Tis the (Bonus) Season

Well, the Holiday season is upon us, and I'm pleased to report everyone is recovering nicely from their tryptophan overdose at my house! After years of haggling, my wife and I have finally settled on a fairly comfortable routine for scheduling which days/times to spend with which branches of our family each year. That's one of the great, unheralded achievements family life - no one tells you about it when you're starting your family, but when you get it right it can make your day like indoor plumbing!

Okay, end of cold open. Today's topic was inspired by that most Griswoldian of holiday traditions-the Christmas bonus. Did you know that income earned from labor performed or services rendered before your date of separation is marital property, even if it's received months or years after you separate?

If you are facing separation, and either you or your spouse has a job that incorporates periodic bonuses, commissions, or other variable compensation plans with lengthy periods between payouts, it can greatly affect strategic planning for your property division case.

An extreme example would be the successful small business owner who sells his marital business and moves to another. The purchaser often agrees to pay large chunks of the purchase price over a period of years after the sale because the money has to be generated from ongoing operations. This leads to all sorts of interesting questions: do you treat the expected future payments the same as you treat cash or property presently held when dividing the  marital estate? If not, do you discount it so that a clean division can be achieved now, or do you divide those dollars separately if and when received it so that both parties share the risk that you will encounter collection problems in the future?

Bonuses and commissions usually don't present collectibility problems, but they do present other valuation issues. Let's take the humble Christmas bonus. If you separate from your spouse in March and later receive a Christmas bonus of $10,000 in mid December, how much of it is marital and subject to division as part of the marital estate? Is it like an annual bonus for work performed throughout the year? Is the amount of the bonus performance or seniority-based? Depending on your employers policy, the answers may change. The most likely result is that a judge would try to determine the period of employment from which the bonus is derived and prorated based on how much accrued prior to separation.

Either way, if you find yourself in the situation be sure to discuss it with me, or whatever fabulous attorney you retain, so you don't end up feeling Scrooged later. Happy holidays everyone!

The contract just won't die...

First, let me apologize for the extended delay in between posts, which come to think of it has become an all too frequent refrain on this blog. So many of you wonderful folks keep hiring me that it's getting harder to find time for new posts.

I'm not complaining mind you, but it got me thinking about movie franchises that I love and how sequels that come out many years after a beloved original can crumble under unrealistic expectations. Some sequels try to cram in every possible bit of ambition and spectacle, only to collapse under the weight of their own gilded adornment (I'm looking at you, Episode I: The Phantom Menace!).

So, after a summer long layoff I have decided to tack in the opposite direction and keep today's post confined to a narrow and decidedly wonkish topic - the survival of contract damage claims after the entry of a child support order overriding a separation agreement.

Here's your 30 second primer: since the taxpayers of North Carolina ultimately have to support a child whose parents don't provide enough support themselves, any private agreement for the Child Support is subject to review by a judge. If you elect to agree to Child Support in a private contract, and either party later decides to file a traditional Child Support claim with the court, your agreement is presumed reasonable but that presumption can be rebutted fairly easily if The agreed-upon support amount substantially differs from what the stay child support guidelines would otherwise dictate.

I have a whole spiel prepared to warn clients about this possibility every time this issue comes up. Still, lots of people would rather handle all of their issues, from alimony to property to Child Support in a private agreement and not open up a court file on the public record. I can respect that, and luckily if your ex husband or wife starts to feel that he/she was overly generous in your settlement and needs to reduce his/her Child Support, there is still a remedy available to you.

Your contract for Child Support remains enforceable even after a judge has decided the statutory child support amount should be lower. You can be awarded a money judgment for the difference, and if you've ever had an aggressive creditor get a judgment against you, you know that it's about as much fun as a root canal.

Though I am a board-certified specialist in family law, I keep a diversified practice that includes lots of civil litigation. Some of the most "fun" I get to have involves seizing and selling a judgment debtors property long after he thinks we're no longer looking.

If you find yourself on either end of the situation, feel free to give me a call and let's figure out what we can do to make sure all of your options are laid out on the table.

Tell Me This Isn't a Government Operation...

Each year, I spend the first weekend in May at a seminar hosted by the North Carolina Bar Association's Family Law Section. This year, the event was held in downtown Charleston, one of my very favorite places in the world and the best place EVER for a guided, history-themed pub crawl!

The seminar is usually good for at least 6 hours of continuing legal education credit, and invariably I learn some new nugget of information that helps me with in a pending case.

This year, my favorite presentation was not from a family law attorney but a school board attorney representing one of the largest public school districts in North Carolina.

She was there to offer insights on how schools interpret the custody orders we domestic attorneys work so hard to craft. The takeaway for me was that family lawyers in general (myself included) don't give schools enough thought when structuring settlements, but we should.  Clients tend to assume that the court system, the justice system, the social service system, and the educational system are all part of the same monolithic bureaucracy in which the right tentacle knows what the four tentacles to it's left are up to.  Nothing could be further from the truth!

I encounter school issues in my custody cases all the time - private vs. public; your preferred school vs. mine; how often can dad drop by to have lunch with the child?  Does the child's teacher need to schedule one parent/teacher conference or two?  Unfortunately, those questions tend to get crowded out by arguments over custodial time and child support.

Another thing attorneys overlook is the fact that schools are independent, semi-autonomous legal entities that generally don't care how the domestic system works; they need custody orders to work with in their structure.

For example, it's routine for parties to a consent custody order to agree that their child will attend a particular school. However, did you know that by statute a District Court judge in family court has no authority to assign your child to any particular school? That authority belongs to the local school district in which the child is enrolled. Therefore, if you have a shared physical custody schedule and the parents live in different school assignment zones, you should check with the school system before you have a judge sign your consent order if school assignment is an important issue in your case.

Another surprise was how desperately school administrators want family lawyers to give them clear, informed guidance in the written custody order, so principals, guidance counselors, and teachers will know to address the conflicts between separated parents that inevitably arise.  I hope the next time I mediate a case involving custody of a school-age child I can resist the urge to pat myself on the back and consider the job done once the parent's basic schedule is in place, because in truth there may be important work left undone.

Dealer Add-ons

     My wife and I recently bought a new SUV to help tote around the kids and their various accessories (i.e. my "in-laws"!).  Overall, we had an excellent experience at the dealership, but I remember one exchange with the finance manager that felt perfunctory and awkward.  Sitting there in his office after we established the particulars of our new loan, he launched into a bloodless yet clearly practiced speech about the various "add-on" products they offered.
     If you've ever bought a car, you know what I'm talking about - extended warranties, glass protection plans, paint protection (just a fancy wax job), GAP coverage (total crap if you put more than 5% down), etc.  The finance guy outright told us he didn't expect or recommend us to purchase any of these products, in fact he gave us several reasons not to purchase some of them.  Yet, he dutifully recited their entire list of offerings before we closed the deal.  Why?
    I thought over this for while after we left the dealership.  Ultimately, I decided he must have been required to at least mention each add-on during every transaction, either a matter of policy laid down by his employer or by contract with the various outside vendors who supply the add-on products/services.  All we wanted was to sign on the dotted line and drive off into the sunset with our shiny new toy, but first he had to check off all the boxes on his list.  Then I imagined the faces of hundreds of customers he must have given that spiel to over the years, and I realized I had a corollary experience in my family law practice.
    The end game of a family law case can be frustrating, even if all issues are resolved with a reasonable settlement.  I charge the same hourly rate to haggle over specific language in a separation agreement or to email the judge's clerk for the status of an order that I charge for appearing at trial.  Clients tend to see a successful mediation or trial as the "finale" to their case, like the big fight scene in a "Rocky" film.  But that finale merely produces a governing document that must be implemented in your life.  Otherwise, what's the point?  Thus, I morph from the cunning litigator who helped you survive your heinous soon-to-be ex and her bulldog attorney into the finance guy at the car lot who won't let you get down to enjoying your new ride.
    The most under-utilized post-settlement service we offer is estate planning.  Most of my clients who have pre-existing wills haven't stopped to think about the impact of divorce on the distribution of their estate.  When you get divorced, by operating of law your spouses name "drops out" of your existing will.  Anything you left to your former spouse will now be distributed according to the "residual clause" of your will.  That's a the little blurb at the end that says, "Anything I have not specifically devised herein goes to X."
     If your residual beneficiary is your spouse, then in practical effect all of your estate will be distributed according to statute as though you never had a will.  Even if your residual beneficiaries are your kids, you are foregoing your right to make a purposeful decision about who receives what when you die.
     Another added service I often recommend is filing a Memorandum of Agreement with the register of deeds.  This applies especially if you settle your case early in your separation period and you may consider purchasing a new home or any real property prior to getting your absolute divorce after a year of separation.  Separation Agreements are long, complicated documents that often detail private matters you don't want added to the public record.  A Memorandum of Agreement is a short, two-page summary with just enough content to help you transact in real property without the prospective seller or lender giving you a hard time about getting your spouse to sign off on everything.
     Moving forward, I'll continue to encourage clients to keep a little money (and patience) in reserve to handle these clean-up issues.  I want to make sure the resolutions of their cases are made the last.  Trust me, it's a lot more fun coming back to my office for a social event like Business After Hours or Blues & Burritos than it is because an unresolved issue from your divorce has arisen like a zombie from the dead!

Raise the Bar

Dear Devoted Trench-mates,

     This post will be less my typical rambling and more of an open letter with my take on an important new development in my practice. I assume many of you find your way here by doing online research into divorce attorneys in this area and want to know a little more about me, especially if you're thinking about putting some of your hard earned money in our firm's pocket for a consultation. If so, you may have seen some recent press notices in my Google results announcing that I was recently board certified as a specialist in family law.

     Until now, I haven't done a great deal of marketing on this achievement, even though I am proud to be recognized for the work I put into my practice, not to mention knowing after 8+ years I can still pass a standardized test! Truthfully, I meant to write a post about my certification much sooner. Sure I've been busy, but I also think I procrastinated because I don't want family law to utterly define me as a lawyer. I also practice extensively in general civil litigation, particularly construction disputes, and I do a fair amount of criminal work.

     So what finally prompted me to finally write this post? The answer lies in a series of conversations I had with some of my colleagues who were congratulating me on getting certified.

     I was flattered and humbled to have receive congratulations from at least a dozen of my colleagues who reached out in person or on social media after they heard I passed the certification exam. At least four of those conversations involved statements to this effect: "you know, now that you're certified you are held to a higher standard, right?"  What they are referring to is the standard for legal malpractice. Essentially, the standard of care by which my performance and conduct is judged is higher now that I hold myself out as a specialist.

     Imagine an Olympic high jumper who can jump over the bar at a certain height and generally clear it by 6 to 8 inches every time with maximum effort.  Practically speaking, he wouldn't have to give 100% every time to complete the jump.  Imagine now that we raise the bar by five inches, thus requiring the athlete to put forth maximum effort on every attempt in order to have a successful jump.

     I like to think I have given maximum effort on every case since the day I started my practice. In reality, I'm sure there were days I failed to meet that standard. My friends were only joking when they suggested I should be worried about being held to a higher standard, but they raise an excellent point - by becoming a certified family law specialist, I have "raised the bar" on myself, so to speak.  I want to promise you all that I will continue to give my home to clear that bar on every case and for every client.

Sincerely,

Ronnie (a/k/a the "GDC")