Tag Archive for: Child Support

Required Reading for Involved Grandparents

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Recommended reading: “Well Into Adulthood and Still Getting Money From Their Parents” Wall Street Journal, January 26th, 2024.

In order to help their family thrive, many grandparents financially support their adult children and grandchildren. For example, let’s think about a couple that lives in Manhattan with an income of $350,000 – $400,000 a year. In many places, that would be a decent amount of money. If someone’s living on the Upper West Side, Upper East Side, or SoHo, it’s not nearly enough. In these situations, grandparents often give their children very large sums of money on a routine basis as well as make direct payments towards expenses like the grandchildren’s private school tuition and high-end camp experiences. 

I wrote an article called “Good Samaritan Divorce,” which talks about how the Good Samaritan often gets “punished” in some way. For your convenience, you can read the article here.

What does this have to do with matrimonial law? There are standards and statutes in matrimonial law, and grandparents’ consistent and unwavering financial support can affect the support payments. The general support standards are set forth in “The Child Support Standards Act” and “The Notice of Guideline Maintenance” – advisory guideline statutes for child support and spousal support (aka maintenance and alimony). 

The golden rule is maintaining the standard of living.

At the outset of a divorce case, both sides are required to accurately complete, legally acknowledge, and file with the courts a comprehensive document called a Statement of Net Worth, which sets forth the standard of living. 

The standard of living analysis is the most critical and guiding factor in negotiating support and arriving at a final agreed upon amount. The system wants children’s material lives to remain intact. The system wants the lower income earning spouse to have a window of time when they are getting support from their higher earner ex to give them a cushion and bridge towards being more self-supporting. 

I’ve had many cases where grandparents steadily gave money to their children’s family throughout the marriage to subsidize housing, car payments, parking, vacations, and tuition – like a weekly or monthly allowance, but for adults.

If the couple divorces, the idea of imputation comes into play.

Imputation: The assignment of a value to something by inference from the value of the products or processes to which it contributes.

Let’s say it was the husband’s father that helped support the family, the wife is going to want to come after that additional money, even though it doesn’t show in the husband’s W-2 or tax returns – that’s the inference.

Some grandparents feel like imputation codifies an agreement that would have happened anyway. Other grandparents react differently and chafe at the idea of being required to do anything. They also don’t want to be passengers on the roller coaster of their child’s divorce. 

In many instances, grandparents enter into promissory notes with their child for some or all of the funds they give – thereby making their child their debtor. They are trying to ensure that the monies are legally recorded as debts and not gifts or supplemental income. This is done to shield both the grandparent and their child in the event of a divorce. Both the grandparent and child should, however, consult with a qualified attorney when navigating this strategy. 

Understanding imputations and standard of living analyses takes a skilled matrimonial attorney – and the more experience they have, the better. Contact me at The Law & Mediation Office of Cheryl Stein to schedule a consultation.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

Flattening the Curve in Divorce

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When I heard the term “Flattening the Curve” associated with COVID 19, it was eerily familiar, with great resonance. 

Divorce is about flattening a different kind of curve. Instead of spreading out medical care, divorce professionals spread out the financial and emotional impact of divorce on a family. 

COVID is here; it is looking society straight in the eye; there is no averting its presence; it’s the stark reality, so too is divorce when it’s impending and underway. It’s about spreading the consequences out over time or mitigating them to make them more manageable so the parties can transition into a new norm.  

How does that work in the real world? States have laws that govern divorce and essentially cushion people; they spread out the repercussions and soften the blow so that the transition is manageable — and neither party is left disadvantaged. 

I associated divorce with flattening the curve when working with a client recently. It was a husband and wife with a marital home. The husband wanted a divorce and told the wife that he was moving out. Critically, he told her that he would only pay the mortgage for three more months. In that case, we were able to spread the transition over a longer period of time. He was in the wrong to threaten to leave her in the lurch when they had built a life together and assumed mutual responsibilities accordingly.  He was not let off the hook from paying his obligations pursuant to his hasty timeline and we were able to provide the necessary cushion and adequate timeline for the parties’ mutual release of responsibilities to one another. 

Another option that encourages flattening the curve of divorce is pendente lite and post-judgment maintenance and child support. Pendente lite simply means “during litigation” – it is to be paid while the case is ongoing, until the divorce is final. Post-judgment maintenance is tiered and paid out pursuant to the length of the marriage. Longer marriages yield longer pay-outs, with a marriage over 20 years, irrefutably dubbed a “long term marriage,” potentially promising a pay-out duration equivalent to half the length of the marriage, pursuant to the statute. Further, ancillary issues such as the ability of the payee to get up to speed on a career track and the parties’ respective ages and health issues are factors considered when determining maintenance amount and duration. 

Interim agreements are another option to prevent drastic changes in the parties’ standard of living from happening too soon or harshly. 

Cuomo has said about his relationship with Trump through this pressing Covid19 time that their personal differences and political orientations aside, when you are in a foxhole with someone, it doesn’t matter whether you like him or her, you are mutually single-focused in your aim to get out safely. Divorcing parties often share this sentiment when dealing with the IRS and taxes; even very litigious divorcing parties agree that they are on the same side as each other and “friends” to collaborate, align and save themselves tax dollars. The question is, “Are conflicted and divorcing couples also sharing this sentiment and approach in handling their conflicts, separation, and divorce through this time?” Are they in agreement that they must cooperate for the sake of each other’s well-being and the children’s to get everyone to the other side of this pandemic safely? 

The answer varies.

Some parties say that the pandemic is making everything else – including their separation and divorces – seem so trivial. Others, overwhelmed as it is by the drastic and fundamental changes in daily living, feel further crushed by increased hostility and feeling out of control both internally and from their exes.  

Maybe it can also be a time for us all to reflect on our own flexibility and willingness to negotiate? #quarantinegoals 

Stay safe!

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylstein

Beware Selling Clients the Brooklyn Bridge

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When parties first engage in the divorce process, they often do not know the law, how their situation looks from the outside, and how things unfold in court. Part of the attorney’s role may be to give the client a gentle wake-up call. Sometimes when you’re strategizing with them, they’re not sure what tools you may use to try and seal their case.

In part because clients aren’t always telling you the full stack and sharing all their skeletons, I would not tell a client that I could get them relief such as sole custody, 100% rights to a business formed during the marriage, a guarantee that the statutory cap will apply for maintenance and child support when the income exceeds the cap, or the ability to relocate with their children — all of which are big-ticket, multi-dimensional items of relief.

In sharing the personal details of their lives, clients are often vulnerable — opening themselves up to outsider’s judgment and/or disapproval of how they are managing their lives. Attorneys need to know the larger context and help the client see it too.

During a recent client intake, the client revealed that she wanted to not have to pay her husband a penny, even though she earned more than him, to get primary residential custody, and to carte blanche be able to relocate with the children domestically. The latter one, being the one she desired most was the biggest wild card in her case, carrying the greatest improbability.

Her argument that she could offer them a better life elsewhere (perhaps questionable in it of itself in light of them already having the garden, backyard, family nearby, good schools, and residing in a good neighborhood in New York) was overshadowed by the overarching question — Can you offer the children a better life elsewhere than the life of having a father regularly present in their lives who they’ve seen daily to date and have a good relationship with?

Another case presented a high performing husband and father who worked long hours in finance. He wanted custody of his children stating his wife was an alcoholic and good for nothing. When we dug deeper, we learned that he, in fact, drank more than she did, but in light of his high performance at work, he considered himself a highly functional drinker and avoided using the term alcoholic altogether to describe himself. It appeared his wife had unraveled some several years back after she was let go from a prestigious job and never managed to regain her footing after that, but his contempt for her undermined who she was now, which was a functional enough mother, perhaps sloppy at times, but still quite present and active.

A case in point on the support end was a father making over $600,000 for the 5 years preceding the divorce who was adamant that he would only pay the statutory caps for maintenance and support, stating that they were modest spenders and quite frugal. There was some truth to this, except that they lived in New York City, and that alone meant that their modest living would require payments above the caps to sustain the accustomed lifestyle.

There is also the controlling personality type who called the shots during the marriage with the other spouse going along. These clients often think they will be able to navigate the divorce in a way to continue to get their spouse to go along with them, except that their spouse, self-aware enough of their namby-pamby quality, typically hires an overly aggressive attorney to compensate, who pushes back at every turn.

We all get these laundry lists of desired reliefs. As a service provider, we work for the client and are their cheerleaders, but realistic ones, that don’t overpromise and underdeliver; this is a key element of being supportive and effective for the client.

Being a cogent advocate and mouthpiece for the client and helping them to see the full breadth of their situation’s appearance to an outsider when all the relevant factors are weighed are not mutually exclusive; they are part of the same overarching role.

Please contact The Law & Mediation Offices of Cheryl Stein with any related questions.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

Are You an Innocent Spouse?

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One of the benefits of marriage is being able to file joint tax returns with a spouse. However, marriage brings a double-edged sword. On the one hand, spouses reap the benefit of being able to collectively have more money to live on if they’re drawing from the same pool during their marriage and maximizing their tax benefits. The downside, though, is when the spouse with no knowledge of marital finances signs off on tax returns and it later comes to bite them. Often the spouse in control of the finances just tells the other person to sign, because they’ve waited until the 11th hour to file, and have no time for explanations or mincing meat.

Every now and again, a spouse will even sign the other spouse’s signature, which often comes out during the divorce. I’ve had a few clients over the years that said their spouse signed for them, but when I’ve dug deeper, that client has told their spouse to sign for them if they ever needed to.  

In one classic situation, the wife asked for child support and claimed that her husband made $600,000, but the joint tax return showed that collectively they made $180,000. In this case, the husband said that she signed to that amount and should be held to it for child support calculations, thereby imposing a significantly lower child support obligation on him. The wife claimed that she didn’t know what she was signing. She simply believed and acceded to him. Of course, assuming the wife knows basic math, she would know she was living on $600,000, rather than $180,000.

I recently worked on a divorce case, where the wife signed an addendum to the couple’s prenuptial agreement, executed many years ago, that gave the husband carte blanche discretion and authorization with regards to filing their joint tax returns; akin to a power of attorney relating to their taxes. This is an extremely bright and savvy woman — starry eyed in love, in her youth, with who she thought was an incredibly charming millionaire; her romantic notions and desire to be taken care of created thick naïve glasses through which the reality was obscured, and she trusted him wholeheartedly. Years later, his macho charade started to unravel, and IRS letters claiming tax evasion and liabilities exceeding 15 million dollars started to pour in. After her initial shock and numbness, she ran for cover under the safety haven of “innocent spouse relief.” See IRS Publication 971 and IRS Form 8857 (Publication 971;  Form 8857.pdf).

In these case, I’ve looped in accountants, tax lawyers and forensic experts, if needed, to provide the necessary perspective, releases, and maximize the relief to the client. It becomes very interdisciplinary, and a team of professionals who work well together and communicate fluidly, efficiently, and effectively, while also communally keeping an eye on the client’s pocketbook and spending is key.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

Divorcing High Net Worth Couples

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How apropos is the expression, “Increased possessions, increased worries” or the lyrics to the song, “Mo’ Money Mo’ Problems” to high net worth divorces?

In short, these are first world problems, but problems, nonetheless.

The bigger and more intricate or complex the pie, the more moving parts there are to account for. The asset portfolio and sources of income streams and investments are multilayered and the “mandatory” “nondiscretionary” expenses and the definition of necessities have a significantly broader scope.

The difference between income and assets must also be differentiated, although, high net worth couples are typically well-endowed in both areas and may have income producing assets as well as their business and professional incomes.   

When a high net worth couple divorces, the letter of the law, foremost the statutory caps for maintenance and child support, most often goes out the window, with there being significant latitude for judicial discretion. It’s a different ball game. The statutes are mere guidelines, meant for the average couple, and are inappropriate for ones that fall significantly above the median wealth. Many times, when working on monthly budgets with this caliber of client, their monthly expenditures are higher than what the average American makes per year or what the statutory cap may be.

The present statutory caps are set at $184,000 of the payor’s income for maintenance and $148,000 of the combined parental income for basic child support payments. It is the burden of the payee who is requesting support above the cap to prove the need. This burden is, obviously, swiftly and effortlessly met in high net worth cases.

The caps are periodically adjusted to account for inflation according to the Consumer Price Index (CPI). The $148,000 child support cap was increased to this figure on March 1, 2018. Immediately prior to this, the cap was $136,000. At that time, a client whose monthly budget was in that approximate amount wanted to know what his total support payments would be after an 18-year marriage within the first 2 hours of meeting him; this was unrealistic with the level of complexity of his portfolio and standard of living analysis that would need to be conducted.

The guiding light in these cases is the standard of living analysis, which is an in-depth, thorough analysis of the money and resources needed to maintain the payee’s standard of living, balance out the parties, and ensure that the childrens’ needs will be appropriately met in both households.

These clients still pose off-the-cuff queries at inception regarding how much they’ll have to pay in support, as they often have significant anxiety about it. It is important to be very judicious and careful with this answer, since when clients hear support figures, especially at the beginning of a case, they often become psychologically married to these figures and it gets harder for them to mentally adjust it later.

High net worth spouses whose wealth is tied up in non-liquid assets often have to figure out how to most readily convert the assets to cash in the most tax savvy way. Sometimes they intentionally try to stretch out and prolong the divorce towards this end. These types of case can also be extremely expensive, because of all the required valuations of the assets; moreover, if the parties cannot readily agree on the values and need to hire separate valuators.

There are also different levels of high net worth.

Chances are if you’re living in select neighborhoods in New York City or Manhattan, you’re likely considered as having a high net worth. A family with 3 children enrolled in private school could be running on at least a million dollars a year, but they’re not necessarily feeling so well-off when divorce happens, and they have to liquidate assets and clear out savings.

These different levels of wealth can also be treated differently.

A client wrote in the subject line of one of his e-mails, “I earn 500k, have assets totaling 1.5 million, and am middle- class.” While others might view him as delusional or an ingrate, he wore the middle-class sentiment like a halo and as part of his self-identity. He was very concerned how he would be able to live post-divorce.

Moderately wealthy people often get hit hard. Someone can make $750,000 a year, have assets of $5 million and three children in premier private schools and camps, and divorce can wipe them out.

As of late, in New York County, where there is a high constituency of high net worth divorces, we are commonly seeing judges capping the very high net worth spouses at an income level of approximately $400,000 and setting the child support and maintenance amounts accordingly. As an attorney, it’s important to be aware of this, in terms of setting up the case, counseling your clients, and effectively negotiating towards favorable results.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

Adult Children of Gray Divorce

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There is a large demographic getting a lot of air time right now – those over 50 who are choosing to get divorced. Oftentimes, these couples have been married for many years, and now their youngest is about to go to college or move out of the house. Many of the couples in these “gray divorces” have successful and flourishing adult children, who escaped being in the midst of a contentious divorce or custody battle while they were growing up, only to find themselves in the middle of their parent’s divorce now.

Often the adult children are very involved in the divorce and will help their parents find counsel. Sometimes, the children will pay the attorney’s fees. On the surface, the children may have a camaraderie with both of their parents, but underneath they are often more aligned with one parent over the other and feel justice should be brought because of their observations over the years.

If English is a second language, children often serve as interpreters and assist their parents with the more technical tasks and documents, such as filling out the statement of net worth. They often ask to correspond with the attorney, and it is essential that appropriate authorizations and waivers are in place to enable such communications.

In some situations, adult children have one parent move in with them until the divorce settles. This can create tension and complications if the adult child is married, and his/her spouse is not on board and feels the adult child’s support of his/her divorcing parent is usurping too much time from their marriage and family.

Some adult children go as far as to play Scooby Doo – investigating if they feel one parent is hiding something. In other situations, highly educated and employed adult children may still live with their divorcing parents and are helping pay the household expenses. These children’s own finances are somewhat intertwined with their parent’s, and they have a vested interest in the outcome.

Much like elder care planning, in which children are heavily involved, these children feel that helping their parents, especially the more vulnerable, dependent parent, is imperative to their parent’s future planning and sustainability. The adult child also recognizes that he/she will have to take care of a parent and plug in the gaps where that parent’s needs are not met in a divorce.   

These adult children walk a tightrope and try to be careful not to do anything to imperil their relationship with either parent outright. Despite their maturity, success, and adulthood, they are often emotionally affected. They have to deal with the fact that the family unit they grew up with is disintegrating. These adult children often act as a friend and emotional support system to their parents, which is why we advise them to protect themselves and to avoid jeopardizing their own accomplishments and/or marriage in the process of supporting their parents.

If you’re contemplating divorce or are the adult child of a gray divorce, please don’t hesitate to contact me.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
Offices in Manhattan and Brooklyn
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

How Enforceable Is Your Divorce Agreement?

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The agreement is finally signed. The ink is drying. The divorcing parties want to let out a big sigh that it’s finally over. But is it?

Last month, I wrote that there is no such thing as a gentleman’s agreement, but what about when you have a signed and duly acknowledged agreement?

Good lawyering is, among other things, the art of utilizing words in the most poignant and effective manner. Words, sentences, and terms are carefully calibrated; their misuse can have a deleterious effect. Every word present can count. Every word missing can count. Details matter!

Even a written and signed contract is not always as enforceable as people often think. When terms are included that are against public policy, those terms hold no weight.

An example of this relates to custody. Everything pertaining to custody is subject to court review and approval. Some divorcing parties are resistant to court. They want everything completely private—between themselves and their mediator and/or select arbitrator only—with no court interference. Regarding custody issues, however, the court is the parens patriae (a doctrine that grants the inherent power and authority of the state to protect persons who are legally unable to act on their own behalf), and they cannot be divested of that authority. The court cannot be written out of the agreement. Similarly, naming a guardian for a child in an agreement is likely to be unenforceable.

On a further note, parents cannot assign their decision-making authority to third parties. It is common for parties to erroneously write in their agreement something like the following: “If the parties disagree regarding health-related issues, the child’s treating physician shall make the decision; if the parties disagree regarding the child’s educational needs, the child’s principal shall make the decision.” Clauses such as these would not be upheld. The respective physician, principal, etc. can assist the parties in coming to decisions but cannot be the ultimate decision makers.

With regards to support, maintenance cannot be waived if the result is that one of the parties will become a “public charge,” meaning eligible for public assistance. This is, obviously, upsetting where one of the parties makes a significant amount of cash off the books and indicates on their tax returns that they are making nearly nothing, rendering them eligible for many government assisted programs, and the other spouse is paying taxes on their total income. This can create an unfair imbalance in that the tax paying spouse may be obligated to pay maintenance to the spouse skirting tax laws, and this cannot be waived.

Child support is a biggie! A divorce agreement waiver of child support will not be enforced if the needs of the children are not being met; and if parties indicate that they opt out of modifying child support if there is a substantial change in circumstances, the court is likely to hold the “opt-out” unenforceable when a “substantial change in circumstances” rolls around.

Agreements that resolve divorce often reflect a delicate balance among issues of custody, support, and equitable distribution. Apples are often exchanged for apples, and they are also exchanged for oranges. For example maintenance, child support, and equitable distribution all boil down to money and monetary values and exchanges. A little less in one category being exchanged for a little more in another category would be like apples being exchanged for apples. Sometimes, however, the parties barter things like mitigated support obligations being exchanged for the ability of one party to relocate with the children a greater distance away from the other parent; that would be more akin to apples being exchanged for oranges.

If part(s) of the agreement are later determined unenforceable, that can grossly affect the equilibrium of the agreement the parties initially agreed to voluntarily, believing they knew the values and rights they were exchanging in a concrete way. It can lead to a windfall for one party, and the other party being forced to give up significantly more than they anticipated and bargained for.

Independent covenant and severance clauses are staples in all the agreements to ensure that, if parts of the agreement are held to be unenforceable, the remainder of the agreement stays intact. However, in the worst-case scenario, a faux pas can invalidate the entire agreement.

For example, as it relates to the bigger all-encompassing picture, an agreement that mandates the divorce or mandates that the divorce not transpire violates public policy and can invalidate the whole agreement. In this scenario, even a severance clause cannot yield a messianic salvation for the agreement.

A large majority of people have no patience to read through dense and tedious agreements. However, it is critical that the divorcing parties perform the painstaking task of reading their agreement and understanding its provisions, consequences, and enforceability in totality.

First and foremost, my goal is to inform clients of the law so that they understand what they are agreeing to along with any accompanying positive and negative repercussions. I present the options and advise clients what I think the most appropriate options are for their particular situation. Feel free to contact me with any questions.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
Offices in Manhattan and Brooklyn
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com

How to Avoid Knee-Jerk Responses

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Quite often during a divorce when the wife wants sole custody of the children, she will go so far as to completely mitigate what the father does. Sometimes, women who exert this behavior are stuck in their situation—mired in bitterness and the feeling that somehow they’ve been wronged. To her, the husband does nothing. When I ask more detailed questions and parse out the facts, I’ll find out that he does things like make the kids’ breakfast every morning and take them to school. That is not called doing nothing!

The wife will say she doesn’t care about child support so long as it means he will be out of her life. This is a perfect example of a client making overly dramatic, large-brushstroke statements in the beginning. This quickly changes when the numbers get crunched.

For example, one client initially told me she would accept significantly less in basic child support than the Child Support Standards Act dictates. She would also agree for her husband to contribute a lot less than his pro-rata share towards add-ons such as the children’s:

•uncovered medical expenses;
•child care; and
•extra-curricular activities.

Her hope was to make the settlement offer so attractive to him that he would agree to sign. In exchange, he would relinquish custody to her and she would get him out of her life as far and as fast as possible. He was not particularly a bad guy, and the parties even had a fairly decent rapport; she just did not like living in the “neither here nor there” in-between zone of divorce. She wanted resolution and closure to move on.

Over the next few days, she began doing her homework, crunching numbers and calculating how much she would need towards her children’s child care alone in subsequent years, and realized there was no way in the world she could shoulder it alone. She looked at her daughter’s smile at dinner one night, and all she saw were big, disproportionate buck teeth. She realized her kid would need braces, and that she would need help paying for that as well. With that, my client landed back on planet earth and out of the window flew her ideas about proposals that were unrealistic for her.

Knee-jerk emails often flood my inbox in the wee hours of the night when the kids are sleeping and clients don’t have the day’s activities to distract them—the anxieties surrounding their divorce and future envelop them. By the morning, they see the light and have often come up with their own solution. When a client is going through a catastrophe, they are overly sensitive to everything in the moment. My replies have to be carefully calibrated to help diffuse the immediate stressor.

I often tell my mediation clients that I am the facilitator: They have to reach their own agreement; ultimately, they both have to live with it. During the divorce, these couples are still quite familiar with the other person’s lifestyle. They are oftentimes the most equipped to come up with their own solutions.

I similarly remind my litigation clients that the agreement has to be palatable to them. They will usually be living with the consequences for many years to come. They need to prudently weigh and consider the agreement and not sign in haste and desperation.

Contact me today with questions or comments.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
Offices in Manhattan and Brooklyn
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com