Your New York pre-nup may be a ticking time bomb. Because of last year’s changes to the tax law, a divorce could be much more costly than you bargained for in your prenuptial agreement. The good news is that you still have time to disarm the bomb.
Historically, maintenance in New York (alimony everywhere else) has been tax deductible to the payor and taxable as income to the recipient. With the enactment of the new tax law in December 2017, this changed.
The Tax Law Changes the Deductibility of Maintenance
Starting on January 1, 2019, maintenance will no longer be deductible by the payor spouse unless, before December 31, 2018, the parties entered into a separation agreement or a court granted a judgment of divorce providing for the payment of alimony. Maintenance obligations that arose before that date will be grandfathered and remain deductible.
If, before December 2017, you entered into a prenuptial agreement that provided for the payment of maintenance (either a specific of maintenance or a formula for calculating the maintenance payment), it was likely on the then existing law that allowed for the alimony deduction. But, if you divorce after December 31, 2018, the maintenance payment will not be deductible; so, the actual cost of this payment will be much higher than you bargained for.
Your prenuptial agreement, which was supposed to provide for a fair settlement in the event of a dissolution of the marriage, may result in a windfall for the recipient and a significant and unanticipated liability for the payor.
What Are New York Courts Going to Do?
What New York courts are going to do with these agreements is uncertain. On the one hand, courts will hold parties to their contractual obligations. If they bargained for a specific maintenance payment, the judicial policy might be to hold parties to their bargain. On the other hand, there is a mutual mistake; both parties assumed that the maintenance payment would be, as it historically was, a deduction to the payor and income to the recipient.
What Do I Do?
You entered into a pre-nup to eliminate the uncertainty of divorce. But, this significant and unanticipated change in the law up-ended your divorce planning.
One way to eliminate the uncertainty surrounding the change in the tax law would be to amend the pre-nup in a post-nuptial agreement. The parties could address this change in the law and provide for a new “tax neutral” maintenance payment.
Of course, all cures have unintended side effects. Proposing a post-nup could cause result in the reconsideration and the re-negotiation of other pre-nup provisions - everything could be on the table. In cases where the marriage is already in trouble, re-visiting the pre-nup could, itself, result in a divorce.
If you have a pre-nup that needs to be reviewed or revised, contact me. Let's diffuse the bomb.
The times they are a changing. It is now increasingly common to hear ex-wives complain about the amount of spousal maintenance and child support they are paying to the ex-husbands.
For years, men were ordered to both pay both spousal maintenance and child support as part of their New York divorce. But, the pendulum has begun to swing the other way. But, it is now common for the wife to be the “bread-winner” in marriage and, as noted by the American Academy of Matrimonial Attorneys, to be ordered to pay maintenance and child support to her husband.
This phenomenon is the result of a convergence of a combination of economic and legal factors. According to a recent Pew Research study, the wife is the higher earner in 40% of marriage. Thus it follows that the higher earning wife must pay maintenance and/or child support when the couple divorces.
More Wives Are Paying Maintenance in New York
Until New York issued guidelines for maintenance, maintenance was awarded after consideration of a litany of factors, including the length of the marriage, the age and health of the parties, and their respective incomes. The amount of maintenance awarded differed from Court to Court and county to county. As a result of the uncertainty of the award or because of the bias that husbands should not receive maintenance from their wives, it was not the norm for a husband to be awarded maintenance, even if the wife earned substantially more than the husband.
However, with the advent of New York maintenance guidelines, spousal maintenance became a more black and white issue, the parties’ incomes are plugged into a gender-neutral formula which, in most cases, determines the amount of the maintenance award. Few people, male or female, if told that they would be entitled to a monthly payment turn if down.
More Wives are Paying Child Support in New York
Likewise, more men are receiving child support from their wives. Long gone are the days when it was a given that the mother would have custody of the children and the father would see his children every other weekend. More and more, custody is shared. In New York, where the parties equally share custody, the parent with the higher income is deemed the non-custodial parent for child support purposes. So, if the parties share custody of the children and the wife is the higher earner, she would pay the husband child support pursuant to the child support guidelines.
If you have questions about spousal maintenance or child support in New York, please contact us or call us at 212-683-9551.
Twice in the last month, the tabloids made much ado about well-known divorcing couples demanding financial disclosure early on in their divorces. In both the Rudy Giuliani and Donald Trump, Jr. divorces, both husbands demanded that their soon to be ex-wives produce a Statement of Net Worth causing the press to sound the alarm that these divorce cases were going to get ugly fast.
While the divorces may get ugly, simply demanding a net worth statement from the opposing side is not a sign of antagonism, it is just good lawyering.
What is a Statement of Net Worth?
The Net Worth Statement may be the single most important document in a New York divorce. As the name connotes, in a Statement of Net Worth, a divorcing party identifies, in detail, every asset, liability, expense, and source of income so as to provide the other spouse and the Court an accurate snapshot of party’s financial position.
The Net Worth Statement not only lays the groundwork for all the negotiations and financial discovery that follows but will also be used to determine the division of your assets, maintenance and child support.
Generally, the Statement of Net Worth is filed with the court before the Preliminary Conference, which is, in most cases, the first court appearance. A revised and updated net worth statement is filed before a case goes to trial.
What Is In A New York Statement of Net Worth?
The form is broken into several sections which include:
This section seeks basic information about the parties and their children, including their age, health, education and employment status
The section requires you to identify most every conceivable expense from rent, mortgage, and other housing expenses, to health and beauty aids to newspaper subscriptions.
This section requires the litigant to reveal every source of income, including from salary, distributions, pensions, and rent.
Assets and Liabilities
This section requires the party to disclose all assets, including bank and investment accounts, pensions, real estate, cars, collectibles, and jewelry, as well as all liabilities, including mortgages, loans, and credit card debt.
Since the truth of the statements and representations made in the net worth statement are signed and sworn to under oath, any misstatement or omissions open the party up to being punished for perjury in the most extreme cases or simply have their credibility impeached. Once a litigant’s credibility has been impugned, unless the spouse is even less credible, the Court will have little reason to believe any of your testimony.
While your attorney will review your net worth statement, it is likely that only the most glaring errors or omissions will be spotted; people spend drastically different amounts on different expense. What is extravagant to me, may be reasonable to you.
Given the importance of this document, when preparing the net worth statement, be accurate, be complete and be sure you have all the backup to support all of the representations made on your net worth statement.
If you have questions regarding the New Worth Statement or are contemplating divorce, please contact us or call us direct at 212-683-9551.
The issue of the discoverability of private social media postings arose in a personal injury action. In the case, the defendant sought to discover the plaintiff’s entire Facebook account including private postings- those postings neither published nor made publicly visible. The defendant wanted to use the private postings to disprove that the plaintiff sustained debilitating injuries. The plaintiff sought to limit the private postings as an invasion of privacy.
New York’s highest court, The Court of Appeals, allowed the private postings to be discovered, noting that if that if the postings were not discoverable a party would then be able to effectively “hide” otherwise discoverable material simply by marking it as private or otherwise curating their own social media postings.
The Court noted that there could be limits to discovering private postings on social media:
Indeed, as the name suggests, the purpose of discovery is to determine if material relevant to a claim or defense exists . . . In the event that judicial intervention becomes necessary, courts should first consider the nature of the event giving rise to the litigation and the injuries claimed, as well as any other information specific to the case, to assess whether relevant material is likely to be found on the Facebook account.
Second, balancing the potential utility of the information sought against any specific “privacy” or other concerns raised by the account holder, the court should issue an order tailored to the particular controversy that identifies the types of materials that must be disclosed while avoiding disclosure of nonrelevant materials. . . Temporal limitations may also be appropriate—for example, the court should consider whether photographs or messages posted years before an accident are likely to be germane to the litigation. Moreover, to the extent the account may contain sensitive or embarrassing materials of marginal relevance, the account holder can seek protection from the court (see CPLR 3103[a] ). Here, for example, Supreme Court exempted from disclosure any photographs of plaintiff depicting nudity or romantic encounters.
While discovery in divorces is generally limited to financial issues, the disclosure of romantic encounters could be relevant to establish marital waste. Likewise, postings about purchases, travel and large expenditures could be relevant to undermine a parties’ economic claims.
The moral of the story is everything posted on social media may be used in against you if you are involved in contested divorce. The wiser course of action, until your case is settled, stay off social media.
If you have questions about your divorce, contact us!
The clock is ticking; 2018 will be the last year maintenance in New York (alimony virtually everywhere else will be deductible. The recently enacted tax bill eliminates the tax deduction for the payment of alimony.
Historically, maintenance has been deductible to the paying spouse and includable as income to the recipient spouse. Child support, on the other hand, was a tax neutral payment and is neither deductible to the payor nor taxable to the recipient.
By definition, the spouse paying maintenance would be in higher tax bracket then the recipient spouse. Because of this, attorneys were able to leverage the difference in tax rates between the monied and non-monied spouses to, in part, put more money in the hands of the non-monied spouse at a nominal cost to the payor spouse.
Suppose, for example, a high earning husband in the 50% tax bracket and is paying his wife $100,000 a year in alimony. On a cash flow basis he would be paying maintenance of $100,000, but, because of the tax deduction, his spousal support would actually only cost him on $50,000 after the payment is tax impacted (@50% tax rate on a $100,000 payment).
On the other hand, the wife would receive the $100,000, but after tax (assuming a 25% tax bracket) she would be left with $75,000. This tax impacted payment often was called the “divorce subsidy” because the spouse receiving maintenance payment would be receiving more in after-tax dollars than the spouse was actually paying.
This ability to leverage the parties’ tax rates was particularly beneficial when the payor spouse was paying child in addition to maintenance. The divorce subsidy could be extended by apportioning some part of the non-taxable child support payment taxable maintenance. The payments could be “netted” up so that payor would be in the same place if the payment were tax neutral. The recipient, on the other hand, had more cash in hand
The Future of Spousal Maintenance in New York
New York’s maintenance guidelines, like the Child Support guidelines, are used to calculate the payments based on the parties’ income before consideration of federal and state taxes. It can reasonably be anticipated that the maintenance guidelines will need to be revised to account for the loss of the tax deduction.
Alternatively, if the guidelines are not amended, the parties will be left to negotiate how to tax impact the maintenance payments. Any maintenance guideline calculation would have to be discounted to take into account the tax consequences.
In addition, while maintenance will be deductible to parties with agreements in place before December 31, 2018, any modifications after January 1, 2019, would eliminate the tax deduction. In this case, a party, who lost a job and is seeking a downward modification of a maintenance payment, may get a reduction in the amount of the payment, but lose the ability to deduct it.
I can predict that in December there will be a mad rush to settle cases where maintenance is contemplated.
If you have questions about maintenance in New York, contact us or call us directly at 212-683-9551.
Eighteen years, eighteen years
She got one of yo kids got you for 18 years
I know somebody paying child support for one of his kids
His baby momma's car and crib is bigger than his
You will see him on TV, Any Given Sunday
Win the Superbowl and drive off in a Hyundai
She was spose to buy ya shorty TYCO with ya money
She went to the doctor got lypo with ya money
She walking around looking like Micheal with ya money
Should of got that insured got GEICO for ya money
If you ain't no punk holla We Want Prenup
We want prenup!, yeah
It's something that you need to have
'Cause when she leave yo ass she gone leave with half…
-Gold Digger Kanye West
One sure way to protect yourself from financial ruin when a loving marriage ends in a divorce is to have a prenuptial agreement in place. A prenup can establish your post-divorce lifestyle and fix your financial responsibilities and rights even before you wed.
A prenup in New York can completely eliminate or limit maintenance payments. It could also define what happens to property acquired during the marriage. Absent a prenup, the higher earning spouse may be required to pay maintenance to the other spouse as determined by a statutory formula. The prenuptial agreement could over-write the law and eliminate this obligation.
Likewise, a properly executed prenuptial agreement can provide how property will be divided if there is a divorce. Under New York law, marital property is equitably distributed. A prenup can define what, if any, property is marital and how the marital property will be distributed.
What New York Prenups Can and Can’t Do
The prenup cannot only address post-divorce issues, but marital life. The agreement could provide for how expenses during the marriage are paid, how marital bank accounts are funded and how assets, like the marital home, are titled. The only things that cannot be addressed in a prenuptial agreement are issues involving child custody or child support. Those issues can only be addressed if, and when the parties divorce.
In short, prenups are not only used to provide protection against gold-diggers, but they are also appropriate when one spouse:
Comes into the relationship with substantial assets that require protection from the claims of your prospective spouse;
Has children from a prior relationship and wants to secure their inheritance rights.
Runs a business and wants to protect his/her business interests.
Wants to identify his/her separate or pre-marital property.
If you are contemplating marriage, we can assist you in drafting and negotiating a prenup agreement and we will do it right. Please contact us or call us at 212-683-9551.
Hard to believe, divorce in New York may get even more expensive. The tax bill proposed in the House of Representatives, last week, seeks to eliminate the deduction for alimony payments.
The new tax law attempts to eliminate what has been called a “divorce subsidy.” Under the existing law, the party paying alimony may deduct the payment and the party receiving alimony would include the payment in his/her income for tax purposes. Since the payor of spousal support would be in a higher tax bracket than the recipient, the payor’s tax deduction would be larger than the recipient’s tax liability resulting from the support payment.
In real terms, if the party was making a maintenance payment of $100 and was in the highest federal tax bracket (39%), the real cost of the maintenance payment would be $61.00. On the other hand, the recipient, in the lowest bracket (15%) would receive $100, have a tax liability of $15, and receive an actual benefit of $85.
By being able to leverage the differences in the parties’ tax rates, payments between future ex-spouses can be structured in a tax-efficient way. Absent the alimony deduction, the real cost to the payor in the above example would be the full $100 payment.
Sine the recently enacted New York maintenance guidelines were drafted with the “assumption” that the maintenance payments would be tax deductible, if the new tax law is enacted, I would anticipate that the maintenance guidelines would need to be re-formulated to ensure that they are not confiscatory in application.
Given that this tax reform bill was just introduced and is in its first iteration, we will have to keep on it to what if, any changes, are made to alimony deduction. If enacted, the tax law will become effective on January 1, 2017. So, if your divorce settlement contemplates you paying maintenance, do what you must to finalize the divorce as soon as possible– your savings could be substantial. On the other hand, if you are to receive payments, it could be beneficial if you can delay the entry of the divorce until the beginning of the year.
Whether you just decided you want a divorce or you have been served with a summons for divorce, it's time to contact a divorce lawyer in NYC. With the right attorney on your side, your legal rights and interests will be protected.
Divorce is ugly, but it doesn't have to become your worst nightmare. With the right divorce lawyer on your side, you'll have someone ready to guide you through the issues that come with divorce.
Divorce is rarely a happy thing and often filled with animosity and plenty of tension. When the most meaningful relationship in your life comes to an end, it's necessary to be represented by an attorney with a pragmatic approach to the legal and financial side of divorce.
Hiring the Right New York City Divorce Lawyer
With a good attorney on your side, you won't have to worry nearly as much. Daniel Clement is the right choice. Your relationship is coming to an end and Daniel understands how challenging this time in your life can be. He will help you to make the right decisions so that you can move forward with your life instead of remaining stuck in the past.
When you hire the right divorce lawyer in NYC, you'll get someone ready to work hard to ensure your needs and wants are addressed. With Daniel Clement on your side, you'll have an attorney ready to help you achieve your goals as you go through the divorce process.
What to Expect with Divorce
You can be divorced in a few different ways. A divorce can be uncontested. In the case of an uncontested divorce, the parties, with the help of their attorneys, negotiate a settlement agreement and then uncontested divorce papers are filed in court. When this happens, you can be divorced rather quickly and it doesnot have to be incredibly expensive.
While a divorce without a trial may be ideal, it's not always the reality. Sometimes, it's necessary to take the divorce to court and settle the issue.
Whether your divorce happens settles out of court or is litigated and requires court intervention, Daniel Clement will be right by your side throughout the entire process.
Legal Grounds for a NYC Divorce
In the state of New York, thelegal grounds for are:
Living separate pursuant a separation agreement
Cruel and Inhuman treatment
The irretrievable breakdown of the marriage
No matter the reason for filing a divorce, you need a good divorce lawyer in NYC. Without a good attorney on your side, you could end up out in the cold without much left. You have rights and you need to protect those rights as you go through the divorce process with your soon to be ex-spouse.
Hiring the Best NYC Divorce Lawyer for the Job
When divorce cannot be avoided, you need to be protected by a skilled and experienced attorney. When you retainer Daniel Clement to represent your divorce, you will get you someone with more than 30 years of experienced. He has actually been selected as a Super Lawyer.
If you're going through a divorce or you want to file for divorce, contact Daniel Clement today and find out how the Law Offices of Daniel E. Clement can help you.
Hiring the right divorce lawyer in Manhattan will certainly make a difference. Manhattan is a very affluent area within New York City and many of the divorce cases in the area are considered to be high net worth divorces. Millions of dollars and assets may be at stake; the right divorce attorney could make all the difference.
Preparing for a High Net Worth Divorce
When it's time to part ways with your spouse, it's time to protect your assets, especially if you did not sign a pre-nuptial agreement before your married. The right divorce lawyer in Manhattan will protect your rights and your assets.
When divorce becomes a part of your life, decisions are clouded by emotion which fuel your disagreements. The battles can turn into an all-out war, but they don't have to. With the right attorney helping you through your divorce, you won't have to go through the divorce yourself. A good divorce lawyer in Manhattan can settle your divorce without going to trial.
At the outset, you will need to prepare for divorce, become informed and set your goals. Communicate your goals to your divorce attorney. Of course, you will want to make sure your Manhattan divorce lawyer has plenty of experience.
If children are involved, the divorce will become about more than just assets. A good divorce lawyer will be able to help you set realistic expectations when it comes to custody and child support. You should be prepared for what life will look like after divorce and the right attorney will become a tremendous help in this area.
Hiring Your Manhattan Divorce Lawyer
Experience plays a big role in finding the right attorney for your needs. If your divorce falls into the category of a high net worth divorce, you'll want to find a divorce lawyer in Manhattan with experience in these types of cases. You certainly don't want a rookie handling your divorce with millions of dollars worth of assets on the line.
Why Hire Daniel Clement
Daniel Clement is not only a dedicated, hard-working divorce attorney in Manhattan, but he is experienced in all aspects of divorce including distributing assets, maintenance, child custody and child support. With more than 30 years of experience in this arena, he knows how to ensure you get what you deserve during a divorce
While breaking up a marriage is never ideal, it happens. You may not even be the one wanting a divorce, but you still need to be protected. Financial, legal and psychological consequences are all a part of divorce. This emotional time can have you thinking irrationally, but with the right divorce attorney on your side, you'll have someone with their head in the game.
Protect yourself by hiring an experienced and skilled divorce attorney in Manhattan. Call The Law Offices of Daniel E. Clement and find out how we can help you with your divorce case, child custody, child support and even a high net worth divorce.
In New York, there is a “presumption of legitimacy” which provides that a child born during a marriage is presumed to be the married couples’ child. A New York appeals court ruled that this presumption should apply equally to both heterosexual and same-sex couples.
This is a logical extension of the Court of Appeals decision in Matter of Brooke S.B. v. Elizabeth A.C.C., in which New York’s highest court expanded the definition of “parenthood” to include the nonmarried, ex-partner of a biological parent. The court in Brook S. B. declared that either party could seek custody or visitation rights of children resulting from the same-sex relationship. The Brook S.B. case is discussed at length here.
This latest case goes even further than the decision in Brooke S.B. in expanding the parental rights of same-sex couples. Now, not only can either party seek custody or visitation if the same sex relationship dissolves, but now, since the child is presumed to be the legitimate child of both parties, it would be unnecessary for the non-biological parent to formally adopt the child in order to establish his/her paternity rights. Like a child born to heterosexual parents, the child of a same-sex couple will be presumed legitimate, and its parents will enjoy all the rights of natural parents.
This is not the first case to deal with the presumption of legitimacy for same-sex parents in New York, but, I believe, it is the first appellate decision. This case, therefore, must be followed by the trial court in Manhattan and will be persuasive throughout the remainder of New York State.
This decision is a continuation of the progress made in bestowing same sex-couples the same rights as possessed by heterosexual married couples. It further is recognition that even though it is impossible for both same-sex parents to be a child’s biologic parent, in a marriage, this strong presumption will trump science.