I remember taking a seminar in law school on the tax aspects of divorce.  At the time I could not have imagined a more boring topic, but after I began practicing family law, I quickly realized that tax issues could only be ignored to my clients' peril.  Indeed, the Internal Revenue Code has many provisions which will affect the ultimate outcome of your divorce.

Some of the more common tax issues involve the sale of the marital home, interest payments in a marital settlement agreeement, alimony, and the dependency exemption for children.  It is important to be aware of the tax consequences because you must "tax-affect" your agreement in order to get a fair deal.

This will begin a series of blog entries on the tax aspects of divorce.  The first substantive discussion will touch on the sale of the marital home.

The Newport News is reporting that a jury just awarded $420,000 in a malpractice case arising out of a botched divorce settlement.

In the lawsuit, Nancy L. Nicholson accused Amy Van Fossen, her attorney, of negligence for agreeing to language in a divorce case that prevented Nicholson from receiving alimony from her husband of 39 years.

The settlement agreement approved by the lawyer contained language which would have allowed the wife to seek alimony at a later time, but only if her financial situation "materially worsened."  The problem is that the wife had just filed for bankruptcy at the time, so it is unlikely that her future financial condition would ever get worse than that.

For whatever reason the husband was not ordered to pay alimony at the time, the solution would have been a simple "reservation of jurisdiction" clause which would have left the alimony question open ended.  "The Court reserves jurisidiction to determine the issue of alimony and spousal support."  Simple language for an appropriate result.

When agreeing to a divorce settlement, be sure to read the agreement with your divorce lawyer very carefully and ask any question you may have.

Many news outlets are reporting that Mel Gibson's 28 year marriage to wife Robyn will be coming to an end soon.

Robyn filed for divorce in California, which is a community property state.  Under community property laws, she will be entitled to one half of the couple's property.  Although Florida is not a community property state, the result is largely the same.

In Florida, a court is required to equally divide all marital assets and debts upon divorce unless there is a good justification for an unequal distribution.  Be sure to discuss whether there are any grounds for an unequal distribution of marital property with your divorce and property distribution lawyer before you enter into a settlement agreement.

Facing continuing budget shortfalls, the Florida Legislature is desperately trying to find ways to fill the gaps.  According to the Sun Sentinel, one of these proposals includes raising divorce filing fees to $2,000 for parties who own assets in excess of $250,000.

Sometimes you've got to wonder how cases like Williams v. Williams actually make it to a Florida court of appeal.

In Williams, the trial court awarded the wife $1,946 per month in temporary alimony and $685 per month in temporary child support.  The husband, a deputy sheriff, had a gross monthly income of $3,254.  After taking out taxes, the husband would be left with only 3% of his net monthly income.

Did the wife really believe such a ruling would hold up on appeal?  Of course the temporary awards were vacated by the Fifth District.  I assume that a more reasonable ruling will be made on remand.

With the continuing decline in economic fortunes, many people are finding that they cannot maintain existing child support obligations because of a job loss or diminishing hours on the job.  In that case, the person paying support may petition a court to reduce his or her child support obligation.

In Florida, a court may permanently reduce your child suport obligation only if, among other things, your reduction in income is permanent.  So what do the courts consider permanent?  In one case, Burdack v. Burdack, the court found that being unemployed for three weeks wouldn't cut it.  In fact, a later case, Freeman v. Freeman, indicated that the unemployment should persist for at least a year.

So does that mean that you just have to sit back and let the child support arrearages accumulate, getting you further and further into debt?  No.  In yet another case, Bennett v. Department of Revenue, the court indicated that support obligations could be temporarily suspended.  Other cases have found that a temporary reduction would be appropriate.

Be sure to contact a qualified child support lawyer if your ability to pay child support has been affected by the loss of a job or working hours.

In a previous blog I wrote about an English businessman who was asking a court to modify his divorce settlement because the agreement, in the end, turned out to be lopsided in his wife's favor.  Brian Meyerson, a wealthy and savvy banker, took a business gamble:  he kept his company's stock and gave his wife cash.  When the market tumbled and his shares lost much of their value, he complained.

A British court has since ruled that Meyerson is stuck with the bargain he made.  "When a businessman takes a speculative position in compromising his wife's claims, why should the court subsequently relieve him of the consequences of his speculation by re-writing the bargain," the court wrote today, according to Bloomberg.com.

Although you may not be dealing with a multi-million dollar divorce, remember that the values of the property you receive in a settlement may fluctuate.  For example, say it is December of 2006 and you really want two assets from the marriage:  your 401k and the house.  You think they will continue to increase in value, so you let your spouse take the $200,000 in CDs.  Now it is April of 2009 and both your 401k and the house are worth much less.  In hindsight, you got a bad deal.

When negotiating a divorce settlement, be sure to discuss the risks involved with a qualified property distribution lawyer and, perhaps, a financial professional.  Market forces, taxes, and other considerations may impact what you actually receive in the long run.

In a March 31 press release, a recent survey of the American Academy of Matrimonial Lawyers, 39% of the nation's top divorce lawyers say they are seeing an increase in modifications to child support payments.  Moreover, 42% of Academy members are seeing an increase in modifications to alimony.

"When a divorced person loses a job or has take a pay cut, a request to make modifications to a child support or alimony payment arrangement often follows," said Gary Nickelson, president of the AAML. "With job losses becoming so widespread, our members are subsequently noticing a sizeable increase of these modifications taking place."

Bloomberg News is reporting that wealthy British bankers and other high income earners are attempting to have their divorce settlements altered to reflect a loss of wealth in the current economic climate.

In many of the British divorce cases, the husband would settle property issues by agreeing to give his wife a cash settlement in exchange for keeping other assets, such as stock in their companies or other equities.  For example, one husband, Brian Myerson, agreed to give his wife, Ingrid, about 9.5 million pounds in cash and a 1.5 million pound beach house, while he kept the shares in his company.  The value of the stock at the time of the settlement was about 15 million pounds, so it looked like the husband was coming out ahead.

However, when the value of the share's in the husband's company plummeted, his share of the estimated 28 million pound marital estate shrunk to 1.17 million pounds within ten months.  Yet his wife is still entitled to her cash payout.  Myerson is asking a British court to adjust the agreement to reflect his stock losses.

According to leading family law attorney in England, Myerson stands little chance of success.  "He made a commercial decision to put his money on red, and the spin of the roulette wheel came out black," said Julian Lipson, family-law practice group leader at Withers LLP in London, who isn't involved in the case. "The judges may feel sorry for him, and it was an unfair transaction, but it was a decision he took."

The same holds true in Florida.  While alimony payments are generally modifiable when there has been a loss of income after the alimony agreement was made, property agreements are generally non-modifiable.  You are stuck with the bargain you made and the courts are mostly without authority to change your bargain.

So before you enter into any kind of agreement for alimony or property upon divorce, make sure you have a qualified Jacksonville area family law attorney advise you about the pros and cons of any such agreement.

President Obama's nominee for Secretary of the Navy, Ray Mabus, has drawn notice from the press as a result of his divorce several years ago from his wife, Julie.

According to the New York Times, Ray and Julie were seeing a marriage counselor in an effort to work out their marriage problems.  Ray's lawyer advised him to electronically record the marriage counseling sessions.  Ray informed the counselor, an Episcopalian minister, of his intent to do so.  However, neither Ray nor the minister bothered to tell Julie.  The recorded counseling session was later used against Julie in a child custody determination.

This case arose in Mississippi.  According to the Times, Ray broke no Mississippi laws by recording the counseling session.  In Florida, however, the situation may have turned out differently.

In Florida, communications made during voluntary marriage counseling sessions are privileged.  That means neither you, your spouse, nor the marriage counselor can talk about what was said during counseling.  Florida also has laws governing the secret recording of communications, whether in counseling or outside counseling.

If you are contemplating divorce, it might be a good idea to first look into marriage counseling.  Florida law promotes a free and unfettered flow of discussion in voluntary marriage counseling sessions to preserve the integrity of the marriage.