Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

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The Pennsylvania Supreme Court has recently issued the updates to the Pennsylvania Support Rules and Guidelines, which go into effect on May 12, 2010. The Pennsylvania Support Rules and Guidelines are required to be updated every four years and many times involve only an update to the child support schedule with little or no substantive changes to the rules. This year, however, there are a number of significant changes and in some instances, may have a major effect on the calculation of child or spousal support. Below are some of the more significant changes to the 2010 Amendments to the Pennsylvania Support Guidelines:

1.      The first and potentially most significant change is in the application of the support guidelines to circumstances where the monthly household income is in excess of $20,000. Previously, the child support schedule ended at a combined adjusted net income for the parties at $20,000. The new schedule includes a combined adjusted net income of up to $30,000. Therefore, the basic child support schedule can be used where the parties' income is up to or equal to $30,000 per month. This should provide some much needed uniformity in calculating support for parties who have a substantial monthly income up to $30,000.

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One of the most hotly-contested issues facing Judges in custody cases is whether to allow a custodial parent to relocate to another state with the children. This has become quite common, particularly as people have made and developed relationships through the internet. Relocation cases are difficult for all parties involved: the non-custodial parent is shocked and horrified at the prospect of losing regular contact with his or her children and the prospect of not being able to move to a perceived better opportunity is equally difficult for the custodial parent. Often, these cases are not able to be resolved through the custody conciliation process and they end up at a hearing before a Judge.

My practice is to remind clients involved in all custody litigation, including relocation cases, that the Judge deciding the case is a stranger making decisions about what is in the best interest of your family. He or she has no prior knowledge of your family, you and your ex-partner's history, your children's behaviors, likes and dislikes. Depending on your case, it can be helpful or can add to your burden.

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Back in July I wrote about the first-time homebuyer tax credit that applies to home sales occurring before December 1, 2009. However, there is some great news for prospective homeowners unable to squeeze in a purchase in that timeframe: Reuters is reporting that the credit may be extended for another six months. With bipartisan support in Congress and recent hints that President Obama will back such an extension, the amendment is likely to pass.

Also, we have received queries from readers regarding the effects of divorce on the credit. A common occurrence in divorces is that an ex-spouse's name continues to remain on a deed while he or she no longer lives in the residence. As long as the ex-spouse has not lived in the house at all over the past three years, and as long as the divorce was finalized three or more years ago, the ex-spouse will qualify as a first-time homebuyer because the house is not his or her primary residence. Of course, this assumes that the ex-spouse does not reside in other real property that he or she owns.

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The conclusion to my three part series on domestic issues and business owners will focus on support. Previously in parts one and two I discussed marital property, separation, divorce and equitable distribution. 

Support is divided into three general categories: child support, spousal support/alimony pendente lite (APL) and alimony.

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In Part One of Domestic Issues for Business Owners, I discussed the definition and value of marital property. In this post I will be highlighting how separation, divorce and equitable distribution can affect your business.

Separation

Separation is an important aspect in valuation of marital property, including business interests, because the date of separation identifies the ending date for assets to be included in the marital estate.

Divorce

There are two types of divorce, fault and no-fault. Even if you have established grounds for divorce under the fault or no-fault provisions of the Divorce Code, a divorce will not be granted until all economic issues are resolved.

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Starting and running a small business is tough enough. The domestic issue in the forefront of your mind is how the stress of running a business will affect the relationship of your marriage. However, you might want to consider how your marriage affects the assets of your business and understand how a divorce could affect the future of your business.

In this three part post, I highlight some of the issues that arise in a divorce which includes a business owned by one or both parties. Because of the complex nature of this type of divorce, it is difficult to cover all of the issues involved. However, these posts will help to provide some understanding of the basic considerations.

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No one is immune from the realties of today’s economy. Since the economic downturn I have had a number of inquiries from clients regarding their Child Support Order if they are laid off or are receiving support payments from a payor who has been laid off.

First, if you pay support and you experience a decrease in your income due to a layoff, a decrease in the number of hours you are able to work, or a reduction in your salary and/or bonuses, your monthly child support obligation could be reduced. Under the Pennsylvania Support Guidelines, a payor's support obligation is based on the parties' combined monthly net incomes. If your monthly net income decreases, it is likely that your support obligation will decrease as well, provided that the payee has not had a decrease in his/her income and child care expenses have not changed. It's advisable to contact an attorney to assist and advise you about recalculating your support obligation using your most recent paystubs, unemployment statements or 2008 W-2’s.

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Location isn't just important when you're looking to buy a home, but also when you may be thinking about a divorce. The practice of one party filing a divorce in a far removed county from the residence of either party, which could be the result of low filing fees or the desire to place the divorce action in an inconvenient forum for the other party was dealt a lethal blow by a recent Pennsylvania Superior Court decision. The court established that venue, or the proper court in which you must file for divorce, must be established in court and "on the record" and it is the obligation of the trial court to do so. Venue can be established by residence, written agreement of both parties attached to the Complaint or otherwise made a part of the record, or through participation of both parties in the divorce action as required by other Pennsylvania Rules. Strict compliance is required to establish proper venue and a Divorce Decree issued not in compliance with the above rules can be vacated.

Divorces can not be filed in non-residence counties except with the consent of both parties. While there are occasions where parties may desire to have the divorce action conducted in a county not of their residence, perhaps for privacy reasons, the consent of both parties is required. It is advisable for both attorneys and parties filing for divorce to carefully consider whether it is appropriate to bring an action for divorce in a county where neither party resides. 

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There are essentially two types of divorce in Pennsylvania, fault and no fault. A fault divorce requires one spouse to prove the other has done one of the following:

• Deserted him or her without a reasonable cause for at least one year;
• Committed adultery;
• Entered into the marriage while he or she was married to another;
• Endangered the life of the other spouse;
• Sentenced to a term of imprisonment for two or more years; or
• Committed indignities to the other spouse such that his or her life is intolerable and burdensome.

This type of divorce generally requires a hearing and the presentation of evidence by the “innocent” spouse in order to prove that one of these things has occurred.

By contrast, a no fault divorce can be granted in the following situations:

• Where one spouse has been institutionalized for the 18 months before the divorce is sought and where there is no prospect of that spouse being released from the institution for an additional 18 months;
• Where both Parties agree that the marriage is irretrievably broken and 90 days have passed since the start of the divorce action; or
• Where one Party believes that the marriage is irretrievably broken and the parties have lived apart for at least 2 years.

A no fault divorce does not necessarily require either of the Parties to prove why the marriage has failed, only that the Parties have no real possibility of reconciliation. Most divorces in Pennsylvania are no fault divorces.

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Traditionally, you may have thought that a prenuptial agreement is common only among the rich and famous. However, a prenuptial agreement can be beneficial to any person considering marriage, regardless of the size of your personal wealth. Here are some reasons why you should consider having a postnuptial agreement in place prior to tying the knot.

1. You have children from a prior marriage whose financial interests you wish to protect.

Under Pennsylvania law, all property acquired during a marriage is marital property, including the increase in value of assets owned by a spouse prior to the marriage. Failure to protect non-marital assets could jeopardize your children's financial interest or future in the event of your death or divorce.

2. You have an inheritance in your name or expect to receive one during your marriage.

Your inheritance could become a marital asset subject to equitable distribution if you do not protect it in a prenuptial agreement.

3. You want to protect your family business or other assets you acquired prior to marriage.

All assets are subject to valuation during a divorce. Failure to protect your interest in the family business could lead to a complicated business valuation as part of an equitable distribution proceeding, and could open up a claim that it is a marital asset.

For similar reasons as stated above, you should consider a prenuptial agreement if any of the following are present in your case:

• You are the beneficiary of a trust,
• You earn significantly more than your partner,
• You have more income or assets than your partner
• Your partner has a tendency to "overspend" and has incurred significant premarital debt,
• You want to decrease your financial exposure for your partner's financial liabilities.

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The day finally arrives. Your attorney calls you or perhaps notifies you in writing that the Divorce Decree has been handed down. At long last (maybe six months, maybe a year, maybe even three or four years) it is finally over.

Not true! In the famous words of the "political philosopher" Yogi Berra, “it ain’t over till it’s over”. The Divorce Decree (assuming no appeal) in many cases is not the end, and many important matters may still require attention before that Postnuptial Agreement or that decision obtained after a Hearing with blood, sweat and tears - the result you worked so hard to achieve - materializes.

Like many other things, the devil is in the details and taking care of the details is still required. For example, the failure to remove the ex-spouse as a primary beneficiary of life insurance issued through an employer may negate the provisions of a Postnuptial Agreement which provides that the ex-spouse should have no interest in life insurance proceeds or other property of the spouse at death. 

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There is an adage that "change does not necessarily assure progress but progress requires change". In the case of the Lancaster County Domestic Relations Office, the change in office location assures progress. The office recently moved from its previous location on East King Street to a new location on the second floor of 150 North Queen Street, Lancaster, the former Armstrong building. Parking on that block of Queen Street is prohibited so be sure to park in either the Prince Street or Duke Street garage.

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I believe there is a general assumption that the divorce rate in Pennsylvania and around the country is continually rising. It seems we are constantly bombarded with the statement that "half of all marriages end in divorce." But is that really the case? A recent examination of the marriage and divorce statistics released by the Pennsylvania Department Health indicates otherwise. The marriage and divorce statistics for Pennsylvania go back as far as 1950. Some of the more interesting statistics indicate that the number of marriages in Pennsylvania peaked in 1973 at 101,076 and has been steadily decreasing. The most recent year for which data was available was 2006, when there were 71,511 marriages in Pennsylvania. Along with the decrease in the number of marriages, there has been a similar decrease in the number of divorces, with the number of divorces peaking in 1991 at 41,321 and has been continually decreasing to 34,894 in 2006. Divorce rates seem to be declining, although not nearly as quickly. The divorce rate is calculated as the number of divorces per 1,000 people. In 1990, the divorce rate in Pennsylvania was 3.3. Then in 1995, it declined to 3.1 and has remained steady through 2004 (last year statistics were available).The good news for Pennsylvania residents is that our divorce rate is well below the national rate of 3.6. 

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Pursuant to federal law, the statewide support guidelines must be reviewed at least once every four (4) years. The support guidelines currently in place were adopted in September 2005 and became effective in January 2006. Recently, the Pennsylvania Supreme Court Domestic Relations Procedural Rules Committee published for comment new child support guidelines. The public comment period ends on October 31, 2008.

The most significant change to the guidelines relates to the maximum monthly net income included in the guidelines. Under the proposal, the support guidelines would apply to all cases in which the parties' combined monthly net income falls below $30,000. Under the current guidelines, cases in which the parties' combined monthly net incomes exceed $20,000 are governed by Melzer v. Witsberger. Raising the maximum income permitted under the guideline formula will provide consistency and predictability in child support cases for clients in higher income brackets.

The guidelines are in circulation for comment only and may be revised by the Domestic Relations Rules Committee prior to adoption. As the recommended guidelines make their way through the process, we will keep you updated about changes that may affect you.