Saturday, October 20, 2012

The Grey Divorcee

A recent study published by the Bowling Green State University concludes that divorce has replaced widowhood as the primary reason many seniors are single later in life.  No surprise there, as the United States has long held the highest divorce rate in the world.

As the baby-boomer generation ages, more of its members have been divorced than in any prior generation at any point in history.  Add to this the more complex marital biographies of average baby-boomers [second marriage, recently divorced, ever divorced], and you cannot ignore the growing prevalence of divorce in our society.

The study concludes that as widowhood has declined over the past two decades, the divorce rate among the middle-aged and seniors has doubled.  Also of note in this demographic is that, among divorced seniors, they achieved this status much earlier in their lives than in the past.

Another conclusion drawn by this study is that over the next two decades, as the growth of the "older" population accelerates, so will the divorce rate among mature adults.

One option to consider is separate maintenance.  This option, although not for everyone, has the advantage of allowing an unemployed spouse to maintain health insurance coverage.  In most cases, this saves the unemployed spouse approximately $500 per month by not having to  pay an insurance premium.

If you are over 50 and facing the tough options of divorce in Oakland County, contact us for a free consult. We can  provide you with answers to your questions and concerns.

Thursday, October 11, 2012

Double-Dipping for Alimony

The original "double-dip".
Many of us, when we think of “double-dipping,” immediately envision George Costanza nonchalantly eating chips and dip at a boring party. He bites the chip, dips, bites again, dips again, oblivious and happy.

Meanwhile, a fellow party-goer and disgusted onlooker cannot contain the impulse to put a stop to this obvious dip-contaminating behavior and confronts George. Inane hilarity ensues; check it out here.  [Note: Post-Seinfeld generation and long-time Seinfeld enthusiasts – you’re welcome.]

Double-dipping, in the world of family law, typically refers to the way assets are valued in the division of a marital estate.  A recent Michigan Court of Appeals decision, Loutts v Loutts, addresses this issue of “double-dipping” in the spousal support context.

This divorce case originated in the Washtenaw County family court.  One of the main issues in the case was how to determine an appropriate spousal support award where the marital assets included a business valued at more than a quarter million dollars.

The husband started, owned, and operated the business. When the family court awarded half of the business value to his wife, the question became: what income should be imputed to husband now that half the value of the business had been conveyed to wife?

When determining spousal support, the parties’ incomes must be determined so that the family court may decide how to equitably balance the incomes. The Michigan Court of Appeals has articulated a balancing test such that:
the primary purpose of spousal support is to balance the parties’ incomes and needs such that neither party will be impoverished, and spousal support must be based on what is just and reasonable considering the circumstances.
The family court can only perform this balance test on a case-by-case basis – typically unwilling to follow any bright-line rules for determining the rate and term of a spousal support award.

The family court in Loutts, after awarding wife half the value of the business, imputed approximately $130,000 income to husband.  This imputed income was utilized to “equitably balance” the incomes of the parties.

In doing so, the family court judge relied on case law to determine that “the value of a business may be used for the purpose of either property distribution or spousal support, but not both.” On appeal, wife argued that the court should have used the full-value of the business in determining her spousal support award.

The Court of Appeals disagreed, remanding this issue back to the family court for a re-determination of spousal support based upon the specific facts and circumstances of the case.  In their opinion, the Court of Appeals stated that the trial court’s reliance upon the Heller v Heller case was misplaced to the extent that, “the appellate court stated that its determination that a double-dip was inequitable was based on the facts of that case alone and was not a determination that double-dipping is never permissible.”  [The emphasis is ours.]

The obvious "take-away" from this recent case is that, when it comes to determining spousal support, bright-line rules simply do not apply. Rather, the family court judge should consider a variety of factors, including: the conduct of the parties, their ability to work, their ages, needs, health, present situation, prior standard of living, ability to pay alimony, and general principles of equity.

Double-dipping might be ok – given specific factual and equitable circumstances.  Exactly what those circumstances are remains a fuzzy, mutable, arguable enigma, ripe for the art of legal persuasion.

The one constant is that each case before the family court is unique and should be considered so by the judge.

Also of note in the Loutts decision is that the Court of Appeals wasted no time in upholding a 3-year non-compete provision that applied to the business and to which wife agreed, but appealed.  The Court held that you get what you bargain for.