Published on:

Dear Carolyn:

I am involved in an equitable distribution case and I have a closely-held business in the Triad, which was started by my father. He still owns the majority of the business.  Eight years ago, my father gave me twenty-five percent of the business. I separated from my husband eight months ago. What can I expect in my divorce case related to my closely held business?  How do we go about getting a appraiser to appraise the business?  Can he get any of my stock in the family business?

Carolyn Answers….

 You ask a complex, but very interesting, question.  Rest assured that he cannot get any of the actual stock in your family’s business.  The stock itself is separate property because it was given to you by your father.

Continue reading →

Published on:

Dear Carolyn:

My wife and I have been married almost two years. Recently, and unfortunately, her grandmother passed away. Her grandmother had no immediate means to pay for funeral and burial services. The costs were paid by my wife and me on our credit card. The family has considerable land assets in Guilford County, but it is in her grandmother’s and multiple siblings’ name. My wife will inherit a portion of her grandmother’s land (split with my wife’s uncle). No one in the family has the means to buy us out, and, as is often the case, there is no reachable agreement by the family to divide the land. Is there any way to sell off some or all of what my wife is entitled to help reimburse us for the costs of the funeral and burial services?

Thanks for your helpful insight,

Jon D.

Dear Jon,

We have a solution for you!  The property can be sold to pay funeral and burial expenses, but there are several steps you must follow.

The answer assumes there was no Will, as a Will was not mentioned.

First, your spouse will need to go to the Clerk of Court, Estates Division at the Guilford County Courthouse if the grandmother died in Guilford County and open an estate file for the grandmother. If the grandmother died in another county, you need to open the estate file in that county.  Someone is going to have to qualify as the administrator of the estate.  Your wife, as a granddaughter, may apply; others may also apply, but hopefully they will not.

Continue reading →

Published on:

Follow “Ask Carolyn” on Twitter

Dear Carolyn:

The court has just ordered me to participate in a child custody evaluation with a local psychologist.  My children are seven and thirteen. I am a concerned Father, and the Mother has a new boyfriend that is “no good”. This new boyfriend is terrible around my children, and he is even spending the night with the Mother while the children are there. I disapprove of this. I also think the boyfriend is drinking and driving with the children in the vehicle.

What is a child custody evaluation?

Carolyn Answers….

A legitimate child custody evaluation is a complex process performed by a North Carolina licensed psychologist (PhD) under guidelines established by the American Psychological Association (APA).  The APA adopted and published Guidelines for Child Custody Evaluations in Divorce Proceedings in 1994, which were updated in 2009.

Here are the typical stages of a child custody evaluation, where there are no sexual abuse or other abuse allegations.

  1. Initial interview of each parent and general information gathering: The psychologist has an initial meeting with each parent and receives information from the parent, which includes general background, education, employment, family of origin, education, medical issues, stressors, and anything else of general relevance to the matter. Information gathering might be police reports, letters from attorneys, previous psychological evaluations, mental health records, school records, and similar information. Be sure to tell the custody evaluator about the boyfriend, the drinking, and your concerns in your first interview. The psychologist may decide to seek an interview with the boyfriend, and certainly the psychologist will gather information from the Mother and the children on this boyfriend.
  2. Test Administration to the Parents: Most typically in our area, the psychologists use the MMPI-2 for objective testing. This test is comprised of 567 true-false questions. While there is much research regarding how to interpret the results, the test remains controversial for use in child custody evaluations, so the evaluator has to be careful with regard to the use of any objective testing. Continue reading →
Published on:

Follow “Ask Carolyn” on Twitter!

Dear Carolyn:

I think my husband and I may be getting separated and divorced, and I am concerned about our 2016 tax return, which has not been filed yet. The tax return is under an extension.  My husband has a small business in Greensboro, and I have no idea if he reports all of the income in the business.   I have heard that I can be responsible if I sign the return.  He never gives me a copy.  Do you have any thoughts on this issue?  Do I have to worry?

Worried and in the Dark

Dear Worried and in the Dark:

This is always a tough decision, and the law that applies to this is called:  “Innocent Spouse Relief.”  There are some things that you need to know in making the critical decision of whether to file a joint income tax return with your spouse.

First, you need to know that you do not have to sign a joint return, but if you elect to do so, you are potentially 100 percent liable for any income taxes, interest or penalties related to the return you sign.  Yes, I said 100 percent, not 50 percent.  You see, the Internal Revenue Code holds each signer of a tax return jointly and severally liable for all taxes, interest and penalties, absent a co-signer being an innocent spouse. So, to me, signing a joint tax return is always a big decision for a person with a small business.  Contrast this with spouses who both have W-2 incomes from employment with third parties;  if the only income on the return is W-2 income, then generally it is safe to sign a joint return properly prepared.  You, however, are in the riskier situation with the small business.

Continue reading →

Published on:

Follow “Ask Carolyn” on Twitter

Dear Carolyn:

I am thinking about separating from my wife of 10 years. She is a doctor and makes a lot more money than me. I am a school teacher and make extra money coaching, but she still makes a lot more than me.  Neither of us are having an affair, but I am pretty miserable. We are both thirty-three.  She works all the time and I take care of our two children.  I also worked for two years while she finished her medical degree.  I hate to ask, could I get alimony as a man?  Our lifestyle has been great, and I would like to maintain that lifestyle as best I can. Thanks Carolyn.

Carolyn Answers….

Very interesting question, but the answer is quite simple. Men can get alimony on equal footing with women, at least theoretically. This issue was resolved by the United States Supreme Court in 1979 in the noteworthy case of William Orr v. Lillian Orr.  In Orr, the Supreme Court held that an Alabama statute that made alimony only available to women was unconstitutional under the Fourteenth Amendment of the United States Constitution, which provides for equal protection. An interesting twist to the Orr situation was that Mr. Orr did not want alimony from Ms. Orr; rather Mr. Orr was upset that women never had to pay alimony under the Alabama statute. Mr. Orr’s argument that the statute discriminated against men won.

Some men do get alimony in North Carolina, but there are vastly more reported cases of women receiving alimony. Times are changing. I personally believe toward more men receiving alimony. The thirties age group has a fairly typical scenario in divorce of both spouses working, or at least no one has been out of the workforce for 20 years.  Neither of you are out of the work force.  Contrast this with divorces of persons in their late forties or fifties where one spouse did drop out of the public labor force to raise children—those dependent spouses who haven’t worked publicly for 20 years generally receive alimony if the supporting spouse has the ability to pay. Continue reading →

Published on:

By: Carolyn J. Woodruff, attorney

While nothing in this article should be viewed to condone the horrific acts of Christopher Lee Neal, age 42, who shot at a social services worker after children were taken from his home, the event should be a wake up call for the Department of Social Services (DSS). Apparently this Reidsville man targeted at least two social services employees that had been working on his child custody case. He shot at one of the social workers through her car window in Burlington. According to news reports, she was not injured. He was later apprehended in Myrtle Beach.

Let’s face it. Taking away a child is serious business and emotionally drenching, and should only be done by DSS with all the proper protocols, which involve either having law enforcement or a Juvenile Judge.   Unfortunately, DSS is many instances is acting outside the bounds of the law and the Constitution, and they do not follow proper protocol regarding the removal of children, in allegedly dangerous situations, from homes. This makes a parent mad.

DSS is not law enforcement, and DSS is not a court of law. DSS is an agency that MUST apply to the Juvenile Court for the authority for search and seizure of children. DSS can assess the danger and apply to the Juvenile Court, but DSS is not permitted to “search and seize” children based on its own safety assessment. This seizure is improper. While I like Sheriff Page, his statement if reported accurately is both incorrect and not in keeping with the US Constitution. He reportedly said in a Press Conference, ‘Child Protective Services were investigating a case…During the process in their job, sometimes they have to remove children from the home because of neglect and abuse.” No, this is not correct. DSS can investigate, and DSS can apply to the court to obtain an order to remove the child, but DSS cannot do this removal simply because DSS thinks it should. To do so is unconstitutional search and seizure.

Continue reading →

Published on:

Follow “Ask Carolyn” on Twitter!

Hi Carolyn

My husband is having an affair with his secretary and I want to get that woman.  I kicked him out of our home on New Year’s Day when he made an excuse that he had to go by the office for something (something? Right?), and my detective caught them red-handed.  I hear about alienation of affection.  Do I qualify?  How much do you think I’ll get?

Carolyn Answers….

While you need to have a family lawyer go over your evidence, you may have a claim for both criminal conversation AND alienation of affection against the secretary.  Alienation of affection requires (1) that you and your spouse had a genuine marital relationship; (2) that your spousal love was destroyed; (3) that the secretary caused the breakup of the genuine marital relationship; and (4) that you have damages.

Criminal conversation does not have to do with any crime we actually punish today. The requirements for criminal conversation are two-fold:  (1) sex (2) with someone’s spouse.  That’s it.

No one can really say how much you might get. Juries generally decide these issues, and juries can really vary and view these issues differently.  It is attention-grabbing that there have been some very large awards in North Carolina reported in both the North Carolina Supreme Court as well as the North Carolina Court of Appeals and literature.

Affairs also can affect alimony, as in the question below:

Continue reading →

Published on:

McCarthy Estate of McCarthy, 145 F. Supp. 3d 278 (S.D.N.Y. 2015)

Facts: A husband and wife were divorced in Florida in In an agreement incorporated into the decree, the husband agreed to maintain his wife and daughters as beneficiaries of $4 million in life insurance.

When the husband died in 2013, he had only $50,000 in life insurance payable to his former wife and daughters. He had another $500,000 policy, which was employer-provided, but he had named his girlfriend as beneficiary. He had also given almost $360,000 to the girlfriend during his lifetime.

The husband’s estate was insolvent and unable to pay damages. The wife filed suit against the girlfriend, seeking to enforce a constructive trust on the proceeds of the $500,000 policy.

Issue: Are the former wife and daughters entitled to a constructive trust on the policy proceeds?

Answer to Issue: Yes.

Summary of Rationale: The husband’s clear breach of the divorce decree was sufficient under state law to justify imposition of a constructive But the policy at issue was employer-provided and regulated by ERISA. Thus, the only question was whether state law was preempted by federal law.

Following Andochick v. Byrd, 709 F.3d 296 (4th Cir.2013), the court addressed the question which the Supreme Court refused to consider in footnote 10 of Kennedy, and held that ERISA does not preempt state law claims between claiming beneficiaries after payment of benefits by the plan administrator. “As many courts have held in the wake of that decision, after proceeds have been distributed, parties’ rights and equities may be determined without regard to ERISA because post- distribution suits do not interfere with any of those objectives.” McCarthy, 145 F. Supp. 3d at 288.

Observations:

McCarthy did not expressly cite VanderKam VanderKam, 776 F.3d 883 (D.C. Cir. 2015), or any of the other cases holding that ERISA does preempt postpayment causes of action between competing beneficiaries. Continue reading →

Published on:

Becker Williams, F. Supp. 3d     , 2016 WL 878492 (W.D. Wash. 2016)

Facts: Husband and wife were married in In 2002, the husband designated the wife as survivor beneficiary of his retirement plans with Xerox.

Husband and wife were divorced in 2006. In 2007, the employer received several telephone calls from a person claiming to be the husband, who said that he wanted to change the beneficiary to his son by a prior marriage. In response to these calls, the employer sent the husband three different copies of the written form necessary to complete the change. The first two forms were not returned; the third form was returned unsigned and undated.

When the husband died, both wife and son asserted claims to the survivor benefits, and the employer interpleaded the benefits into federal court. The trial court declined to allow summary judgment, and the Ninth Circuit affirmed, finding that a telephonic change of beneficiary was potentially enforceable, even without a writing, and that a it was a material issue of fact as to whether such a designation was actually made. Becker v. Williams, 777 F.3d 1035, 1042 (9th Cir. 2015). Upon remand, the district court held a trial and addressed the merits.

Issue: Who was entitled to the husband’s survivor benefits?

Answer to Issue: The wife

Summary of Rationale: Under Washington state law, to change a survivor beneficiary, an employee must substantially conform with the terms of the policy or “[S]ubstantial compliance with the terms of the policy means that the insured has not only manifested an intent to change beneficiaries, but has done everything which was reasonably possible to make that change.”   2016 WL 878492, at *2 (quoting Allen v. Abrahamson, 12 Wash. App. 103, 105, 529 P.2d 469, 470 (1974)).

The son did not meet his burden of proving substantial compliance. First, there was no evidence that the person who called to make the change of beneficiary was actually the husband. Second, the husband’s failure to return the first two forms and his failure to sign and date the third form suggest that his intention to change the beneficiary was not complete. In this regard, the court noted that the forms themselves stated that the change of beneficiary was not valid until the form was signed and returned. “[T]he failure to complete simple, mundane tasks undermines Asa Sr.’s alleged unequivocal desire to change his beneficiary.” Id. at *3.

Continue reading →

Published on:

Walsh v. Dively, 551 B.R. 570 (W.D. Pa. 2016)

Facts: When husband and wife were divorced in Pennsylvania, they agreed that the wife would receive 50% of the husband’s The agreement was incorporated into the divorce decree, but no DRO was entered.

The wife then filed for Chapter 7 bankruptcy. The bankruptcy trustee moved in bankruptcy court for authority to ask the state court to issue a DRO. The bankruptcy court denied the motion. The trustee then appealed.

Issue: Should the trustee be permitted to seek a DRO?

Answer to Issue: No

Summary of Rationale: The trustee has a duty to collect property of the estate in bankruptcy.  But retirement plans with an antialienation provision are not part of an estate in bankruptcy. Patterson v. Shumate, 504 U.S. 753 (1992). The retirement plan at issue was governed by ERISA, and it was subject to the statutory antialienation provision in ERISA unless a QDRO was entered. Because a DRO had not even been entered, let alone qualified by the plan, there was no QDRO, and the antialienation provision remained operative. Thus, the pension was not part of the wife’s estate in bankruptcy.

Note: As we shall shortly see, it is quite important that the state court awarded the wife an actual interest in a retirement plan, and not an award of cash she could spend freely for any purpose.

 

In re Kizer, 539 R. 316 (Bankr. E.D. Mich. 2015)

Facts: In a consent judgment of divorce, a court awarded the husband 50% of three retirement accounts owned by the wife. The wife was also awarded the marital home, but required to pay the husband for his interest. Because she lacked the funds to make the payments, she agreed to pay for the home by giving up her interest in the requirement accounts, increasing the husband’s interest to 100%.

QDROs were subsequently entered and approved, directing the administrators of the accounts to transfer to the husband 100% of the balance of certain accounts. The plan administrators complied with the QDROs by giving the husband accounts containing the funds at issue. A finding of fact was made that the husband could make withdrawals from these accounts at any time, without any form of early withdrawal penalty. (The husband claimed that his withdrawals were subject to a penalty, but he failed to produce supporting evidence, even after the court gave the husband additional time.)

Continue reading →