to equitable distribution in divorce actions. However, under many public pension plans, government employees do not participate in the Social Security system. For these employees, government pensions, such as those given by Civil Service Retirement System (CSRS), replace Social Security. Therefore, an argument exists whether government pensions are sheltered from equitable distribution when they substitute for Social Security.
Moreover, the controversy persists whether actual Social Security benefits can or should be considered, if not divided.
There are essentially two viewpoints on the issue. One side advocates the consideration or reduction of either spouses hypothetical or actual Social Security benefits in determining the equitable distribution of the parties property. This argument works best in equitable distribution states. Unlike community property states, equitable distribution states do not require an equal split of all property acquired during the marriage but give the court discretion to consider all of the parties property to arrive at a just and reasonable division. Alternatively, the opposition argues that no consideration or reduction should be made in accordance with federal statute. Several courts have concluded that a pension that is a substitute for Social Security may nonetheless be treated as marital property.
Classification - According to federal statute, Social Security benefits are not divisible in divorce proceedings and therefore cannot be considered a marital asset.
Valuation - If it has been determined that one or both spouses hypothetical or actual Social Security benefits will be considered in determining the equitable distribution of the parties property, then the benefit(s) may be valued in several different ways according to whether the parties agree to an immediate or deferred distribution of their other property.
Social Security is the federal government version of a defined benefit plan. A defined benefit pension plan promises to pay a specified benefit at retirement. When a spouses rights under a defined benefit plan are valued for immediate distribution, it is necessary to reduce the benefits to present value.
This requires a number of steps calculate a present value. First, the value of the pension at retirement age must be ascertained based on the amount of the monthly benefit, the employees mortality, and an appropriate interest rate. Second, that value must be reduced to account for interest, mortality, and the possibility that the pension will not fully vest. Third, a coverture fraction must be applied to determine what amount is attributable to the marriage.
Distribution - Security benefits are not divisible in divorce proceedings and therefore cannot be distributed as a marital asset.
--Conclusion--
Thursday, September 12, 2013
The QDRO and Divorce Decree/Decree of Dissolution
4:37 AM
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Recently I read an article in QDRO Desk.com which may be of some help in addressing issues in the drafting of a divorce or dissolution decree where there is a division of a retirement account through a Qualified Domestic Relations Order ( QDRO).
QdroDesk.com - September 2013 QDRO Newsletter -
Volume 2, Issue 3
THE QDRO AND THE DIVORCE
DECREE/SETTLEMENT AGREEMENT
________________________________________________________
Some family law attorneys do not
appreciate that the QDRO only effectuates the agreement between the parties, so
the two must be consistent. The agreement need not contain the technical
language of a QDRO; however, a generalized statement invites trouble.
At a minimum, every agreement that
divides a retirement plan should include the following:
1.
Exact legal plan name or names. The most common reason a QDRO is
rejected by the plan administrator is because the plan name provided is
incorrect. There are circumstances however when additional general provisions
would be appropriate if a question arises as to unknown plans.
2.
Clear, precise expression of the award, whether by percentage or dollar
amount. Attorneys should be aware of the payment options available under the
plan before finalizing the agreement. For example, many defined benefit plans
do not allow lump sum distributions beyond a certain amount (often $5,000).
Therefore, an agreement awarding the alternate payee $100,000 from a plan that
does not allow such a distribution will force the parties back into
negotiations when the order is rejected by the plan administrator.
3. Date when the division occurs,
such as date of divorce or other specific date. This normally corresponds with
the date on which marital property rights end but may be a different date. Some
plans will only divide benefits at the end of a particular fiduciary period
(e.g. the end of a month or end of a quarter). The practitioner should know
this when negotiating the agreement.
4. The disposition and the extent of
a post-retirement surviving spouse benefit should be addressed for all plans
that do not allow for a separate interest approach. This includes both federal
government plans and most state and local government plans as well as the
military and some private plans.
5.
In the Civil Service Retirement System or Federal Employees Retirement
System Plan, whether the division is for the gross, net or self-only benefit.
Both parties and their attorneys should understand the difference between these
terms. The gross benefit under the federal government plans does not have the
same meaning that most people infer. Additionally, most non-ERISA, government
plans have unique terms or language that should be included in the agreement.
6.
For all defined benefit plans, a statement indicating whether the award
includes cost of living increases (COLA).
Moreover, every agreement that
applies to defined benefit plans should state whether the alternate payee
should be considered a surviving spouse and entitled to any pre-retirement
death benefit if the participant dies prior to either party commencing benefits
and whether the alternate payee should receive benefits for his/her lifetime or
the lifetime of the participant.
Every decree that applies to a
defined contribution plan should additionally state the following:
1. Whether or not earnings and
losses should apply to the alternate payee’s award from the date of division to
the date of distribution.
2. The disposition of the award if
the alternate payee dies before receipt of his/her benefit.
3. Which party is responsible for
any outstanding loan balances.
Sunday, August 25, 2013
Hague Convention
8:04 AM
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The Hague Convention:
The Hague Convention is a treaty
between the United States and many foreign countries. As of May 2013, 89 Countries including the
United States were signatories to the Hague Convention. The actual name of the convention is The Hague
Convention of 25 October 1980 on the Civil Aspects of International Child
Abduction. However many people refer to
The Hague Convention of 25 October 1980 on the Civil Aspects of International
Child Abduction as simply “The Hague
Convention”. It should be briefly
noted however that there are many other treaty’s which have been adopted by the
Hague Conference on Private International Law which deal with issues other than
international child abduction and which may also be referred to as the “ Hague Convention”. It is therefore
prudent for a parent seeking the return of child who has been abducted to use
the formal name of the treaty when seeking assistance in the return of the
child(ren).
In the United States, The Hague Convention ,or the Hague Convention
of 25 October 1980 on the Civil Aspects of International Child Abduction has
been incorporated into Federal Law with the adoption of the International Child
Remedies Abduction Act ( 42 USC 11601 et seq). Pursuant to 42 USC 11603 the provisions of
the Hague Convention are enforceable
in both Federal Courts and state courts. Section 42 USC 11603 provides as follows
11USC 11603 : Judicial remedies
(a) Jurisdiction
of courts
The courts of the States and the
United States district courts shall have concurrent original jurisdiction of
actions arising under the convention.
In Ohio, The Hague Convention and its provisions are enforceable in Ohio pursuant
to Ohio Revised Code R.C. Section 3127.32.
Ohio Revised Code Section 3127.32 provides that a juvenile court or
other court with appropriate jurisdiction may enforce an order for the return
of a child made under the Hague Convention on the Civil Aspects of
International Child Abduction.
The purpose of The Hague Convention is to provide a legal process whereby a child(
ren) who is/are wrongfully removed or
wrongfully retained ( as those terms are defined by Article 3 of the
Convention) can be returned to the child’s country of habitual residence ( and
as that term is defined by Article 4 of the Convention). However, in
considering an action for the return of
a child who has been wrongfully retained or wrongfully removed ( abducted), it is
necessary that a parent must consider a number of factors before filing a
petition for the return of a child pursuant to the provisions of The Hague
Convention.
A
parent considering an action for the return of a child pursuant to The Hague Convention must take into
consideration a number of factors. First
a parent must consider whether his/her country is a member of The Hague Convention. In order to invoke the provisions of The Hague Convention both the country
where the child has been removed /or retained and the country to which the
child is to be returned must be signatories ( members) to The
Hague Convention. If both countries
are not signatory’s to The Hague
Convention ( a member) then the provisions of The Hague Convention do not apply.
A list of the countries which are members of the Hague Convention can be found at the Hague Convention Web Site
which is www.hcch.net .
The second factor which a parent
must consider is what is the “ Habitual Residence” of the child immediately prior to the
wrongful removal or wrongful retention.
Generally a parent seeking the return of a child is seeking to have the
child returned to that parent’s country of residence. Habitual residence is a term that is defined
by Article 4 of the Hague Convention. Article 4 of the Hague Convention defines
when a child is a habitual resident of a country. Article 4 of the Hague Convention states:
The Convention shall apply to any
child who was habitually resident in a Contracting State immediately before any
breach of custody or access rights. The Convention shall cease to apply when
the child attains the age of 16 years.
Finally a parent who
is seeking the return of the child who has been abducted must consider whether
there has been a wrongful removal or retention under Article 3 of the Hague Convention. If a child is
determined to be a habitual resident of a country then a parent seeking the
return of a child to the child’s country of habitual residence must determine
whether the child has been wrongfully removed or wrongfully retained. Article 3 of the Hague Convention defines a wrongful removal and a wrongful
retention as follows:
Article 3: The removal or the retention of a child is to
be considered wrongful where -
a) it is in breach of rights of custody
attributed to a person, an institution or any other body, either jointly or
alone, under the law of the State in which the child was habitually resident
immediately before the removal or retention; and
b) at the time of removal or retention those
rights were actually exercised, either jointly or alone, or would have been so
exercised but for the removal or retention.
The rights of custody mentioned in
sub-paragraph a) above, may arise in particular by operation of law or by
reason of a judicial or administrative decision, or by reason of an agreement having
legal effect under the law of that State.
Since 1996 when
the law firm of Gary J. Gottfried Co LPA was lead counsel in the land mark case
of Friedrich v Freidrich, 78 F.3d 1060( 6th Cir. 1996), the Law
Firm of Gary J. Gottfried Co LPA has continued to be counsel for many families
seeking the return of children pursuant to the Hague Convention.
Saturday, August 24, 2013
Same Sex Divorce Granted in Ohio
1:35 PM
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In the days and weeks since the Supreme Court's decision on same sex marriages, Hancock County granted a same sex marriage between 2 women. In the case in Hancock County both women were married in Jamestown New York. Subsequent to their marriage they moved to Ohio. Thereafter they sought to terminate their marriage by filing a divorce in Hancock County, Ohio. A divorce was granted to the Plaintiff in this action on August 16. 2013 by the Hancock County Court of Common Pleas, Division of Domestic Relations.
Friday, March 15, 2013
New York Case on Prenuptial Agreements
8:03 AM
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Prenuptial Agreements
Tim Tepe an Ohio AAML fellow brought to my attention an article from the ABA Law Journal which may be of some interest to the members of the Ohio Family Law Bar. In the ABA Journal it was reported that lawyers are calling a landmark ruling, a New York appeals court has upheld a Long Island judge's decision to void an prenuptial agreement that the wife of a millionaire says she was tricked into signing by false promises made by her husband-to-be, days before the wedding.
Elizabeth Cioffi-Petrakis says she was presented with the document and an ultimatum four days before her scheduled 1998 wedding to Peter Petrakis, according to the New York Post and Yahoo's Shine blog.
Young and naive, she believed Petrakis when he told her orally that his lawyers had made him get a prenuptial agreement signed to protect his business and promised to destroy the document once they had children and put her name on the deed to the house, Cioffi-Petrakis now says. She also says Petrakis gave her an ultimatum four days before the wedding for which her father had already paid $40,000, telling her to sign the document or it wouldn't occur. The appellate decision to strike what it called a "fraudulently induced" contract “is unprecedented in the family law world,” Vikki Ziegler, a matrimonial lawyer apparently not involved in the case, told Yahoo. “This is a landmark decision that will likely be litigated a great deal in the future in similar cases for those who feel their prenups are unconscionable.” Renowned matrimonial lawyer Raoul Felder, also not involved in the case, agreed, called the ruling "really rare," the Post says. Dennis D’Antonio represented Cioffi-Petrakis in the case. The articles don't include any comment from Peter Petrakis, 41, or his counsel. Now that the status of their prenuptial agreement is clear, the couple's divorce will proceed.
It would appear that the decision reached in the Petrakis case is very similar to the Ohio line of cases starting with the Fletcher case from the Ohio Supreme Court 68 Ohio State 3 464.
Elizabeth Cioffi-Petrakis says she was presented with the document and an ultimatum four days before her scheduled 1998 wedding to Peter Petrakis, according to the New York Post and Yahoo's Shine blog.
Young and naive, she believed Petrakis when he told her orally that his lawyers had made him get a prenuptial agreement signed to protect his business and promised to destroy the document once they had children and put her name on the deed to the house, Cioffi-Petrakis now says. She also says Petrakis gave her an ultimatum four days before the wedding for which her father had already paid $40,000, telling her to sign the document or it wouldn't occur. The appellate decision to strike what it called a "fraudulently induced" contract “is unprecedented in the family law world,” Vikki Ziegler, a matrimonial lawyer apparently not involved in the case, told Yahoo. “This is a landmark decision that will likely be litigated a great deal in the future in similar cases for those who feel their prenups are unconscionable.” Renowned matrimonial lawyer Raoul Felder, also not involved in the case, agreed, called the ruling "really rare," the Post says. Dennis D’Antonio represented Cioffi-Petrakis in the case. The articles don't include any comment from Peter Petrakis, 41, or his counsel. Now that the status of their prenuptial agreement is clear, the couple's divorce will proceed.
It would appear that the decision reached in the Petrakis case is very similar to the Ohio line of cases starting with the Fletcher case from the Ohio Supreme Court 68 Ohio State 3 464.
www.GOTTFRIEDLAW.com
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Wednesday, March 13, 2013
Hague Convention on the International Abduction of Children
5:55 PM
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International Abduction of Children
On February 19, 2013 the United States Supreme Court issued a significant decision which affects children who have been returned to their country of Habitual Residence pursuant to the Hague Convention on the International Abduction of Children ( The Hague). The case is Chafin v Chafin, and the Case No is 11-1347. In Chafin, Father was living in Alabama with the minor child. The Mother then filed an action for the return of the child pursuant to the Hague convention.
After a trial on the matter, the District Court concluded that Scotland was the child's country of habitual residence and ordered the Father to return the minor child to the child's country of habitual residence (Scotland). Father then filed an appeal of the District Court's decision ordering the return of the child. The 11th Circuit Court of Appeal dismissed the appeal finding that because the child had been returned an appeal of the decision order the return of the child was moot. Father, then appealed the dismissal of his appeal to the United States Supreme Court. In reversing the decision of the 11th Circuit court of Appeals, the United States Supreme Court held that although a child had been returned to the child's country of habitual residence that the return of the child did not render an appeal of the return order as moot.
After a trial on the matter, the District Court concluded that Scotland was the child's country of habitual residence and ordered the Father to return the minor child to the child's country of habitual residence (Scotland). Father then filed an appeal of the District Court's decision ordering the return of the child. The 11th Circuit Court of Appeal dismissed the appeal finding that because the child had been returned an appeal of the decision order the return of the child was moot. Father, then appealed the dismissal of his appeal to the United States Supreme Court. In reversing the decision of the 11th Circuit court of Appeals, the United States Supreme Court held that although a child had been returned to the child's country of habitual residence that the return of the child did not render an appeal of the return order as moot.
www.GOTTFRIEDLAW.com
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