February 16, 2014

Colorado Divorce and Income Tax Ramifications

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A Colorado divorce case can have many facets to it, whether financial or child related. The financial aspects of a divorce case can include property division, alimony (properly termed "maintenance"), and child support. With those financial aspects come various nuances and intricacies of which your expercienced Colorado family law attorney should be aware. One category of nuances tied into the financial aspects of a divorce case relates to taxes.

Most Denver area divorce attorneys have a basic understanding or knowledge of tax implications tied into a divorce case. Because the Internal Revenue Code is a volumious and shifting literary compilation, most family law attorneys are hesitant to give concrete tax "advice" to their clients. That does not mean that we cannot import general tax information or knowledge to our clients with the caveat of, "you should follow up with an accountant to be certain." In essence, family law attorneys are not tax experts. Despite the lack of expertise as relates to taxes, set forth below are some of the basic topics in which tax issues can arise in a Colorado divorce case and basic information related to such.

MAINTENANCE:

"Maintenance" is the proper term for what people might often call alimony in Colorado. Alimony is essentially spousal support. Colorado statute and case law indicate that depending upon financial circumstances, one spouse may have a duty to financially support the other, for a certain period of time, during and after a divorce case. The issue of taxes arises in an alimoy situation in that the Internal Revenue Code allows the party paying alimony to deduct the payments he or she makes from his or her income on the tax return. This can include temporary maintenance paid while a divorce case is pending, maintenance paid after the divorce is done, or sometimes "unallocated" support that is not necessarily defined, so long as that "unallocated" support is not classified as child support. When one is in an alimony paying situation, it becomes important to speak with a learned accountant to find out specifically your rights, obligations, and what documentation you may need, from an IRS stand point, to be able to claim the deduction. An accountant can also strategize with you in terms of making sure you handle your tax affairs in proper fashion as relates to alimony. The tax code is tricky and subtle deviations in how you pay or what you pay can have an effect. For example, the IRS may allow you to deduct the $2000 in alimony you pay on a monthly or "periodic" basis, but might disallow the deduction if you pre-pay for the year in a lump sum. The primary point is that as an alimony payor, you need to be informed as to the tax benefits and consequences tied into your court orders.

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February 4, 2014

MEDIATION AND YOUR DENVER AREA FAMILY LAW CASE

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As family law attorneys in the Denver area, the lawyers at Plog & Stein are asked many questions on a daily basis. A fairly common subject raised by both current and potential clients is mediation. The questions we are asked vary and can be as simple as "what is mediation?" The reality is that though most people are familiar with the term, there are many misconceptions about mediation, how mediation ties into divorce and custody cases, the role of the mediator, and the end result of the process. As a large percentage of the Denver area metropolitan courts require mediation, our attorneys assist our clients through the process on a regular basis.

The first step in understanding mediation is knowing what exactly mediation is and what it entails. Mediation is a process by which two parties to a case meet with a neutral, third person, whose sole function is to assist them in arriving at an agreement. The mediation process will generally entail the parties meeting with the mediator together, or in separate rooms, letting the mediator know each's position on whatever issues need to be addressed, and then letting the mediator do his or her work in terms of trying to find compromise or middle ground between them. If the parties are able to find that common ground, the next step is generally to have the mediator, or the attorneys, put the agreement down in writing, preferably in a legally cognizable format, for signatures and submission to the court. Though this explanation is somewhat simplistic, it is an accurate representation of what mediation is and how it is conducted.

Beyond explanation of what mediation is, or entails, there are many finer points that the general public is just not aware of. Below, I will convey those finer points with the hope that a broader understanding is obtained by the reader.

1. Mediation is not a replacement for the court process. Often times, people will ask whether they can go to mediation in lieu of filing a court case. Mediation can be conducted before a case is filed, or during the court process. However, for any agreements arrived at in mediation to be binding and enforceable, a court case will still need to be filed. Thus, parties to a divorce may wish to mediate prior to filing a case, but will ultimately need to get that case filed before any agreements can become enforceable court orders. There is nothing precluding people from mediating prior to the filing of a case and submitting their agreement(s) with the initial filing. Generally, mediation occurs after a case is filed.

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January 25, 2014

Is Sick Leave Considered Marital Property in Colorado?

summer-beach-1270002-m.jpgThe Colorado Supreme Court recently decided an interesting issue for the first time. It looked at whether accrued vacation and sick leave is considered marital property during a divorce. In the case a husband and wife petitioned for divorce in 2007. The trial court divided the husband's accrued unused vacation and sick leave, construing it as marital property.

The wife had submitted an exhibit during the divorce at the bottom of which she noted her estimate that the husband had accrued $23,000 worth of vacation and sick leave. The wife stated she would not ask for half of this sum if she could move to Florida with their kids. If she moved to Florida, she would leave the amount for the husband to use for visitation with the kids.

The court calculated that the husband had 452 hours of leave and sick time, which was worth $51.40 per hour or $23,232.80 in total. The husband's pay stub did not indicate whether the accrued leave had a cash value. However, the husband was entitled to payment of the accrued leave if his job was terminated.

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December 25, 2013

How Business Interests Are Divided in Colorado Divorce Cases

oil-pumps-752980-m.jpgSometimes the division of property in a Colorado divorce is relatively straightforward, but it can become much more complex if one or both partners owns a business or is a partner in a business. Dividing a business or partnership interest during a divorce may be a difficult valuation that falls within a trial judge's discretion. The price stated in a buy-sell agreement is not conclusive. Partnership agreements are not conclusive either.

A Colorado judge must do more than look at a balance sheet of assets and liabilities. Rather, the court must consider the context of the agreement. It should also factor in assets, both tangible and intangible. This includes the value of the work in progress, goodwill, and accounts receivable.

If a business share is in a company not traded on the stock market, the value of an ownership interest can be hard to measure fairly. However, a "marketability discount "can adjust the value of shares downward. A marketability discount is an amount that is deducted from an equity interest to reflect the lack of a ready trading market for shares. The propriety of using a marketability discount was decided in a 2010 Colorado Supreme Court case.

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December 5, 2013

COLORADO CHILD SUPPORT: 2014 CHANGES

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As 2013 draws to a close, Denver area divorce and custody attorneys know that various changes are coming to Colorado statute in 2014, that relate to many aspects of family law, including statute related to child support. The general child support statute is set forth in Colorado Revised Statutes section 14-10-115. C.R.S. 14-10-115 covers the majority of topics related to the calculation of child support, specific dollar amounts owed, definitions of income, and other specifics on the subject. Commencing January 1, 2014, certain changes, some significant, will come into play which will likely affect parties with child support cases moving forward. Perhaps the most significant change relates to the restructuring in the acutal guidelines set forth in the statute in terms of what should be paid based on income levels.

Colorado child support is calculated based on a formula. The primary factors for establishing child support are the incomes of the parties, the number of children, the amount of overnight parenting time spent with the children, each year, by the non-custodial parent, day care costs, if any, and health insurance costs, if any. The numbers leading to a child support calculation are plugged into software, which then generates a monthly child support amount, based on a statutory formula. C.R.S. 14-10-115 contains a basic table setting forth the amount the legislature has deemed needed to support a child, or children, depending upon the parties' combined monthly gross incomes. This figure is titled the "basic support obligation" and is not the actual monthly child support amount owed. Without any adjustments, which will not be discussed in this posting, the software would, in essence, divide the monthly support obligation between the parties proportionate to their incomes, with the presumption that the payor is paying his or her proportionate share to the custodial parent.

Current support obligation figures were established commencing 2008. On the low end of the table or chart, parties with a combined monthly gross income of $850 would have a combined support obligation of $184 for one child. On the high end of the current table, the maximum combined monthly income set forth is $20,000 per month and the combined support obligation for one child would be $1858. The 2014 changes not only increase or decrease the combined support obligation, depending on the combined income and number of children, but also raises the upper most limit of the guideline combined income amount to $30,000 per month between the parties. This is significant in that some courts in the Denver metropolitan area have taken a position that they are not generally willing to exceed the $20,000 maximum guideline income amount for calculating child support. Thus, despite case law on the subject, there has been a gray area as relates to calculating child support for families making over $240,000 per year. That figure will now change to $360,000 per year. As such, persons with significant income over $240,000 will now lose any gray area as to what child support should be, up to the new $360,000 threshold. This change makes sense in that some sort of standard should be in place which limits potential litigation over what child support amount is fair for higher earning families. Perhaps such a change was long overdue.

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November 19, 2013

Gifts and Property Division During a Colorado Divorce

white-house-1426634-m.jpgFrom the wedding and throughout the course of a marriage, a Colorado couple may receive many gifts, including gifts of real estate or significant amounts of money. If the couple gets divorced, one of the major controversies of the divorce may be who gets the property that was gifted. Is it separate property belonging to the partner who is friends or family with the gift giver? Or is it property to which both partners have a right? How does property division work in the case of gifts? Disposition of property in Colorado is covered by Colorado Revised Statute 14-10-113 and case law.

In a recent case, a husband appealed as to the property distribution ordered in connection with his divorce, among other things. One major piece of property that caused contention was the marital home. The couple had purchased the martial home together as joint property while they were married. Years later, the wife's mother had paid off the mortgage by making a direct transfer to the lender. The couple was still married at the time. Soon after she paid the mortgage, the mother signed a trust instrument that described all her gifts to the wife as advances on her inheritance.

The mother's trust instrument did not mention the husband. At trial, the wife testified the mother did not intend the mortgage payments as a gift to the marriage, but just to her. The husband testified both the wife and mother had told him it was a gift for them both. The trial court classified the home as the wife's separate property because her mother had contributed to the mortgage. It found that the funds used to pay the mortgage were treated as part of the wife's inheritance, which would be separate property.

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October 30, 2013

Colorado Custody: Pregnancy, Birth, and the U.C.C.J.E.A.

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Colorado custody is represented in an extensive body of law stemming from both statute and case law. The primary statutory section related to the establishment of custody and visitation is Colorado Revised Statutes section 14-10-124. Though this is the general section courts and lawyers look to, experienced Denver area family law attorneys know that there are additional statutory sections and intricacies that come to play. Though most custody cases in Colorado involve two parties who live in Colorado and intend on staying in Colorado, there are instances in which interstate issues arise. Without getting into an extensive analysis of interstate custody, this posting will focus on the issue of pregnancy, where a child is born, and how the Uniform Child Custody Jurisdiction and Enforcement Act governs custody matters in such instances.

Occasionally, though not often, our Colorado custody lawyers will get a call from an expectant mother wanting to retain legal services prior to the birth of her child. With similar frequency, we will also get calls from a potential father indicating that his former girlfriend, or sometimes wife, is pregnant, and wanting to know his rights and options as relate to custody. In either instance, the first question our attorneys will ask relates to where the child will be born and/or if the expectant mother is planning on remaining in Colorado to give birth. This question is extremely pivotal as relates to whether Colorado will even have jurisdiction to exercise jurisdiction over the child.

Pursuant to the Uniform Child Custody Jurisdiction and Enforcement Act, the UCCJEA, C.R.S. 14-13-102, a Colorado court can exercise custody, properly termed "parental responsibilities, jurisdiction over a child if Colorado is the child's "home state." The home state is generally the state in which a child has resided for the preceding 6 months prior to commencement of a case. For children under 6 months of age, the home state will be that state in which the child has lived since birth.

When an expectant father calls, his first question is often whether he can file a custody case prior to the birth of the child. The answer under Title 14 is "no." However, under C.R.S. Title 19, Article 4, the "paternity" statutory section, one can file a paternity case regarding an unborn child. In these instances, our attorneys are very cautious to assess what the father's wishes are. Additionally, we always ask whether he believes the expectant mother is intending to stay in Colorado during her pregnancy or if she is planning on going out of state to have the child. If the mother is planning on having the child out of state, and is not likely to return, there is really no reason for the father to file a custody case prior to the birth of the child. If the child is born elsewhere, regardless of where conceived, Colorado will not have jurisdiction over the child. Expectant fathers will often respond in disbelief when presented with the notion that they really have no say in whether the mother goes elsewhere to have the child or decides to live prior to birth of the child. Though a court, at least in a Title 19 situation, can exercise jurisdiction in this instance over the potential mother as will relate to financial issues, such as child support, the reality is that jurisdiction as to custody flows with the child, not the parents.

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September 29, 2013

When May Non-parents Petition for Parental Responsibility in Colorado?

big-sister-first-day-of-school-1115880-m.jpgIn Colorado and other states within the United States, parents are deemed to have fundamental rights related to their child's care, guaranteed by the Constitution. However, parental rights may be trumped by a child's best interest. For example, there are circumstances in which a child's best interest may be better met by a nonparent than parent. A non-parent may petition the court for an allocation of parental responsibility only if certain conditions are met.

In a 2012 case, the Colorado Supreme Court considered the question of a minor whose parents divorced five months before she was born and who had a half-sister on her father's side. The minor lived outside Colorado with her mother until she was 3 years old when the father asked that she live with him and the half-sister.

The minor lived with the father and half-sister in Colorado for six years until the father died in 2008. At that point, she continued to live with her half-sister. For the first two years of living with her father, her mother visited regularly. But for the last several years before the father died, the mother had no physical contact, only telephone conversations and correspondence.

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September 14, 2013

Avoiding Problems in Colorado Restraining Order Cases (Part 2)

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Our last blog posting dealt with issues related to Colorado restraining orders. The posting was prompted by a rash of restraing order cases this summer, with numbers higher than any given year that I can remember in at least the last decade. In that article, I discusssed some of the pitfalls the person served with a restraining order might face, including pitfalls which could have lasting consequences, including criminal. This second posting on the topic will cover the opposite side of the coin in terms of behaviors the person seeking the protection order should avoid as relates to conduct, or contact with the restrained person.

When seeking a Colorado restraing order, the person in need of protection will first go to the court and fill out various forms, setting forth, on paper, the allegations or incidents which give rise to the need for protection. Generally, these allegations will relate to domestic violence, threats of domestic violence, or stalking type behaviors. Part of the paperwork will entail stating that he or she is in fear for his or her safety, or that of the children, if the other party is not restrained. In essence, the standard is that the person seeking protection is in fear of imminent harm if he or she is not protected.

Once the paperwork is turned in, the protected person will go before a judge or magistrate, testify as to his or her concerns and allegations, and most likely be issued a temporary protection order. An evidentiary hearing will also be set, at which it will be determined whether the protection order will be made permanent. As there are things a restrained person can do to damage his or her case, there are also things we, as Colorado family law attorneys, see over and over again, that the protected person can also do to damage the outcome of the case. Set forth below are a couple of simple rules to follow to help in making your protection order stick, or become permanent.

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September 1, 2013

Avoiding Problems in Colorado Restraining Order Cases (Part 1)

Judging by the number of restraining order cases, properly termed "protection orders," the experienced Denver area family law attorneys at Plog & Stein, P.C. have seen in the last few months, our assessment is that summer 2013 has been problematic from the standpoint of people behaving in inappropriate and unsafe behaviors. In other words, we have seen an extraordinarily large number of protection order cases this summer.

After successfully wrapping up another protection order case a couple of weeks ago, it dawned on me that there are certain pitfalls which either side of a restraining order case can face. Those pitfalls can have not only lasting effects as relates to that protection order, but also potential lasting effects in a custody case, or divorce case with children. Realistically, many restraining order cases will ultimately tie into a divorce or custody case. Some temporary restraining orders are even issued at the outset of such cases.

For now, I will focus solely on the protection order aspect of things. The general process for a protection order is that, first, the complaining party, or victim, will go to the court, without the other side, and state his or her case to the judge or magistrate, setting forth the allegations of violence, threats of violence, stalking, or whatever the case may be. One aspect of this initial hearing is the person essentially having to indicate that he or she is concerned for his or her safety in an immediate sense, if the other party is not restrained. He or she will actually check a box on the standard state form indicating such. Presuming the court believes, based on the testimony of the complaining party, that grounds exist, a temporary restraining order will be issued. The complaining party will then have the other party served with the complaint, as well as the temporary restraining order. On that order will be a set date for the parties to return for an evidentiary hearing to determine whether the restraining order will be dismissed or made permanent.

With service of the Colorado restraining order, the defendant will also be served with specific notice indicating that violation of a protection order is a crime, punishable by time in jail, as well as potentially a fine. Violation of a protection order can also lead to the court potentially making the order permanent, or further contempt of court proceedings. If one is served with a temporary protection order, he or she must be certain to take seriously the warnings set forth in the paperwork.

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August 15, 2013

What Does The New Colorado Maintenance Law Say?

photo_1069_20060213.jpg The rumors circulating in the Denver Colorado family law community regarding alimony/maintenance, mentioned by us in early 2013 blog postings, have now become reality. Starting January 1, 2014, Colorado will be following new "maintenance" guidelines as set forth in Colorado's House Bill 13-1058, which was signed into law this past May. "Maintenance" has also been called alimony in the past and in other jurisdictions. It is money one spouse pays to a former spouse every month for a period after a divorce or formal separation.

In the recent past, in Colorado, courts have tended to disfavor maintenance except where circumstances are especially compelling. This included scenarios such as when a lower-earning spouse needs to attend school or training to be able to support themselves or where a former spouse has a physical condition that impairs his or her ability to work or where one party has to take care of an infant or toddler.

Those who may have been concerned about this new law can rest assured that most of the law is not truly "new." Rather, many of the factors outlined in the new law were previously left up to an individual judge's discretion and this sometimes led to inconsistent results in factually similar scenarios. What is new is that the Spousal Maintenance Act offers a concrete formula to calculate maintenance and detailed guidelines for the court to implement in determining the amount of maintenance and the term.

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July 29, 2013

Division of Property During Divorce in Colorado

photo_6288_20080611.jpgIf you file for divorce in Colorado, within 40 days of serving your husband or wife you must also file a sworn financial statement with the court and make various mandatory disclosures to your spouse. Unlike some other states, Colorado is not a community property state; not all of your property is considered equally the property of your spouse. Therefore, the judicial system requires that spouses make each other aware of their financial information while coming to an agreement on marital property, debts, and maintenance.

When the parties are unable to come to an agreement, the court divides the marital property by weighing several factors. Among these factors are: each party's contribution to acquiring the property, including the contribution of a homemaking spouse, the value of each party's contribution, economic circumstances of both partners when they divorce, which partner is going to have custody of the children, and any changes in property values where only one party owns the property. Some items often considered "marital property" by the court are pensions, life insurance policies, tools, businesses, houses, vehicles and furniture.

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June 26, 2013

When is Child Support Terminated or Modified in Colorado?

1391967_baby_hands-1.jpgChild support is considered a child's right in Colorado. In every divorce or custody case involving children in Colorado, the court will determine whether one parents owes the other child support. Usually child support does not continue indefinitely, of course; it terminates upon a child's emancipation.

"Emancipation" in Colorado occurs when a child turns 19, marries, joins the military, graduates from high school and/or becomes self-sufficient, or death--whichever comes first. These are considered the moments when a child becomes an adult.

Until child support is terminated, a mathematical formula in Colorado's child support guidelines are used to calculate the appropriate amounts. While it is possible to calculate the amount yourself using worksheets, an attorney can help you figure out whether you can ask the court for a deviation from the formula or not. For example, an attorney can argue to the court on your behalf if you need to ask for more child support because of large medical expenses or private school tuition. Support is calculated using both parents' incomes and taking into account how much time each parent spends with the kids. The guidelines do not apply, however, in the case of very low or very high-income parents.

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June 12, 2013

DENVER DIVORCE AND YOUR BUSINESS

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As divorce attorneys in Denver, we deal with various issues in any case. This can include issues related to children, property, financial support, and more. Not all cases are the same. One of the significant issues that can arise in a divorce is the division of property. In most cases, the property to be divided consists of a home, retirement and bank accounts, vehicles, investment accounts, or the furniture and pots and pans. However, there are families or parties to a divorce case who own businesses or business interests. As part of our divorce practice, experienced family law attorneys at Plog & Stein assist with the valuation and division of business assets as well.

Colorado business interests come in all shapes and sizes. A person may own a large business, such as a chain of restaurants or a car dealership. A person may own a small business, such as a one person accounting firm or a mom-and-pop laundry mat. A person might also own a fraction or portion of a business, without owning the whole entity outright. In a Colorado divorce setting, a business, or interest in a business, is generally considered property. As property, the same principles for dividing other assets apply. Property acquired during the marriage, absent a limited exception, is marital. Increases in value during the marriage to property acquired prior to marriage are considered marital in nature. Titling on property determined to be marital does not matter and said property can be divided by the court regardless of whose name it is in.

Prior to arriving at the actual division of a marital business asset, the parties must determine the value of a business. Contrary to popular belief, the value of any business is more that just looking at the assets/property and debt to arrive at a value from a balance sheet approach. Though this can be one facet of a business valuation, there is much more to the equation generally accepted by attorneys and courts in a Colorado divorce case. Beyond assessing assets and liabilities, a business valuation will entail an assessment of current and historical revenues and profits. This analysis also ties into the term "good will," which can be quantified into an actual dollar figure. We have seen cases in which there may be a two person professional operation in which one party or the other will say, "There's no value to the business; I am the business." Of course, this will be a statement made by a husband or wife who actually runs or owns the business. Conversely, the other party may find it meritorious to look into whether even a small business has value for asset division purposes. As part of the process, business valuators can also determine historical values, such as the value at the time of marriage or acquisition, as well as the current fair market value.

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May 14, 2013

Colorado Appellate Court Considers Great-Grandparent Visitation

333066_nana.jpgAn area that can present a cause for concern in Colorado child custody cases is the question of grandparent visitation. Can grandparents request visitation with their grandchildren through a judicial process just as a divorced parent asks for parenting time with his or her child? Colorado gives grandparents more legal rights than many states do, but these rights are still limited. A grandparent can bring a case to court only under certain circumstances.

Colorado Revised Statutes 19-1-117 controls this issue, stating that a grandparent can seek judicial recourse under such conditions as: (1) the parents are legally separated or divorced and there has been a child custody case, (2) custody of the child has been given to someone other than the parents, (3) the marriage of the parents is annulled, or (4) the child's parent who is the child of the grandparent dies.

Additionally, grandparents cannot sue for visitation merely because they are estranged from the parents. The grandparents bear the burden of proving by clear and convincing evidence that a parent who wants to deny them visitation is not acting in the child's best interests and also that visitation would be in the child's best interests.

Colorado courts also look at a parent's rights in these visitation cases. An unusual but instructive discussion came up in an appellate case earlier this year In re Parental Responsibilities, MDE. In that case, a great-grandmother sued for visitation under the grandparent statute when her granddaughter got a divorce.

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