Ch-ch-ch-Changes! Preparing for Trump’s Tax Code Reforms

Michelle Piscopo and Mary Vidas

Donald Trump was sworn in as our country’s 45th President on January 20 and, prior to his inauguration, he vowed to immediately set into motion many of the promises he made during his campaign. One of the promises made by President Trump during his campaign was to reduce taxes across the board—especially for working class and middle class Americans.

Currently, there are seven different individual tax brackets ranging from 10% to a maximum of 39.6%. Under the plan proposed by President Trump, there would only be three tax brackets:

  • 12% for individuals earning less than $75,000;
  • 25% for individuals earning more than $75,000 but less than $225,000; and
  • 33% for individuals earning more than $225,000

President Trump’s plan also proposes raising the standard deduction from $6,350 to $12,000 for single tax filers and from $12,700 to $30,000 for joint tax filers, and eliminating the head of household tax filing status. Under President Trump’s plan, the corporate tax rate would be reduced from 35% to 15%.  While Trump alone cannot change the tax code, the proposal put forth by House Republicans is quite similar to the Trump proposal. The House Republican plan agrees with Trump’s three tax brackets—so changes in tax rates are inevitable.

How will this impact you?

Lower taxes means higher net income. And, that higher net income could impact you if you are paying or receiving child support, spousal support, maintenance, or alimony. For example, under the current tax code, an individual who earns $500,000 per year would be in the 39.6% tax bracket, which results in net income of $302,000. Under President Trump’s proposal, an individual who earns $500,000 would be in the 33% tax bracket, which results in net income of $335,000. That additional $33,000 of net income will impact your support calculation. Depending on whether you are the party receiving support or the party paying support, this could be good news or bad news. We expect quick changes from the new administration and are keeping a close eye on any changes to the tax code. As this issue develops, if you have any questions about how new tax laws could affect your support order, the attorneys in all states of our matrimonial group are prepared to answer them.

The Top Five Things to Do Before You Discuss Divorce with Your Spouse

Lois Liberman and Marilyn Chinitz

You are facing one of life’s most difficult transitions. After putting your financial affairs in order, but before broaching the topic of divorce with your spouse, we recommend that you prepare yourself by consulting experts who can provide the guidance and support you will need. Knowledge is power, and being fully informed will enable you to protect your rights and those of your children.

Consult a Family Law Attorney. An attorney who is an expert in the domestic relations/family laws of the state in which you reside will be able to provide you with vital information and guidance about what you can expect regarding child support, spousal maintenance, the division of assets, child custody, and parental access. Don’t consult someone who dabbles in family law—consult a specialist in the field.

Consult a Child Therapist. To ensure that your children are shielded from the stress and tension that has led you to make this decision, consult with a child therapist in your area. He or she can make suggestions as to the best way to advise your children about the divorce. These experts can also provide you with tools and strategies to deal with many of the questions and issues that will arise once your children have been told.

Safeguard Important Personal Belongings and Documents. Hurt, anger, and resentment often cause people to act out of spite. Before you discuss divorce with your spouse, make sure to safeguard your important personal belongings, which could go missing or be destroyed. Open a safe deposit box or place these items with a trusted friend or family member.

Consider Your Legal Options for Resolution. There are many options available, but not all options work for all parties. Negotiation and/or Litigation between two parties each represented by counsel; Mediation—in which a neutral third party attempts to help the parties reach a compromise; Collaborative Divorce—where each party has an attorney, but the adversarial milieu is replaced by a philosophy of harmony and the goal of getting along. If there is one party who is very controlling or there is an uneven balance of financial power, mediation may not be the best option. If there is a party who is acting unreasonably, you could find yourself having to go back to square one in a Collaborative Divorce because you entered into a contract in which your collaborative attorney cannot represent you in litigation. Seriously consider the dynamic between you and your spouse when selecting your path to resolution.

Ensure That You Have a Support Network. Surround yourself with people whom you trust, to not only provide you with the emotional support that will be essential, but who will also tell you the truth throughout the divorce process—even when it is difficult to hear. Whether that support network is made up of family, friends, and/or mental health professionals, make sure they are in place before you embark on your journey.

Excerpted from “10 Things You Should Do Before You Discuss Divorce With Your Spouse,” by Lois Liberman and Marilyn Chinitz, originally published in ModernMom on March 8, 2016.

Considering Divorce? Put Your Financial House in Order

Stacy D. Phillips

While you may have come to the conclusion that your marriage is over, we recommend that you take the following steps before “crossing the Rubicon” and sharing this news with your spouse. Knowledge is power and your first order of business should be to put your financial house in order.

Know Your Financial Picture. In too many instances, we have met with clients who are unaware of their complete financial situation. Be knowledgeable about both your and your spouse’s finances. Summarize income from all sources. Identify assets and liabilities (in your name, your spouse’s name, and jointly held), including when and how these assets were acquired. List your family’s insurance coverage (medical, dental, property, auto, and life). Once armed with this information, you will be able to obtain a clearer understanding of your entitlement under the law.

Understand Your Monthly Expenses. Be able to articulate how much you realistically spend on a monthly basis both on basic needs and discretionary items. This fluency with regard to your expenses will enable you to better understand your needs on both a temporary and permanent basis.

Obtain Financial Records. Before you even utter the word “divorce” to your spouse, look for bank statements, canceled checks, tax returns, life insurance policies, credit card statements, closing records/binders, loan documents, etc.; make copies of those records; and keep them in a safe place.

Open Your Own Bank Account. It is important to have funds in your own name in case of an emergency and in the event that your spouse attempts to reduce your access to money and credit cards after your announcement. This will also enable you to hire an attorney when you are ready.

Build Your Credit. If you don’t have credit cards in your name, apply for them so that you can build up good credit. Use the cards and pay the entire balance each month. By doing this, not only will you establish your own credit, but it will enable you to document your expenses.

Promoting Peace This Holiday Season

Stacy D. Phillips

Even in the best of times, family dynamics can be fraught. At holiday time, emotions are heightened for myriad reasons, and when separation, divorce, or custody issues are thrown into the mix, this time of year can be challenging. This may be your first holiday sharing your children’s vacation time. Perhaps your communication with the other parent isn’t at its finest, or financial concerns are part of your new normal. All of these—on top of visiting relatives, travel arrangements and hectic schedules—can be anxiety-provoking.

We hope that the following suggestions will help you through the season and bring better communication in the New Year.

  1. Avoid engaging in the “divorce war games” with one another. In the end, it’s the children who suffer, becoming collateral damage.
  2. Forgo the “one-upsmanship.” Be mindful not to try to out-do the other parent with gifts or vacation plans. Your children are likely to feel torn, no matter their age.
  3. Don’t go it alone. Give yourself the gift of some “centering.” Whether in the form of therapy, yoga, or a daily walk with a close friend, both you and your family will benefit.
  4. Be flexible. Easily said, more difficult to do—especially if custody arrangements are relatively new. Try to take the pressure off of transition times. Your children will notice.
  5. Show your children what the holidays really mean: They are all about giving. Ask your children to join you in a kind act for those less fortunate. It will divert your focus away from your own hurt or pain.
  6. Make plans for 2017. Discuss what good will come after the holidays and let your children help schedule activities to look forward to.
  7. Promote peace. No matter what your religious or spiritual beliefs may be, harmony is the ultimate goal, and it starts with you.

All of us at Blank Rome wish you a peaceful holiday season filled with opportunities to create new memories.

Not So Fast—New PA Law May Not Shorten Your Wait to No-Fault Divorce

Mary Vidas and Michelle Piscopo 

Pennsylvania is set to shorten the time parties need to be living separate and apart from two years to one year, but will that really enable you to get a divorce faster?

Pennsylvania is a “no-fault” state for establishing the grounds for divorce. There are two no-fault grounds— mutual consent by both parties 90 days after the filing and service of a divorce complaint, OR living separate and apart for a period of two years. The grounds for divorce must be established before the court can determine the equitable division of the marital estate and enter a divorce decree. This week, the Pennsylvania legislature approved a bill to shorten the time period for living separate and apart from two years to one year and the bill is on Governor Wolf’s desk waiting to be signed into law. Once the bill is signed, it will go into effect 60 days later.

This new law has been greatly supported by the Family Law Section of the Pennsylvania Bar Association and the PA Chapter of the American Academy of Matrimonial Lawyers. Often times, the party who will not consent to a divorce will do so in order to collect support for a longer period of time or simply out of spite (we know…hard to believe). The benefits of a shorter waiting period have been discussed and debated for years and most practitioners agree that the shorter waiting period will lessen the emotional turmoil that comes with a divorce and lower legal costs.

All in all, a shorter waiting period sounds like a good thing. However, this new law will only apply to divorce actions filed or to parties who separate AFTER the law goes into effect. While that hardly seems fair, it seems that the only option to avoid the longer waiting period would be to withdraw the divorce action, reconcile and then separate again. Not a very likely solution for most couples.

While there may not be anything you can do if you are already involved in divorce litigation to speed up the process, if you have been contemplating a divorce but haven’t actually separated from your spouse or filed for a divorce—wait! If you suspect that your spouse will not be so willing to consent to a divorce, the best thing you can do to avoid having to wait two years instead of just one year is to put the brakes on separating from your spouse. If you wait to separate until the new law goes into effect, you can potentially shorten your waiting time by a year. While not ideal, the benefits of waiting may outweigh staying in the relationship for a few more months. However, we would never encourage anyone involved in an abusive relationship to delay leaving.

For more information on how this new law may impact you, please contact the Philadelphia attorneys in our Matrimonial Practice Group.

Social Media Restrictions in Custody Cases—What Can or Should a Court Do?

Mary Vidas and Michelle Piscopo

Facebook, Twitter, Instagram, Snapchat. The world of social media is ever-evolving. And in the world of divorce and custody litigation, the use of social media is also evolving. We can’t always control what our clients decide to post on their social media accounts—but we can certainly try! We routinely advise clients not to post anything derogatory or defamatory about their ex-spouse. However, what can be done when one parent insists on posting pictures of minor children on his or her social media account that is available for public view? Parents with shared legal custody often do not agree that their minor children should be regularly featured on such accounts. While one might think you would need both parents’ consent to post pictures of a minor child on public social media accounts, that is not always the case. Courts may be reluctant to infringe on a parent’s right to free speech by placing restrictions on his or her ability to feature their children. At the same time, courts may recognize the potential danger of exposing children to child predators when pictures of minor children are posted on public social media accounts.

If you are a parent who does not want images of your children on publicly viewed social media accounts and the court will not impose a restriction on the other parent, you should regularly monitor your co-parent’s account and read the comments. If you see anything alarming and concerning, immediately contact the other parent and request that they remove the post. Take a screen shot of the post and the concerning comments. If the other parent refuses to remove the post, contact your attorney. While the court may not initially be inclined to issue a restriction, if you can show that the postings are receiving disturbing comments, the court may then be inclined to act.

If you are parent who wants to be able to post photos on publicly viewed sites—use caution! Monitor your own account and be proactive in removing photos that garner concerning comments and blocking users who make such comments. You may need to convince a court that you are using photos of your children on public social media in a responsible way. Also, stop and really assess whether it is necessary to have your children featured on a publicly available account and if it is going to be worth the ongoing animosity between yourself and the other parent. If the reason for wanting a public account is so you can share pictures with family and friends, then it may not be worth the battle. Opt for a private account and invite your family and friends to follow you. Children always benefit when parents are able to compromise.

And, as a final note, parents also need to use good judgment when sending sexually explicit private photos over social media. Children should never be included in any such photos. (Yes, Anthony Weiner, we are talking to you!) If your spouse or co-parent comes into possession of “sexts” that show your children, not only could it affect your custody rights, but you could also become the subject of a social services investigation. Adults are free to do as they please, but when it affects children, courts will always act swiftly and harshly to protect them.

Zika Panic—Ethical and Legal Considerations for Clients Considering Gestational Carrier Agreements

Mary Vidas and Michelle Piscopo

One of the hottest topics in the Assisted Reproductive Technology (“ART”) community today is the Zika virus and its impact on gestational carrier agreements from both the standpoint of Intended Parents and Gestational Carriers. As has been widely publicized, the Zika virus has been directly linked to severe birth defects. While most gestational carrier agreements contain a provision regarding the right to terminate a pregnancy under certain circumstances, there is a debate on whether the agreements should contain more specific agreements to address the Zika virus.

Even if you determine that your agreement does not need to have a specific provision to terminate a pregnancy if the Gestational Carrier tests positive for Zika (because it is covered in a more general provision), there are other issues to consider. For example:

  • Travel Restrictions: The Intended Parents may want a provision that restricts the Gestational Carrier from traveling to areas where Zika cases have been confirmed. If you are going to include a travel restriction, the agreement should perhaps specify not only known areas but also a specific radius from known areas. Parties should look to the Centers for Disease Control and Prevention (“CDC”) and treating physicians for advice.
  • Removal from Zika Area: If the Gestational Carrier resides in a place where Zika cases have been confirmed or become confirmed during the pregnancy, the Intended Parents may want to require the Gestational Carrier to relocate. The agreement would then require additional provisions regarding the costs and additional payments to cover the relocation.
  • Testing Frequency: Given the potentially devastating effects on pregnancy, the parties may want to include a provision requiring the Gestational Carrier to be tested periodically after the Gestational Carrier may have been exposed to the Zika virus. The agreement could also potentially include specific provisions regarding the Gestational Carrier’s responsibility to report potential exposure. The parties may also want to include a provision requiring consultation with an infectious disease specialist.

Clearly, all of the foregoing examples carry with them the problem of not only the enforceability and damages related to Zika provisions in agreements, but ethical and moral issues.

Information regarding the Zika virus and its effects continues to develop. Parties should pay close attention to information and recommendations from the CDC and their treating physicians. Most importantly, Intended Parents and Gestational Carriers should share information, communicate, and agree on all relevant terms regarding this serious issue when negotiating an agreement.

Please contact a member of Blank Rome’s full service Matrimonial and Family Law practice group for further information regarding this topic and other family law issues.