Hiding Assets In A Divorce: You Can Run, But You Can’t Hide; Or Can You?

Dealing in Cash, Multiple Foreign Numbered Accounts, Offshore and Shell Corporations, Family Owned Businesses with “Perishable” Inventory, Multiple Holdings in Precious Metals and Other Commodities, Bearer Bonds, as well as Real and Personal Property owned through layers of corporations, individuals and other entities.

Division of Assets in A Divorce

A major part of divorce proceedings are focused on finances. Like a business partnership, dissolution requires division of assets, whether agreed to or determined through courtroom proceedings. Some involved in a divorce try to hide assets in a misguided attempt to deprive their spouse. Here are some signs to look out for:

  • Unreported income on financial statements and tax returns.
  • Esoteric categories on financial statements for “business-related” expenses for business owners.
  • Cash maintained in travelers checks.
  • Using a child’s Social Security Number to set up a custodial account in the name of the child with the spouse as the account holder.
  • Purchasing certificate “bearer” municipal bonds or Series EE savings bonds.
  • Side deals with employers to delay pay increases, bonuses, equity buy-ins, and stock options, until after a divorce or when the asset or income would no longer be considered marital property.
  • A phony debt repayment plan to a friend or family member.
  • Rent, gifts, travel, tuition, and other expenses paid for a paramour.
  • Retirement accounts you were never told about.

Business owners have more methods at their disposal to hide assets. If your spouse is a business owner some of the following could also apply:

  • Paying for personal expenses through the business in order to reduce income.
  • Designating personal expenses as business expenses.
  • Payments of benefits or salary to non existent employees.
  • Assets transferred from businesses to third parties who are relatives or friends of your spouse.
  • Money paid from businesses to someone close without any legitimate basis, such as for services rendered.
  • Delays in the execution of business contracts until after a divorce so that it may not be included as part of the value of the business or for purposes of determining the ability to generate income, including for purposes of alimony or child support.
  • Falsification of documents in order to hide assets in the hands of third parties or shell corporations.
  • Unexplained adjustments to the financial statements and general ledgers of the business.
  • Unusual disgorgement or acquiring of inventory.

When your spouse is hiding money or assets in a divorce, it is important to understand the means by which they move income and property. Whether that’s transferring ownership to a third party or using false documentation, an experienced professional knows the techniques to uncover those hidden assets and can realize the value of the property so that it is included as part of the equitable distribution in a divorce.

Hiding Assets and Property

There are all sorts of creative ways people find to hide assets. If you are concerned that your spouse may be trying to hide assets, some of the more common methods include stacking a safe deposit box full of paper money as well as gold coins, jewels and other collectibles. A sudden interest in collecting items like firearms, collectible cars, tools, hobby related items, artwork, antiques, or original paintings.  These are often overlooked or undervalued.

Hidden assets may also include mutual funds, bonds, cash value and insurance policies and other annuities as well as savings bonds.  Money and assets can be hidden by individuals in businesses in the value of vehicles, planes, boats, motorcycles and other conveyances, as well as inventory.

Finding Hidden Assets in a Divorce

Discovering hidden assets is sometimes just a matter of understanding what specific questions to ask yourself and expect to then pursue through the discovery process conducted by your attorney.  Much of it has to do with understanding the clues that tip you off to the existence of hidden assets; often times these clues are just the tip of the iceberg.  Securing documentation of the activities – “the paper trail” – or electronic documents stored in computers concerning these activities is crucial.

Although not exhaustive, some additional questions might include:

  • What are the sources of income, including income from wages?
  • Does your spouse have a deferred compensation plan or other types of executive incentives or fringe benefits?
  • Is there any interest or dividend income that was not disclosed to you during the marriage?
  • Are there tax free bonds providing interest?
  • Where did the taxable refunds of state and local taxes go?
  • Were there overpayments of taxes on state and federal returns for future tax years, but then refunded?
  • Were there any distributions made from retirement accounts including deferred compensation plans, IRAs or 401Ks?
  • Were there any designations of an alternative minimum tax preference?
  • Have stock options been exercised or other shelters and credits used to reduce or eliminate tax?
  • Were there any state or local income tax generated in another state?
  • Are there assets located in another state or foreign country?
  • Have you seen payments for property taxes or other types of taxes and fees on assets, including real estate, that are not listed on a financial statement?
  • Are there any side businesses?
  • Is the business a cash heavy business, such as a retail business?
  • Does the business carry an inventory that can be easily manipulated?
  • Does the business involve international monetary exchanges, where funds are being converted from one sovereign currency to another.

What To Do If You Think Your Spouse Is Hiding Money

Without the resources of a law enforcement agency behind you, what is a spouse to do if they suspect that their spouse is hiding money, or have a hunch that assets are being hidden, transferred, assigned, or otherwise dissipated?  Or what if you are a business owner and your spouse falsely accuses you of these acts, including not reporting income, skimming money, or hiding assets or property?  First, you need an attorney who understands the manner and means by which individuals and businesses hide money and assets.  And if accused of doing so, an attorney who has experience in presenting evidence to the Court in defense of such claims, including distilling in understandable terms and evidence, complex financial endeavors and business enterprises.

Second, takes notes about “suspect” arrangement and take steps to preserve evidence to share with your attorney. Hiding money or other assets almost always leaves some sort of trail. However, you must be careful. Under no circumstances should you hack into a spouse’s computer or mobile device since that is illegal and can compromise the evidence. Instead, watch for unreasonable or unexplained financial transactions and make a note of it.

Third, after first consulting with your divorce attorney, gather bank statements, cancelled checks, tax returns, tax payments, pay stubs, brokerage account statements, or other things that make up the paper trail.

Whether concealed, hidden, obfuscated, or obscured, the various instrumentalities and means that one spouse can use to prevent another spouse from understanding the true picture concerning their personal, business, real property and cash can be a daunting and ostensibly impossible task. Although it may seem extremely difficult to uncover hidden assets, unreported income, and other hidden property, an aggressive and disciplined approach by an attorney who understands the complexity and variety of the means by which individuals and businesses hide assets and money can secure a just and fair result for their client when these types of activities occur.


Meet Your Spouse’s New Private Investigator: It’s In Your Pocket

Whether you call it a cell phone, mobile device, or smart phone, today’s devices are technological wonders.  And the best friend of your “soon to be ex’s” divorce attorney.

They make life easier and have become extensions of ourselves. Yet, for all their convenience, do we ever think of potential consequences?   Here’s a fact. Your mobile device keeps track of everything you do. Sure, it’s useful but also has serious risks. Someone with a little technical expertise and information now has a portal into your entire life; every place you have been; everyone with whom you have spoken; every web site you have visited.

Do I have your attention yet?

A smart phone is, in fact, a small computer with most of the characteristics of your laptop or desktop computer except that it is with you constantly.  It has a memory; it stores data and keeps track of what has transpired on it, intentionally or otherwise, even when you think you have erased it. Every two years, or less, we upgrade to newer and better phones with better capabilities because of faster processors and more memory.  But, this also means they can and do retain more data about us, whether you intend it to or not.

Mobile Devices and Divorce

Beginning with the basics, when you make a phone call using a cell phone, a record is created.  This type of information is available readily on-line on your bill including phone numbers called, time of and duration of calls as well as locational information.  The same applies to text messages.  This is the obvious, although often overlooked and potentially quite valuable information to your soon to be ex-spouse’s divorce attorney that we generate on our cell phones every time we use them. If you are texting your boyfriend the personal trainer, tennis pro or pool boy at 2a.m. while your husband is asleep, you are creating a record that you may find hard to explain. Some may opt for a surreptitious mobile phone for these purposes but, the fact remains that you have created an almost unimpeachable source of evidence.

Now, the really dangerous stuff: Using state of the art equipment, computer forensics experts can copy the entire memory of your computer, tablet and/or cell phone in a matter of hours or even minutes leaving no trace of their presence.  This includes data that you think you have erased.  Speaking from many years of experience as an attorney, trust me when I tell you, you haven’t.  Despite your best efforts, short of completely re-formatting and overwriting the memory and hard drive, or destroying it (think 60 seconds in a food processor), which is the better option, the data is just waiting for a trained expert to find it and share it with your spouse or their attorney.

What this means to you is that every e-mail and every text message may well still be on your cell phone waiting for someone else to read it. Every “selfie” you Brett Favre wannabes take or the photos and videos of you and your girlfriend are still on that “smartphone.” In the right computer forensic expert’s hands, you and that cell phone have created more damaging photographs than Jake Gittes (The immortal private eye from the movies Chinatown and The Two Jakes, starring Jack Nicholson as our “hero” Jake Gittes.  Yes, I am dating myself, but a classic is a classic) could ever have dreamed of getting on his best day.

Every internet search also leaves a record which might be of interest to your opponents.  Were you accessing a hidden bank account?  Were you looking at pornography of a certain type that might trouble a judge in a custody case?  Were you looking for divorce attorneys on the internet and reading some article about how to plant a tracking device on your husband’s car or perform an information dump from your wife’s i-Phone? Were you booking flights to Russia to seek asylum?

Every place that you have been, especially when specifically guided by your phone’s Global Positioning System (GPS), will leave a record in the memory of your cell phone just waiting to be examined by a top expert and shared with your spouse and his/her attorney. As far as real time surveillance is concerned, i-Phones that you share on a family “network” can be used to gather locational information without any particular effort by almost any novice.  Locational programs are also available for Android based systems that run in the background on your phone.

Divorce, Family Law, & Technology Evidence

The potential uses for this GPS information are almost unlimited.  Have you been to the gentleman’s club?  Were you visiting your boyfriend/girlfriend?  In a custody case, have you been to your psychologist or psychiatrist?  Were you at a bar when you told your husband that you had to work late and couldn’t be home with the kids? Were you at a hotel in downtown Washington at 2 in the afternoon when you work in Gaithersburg?

Turning the GPS feature off will not solve the problem either.  It is absolutely possible, if not easy, to trigger a GPS on a telephone remotely and without prior consent.  Now for the really bad news: this can be accomplished even when the phone is turned off.  You don’t even have to be in the National Security Agency to do it.  A signal can be sent which will locate the phone either by Global Positioning System and/or by triangulating the cell towers surrounding the phone.  Just like that, your location has been disclosed and you will have no idea that it has occurred.  The phone will not “turn on” when this signal is sent.  It will just confirm your location for the investigators seeking to prove that you are somewhere where you are not supposed to be.

In our White Paper focusing on GPS and the United States Supreme Court’s ruling in Jones vs. the United States, I discussed the shock and concern of the highest court in the land at the prospect that technology, specifically GPS, could be abused by our government to gather information about any one of us by placing a tracker underneath our cars. And that was in those innocent days before people realized that the NSA was reading our e-mail, monitoring our internet access and listening to our phone calls. The restrictions imposed by the Supreme Court however, only apply to the government– not to private citizens.  This leaves your estranged wife or her divorce lawyer in the private sector free to gather information about you with little or no restriction.

Granted, some of what is discussed within this article is not strictly speaking legal, although most of it is.  More to the point, there is an important distinction between what may be used as evidence in a court of law and intelligence which can be gathered and utilized in other ways.  Illegally obtained information will be inadmissible in most courts.  However, for those less concerned with the initial legalities of their actions, information can be gathered and the sources backtracked through to legally useable sources. In most instances where the intelligence gathered was discovered through marginally legal methods, your opponents will not even trouble themselves to create a plausible source for the information.  Instead, it will be used to check legally obtained information or simply used to box you into a corner.

The Solution for Your Indiscretions

The best solution is to eliminate the indiscretion. However, as a family law attorney with over twenty years of experience, I’m realistic in my expectations of human nature. There are things that you can do to protect yourself.  Some are more obvious than others.

  • Don’t go to the strip club but if you do, and you probably will, don’t bring your phone with you.  You shouldn’t be answering calls there anyway. The music in the background isn’t the type they play at client dinners, like the one you told your wife you HAD to attend.
  • Don’t e-mail or text your boyfriend/girlfriend.
  • Don’t access your hidden bank account using your smartphone and don’t send e-mails talking about it.
  • Resist the temptation to create photographic records of your indiscreet behavior.
  • Don’t do anything on or with that phone that you don’t want someone else to have the opportunity to see.
  • Operate under the assumption that anything you do with that phone is going to afford someone else the opportunity to catch you doing it

I am not offering a road map for poor behavior. My point is really rather simple. When you are engaged in a family law dispute like a divorce, you must be aware of the implications of using technology. As an attorney, I am going to look for and find legal sources of evidence that help advance my client’s objectives. The days of private investigators endlessly following subjects in the manner of the aforementioned Mr. Gittes are over. Each of us carries the best private eye available in our pocket or purse. And we use it without forethought or restraint. As I tell each new client, be careful with how you use your mobile device and technologies like social networking. You are creating a treasure trove of potential evidence for modern investigators to document your every move. Take this advice and save yourself legal fees and unnecessary headaches by avoiding the creation of volumes of damning evidence with which your family law attorney will have to contend. Or don’t; my kids need to go to college too.

 


GPS & Technology: Divorce Friend or Foe?

Every day we are bombarded by advertisers with the latest and hottest “must have” technology product. We are told by Apple, Samsung, and a host of other vendors that without their “latest” products we are falling behind and out of style.  While they do provide a number of useful applications and services, we use tend to use them without thought. Increasingly, these new technologies are being used as forms of evidence in legal proceedings.  One of the most recent “advancements” to take a turn before the bar is Global Positioning System (GPS) data. GPS and other technologies are here to stay but everyone should be aware of the risks they pose and their potential to harm you in a divorce, child custody, or other family law proceeding.

Technology & The Supreme Court

The issues surrounding technology certainly extend beyond just family law. It is a burgeoning issue that has already made it to the highest Court in the land.   The Supreme Court of the United States was recently called upon to address the irresistible march of technology and the potential consequences of its misuse in United States v. Antoine Jones. In a nutshell the issue before the Court in Jones was our government’s unlimited ability to monitor our daily activities and what many consider our basic right to privacy through the use of GPS.

GPS is found on virtually every smart phone currently on the market.  Stand alone GPS navigation systems are still in wide use as well and not just in vehicles. It is a commonly used tool that is part of almost all of our lives.  What makes this technology of interest to the Supreme Court, and for purposes of this paper, people facing a divorce, is its use in conducting surveillance.

Antoine Jones was the owner and operator of a nightclub in the District of Columbia.  He was suspected of having involvement in drug trafficking.  He became the target of an investigation by a joint FBI and D.C. Police task force and was placed under visual surveillance.  The task force applied for and was granted a warrant by the United States District Court for the District of Columbia to attach a GPS device to Jones’ wife’s SUV. The device was in effect a GPS enabled cell phone with an extended life battery placed in a heavy duty plastic box with a strong magnet on it.  The magnet equipped box was then attached to the vehicle, typically under the bumper. The warrant required that the device be attached within 10 days of its issuance and within the confines of the District of Columbia.

The GPS device was attached the day after the warrant had expired and in the State of Maryland.  The warrant was therefore invalid and, accordingly, no longer sanctioned by the Courts which, in this situation, are charged with regulating the ability and methods of local, state and federal governments to conduct searches and investigations of its citizens.  The consequence of a warrantless search is that any evidence it produces cannot be used by the government in criminal prosecutions.  Relying in part on the data produced by the GPS device, the government successfully prosecuted Jones before a jury in the District of Columbia for conspiracy to possess and distribute 97 kilograms of cocaine.   He was sentenced to life in prison.

Jones appealed the conviction on the grounds that the government’s GPS generated evidence had been obtained without a warrant and should therefore not have been admitted. The United States Court of Appeals for the District of Columbia agreed and threw out the conviction on that basis.  The government appealed to the Supreme Court of the United States.

A very clearly alarmed Court unanimously affirmed the Court of Appeals ruling that the use of the GPS without a warrant violated Jones’ Fourth Amendment rights.  Although the Justices all agreed on the ultimate outcome, the reasoning they employed was very much at odds.

Justice Scalia, writing for a majority, focused on the government’s physical intrusion into Mr. Jones’ private property as the basis for requiring the warrant.  In effect the opinion is based on the notion that when the government attached the GPS to the exterior of Jones’ wife’s car, it was physically trespassing.

Justice Alito joined by Justices Ginsburg, Bryer and Kagan and Justice Sotomayor in her own concurrence, dismissed the majority’s rationale as in effect outdated and too dependent on antiquated concepts of property law.  They instead focused on the very real dangers GPS and technology advances in general can pose to our basic civil liberties.  Focusing instead on our expectations of privacy and how they have changed with the development of technology, Justice Sotomayor sounded the alarm bell:

…(“Disclosed in [GPS] data…will be trips the indisputably private nature of which takes little imagination to conjure: trips to the psychiatrist, the plastic surgeon, the abortion clinic, the AIDS treatment center, the strip club, the criminal defense attorney, the by-the-hour motel, the union meeting, the mosque, synagogue or church, the gay bar and on and on”).  The Government can store such records and efficiently mine them for information years into the future.  Pineda-Moreno, 617 F.3d, at 1124 (opinion of Kozinski, C.J.).  And because GPS monitoring is cheap in comparison to conventional surveillance techniques and, by design, proceeds surreptitiously, it evades the ordinary checks that constrain abusive law enforcement practices: “limited police resources and community hostility.”

In other words, there is a very real danger in allowing the government, or anyone for that matter, to monitor all of our movements with such ease and at minimal cost without any oversight by the Court’s who are charged with protecting our civil liberties, including our reasonable expectations of privacy.

GPS and Divorce or Family Law Implications

As with every rule, there are exceptions. The Fourth Amendment and its protections apply only to the government and not private citizens. Private citizens are, within limits, free to utilize GPS devices to track the comings and goings of other private citizens, such as a spouse that one suspects is doing something they ought not to be.  GPS surveillance of this variety is not subject to court oversight or a reasonable exercise of restraint.

It is not hard to imagine just how useful these devices can be to private investigators or individuals attempting to make a case for adultery.  Further, as Justice Sotomayor pointed out, information can be gathered through the use of GPS that might prove useful in a custody case, such as trips to a psychiatrist, or strip club or ……  Costly surveillance that once had to be conducted by a “gum shoe” (think Humphrey Bogart in the Maltese Falcon or Tom Selleck in Magnum P.I.) is no longer necessary.  Now, anybody with a PC, tablet or even smartphone can slip a magnetized box under the bumper of a car and inexpensively generate a data stream that would put our heroes from a more “romantic” era to shame.

An obviously troubled, if not alarmed, Justice Alito invited the various state legislatures to craft laws regulating the use of GPS devices but, to date, no state has taken up the gauntlet to regulate the use of GPS by anyone other than the government in the context of criminal investigations.  To date, the State of Maryland has taken no action to regulate the use of GPS.   The District of Columbia has likewise not yet taken any action to curtail the use of GPS by private citizens. The issue has been raised in other state courts, even in the context of a divorce.  Ultimately, however, the courts have not taken any action that would impede use of GPS as a tracking or surveillance tool.

The law has trouble keeping up with technology.  The courts will continue to struggle with the incredibly rapid proliferation of technology and its application in our daily lives. (This technology lag extends outside of electronics technology too. Courts are similarly vexed by medical technology as we discuss in a previous article on Assisted Reproductive Technology.) Once the courts or the legislatures fully address use of GPS we will almost certainly be immersed in the next set of issues raised by GPS technology. One likely and very thorny area will be the ability to convert someone’s cell phone into a tracking device, a service which is available through some companies already.

Users Beware

We frequently advise clients on their use of technology as they enter into a family law matter. Unfortunately, by the time most consult an attorney the relationship or issue in question has deteriorated enough that our admonishments may be too late. If you are in a situation where legal proceedings are possible, be aware of how you use technology. GPS is only one front in the wider technology war. Social networking, email, and other products create an electronic evidence trail that will be used in a family law proceeding.

Without even getting into the issues surrounding our private use of the internet and what gathering of that information might lead to, cell phone companies including Verizon and Google already have access to vast amounts of information about our private lives every time we consent to the use of their GPS systems to find directions to a child’s basketball practice or the local strip club, as the case may be.   When we use these devices or other products and services we voluntarily sacrifice our privacy for convenience.   We must also understand that even when we don’t voluntarily offer ourselves up for data collection, the technology can be easily used by others to monitor our daily activities to an unprecedented level.  The technology to which we are so addicted can be highly effective tools in the right or, depending on your point of view, the wrong hands when marriages are breaking down and moving towards a potential divorce.  So at the risk of stating the obvious, on the one hand, if you are looking to find out what your spouse is really up to, then GPS can be a gold mine of information; on the other, if you might have reasons for protecting your privacy even from your spouse, you may want to give some thought to checking under the bumper for any magnetized boxes containing a cell phone.


Who’s Your Daddy (or Mommy)?? Maryland & Washington, DC Family Law and Assisted Reproductive Technology (ART)

The Reproductive Technology Revolution

Over the past twenty years, radical changes have occurred in science, allowing persons to have children with assistance.  While these incredible steps in science are useful to mankind and have given hope to millions, the issue is that masses of people are using these technologies without any knowledge of the potential legal ramifications they could encounter.

The legislatures and courts often move slowly and are no match when it comes to keeping up with advances in science.  As a consequence, it is difficult for a person to know how to protect themselves and/or his or her child when it comes to using reproductive technology.

Couples that might not have been able to have children, including individuals, heterosexual couples, and same-sex couples, have many options in assisted reproductive technology:

1.    Intrauterine insemination
2.    Transfer of fertilized eggs
3.    Donation of sperm
4.    Donation of egg
5.    In vitro fertilization and intracytoplasmic sperm injection
6.    Surrogate carrier for gestation

The above technologies may involve “collaborative reproduction” whereby person(s) who are not intended to be parents and those who are intended to be parents participate collaboratively to produce a pregnancy.  The scenarios can range from simple to quite complicated.

As discussed in more detail below, countless legal issues arise from the act of assisted reproductive technology.

Legal Issues in Assisted Reproductive Technology

The development of the above medical advances has not been accompanied by uniform legal developments. In other words, state courts and legislatures hold different laws and most states have not addressed these issues directly.  Therefore there is very little precedence on assisted reproductive technology issues and most courts are forced to resolve very specific issues without precedent.

Donation of Sperm & Child Support

One major legal issue concerns sperm donation and child support.  Certain states have adopted the Uniform Parentage Act, or versions similar to the uniform act, which states that “A donor is not a parent of a child conceived by means of assisted reproduction.”  Unif. Parentage Act § 702 (2002).  Likewise, the law generally does not treat a sperm donor, who has no intention of becoming a parent, as a legal parent.  However other states, like Pennsylvania, have found that known sperm donors can be liable for child support.  In one Pennsylvania case where the parties agreed that the father would have no parental responsibilities, the court still found the donor to be responsible for child support. The courts in Pennsylvania held that the parents could not bargain away a child’s right to support, and thus the original agreement was unenforceable “on legal, equitable and moral principles.”

In Vitro Fertilization & Surrogates

In vitro Fertilization and surrogacy brings about numerous legal issues.  This involves the fertilization of eggs in a culture dish and the embryos are then implanted into the intended mother or surrogate.

One question that often comes up is what happens to the unused embryos? Typically, more than one embryo is fertilized and the unused embryos are preserved by cryopreservation so they may be use at a later date. A number of legal issues have arisen from the cryopreservation of embryos; however IVF technology is unregulated in the United States.  Divorce cases have involved disagreements over the disposition of embryos and claims for child support.  In a New York divorce case the parties were unable to conceive and tried IVF.  After the first attempt the parties decided to separate.  After separation, the wife wished to use the embryos for future IVF attempts.  The New York Court of Appeals looked at the parties’ intent at the time when the parties began fertility treatment.  The parties agreed in a medical consent form that in the event of the divorce they would destroy any remaining pre-embryos. Because there was no intent of the husband to be a parent, the court could not force one party to parent against his or her will.

When a surrogate is used for gestation the legal issues become rather complicated.  For example, what happens when the surrogate attempts to assert parental rights over the child?  In California, the Court ruled that “when the two means of establishing a mother-child relationship do not coincide in one woman, she who intended to procreate the child… is the natural mother.”  In Pennsylvania, in deciding the same issue, the court looked at the genetics first to determine parentage.  The court first determines the genetics and then determines if the genetic parents waived or relinquished parental rights.  Using this test, the Court in Pennsylvania has found the surrogate was the legal mother.  These cases underscore the importance of highlighting the parties’ intent in surrogacy agreements.

A 1998 California case, In re Jaycee, addressed issues involving a child that was born to a gestational carrier using a donor embryo.  The intended parents were later divorced and the surrogate carrier filed for custody.  The legal issues became complicated.  The court held that the intent of the parties governs in determining parentage and that the intended parents were the legal parents of the child.  The court found that without the intended parents’ intent to parent the child, as expressed in the parties’ contract, the child would have not been born.

In Florida, in a case where lesbian mothers conceived a child where one of the women was the egg donor (genetic mother) and the other (birth mother) carried the child to term. The birth mother was on the child’s birth certificate and the genetic mother was not.  The trial court held that the birth mother was the parent of the child and that the genetic mother had no rights as the parent.  As a result, the genetic mother went more than two years without seeing the child.  The Florida intermediate appellate court ruled narrowly, holding that a woman in a lesbian relationship who gives her egg to her partner has legal rights to the child produced.

So that there is less ambiguity involved in these cases it is generally a good idea to have a contract that protects the parents and the child when any form of assisted reproductive technology is employed.  However, one must be cautious in entering into agreements and contact an attorney for advice specific to the individual situation.  For example, many states require a written contract when using a surrogate. Said contracts can include financial compensation, but some states, like Washington, D.C. forbid surrogacy agreements all together and can impose criminal penalties, which include incarceration.

Assisted Reproductive Technology Laws in MD and DC

It is extremely important to contact an attorney who is familiar with DC and Maryland laws before contemplating the use of ART. 

In general, the laws and Maryland and DC do not address the vast array of technology available in ART.  As a result, it is important to discuss with an attorney the implications of the use of any of the above technologies.  For example, one would think that a contract is absolutely necessary for the use of a surrogate.  However in DC, an attorney would advise you not to enter into a surrogacy contract because surrogacy contracts are void and against public policy.  Not only are surrogacy contracts unenforceable, but the penalty for entering into or assisting in the formation of a surrogacy contract includes incarceration. On the other hand, contracts are absolutely necessary when considering artificial insemination. In DC, if artificial insemination is consensual, DC Code §16-909(e)(1) states that “A person who consents to the artificial insemination of a woman… with the intent to be the parent of her child, is conclusively established as parent of the resulting child.” In other words, if the donor is known, you should have a contract so that there is no ambiguity and the parties’ intent is clear.

Maryland statute differs considerably from DC when addressing assisted reproductive technology.  Md. Code, Estates and Trusts § 1-206(b) states that a child conceived by artificial insemination of a married woman with the consent of her husband is the legitimate child of both of them for all purposes. This presumption exists only for the husband, and therefore any non-husband considering artificial insemination should consult an attorney to determine whether an agreement is necessary so that there is no ambiguity as to the intent of the parties. In Maryland, there is no statute concerning surrogacy contracts so it is likely that a surrogacy contract is necessary to clearly state the rights of the biological parents, the rights of the surrogate and any compensation that may be involved..

Same-sex Couples and ART

Neither Maryland nor DC address the majority of technologies involved in ART nor the implications involved when these technologies are used for same sex couples.   Because there is little guidance from the statutes and case, the outcome may differ considerably over any dispute regarding parentage, child support, custodial rights, physical custody, access rights, and legal custody.  Furthermore, there is little precedence over the rights of the child to estate issues and inheritance. One should be advised by an attorney of these potential outcomes and the implication of the use of a particular technology.  Depending on the technology uses, the use of an agreement could provide for a more defined outcome should there be any dispute in the future.

Proceed With Caution

Like so many legal issues, there isn’t an easy answer on protecting yourselves and your children in cases involving assisted reproductive technology. Everything depends upon the circumstances and the locale. Look no further than the prohibition and criminal implications of surrogacy within the District of Columbia. Law as it relates to ART is complicated by both the legal issues as well as the technical issues involved in the science. It is further aggravated by the emotional desire to have a child, especially when biological factors make it difficult. Of course, it is very understandable that couples focus upon conceiving the child with little thought of the legal matters. However, it is important that you consult a family law attorney in your area for advice on how best to proceed. In many cases a simple legal agreement can avoid the significant emotional and financial distress that may result from legal complications in the future.

 


Cohabitation: Alimony in Maryland When Your Former Spouse Starts Living With Someone New

A question heard time and time again – asks why the payor of alimony should have to continue to support their former spouse when they are in a new relationship with all the benefits of marriage except the actual marriage, including cohabitating.  Often times the lack of a legally-binding marriage is the payee’s choice made strictly for purposes of continuing the receipt of alimony.  On its face, that doesn’t seem fair.

Maryland Cohabitation

Maryland Code, Family Law Section 11-108 provides that unless the parties agree otherwise, alimony terminates upon the death of either party or upon the marriage of the recipient or if the Court finds that termination is necessary to avoid a harsh or inequitable result.  Unfortunately, cases interpreting the statute have held that the fact that a recipient of alimony starts up a relationship with another similar to marriage but without actually entering into a legal marriage does not suspend or terminate the payee’s right to receive alimony.

On February 2, 2011, legislation had been introduced in the Maryland House of Delegates to codify the termination of alimony upon cohabitation of the recipient of alimony. Specifically, House Bill 304 proposed to terminate alimony if the Recipient of alimony cohabitated for a period of at least 30 days with an individual who is not a member of the Recipient’s family.  The Bill would also have created a presumption that Maryland cohabitation exists under the following circumstances:

  • 30 days of cohabitation;
  • The Recipient and the other individual are engaged in a relationship of a romantic nature;
  • The Recipient provided any economic benefit to or received any economic benefit from the other individual as a result of the relationship.

House Bill 304 would also had made it a requirement that the Recipient immediately notify the party required to pay alimony upon marriage or cohabitation.  Had this Bill been voted into law, it would have taken effect on October 1, 2011.  Ultimately, this Bill did not go anywhere in the Maryland legislature, but it is a subject with which the legislature is concerned.

Steps to Address Maryland Cohabitation

So what to do?  Appropriate language might be inserted into an Agreement, either as a Pre-Nuptial, Post-Nuptial, or Separation and Property Settlement Agreement, etc., that would terminate or suspend alimony if the recipient entered into a relationship as defined by the Agreement.  That definition would have to be case specific and could have various components.  The terms and provisions of the Agreement, including the definition of the relationship, should be geared so that the desired result may be secured.  These provisions are commonly referred to as “Cohabitation Clauses.”

The seminal Maryland case defining “cohabitation,” is Gordon v. Gordon, 342 Md. 294, 675 A.2d 540 (1996).  In Gordon, the parties entered into a separation agreement which was incorporated, but not merged, into their divorce decree.  Id. at 296.  Their Agreement provided, “Husband shall pay to Wife as alimony $6,000 per month…the said payments shall also terminate in the event the Wife resides with an unrelated man without the benefit of marriage for a period continuing for beyond sixty (60) consecutive days.”  Id. at 297.  Three years after the parties’ divorce, the husband began to suspect the wife was residing with an unrelated man in violation of their agreement and engaged the services of a private investigator.  Id. at 297-298.  After three and a half months of surveillance, the husband informed wife that he was going to cease paying alimony because she had resided with an unrelated man for in excess of 60 consecutive days.  Id. at 298.  Husband filed a motion to terminate his alimony and recover on amounts previously paid.  Id.  The matter came for hearing before a Family Division Master who found that Mr. Shankland, the wife’s boyfriend, had no other residence than the wife’s for a period of more than 60 consecutive days and recommended the Trial Court confirm termination of alimony.  Id. at 299.  The wife filed exceptions, which included asserting that the Family Division Master should not have applied the missing witness rule to infer that Mr. Shankland would have provided testimony adverse to the wife’s case.  Id.  The Trial Court entered an order terminating the husband’s alimony obligation.  Id. The wife appealed the Trial Court’s decision to terminate alimony.

The Court of Appeals found that the ordinary meaning of “cohabitation,” together with the factors developed by courts in interpreting “cohabitation,” applied to determine whether termination of alimony was warranted.  Id. at 304.  The Court of Appeals opined, “the term ‘cohabitation’ implies more than merely a common residence or a sexual relationship…[it] connotes mutual assumption of the duties and obligations associated with marriage.”  Id. at 308.  Further, the Court set forth a non-exhaustive list of factors to be considered in determining whether cohabitation existed, including,

  • establishment of a common residence,
  • a long-term intimate or romantic involvement,
  • shared assets or common bank accounts,
  • joint contribution to household expenses, and
  • recognition of the relationship by the community.  Id. at 308-309.

Finally, the Court of Appeals mandated that “if the parties to a separation agreement use the term ‘cohabitation’ or an analogous term, we shall interpret its meaning according to the definition outlined [in this opinion] absent evidence of an intent to use a different meaning.”  Id. at 310.

Therefore, it is essential that a potential payor of alimony secure an Agreement that protects against a cohabitation type scenario and provides for termination or modification of alimony should one arise as defined by the Agreement.

So you have an Agreement, and the Ex starts to cohabitate, what next?  Hire a private investigator on your own?  Do your own detective work?  Probably not the best choices.  The potential payor should consult with counsel to analyze the evidence available and, more importantly, what other evidence might be acquired before instituting an action to ensure that the desired result under the Agreement might be obtained.  Through counsel a strategy may be implemented to pursue the evidence necessary for a successful and just resolution.


Maryland Child Support Guidelines

MD Child Support Guidelines

In 1990, the Maryland General Assembly passed a law establishing MD child support guidelines in all child support cases–guidelines which provide a standardized approach to the establishment of child support in the State of Maryland, so long as the parties’ income fell within the guideline’s matrix.  Fast-forward to today: the Maryland legislature has enacted legislation (contained in House Bill 500) which will result in the first upward adjustment to the Maryland Child Support Guidelines in more than 20 years. The legislation became effective October 1, 2010.

Calculating New Payments Under Maryland’s Child Support Guidelines

The upward adjustment contains some meaningful changes. First, while existing guidelines top off at a combined adjusted annual income of $120,000 or $10,000 per month, the new MD child support guidelines increase it to $180,000 per annum or $15,000 per month. Second, under the new law, most basic child support within the matrix increases. For example, basic child support for one child would increase from $1,040 to $1,271 (at the $10,000 aggregate monthly income level), with a maximum for one child of $1,942. For two children, the old guidelines maxed out at $1,616 per month and under the new guidelines–at the same amount of $10,000 per month income–the child support would be $1,811. The new MD child support guidelines provide for $2,847 per month in basic child support for an aggregate monthly income of $15,000. As with the old guidelines, the Court will have discretion in setting the support level for parties and individuals with income above the maximum under the guidelines of $15,000 per month.

The new guidelines are long overdue and address the need for increased financial support for children. That said, even legislation as seemingly innocuous as providing more financial support for children is not without its friction. For Maryland and any state balancing its desire to strengthen child support with the harsh economic realities, the legislation can be a double edged sword for parents who must manage increasing payments with decreasing income.

Proponents of the new child support guidelines argue that the lack of revision to the existing child support guidelines has forced custodial parents to bear a larger burden of increased family expenses, including housing expenses which have historically been above average in Maryland.

Additionally, proponents point out that the revised guidelines offer increased protection for the payor-parent. For example, low-income parents may benefit from the expanded range of incomes where judges are advised to assign minimal child support. The old guidelines allowed the minimal child support for a parent whose income was up to $850 per month, but this has now been increased to $1,250 per month to reflect the current minimum wage and to ensure that low-income payors can maintain a minimum standard of living. Finally, a provision has been removed whereby adoption or revision of child support guidelines are grounds for requesting a modification of child support if the use of the revised guidelines would result in a change in the award of 25 percent or more.

Critics of the revised guidelines counter that Maryland child support guidelines were initially drafted to take into account annual inflation, as the matrix is based upon the parties’ gross incomes–which increase with the cost of living. Critics also argue that in a recessionary or struggling economy, increasing financial obligations associated with child support will simply overburden parents already stretched thin financially, creating a surplus of bankruptcy cases and contempt proceedings.

Enforcing Maryland’s Child Support Guidelines

In addition to disagreement regarding the revised guidelines themselves, there is also confusion regarding their application. Some individuals and their attorneys waited until after October 1st to file their modification request due to uncertainty inherent in the current guidelines, which do not explicitly provide to which cases these new guidelines apply. The ambiguity centers on whether the new guidelines apply to any case heard after October 1st or only to cases filed after October 1st, to say nothing of the confusion regarding requests for retroactive modification of child support.

Different courts may adopt different interpretations of the new child support guidelines legislation, and to which cases the new guidelines apply. It is important to remember, however, that there is no definitive legislative mandate to guide the way, and advocacy for differing interpretations are left to family law attorneys, and ultimately to the court’s discretion. Under both the old child support statute and the new statute, certain areas are left to the court’s discretion, which advocates will be arguing vociferously. By way of example, child support where the aggregate monthly income was greater than the cap was always discretionary. Additionally, Section 12-202 of the Family Law Article of the Maryland Code provides that application of the child support guidelines were presumptively correct, but the presumption may be rebutted by evidence that the application of the guidelines would be unjust or inappropriate in a particular case.

While the new Maryland child support guidelines have sparked some consternation and confusion among lawyers, courts and parents, the path forward to ensure the benefits of the new guidelines are fully realized while the risks are mitigated requires, at the very least, acknowledgment and familiarity with the current debate and confusion.