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NEW YORK, N.Y. – A New York City judge has approved a child support settlement between supermodel Linda Evangelista and a billionaire French businessman.

Model Linda Evangelista leaves Manhattan Family Court after facing her former beau Francois Henri-Pinault in New YorkNEW YORK (Reuters) – Canadian supermodel Linda Evangelista and French billionaire Francois-Henri Pinault reached a child-support settlement on Monday following two days of tense, often personal court testimony last week in Manhattan. Lawyers for both parties declined to disclose the settlement. A lawyer for Evangelista called media reports that she sought $46,000 a month as a misunderstanding, but acknowledged she was seeking a “substantial” sum to raise their 5-year-old son. Both parties agreed to return to court on Tuesday to finalize the agreement. …

Supermodel Linda Evangelista, French Tycoon Duke it Out Over Child SupportBy Carlos Boettcher and Candace Smith In the second day of the battle of the malcontent millionaires, Linda Evangelista, 46, duked it out, litigation-style, with her former lover Francois Pinault, 49, on Friday over how much money she would receive in monthly expenses for their…

By Carlos Boettcher and Candace Smith In the second day of the battle of the malcontent millionaires, Linda Evangelista, 46, duked it out, litigation-style, with her former lover Francois Pinault, 49, on Friday over how much money she would receive in monthly expenses for their…

Model Linda Evangelista leaves Manhattan Family Court after facing her former beau Francois Henri-Pinault in New YorkNEW YORK (Reuters) – When supermodel Linda Evangelista told French billionaire Francois-Henri Pinault in 2006 she was pregnant with his child, he asked her to get an abortion, her attorney charged Thursday on the first day of a child-support trial in Manhattan. Pinault, 49, who is currently married to actress Salma Hayek, denied that charge but testified he told Evangelista that “if she were to have a child (they) might not have a relationship.” With that a four-month relationship, in which he said the couple only actually saw each other seven days, came to an end. …

Swedish Dads, Skansen

Swedish Dads, Skansen (Photo credit: ChrisGoldNY)

Under most circumstances (with the possible exception of surrogacy situations), establishing maternity of a child is obvious. Establishing paternity is another matter. But is this uncertainty enough to require genetic testing for all new parents and babies? If, after reading the following, you need assistance from a Hunterdon County lawyer regarding paternity issues, contact the family law attorneys at The Rotolo Law Firm located in New Jersey, Clinton Township.

A New Jersey Assemblyman recently put forward a bill that, if adopted, would require all new parents and their babies to undergo genetic testing to establish parentage. Because maternity is usually easier to prove, the bill, admittedly, is geared more to determining paternity. The thinking behind such a bill is that establishing paternity from the start would alleviate the potential for future court battles and the heartbreak associated with them. (1)

Current New Jersey law essentially presumes the husband is the father of a child born during the marriage, or within 300 days after a marriage is ended by annulment, divorce or death of a spouse. (2) In the case of babies born outside of a marriage, the unwed father should make the effort to establish his paternity. (3) In New Jersey, parents can sign a Certificate of Paternity, which establishes the man named as the legal father of the child. (4)

When a father signs a Certificate of Paternity, it helps to establish the rights and privileges of both father and child, as well as the duties and obligations the father has toward that child. A legal father has the responsibility to provide financially for his child and to meet his childas health and emotional needs. With these responsibilities come visitation rights and the right to seek custody should the relationship between mother and father terminate. (5)

Establishing paternity is important for the child, as well, as it protects his or her rights to inheritance and other benefits, including medical, Social Security, life insurance and veteransa benefits. It also provides a child with important information regarding his or her medical history. (5)

For most people, the presumption of paternity is sufficient, at least until the relationship between mother and father sours. In that case, the court may order genetic testing if there are questions regarding paternity before ruling on such matters as child support, visitation and custody.

New Jersey previously considered mandatory genetic testing, but rejected the idea as too costly in terms of money and time, and for being an invasion of privacy. (4) The proposed bill would put the financial burden, at least, on the parents and their insurance providers. (1)

Whether or not such a bill will make it into law is yet to be seen; to date there is no companion bill before the State Senate, so any decision is a long way off. (1) In the meantime, if you or someone you know needs assistance regarding paternity issues in Hunterdon County, contact the family law attorneys at The Rotolo Law Firm.

(1) http://www.nj.com/news/index.ssf/2012/03/nj_legislator_proposes_measure.html
(2) http://www.dna-testing-paternity.com/paternity-laws/new-jersey-state-paternity-laws
(3) http://family.findlaw.com/paternity/paternity-suit-faqs.html
(4) http://www.lawrev.state.nj.us/children/t9parentageFR041510.pdf
(5) http://www.dna-geneticconnections.com/paternity.html

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LOS ANGELES, CA - NOVEMBER 16: Nicole Richie a...

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Although New Jersey has the lowest divorce rate in the nation (1), break-ups do happen and when they do, tempers can flare. Sometimes those tempers get out of control. Restraining orders are designed to offer protection from a former or current partner who poses a threat. (2) If, after reading the following, you need a Hunterdon County lawyer to assist you with a similar situation regarding restraining orders, contact the family attorneys at The Rotolo Law Firm.

New Jersey offers three types of restraining orders. Emergency orders offer immediate protection when courts are closed. Temporary restraining orders (TROs) are issued prior to a full hearing provided a judge finds sufficient evidence of potential harm. Final restraining orders are those issued after a full hearing at which each party is given a chance to present their side. They can stay in effect indefinitely; in fact, they do not terminate unless a judge sets an expiration date or either party files a motion to end or amend the terms of the order. (2)

Normally restraining orders spell out explicitly where the person against whom the order is written can and cannot go. Unless the order is written specifically, though, confusion can arise, causing problems for all involved. Take the case of a New Jersey man who was arrested and charged with contempt and harassment for attending his childas soccer game.

About a year after their divorce, the manas ex-wife sought a restraining order against him following a confrontation over support payments. The judge hearing the case issued a final restraining order specifying that the man could not contact his ex-wife and must stay away from her home, workplace and aany other placea she may be. (3)

When the man showed up at his childas soccer game, his ex-wife, who was also in attendance, called the police to report him in violation of the restraining order. He was charged with contempt and harassment and held in custody briefly. Eventually the man was sentence to one day already served and a penalty of $125. Since the order did not specifically name the aothera places from which the man was barred, he appealed. (3)

According to the Prevention of Domestic Violence Act, restraining orders can keep a person away from the home, school or place of employment of another, as well as from any other place specified in the order. This is usually a place the victim is known to visit often. (3)

Last month a state appeals court ruled in favor of the man, noting the order against him failed to specifically define aany other place.a Because of the vague wording, the court ruled the man could not deliberately violate his restraining order by attending his childas soccer game. In order to comply with such a broadly worded restraining order, the onus would be on the man to know where his ex-wife was at all times. This, it was noted, could almost be considered stalking which, in itself, is a form of domestic abuse. (3)

Restraining orders are designed to protect, but they can be ineffective if the wording is too general. If you or someone you know needs assistance with restraining orders, particularly in Hunterdon County, contact the family law attorneys at The Rotolo Law Firm in Lebanon, N.J.

(1) http://www.nj.com/news/index.ssf/2011/09/nj_leads_nation_in_lowest_divo.html

(2) http://www.womenslaw.org/laws_state_type.php?id=557&state_code=NJ

(3) http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202538637913&Restraint_Held_Too_Broad_To_Prevent_Father_Attending_Childs_Soccer_Game&slreturn=1

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Daily headlines are filled with stories of layoffs and dismal unemployment rates as our economy continues to flounder. People are finding it harder to meet their financial obligations as they face pay cuts or worse – loss of wages. Recognizing our current difficult financial environment, the New Jersey State Senate recently passed a bill that could ease child support obligations for the newly unemployed. (1) If, after reading the following, you need assistance with child support issues, particularly in Hunterdon County, contact the family law attorneys at The Rotolo Law Firm in Lebanon, N.J.

The State Senate on February 16 unanimously approved a bill that would enable people who have experienced a significant change in employment to petition the court for a reduction in their alimony and child support obligations. A asignificant changea has been defined as having their wages reduced significantly or being unemployed for more than six months. (1)

New Jersey family courts have long had the authority to reduce support payments in the event of changed financial circumstances under common law. The new bill, however, makes this authority official. (2)

Support payments, particularly child support, are financial obligations that New Jersey courts take seriously. Consequences for failure to pay can include garnishment of wages, interception of tax refunds, adverse reports to credit bureaus and confiscation of assets. Failure of payment can also result in revocation of driveras licenses and professional licenses, which would affect the ability to work; suspension of a passport, restricting a personas ability to travel; and a lien on real estate, which would prohibit a person from selling or refinancing a home. Further failure to pay could result in jail time. (3)

While the new bill could make things a little easier for those making the support payments, it obviously does not help the receiving parent who is still faced with the financial obligations of raising the children. To help eliminate the possibility of people using this change to avoid their financial responsibilities to their children, the bill stipulates that judges could refuse to grant a reduction in payments if the obligated party refused to make areasonable effortsa to find employment or deliberately turned down income in order to avoid his or her obligations. (1)

If you or someone you know needs assistance with child support or alimony issues, particularly in Hunterdon County, contact the family law attorneys at The Rotolo Law Firm located in Lebanon, N.J.

(1) http://www.nj.com/news/index.ssf/2012/02/senate_committee_urges_christi.html

(2) http://www.law.com/jsp/law/sign_me_in.jsp?article=http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202541643474&Assembly_Committee_Advances_Bill_On_IncomeDriven_Alimony_Reductions&slreturn=1

(3) http://www.divorcenet.com/states/new_jersey/new_jersey_child_support_part_2

When a couple comes to an agreement to terminate their marriage, getting a court to make it official usually is not an issue. Resolving the associated aspects of divorce is where it can get complicated. If you are seeking a divorce in Hunterdon County, the family law attorneys at The Rotolo Law Firm can assist you.

Divorce is an emotionally trying process for all involved. Once a couple has come to terms that their relationship is over, they still must deal with the often heated issues related to the dissolution of their marriage — child custody and support, fair and equitable distribution of assets and, perhaps the most contentious of all, alimony.

Alimony is a payment of support from one spouse to another. In New Jersey married couples are responsible for supporting each other. This holds true even after the marriage ends. Alimony is designed to ensure that both spouses can enjoy a lifestyle reasonably similar to the one they had while married. (1)

A New Jersey statute gives courts a list of 13 factors they can consider when determining alimony awards, including need and the ability of one spouse to pay. (1) That ability is based on recorded earnings during the marriage and sometimes, as recently confirmed by an Ocean County Superior Court, immediately following separation.

On November 1 Superior Court Judge Lawrence Jones, in hearing Dudas v. Dudas, ruled that an increase in Mr. Dudasa income, which occurred almost immediately following his separation from his wife, can be considered when deciding the amount of the alimony award. (2)

Mr. and Mrs. Dudas were married for 26 years during which time Mr. Dudas earned an estimated $40,000 annually. Soon after Mrs. Dudas filed for divorce in 2008 Mr. Dudas experienced a significant increase in salary, earning $64,000 in 2009; $76,000 in 2010; and an anticipated $68,000 for 2011. (2)

In considering this case, Judge Jones gave particular attention to 4 of the 13 factors: need and ability to pay; the lifestyle enjoyed by the couple during their marriage; earning potential of both spouses; and other evidence considered relevant. Two other factors Judge Jones considered were the cost and the amomentuma of the marriage. (3)

According to the Judge, specifics of this case showed that Mr. Dudasa ability to succeed and increase his earning potential was made possible by the support received from Mrs. Dudas throughout their marriage. He further ruled that ignoring the increased earnings would make it impossible for either spouse to enjoy a lifestyle similar to what they had while together. (2)

The nuances of divorce are complicated and can vary case by case. If you or someone you know is going through a divorce in Hunterdon County, The Rotolo Law Firm divorce attorneys can help. The Rotolo Law Firm, in Lebanon, NJ, is on Route 22 close to the intersection of Route 22 and 78.

(1) http://www.njdivorceonline.com/njpages/Alimony/alimony.asp
(2) http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202521259101&slreturn=1
(3) http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202522350523&hubtype=MAIN%20PAGE

This blog is part three of a three-part series discussing how a divorce could affect your taxes. You can read the first blog post in this series here, and the second here.

In 1962, the United States Supreme Court decided United States v. Davis, which created difficulties for divorcing parties and attorneys. Although, there was no sale and no money changing hands, the transfer of appreciated property in exchange for marital rights was considered to be a “sale” with the transferor liable for payment of capital gains taxes.  The gain was determined by the fair market value of the asset on the date of the transfer with the transferor deemed to have received the value equal to that portion of the fair market value transferred to the other spouse.  Conversely, the transferee was charged with neither gain nor loss because the marital rights relinquished were not “appreciated property,” even though these rights were considered to be equal in value to the value of the property received.  Thus, the transferee of appreciated property received it on a “stepped up” basis equal to the fair market value of the property received. 
 

Imposing a tax on the transferor of property incident to a divorce was largely viewed as a perverse tax consequence since the transferor, who was parting with an asset like the marital residence (and often reluctantly so), considered the imposition of a tax in addition to the taking of an asset to be punitive. 
 

The Domestic Relations Tax Reform Act of 1984 changed the Davis rule so that divorce related transfers after July 18, 1984 are treated as gifts which result in neither gain nor loss to either party and thus have no tax consequences.  The transferee receives the asset at the original basis rather than the stepped up basis and is taxed on the gain when the property is ultimately sold.  The transfer is not a taxable event since no tax is immediately imposed on the transferred property. 
 

With regard to transfers of appreciated property, such as real estate or stock between spouses incident to a divorce, prior to 1984 these were considered to be taxable events.  The transferor was subject to capital gains taxes on the gain from the original basis of the property to the fair market value on the date of transfer.  The theory justifying the tax was that even if the transferor received no money, the consideration for the transfer was “money’s worth” in exchange for the transfer.  Again, the transferee took the property at the new “stepped up basis”.  The Domestic Relations Tax Reform Act of 1984 likewise changed the law by providing that the property would pass to the transferee at the original basis with no tax imposed.  Of course, the transferee was required to eventually pay the capital gains taxes or qualify for an exemption when the property was ultimately sold. 
 

The shift of the tax burden from the transferor to the transferee was temporarily rendered more onerous with the passage of the Tax Reform Act of 1986 that eliminated preferential capital gains tax treatment and imposed tax on capital gains at ordinary income tax rates.  The Taxpayer Relief Act of 1997 eliminated taxes on capital gains of up to $250,000 realized from the sale or exchange of the taxpayer’s principal residence. 
 

Deferred compensation payments from non-qualified plans and stock options transferred incident to divorce do not trigger an immediate tax consequence to the transferor.  The tax liability is imposed on the transferee upon exercise of the options or receipt of the deferred compensation.  However, cashing out a retirement account and transferring the proceeds results in an imposition of tax to the transferor.  To avoid an immediate tax consequence, the transfer must be made of the transferor’s interest in the account by way of a rollover directly into the transferee’s account or by changing the name on the account. 
 

With regard to dependency exemptions, prior to 1984 a parent could claim a child if he or she paid more than 50% of the child’s support for the year in question.  Application of this test generated disputes between parents and significant administrative problems for the IRS.  In cases where both parties claimed the dependency exemption, they were required at an audit (usually years later) to produce proof of their expenditures for food, clothing, medical care, shelter and so on.
 

These provisions were changed in 1984 to entitle the primary custodial parent to claim the child absent a written waiver to the other parent.  This was an important feature because as  personal exemptions were phased out for high income taxpayers, it cost little or nothing for a payor in a high income tax bracket to grant the exemption to the other party for whom the exemption actually confers a benefit. 
 

Congress created an additional benefit to parents in 1997 in the form of a child tax credit which acts to offset actual tax liability.  The child tax credit is an addition to the dependency exemption and is available only to the parent entitled to claim the exemption. 
 

An additional credit, the Child and Dependent Care Credit, is available to a custodial parent even if he or she waives the dependency exemption in favor of the other parent.
 

From a simple concept one hundred years ago to provide a source of revenue for the Federal Government by taxing income, federal tax law has steadily evolved and expanded.  Despite periodic expressions of intentions to simplify the tax Code, it has grown ever more complex.  Changes in tax law over the past fifty years have generally been modifications that are responsive to the needs of divorcing couples and their children.  When considered as a whole, such changes have, almost without exception, been improvements. 
 

Divorce lawyers have used their experience in applying the tax consequences of transactions incident to divorce into catalysts for change.  The current state of the tax law as it applies to divorce remains a work in progress; however, it improves with each change.          
 

John Eory is the Co-Chair of Stark & Stark’s Divorce Group in the Lawrenceville, New Jersey office. For questions, please contact Mr. Eory.

This blog is part two of a three-part series discussing how a divorce could affect your taxes. You can read the first blog post in this series here.

 

Alimony comes in many forms, including permanent, rehabilitative, limited duration, reimbursement and temporary (pendente lite) support. It is important to recognize that whether payments qualify as alimony under federal tax law is determined by the characteristics of the payment and not by how they are labeled under state law.

 

In 1954, the Internal Revenue Code added two key provisions, Section 71, which provided that alimony payments were includeable in the taxable income of the recipient and Section 215, which provided that such payments were deductible to the payor.  These provisions remain part of current tax law although they have been subject to revisions over the years.

 

Initially, to qualify as alimony, the payments have to be “periodic”.  Thus, installment payments of a principle sum did not qualify for periodic payment treatment unless the installments were payable for a period of more than ten years.  This ten year requirement was rigidly enforced.  Payments over a shorter period of time could qualify as periodic provided that the total sum was rendered uncertain by a contingency, such as the death of either party or the remarriage of the recipient.  Additionally, the payments must be in discharge of a support obligation, as opposed to payment for transfer of property or a property settlement.

 

Additionally, the payments must have made pursuant to a decree, court order or written agreement.  In the case of an agreement, the requirement was that it be signed by both parties. 

 

Thus, agreements for payment of support that were confirmed by an exchange of letters between lawyers did not qualify, nor did oral agreements between the parties.  Importantly, the requirement of a writing has remained unchanged despite subsequent amendments to the Internal Revenue Code.

 

The Domestic Relations Tax Reform Act of 1984 and Tax Reform Act of 1986 amended the Internal Revenue Code and dramatically changed tax law with respect to alimony. Most of the changes are beneficial to divorcing parties and have provided lawyers with previously non-existent planning possibilities.

 

For example, since1984, parties have been able to designate alimony payments as non-taxable to the payee and non-deductible to the payor and this designation is accepted without question by the IRS.  The concept of alimony “recapture” was also introduced to prevent “frontloading” or disguising property settlements as alimony to gain tax advantages.  To eliminate such problems, the new law placed limits on accelerated alimony by “recpaturing” excess payments in earlier years and adding that excess back to the payor’s income.  The recapture rules do not apply to temporary support or to fluctuating payments not in the control of the payor, such as an  obligation to pay a percentage of income.  Importantly, the rule is applicable only to qualifying payments in the first three post-separation years. 

 

Unlike alimony, child support payments are neither deductible to the payor nor taxable to the payee; however, payments that are “unallocated” between spousal support and child support are entitled to alimony treatment under the Internal Revenue Code.  Unallocated payments became a popular device which resulted in making additional funds available to the family assuming that the payor is in a higher tax bracket than the payee, he or she could afford to pay a larger amount, a portion of which would be retained by the payee rather than paid out in taxes.  This principle proved to be so popular that many states have adopted the unallocated payment structure. 

 

The next and final article in this series will deal with the tax considerations of property distributions, dependency exemptions and childcare credits.

 

John Eory is the Co-Chair of Stark & Stark’s Divorce Group in the Lawrenceville, New Jersey office. For questions, please contact Mr. Eory.

In a previous post, I posed the question ”are you a good candidate for a collaborative divorce?” Once we have determined that the collaborative divorce process is right for you and your spouse, and you have each retained a collaboratively trained attorney to help you through the process, it may be necessary to add other professionals to the team.

In addition to each party’s attorney, other trained professionals may be called upon to help you navigate through the issues in your divorce case.  Not all of these professionals are used in every case, but one or more may be helpful, depending on the issues in your case.

Divorce Coach: This is a licensed mental health professional who guides a party through the emotional issues that many times hinder the settlement process.  A divorce coach can help prioritize issues, aid with communication between the parties, and support that party through the emotional ups and downs of divorce.  Each party should have their own divorce coach to deal with their particular issues.
 

Child Specialists: These are trained professionals who work with children, parents and families in transition.  They advocate for the children in this process by communicating the children’s concerns to the parties.  The child specialist can make recommendations to the parents based on their education and experience as well as the children’s needs and desires.  The goal is to establish a workable parenting plan taking all family members’ needs into consideration.
 

Financial Specialists: This team member can aid the parties by analyzing assets, debts, incomes and budgets with the goal of having everyone understand the financial situation.  In addition, he/she can identify options in dealing with that situation.  Issues of cash flow, tax consequences, and net worth, fall within their purview, as well as determining true income for support purposes in the event there is a closely held business in the mix.
 

Appraisers: If the value of real estate, a business or personal property is at issue, various experts in these fields should be hired as neutral experts to value said property.
 

The above professionals are hired on an as needed basis and can greatly aid the parties in first understanding the issue and them coming to a workable settlement.

 

Maria Imbalzano is the Co-Chair of Stark & Stark’s Divorce Group in the Lawrenceville, New Jersey office. For questions, please contact Ms. Imbalzano.

The impact of federal tax law has evolved into an important aspect of my matrimonial practice. This is the first of three blogs which will discuss how the divorce process can affect your taxes, as well as the difference between the need for joint and individual tax return filings during a divorce.

Most married persons file joint returns because it saves them money. The quid pro quo for lower taxes is joint and several liability on the return. Since joint tax returns are favored, the parties are permitted to amend filed tax returns to joint tax returns within three years from the due date of the original returns.

The marital status of the parties at the end of the tax year determines their federal filing options.  If a couple is divorced at any time during the year, including December 31, they are considered single.

Although same sex couples are legally entitled to marry in a growing number of states, these marriage are not recognized under federal law pursuant to the Defense of Marriage Act. Thus, federal benefits, including application of the tax laws, are available only to spouses in heterosexual marriages.  As a result, legally married same sex couples are not entitled to file joint tax returns.  Other federal tax benefits, including alimony treatment of post-dissolution payments are also unavailable to same sex couples. 

Whether a joint tax return is accepted by the Internal Revenue Services is determined by the intent of the parties in the context of the circumstances.  When a couple has historically filed joint tax returns and one party withholds his or her signature, a joint tax return filed by the spouse may be accepted.  For example, in Federbush v. Commissioner, (1960), it was determined that the tax return was a joint filing even though Mrs. Federbush refused to sign it, since her refusal had nothing to do with the contents of the return, but was related to other marital problems. 

In Anderson v. Commissioner, (1984), it was determined that Mrs. Anderson did not intend to file a joint tax return but signed it only when ordered to do so by the divorce court. 
Mrs. Anderson had no income and was not even required to file a tax return.  She resisted signing the joint return because she had concerns about the propriety of her husband’s deductions. Such concerns proved to be justified when a deficiency resulted from the IRS disallowing the losses. The determination that Mrs. Anderson did not intend to file jointly return relieves her of any liability for the deficiency. 

When the issue of intent is driven by threats of abuse or duress, such facts operate as a defense to joint liability, provided that the conduct is directly related to the signing or the refusal to sign the tax return.

An exception to the rule of joint and several liability is known as the “Innocent Spouse Doctrine”, which was introduced in 1971.  Initially, to qualify as an innocent spouse, a taxpayer was required to prove not only that he or she did not know the item on the return was incorrectly reported but also that he or she did not benefit from the underpayment of taxes. 

In response to criticism, the Tax Code was revised to afford broader protection for innocent spouses.  Under the new law, a party could seek relief from joint liability by establishing a lack of knowledge of the understatement of the taxes and that it would inequitable under the circumstances to hold him or her liable for the deficiency.

Joint tax refunds can also involve substantial funds.  Federal tax law often dictates a different result from State divorce laws.  Although a federal tax refund check is drawn to the order of both parties, they do not necessarily have equal joint ownership rights to it.  Instead, it is the source of the overpayment which determines ownership of the refund. Overpayment by a married couple filing a joint tax return is owned by each spouse separately to the extent that he or she contributed to the overpayment.

One of the potential hazards of filing jointly that one of the joint filers may appropriate a tax refund to which the other is entitled.  In United States v. MacPhail, a 1997 Separation Agreement contained a provision requiring the parties to file joint tax returns for the previous year but made no mention as to the payment of any taxes due or entitlement to any refund.  As a factual matter, the taxes due were almost entirely attributable to Mrs. MacPhail’s income from the family business.  When the parties requested a filing extension, it was accompanied by a substantial payment from Mrs. MacPhail’s funds.  When the return was eventually prepared, it showed an overpayment of approximately $300,000 which was designated as a credit against the parties’ tax liability for the following year.  Now divorced, the parties filed separate returns.  Mr. MacPhail filed first, showing a tax liability of approximately $1,000 and claiming the credit.  As a result, the IRS applied the overpayment to his tax liability and issued him a refund check of $299,000.  When Ms. MacPhail later filed her tax return, and claimed the $300,000 credit she thought she thought she had coming, the IRS refused her claim, stating that Mr. MacPhail had already received the refund.  Eventually the IRS acknowledged that the funds had been paid to Mr. MacPhail in error and granted Ms. MacPhail a credit on her separate tax return.  The IRS then demanded payment from Mr. MacPhail but he had already spent  the money and was essentially judgment-proof.  When the issue was further litigated, it was determined that the credit was correctly given to Ms. MacPhail because she was the source of the overpayment and that the IRS was required to look to Mr. MacPhail for repayment, although by this time, a futile act.

In summary, the ownership of a joint federal tax refund belongs to the person who made the overpayment and not necessarily the person who earned the income. 

The upcoming blogs in this series will deal with the tax considerations of alimony, child support and division of property in a divorce.

In 1995, the New Jersey Supreme Court rejected a long-standing custom favoring a child assuming the father’s last name automatically. In Gubernat v. Deremer, the Court held that, when parents do not agree what last name their child should have, the Court must determine which name is in the best interests of the child. 140 N.J.120 (1995). This determination begins with a “strong presumption” that the name selected by the custodial parent is in the child’s best interest.

 

That decision was further affirmed by the New Jersey Supreme Court in 2004 in the case of Ronan v. Adely, 182 N.J. 103 (2004).  The Supreme Court affirmed the presumption in favor of the custodial parent’s choice of last name and clarified that the non-custodial parent has the burden of rebutting the presumption–i.e. showing that the name set forth by the custodial parent is not in the best interests of the child. The Court further emphasized that, in rebutting the presumption, the non-custodial parent should address the following factors in showing that the last name set forth by the custodial parent is not in the best interest of the child:

  1. the length of time the child has used one surname;
  2. the identification of the child as a member of a family;
  3. the potential and anxiety, embarrassment and discomfort the child might experience if the child has a different surname than the custodial parent; and
  4. any preference the child might express assuming the child is of sufficient age

It is important to note that both of the children in both Gubernat and Ronan were born out of wedlock, i.e. the parents of the child were never married. In an unpublished (non-precedential) decision rendered in January of this year, the Appellate Division decided the issue of whether the presumption set forth in Gubernat and Ronan applied where the parties were previously married, and the children were born during the marriage. In Emma v. Evans, after the parties’ divorce, the mother sought to change the child’s last name from the father’s last name to her last name. The Appellate Division, in that case, affirmed the best interest of the child test regardless as the child’s birth status, but rejected the presumption in favor of the parent of primary residence when children are born in wedlock. In that case, even though the mother was the custodial parent, the Appellate Division held that she was not entitled to the presumption because the child was born when the parents were still married. 
 

A different Appellate Division Panel issued a published (precedential) decision on March 6, 2012, addressing the same issue addressed in Emma v. Evans, but rejected the conclusion reached in Emma v. Evans that held that the presumption established by Gubernat does not apply to children that were born when the parents were married.

 

In Holst-Knudfen v. Mikish, the Appellate Division clarified that the Supreme Court’s Decision in Gubernat did not differentiate between children born out of wedlock and those born to married parents.  Accordingly, the Panel held that the presumption set forth in Gubernat in favor of the last name proposed by the custodial parent applies to all cases– whether or not the child is born out of wedlock or to married parents.  That Panel also clarified that, the current law states that it is the non-custodial parent’s burden to rebut that presumption by addressing the relevant factors and showing that the last name is not in the best interest of the child. 
 

However, the Appellate Decision in Holst-Knudfen v. Mikish found some merit in the issues that the Panel in Emma v. Evans found with the presumptions set forth in Gubernat, and essentially,  invited the Supreme Court of New Jersey to make new law.  The Panel asked the Supreme Court to differentiate between cases where the parents  have entered into a detailed settlement agreement and cases where the parents did not have a settlement agreement– despite their marital status at the time the child was born.  The Panel noted that,  even in cases where the parents were never married, they may enter  into settlement agreements outlining the parenting time, responsibilities, child support obligations, etc. – and perhaps those settlement agreements may even address which parent’s last name the child shall assume. 

 

The Appellate Division in Holst-Knudfen v. Mikish further suggested that if the parties have expressed a position in their settlement agreement regarding the child’s last name, then the Court should enforce that agreement.  On the other hand, if the agreement is silent with respect to the child’s surname, the Appellate Division in Holst-Knudfen v. Mikish suggested that perhaps the parties should be on neutral ground rather than proceeding with the presumption in favor of the parent of primary residence (who in many cases are women)– so as to not unfairly advantage either parent.  In the event that the Supreme Court adopts this reasoning, then cases where the  parents  have settlement agreements that are silent on the issue of the child’s last name would be determined by a straight best-interests-of the child determination. 
 

In lieu of these conflicting decisions issued only two short months apart, it seems that the issue of the presumption set forth in Gubernat as it applies to persons that have a negotiated settlement agreements–despite their marital status at the time of the child’s birth–may be an issue that comes before the Supreme Court of New Jersey before long. 
 

As always, it is important to consult with an experienced matrimonial attorney if you have any questions regarding any of these cases, or wish to enter into a settlement agreement outlining your rights and responsibilities as a parent.

 

Corrine Cooke is a member of Stark & Stark’s Divorce Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Ms. Cooke.

In the case of Holst-Knudsen v. Mikisch, decided on March 6, 2012, the Appellate Division of the New Jersey Superior Court addressed the thorny issue of a custodial parent’s right to legally change the surname of a child from that of the other parent.
 

In this case, the parties were married in 2000 and had a daughter in 2005. They divorced in 2008. The Final Judgment of Divorce incorporated a Marital Settlement Agreement negotiated with the assistance of counsel which contained detailed arrangements and financial support obligations for the child between the individual parent and the non-custodial parent. Two years later, Ms. Holst-Knudsen filed a motion to compel Mr. Mikisch to remit child support through the Probation Department by wage garnishment, to modify the parenting schedule and to legally change the surname of the child to “Mikisch Holst Knudsen”. Mr. Mikisch filed opposed the relief sought.
 

The Marital Settlement Agreement provided that the parties would have joint legal custody with Ms. Holst-Knudsen as the primary custodial parent.
 

The Agreement also laid out a complex parenting time schedule base on Mr. Mikisch’s residence in South Carolina. After issuing its rulings on child support and parenting time, the trial court denied Ms. Holst-Knudsen’s request to change the child’s surname.  Ms. Holst-Knudsen appealed.
 

The Appellate Division reversed and remanded the issue back to the court for further proceedings. In so doing, the Appellate Division cited the seminal case of Gubernat v. Deremer, 140 N.J 120, decided by the New Jersey Supreme Court in 1995. In Gubernat, the Supreme Court held that when parents who are  not raising a child together do not agree about the child’s name, the court must resolve the issue under the “best interests of the child” standard but with a “strong presumption” that the name selected by the custodial parent is in the child’s best interests. Thus, the non-custodial parent bears the burden of proving by a preponderance of the evidence that the custodial parent’s choice is not in the child’s best interests. As stated in Gubernat, the trial court should”examine scrupulously all factors relevant to the best interests of the child” including the length of time the child has used one surname, the identification of the child as a member of a family unit, the potential anxiety or embarrassment the child might experience if he or she bears a surname different from that of the custodial parent, and any preference the child may express if sufficiently mature.
 

The Appellate Division went on to address its disagreement with the recent decision of another appellate panel in the similar case of Emma v. Evans which drew a distinction between children born out of wedlock and those born of married parents. The Court held that the Gubernat standard applies equally in both circumstances. If, however, the parties entered into “a detailed settlement agreement that addressed parenting issues, perhaps the parents should be on equal footing” (emphasis supplied by author). Factors to be considered are whether the parties addressed the issue in their agreement, purposely omitted it or inadvertently omitted it. The Appellate Division concluded that the trial court did not rule under current legal standards and remanded the case for further proceedings consistent with Gubernat, as discussed above.
 

The case is important because changing a child’s surname has consequences for the child’s self perception and relationship with his/her parents, peers, teachers and the community at large. This author personally believes that the presumption in Gubernat should be set aside and that such cases be determined on a straightforward “best interests of the child” basis.  Readers are invited to agree or disagree. 
 

John Eory is the Co-Chair of Stark & Stark’s Divorce Group in the Lawrenceville, New Jersey office. For questions, please contact Mr. Eory.

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