Amid the Pandemic: Families Coming Together … and Coming Apart

Marilyn B. Chinitz

In times of crisis, families typically come together. People decide to avoid unnecessary battles. Arguments are fewer. But that is not the case for unhappy and divorcing couples, many of whom now are experiencing extraordinarily challenging times. Family tensions are exacerbated as COVID-19 continues to impact lives in previously unimaginable ways. Some form of social distancing, working from home, limited mobility, and caring for children full-time without traditional support systems, are all now the norm and will be for the foreseeable future.

Concerns for Our Children.

Children of all ages are experiencing tremendous anxiety from the significant changes in their daily lives—the isolation, the new cleaning/sanitizing routines, and fears created by the pandemic. Limited access to parks, playgrounds, and friends coupled with distance learning, media consumption, and time-filling crafts and games can be sustained for a few weeks, but not for months on end. In divorced or separated families, many children are not spending time with their non-custodial parent because it would present too much of a risk for contracting the virus. Children are understandably confused, upset, depressed, and unfamiliar with how to process their feelings.

Parents’ Challenges.

Parents are juggling and multitasking like never before. They are expected to work from home while at the same time providing full-time care for their children, cooking, cleaning, shopping, and supervising online studies and extracurricular lessons. Some parents are doing this alone, without help from anyone—no tutor, spouse, or domestic helper. Simply put: parents are stressed and overwhelmed. They, too, are socially isolated and cannot depend on their normal diversions. Activities they once took for granted—dinner with friends, in-person meetings with a therapist, workouts in the gym, or myriad other traditional methods of dealing with stress—are now out of reach. Additionally, isolation presents parents with some of the unhealthiest of options for dealing with stress: binge eating and alcohol consumption. Moreover, many non-custodial parents find themselves in the untenable position of missing their children as a result of the coronavirus prohibiting travel and visits.

Divorcing Couples.

Those in the middle of divorce litigation are in uncharted waters. Their dispute resolution forum is not available to them. The courts are, for the most part, closed or only hearing cases involving an emergency, such as danger to a child. While some judges are conducting conference calls/Zoom sessions with attorneys, the fact of the matter is that the family courts are not available and will not be for the near future.

One of the most concerning aspects in all of this is the decrease in the value of marital assets—in some instances having decreased by as much as 50‒70 percent. Ongoing negotiations about the division of assets will need to be re-examined. Updated appraisals will be required, including revised business valuations and/or re-calculations of the transfer amounts from one spouse to the other.

And it does not stop there. Historic levels of unemployment, now a reality, are impacting the ability to pay support for the benefit of the children as well as spouses. Unexpected unemployment or the shuttering of businesses are examples of substantial changes in circumstances that will likely prompt countless applications to the court for downward modification of support obligations.

Considering Divorce.

If a marriage was falling apart and on the edge before this pandemic hit home, undoubtedly things will get worse with spouses together in a “lockdown” situation. We could be hopeful that cooler, wiser heads will prevail and that couples having problems can put their emotions and fears aside and either present a united front against these very challenging times or work out their custody and financial issues amicably. But this is unlikely to be the case. Although new divorce proceedings are generally not being instituted because the courts are focusing on emergency issues in the cases already proceeding, people are still at war with one another. Even in jurisdictions where filings are being accepted, do not expect to get any relief from the court soon. We are receiving multiple calls from prospective clients who want to understand what the next best steps are to terminate their marriage and divide assets during an unpredictable, unsettling economy.

Moving Ahead.

Many lawyers are now working with their colleagues to negotiate settlements and resolve issues in the interest of moving cases along, even though the courts are not available. More than ever before, it is incumbent upon the attorneys to assert leadership—and to step in since the judges cannot—to try to work with their adversaries to take a position that is fair and reasonable to both sides and build consensus. Otherwise, everybody loses.

For more on this important topic, please join Marilyn for her May 27, 2020, webinar:

Lunch & Learn: Successfully Navigating Divorce and Separation Amid COVID-19

Two Legal Eagles Discuss Representing Professional Athletes

Stacy D. Phillips

For the past two years, I have enjoyed sharing with you my perspectives on many aspects of family law as they relate to high-net-worth individuals. In this advisory, I want to give you a bird’s-eye view into a conversation I had recently with nationally renowned sports law attorney Jay K. Reisinger, partner at Farrell & Reisinger LLC in Pittsburgh, PA. Jay’s practice focuses primarily on sports law, white collar criminal defense, and complex litigation. It turns out that our areas of legal specialty intersect frequently, as divorce and custody issues present thorny challenges when professional athletes are our clients.

Stacy D. Phillips Jay, how are professional athletes different from C-suite executives in the work you do?

Jay K. Reisinger First and foremost, pro athletes (whether in baseball, hockey, basketball, or football) have exceedingly short earning spans. Unlike top executives whose careers can move upward and outward for many lucrative years, the majority of players make significant dollars for just six to eight years. Not surprisingly, the average pro football player’s career lasts no more than two years. Continue reading

Should You Rush to the Finish Line?

Stacy D. Phillips and Michelle Piscopo

With news that the alimony deduction will expire at the end of this year, many clients are asking if they should rush to finalize their divorce. The answer to that question is, it depends.

The 2017 Tax Cuts and Jobs Act (the “TCJA”) made sweeping changes to the tax code and one of the most unexpected was the elimination of the alimony deduction. The alimony deduction had been part of the Internal Revenue Code for the last 75 years and allowed the higher income spouse to shift part of the tax liability on his/her income to the lower income spouse. This shifting of tax responsibility resulted in more after-tax income to allocate between the two households.

Under the TCJA, for any divorce or separation agreements or court orders entered into after December 31, 2018, the party paying alimony will no longer receive a deduction and the party receiving alimony will no longer have to report it as income. For divorce or separation agreements or court orders that are modified after December 31, 2018, the alimony deduction will not be allowed unless the modification expressly states that the TCJA does not apply. There is concern that, without the alimony tax deduction, there will be less incentive for the higher income spouse to pay alimony at a rate that will enable the lower income spouse to support his/her own household.

If you are the party receiving alimony, you might initially think it’s a good idea to wait to finalize your divorce because you won’t have to pay taxes on the alimony payments. Think again. If the tax liability remains with the party earning the income, his or her net income will be lower which translates to a lower alimony payment. While you will avoid tax liability for the payments, the reality is that the amount of alimony you receive will likely be lower than the amount you would have netted if you received the larger payment and paid the taxes on it.

Parties that are in a position to resolve their divorce cases before the end of the year should certainly try to do so in order to take advantage of the alimony deduction. However, if you are not in a position to finalize your divorce, but you have a temporary support order in place, don’t panic. You still have the option of opting out of the TCJA provision when the final order is entered.

Noteworthy Nuances of High Profile and Celebrity Divorce (Part Two)

Stacy D. Phillips

Part Two: A Particular Kind of Tug-of-War

In dissolutions of high-net-worth and celebrity marriages or domestic partnerships, intellectual property rights, profit participation, residuals, and royalties often represent the most valuable of all the assets. They frequently become a battleground for control. Contracts are typically made over long periods of time, and are constantly renegotiated and amended. Valuing such assets can quickly become a hotly contested issue. These assets require a sophisticated and experienced family law attorney, working with a top forensic accountant, who understands the nuances involved.

The matter of support is often a particularly difficult challenge when the major earner of the couple is a professional sports figure. Because their ability to play and earn at the highest levels is limited to a finite time period, support (both spousal and child)—and custody, for that matter—could change dramatically when the professional’s career ends. The lifetime of an entertainer’s career can be similarly brief or span decades, presenting equally complex implications. These are nuances that must be managed when the income of the earning spouse/parent exceeds the couple’s marital standard of living and/or the reasonable needs of the children.

Child custody is another highly nuanced area of family law, particularly when one or both parents are required to be “on location” or travel extensively for business. The amount of time spent with the children, where that time is spent, the level of child support, the ages of the children—all are factors that impact custody agreements. If a parent’s absence is due to filming away from home, for example, is that parent entitled to makeup time? Are the children to visit on location, missing school, friends and their normal routine? Are the children of an age to fly alone? These sorts of custody arrangements are, in many cases, subject to annual renegotiation depending on the working parents’ professional demands. All too often, these negotiations can devolve into contentious Control Wars.

What is especially difficult about most divorce and custody cases is that this tug of war over control does not begin or end in my office or the courtroom. It may go on for years, long after the divorce decree or judgment of paternity is official. I truly believe that a better understanding of how to mitigate control battles would greatly benefit anyone contemplating or in the midst of divorce, and those who suffer from what I term “divorce residue.” Attorneys, even the best ones, cannot be expected to stop these battles or manage the other party. I have seen, however, that if both parties resolve to diminish the legal, financial, and emotional Control Wars, there is hope for the prospect of healing and peace.