"Examples of settlements facing tax on 100% include recoveries ... from your ex-spouse for claims related to your divorce or children," tax lawyer Robert Wood wrote in Forbes recently. "Defamation, financial fraud, divorce, malpractice, false imprisonment — clients will be paying taxes on 100 percent of their recovery on all of these." -- Joe Patrice blogged at Above the Law.
Nope. What you get in a divorce is not taxable as income, and that is absolutely unchanged in the new tax act. Tax Code Sections 102 and 1041 ensure that. They do so by treating a divorce settlement as a "gift", which is mostly wrong, archaic, and insulting to women, but it gets the job done. As the IRS's guide to all things divorce-related, Publication 504, puts it,
"Property you receive from your spouse (or former spouse, if the transfer is incident to your divorce) is treated as acquired by gift for income tax purposes. Its value isn’t taxable to you."
The latest edition of Publication 504 is from before the 2017 tax reforms, but again, the relevant parts of tax law weren't changed at all.
By Robert W. Wood in Forbes
Judicial independence is threatened because self-satisfied courts & lawyers don't listen, don't explain, don't adapt to public's needs
So says Jesse Rutledge of the National Center for State Courts in Williamsburg, Virginia, based on the Center's annual surveys of public opinion about the courts, and decades of working on how the courts interact with the population:
"It’s really easy to blame efforts to erode the independence of our courts exclusively on shrill politicians or the fragmented news media. ... With all this outside pressure, is it any wonder that public trust in the courts—the stock and trade that underpins the ability of the courts to be independent—continues to erode?
"Unfortunately, those of us on the inside of the system may have myopia. ... The data shows that Americans who have had direct interactions with courts trust the judiciary less than those who haven’t. Put differently, those who come to our courthouses aren’t as impressed with what they see as we are with ourselves.
"... Courts must take swift action to improve customer service, simplify forms and processes, and move as much of their routine business online as is practicable for their community. Americans perceive judges and the lawyers who appear in their courtroom as sharing an interest in delay, and at the same time an increasing number feel they are being shut out of the legal system entirely. Simplifying byzantine forms and procedures could go a long way to allowing more people to help themselves. ...
"Americans are sending a clear message about their courts. They don’t need another lecture on the virtues of jury service. Instead, they want courts that are accountable, connected to their communities in meaningful ways, and where they are able to take care of routine business expeditiously. Court users—whether they are litigants, jurors, or those seeking to pay for a traffic infraction or to file a simple form at a clerk’s window—should be placed in the middle of every equation, not treated as an afterthought."
Divorce/separation not affordable for Bay-area lawyers, other professionals, so here's what they do:
Bay area couples who separate or divorce are increasingly sharing a home for economic reasons, Amy Graff writes in SFGATE. The example she leads with includes a lawyer in private practice. For actual separation to be affordable, at least one parent would have to move so far away that caring for, and transporting, the children would be unworkable. And this arrangement is actually optimal for the children, when the parents can remain civil with each other, she says after looking at several couples who are doing this.
SF Gate, May 8, 2018
Shocked by cheerfully ignorant, arrogant decision-making? Not if you've seen a judge learn family law on the job.
There was a lot of interest on social media in Jesse Singal's analysis of how President Trump deals quickly and authoritatively with issues he admittedly knows nothing about. Singal was thunderstruck at how monstrously dangerous it was to have major decisions made in cheerfully-admitted ignorance, by what the decision-maker thinks is simple common sense. But as a family law attorney, I really couldn't tell any difference between the President's performance and watching a judge who's new to Family Law, trying to puzzle out why the law seems to want both parents involved in a child's life after a breakup, why unwed fathers have the few rights they do have, etc. Or what the Hague Convention on child abduction is for, and what in the world is wrong with a mom taking her children halfway around the world just to get them far away from the father. Or the times I've watched Supreme Court Justices do the same thing as they debate the Hague Convention, or paternity law, assume the validity of wildly wrong speculations about what happens in custody litigation, and snort with equal contempt at the parents in these cases and the Congress that passed such seemingly pointless laws and treaties. Even experienced trial judges sometimes just reinforce their bias and irrational rules-of-thumb over time.
Here's the Trump version of this routine:
SHERIFF AUBREY: And the other thing is asset forfeiture. People want to say we’re taking money and without due process. That’s not true. We take money from dope dealers —
THE PRESIDENT: So you’re saying – okay, so you’re saying the asset-taking you used to do, and it had an impact, right? And you’re not allowed to do it now?
SHERIFF AUBREY: No, they have curtailed it a little bit. And I’m sure the folks are —
THE PRESIDENT: And that’s for legal reasons? Or just political reasons?
SHERIFF AUBREY: They make it political and they make it – they make up stories. All you’ve got to do —
THE PRESIDENT: I’d like to look into that, okay? There’s no reason for that. Dana, do you think there’s any reason for that? Are you aware of this?
[Then-acting Attorney General Dana Boente]: I am aware of that, Mr. President. And we have gotten a great deal of criticism for the asset forfeiture, which, as the sheriff said, frequently was taking narcotics proceeds and other proceeds of crime. But there has been a lot of pressure on the department to curtail some of that.
THE PRESIDENT: So what do you do? So in other words, they have a huge stash of drugs. So in the old days, you take it. Now we’re criticized if we take it. So who gets it? What happens to it? Tell them to keep it?
MR. BOENTE: Well, we have what is called equitable sharing, where we usually share it with the local police departments for whatever portion that they worked on the case. And it was a very successful program, very popular with the law enforcement community.
THE PRESIDENT: And now what happens?
MR. BOENTE: Well, now we’ve just been given – there’s been a lot of pressure not to forfeit, in some cases.
THE PRESIDENT: Who would want that pressure, other than, like, bad people, right? But who would want that pressure? You would think they’d want this stuff taken away.
SHERIFF AUBREY: You have to be careful how you speak, I guess. But a lot of pressure is coming out of – was coming out of Congress. I don’t know that that will continue now or not.
THE PRESIDENT: I think less so. I think Congress is going to get beat up really badly by the voters because they’ve let this happen. And I think badly. I think you’ll be back in shape. So, asset forfeiture, we’re going to go back on, okay? I mean, how simple can anything be? You all agree with that, I assume, right?
See also, for example,
- Study: Judges interpret legal precedent mostly based on parties' personalities, & won't admit it.
- How Bias Actually Works -- Everywhere, Even in Family Courts
- Supreme Court silently ignores clear text of Indian Child Welfare Act, "needlessly demeans parenthood"
- On First Looking Into Posner's Opinions, and Finding One Where He Didn't Exactly Hit a Homer
"How Much Does Infidelity Cost?", Forbes.com asks. I'm just glad someone is asking the question, and acknowledging that such choices, and divorce, have costs and are not "value-neutral."
The article starts with costs so trivial as to be ridiculous, but then follows out some very foreseeable and common consequences -- separate vacations, faraway hideaways, therapy, marriage counseling, separation, restraining orders among new partners and old, loss of security clearances and arms-bearing rights for people under restraining orders, divorce, increased divorce-lawyer costs as the adultery makes every issue in the divorce more vicious and hard-fought, job loss for workplace affairs, a few months of unemployment, and finally a new job that pays 20% less.
The writing tone is a little bit like a typical canned article, what Helen Fielding's Bridget Jones called "a two-shrink, five-friend" article, except that the subject is so rarely brought up in the media, though it has always been a huge topic in life, art and literature. There's a bit of copy-editing, or lack thereof, that's really surprising in a top-flight source like Forbes. A couple times I thought I was reading one of those odd articles that are taken from real ones, then run through a couple translators and/or some guys in India who didn't qualify for jobs with the gang that calls people up pretending to be "Windows." That's happened to many of my own articles. It ends oddly, like a freshman term paper ending at the exact turn-in deadline with a neat balancing of supposed opposites that actually makes no sense, resting on assumptions and definitions that reveal the author to know far less of the basic terms and context than it appeared from the introduction as it rose slowly through 50 shades of obvious, or from the body of the paper as the student could lean this way and that on quotations and cautiously slight paraphrases of opposing authorities on the topic. Anyhow, back to the Forbes article. No, wait, this lamest conclusion that I've seen, except in term papers that potential interns send me as writing samples, goes on for two paragraphs of appalling shallowness, totally betraying the whole point of the article by nattering about these things as if they were subjects one would encounter for the first and last time in a college class, and never in real life:
"Who are the people engaging in these covert relationships? Nika Kabiri, Director of Strategic Insights for Avvo, the company which offers a fixed fee uncontested divorce, recently conducted a relationship study to uncover this answer.
Avvo is where you go for reliable studies of marriage? I mean, they're a great company for what they do, and I'm sure Kabiri and his team are good at studying their potential customers, but there are actual disinterested scholars, statisticians and therapists who study these things, many of whom are studying how to keep more marriages healthy and together, not to grow the number of people who get ensnarled in family/legal problems.
"Kabiri found that 61% of Americans are unhappily married.
[I've never seen a figure over the high 40s.]
"Yet only ¼ of these people say that divorce is inevitable if one no longer wants a romantic relationship with his/her spouse. In fact, nearly 80% believe in staying together so much so that they are open to exploring alternatives to breaking up. Only half of these people say that if their partner wanted an open relationship they would leave him or her. [What about those who respond with, "Oh No, you won't,", among many others?] In other words half who are confronted with a partner who wants to stray are willing to talk about it, work through it, maybe even be part of an open relationship.
[Uh, you're not curious about defining who wants to fix the marriage versus who wants an 'open relationship'?]
"While on the surface it seems that having an affair is financially a more affordable road than divorc'em this is not necessarily the case. Clearly the emotional, mental and financial hardship could end up being more detrimental than enduring a divorce."
Huh? Despite everything in the first half of the article, now "Having an Affair"and "Divorce'Em" are not cause-and-effect, but the two mutually exclusive alternatives for a Smart Shopper to thoughtfully consider? All that talk about how a marriage that grows unhappy doesn't have to devolve into divorce, and in fact 80% of them recover, and suddenly the only alternatives to divorce are affairs and "open relationships"? Sick.
Think family court is a big racket? You're not alone ... until you get to court. Then you truly are.
One of those crank lawsuits of a kind that gets filed and discarded every day has, for once, gotten big coverage in a mainstream newspaper. "Lawsuit claims divorce court is a racket: Dismissed at district level, case is being appealed to 9th Circuit". San Diego Union-Tribune.
If you polled people on the street, you'd find that to be a pretty common view, perhaps not a majority but a plurality of the same kind that makes the presidential primaries so interesting. But in the family court system, people who have cases there, and start saying things like that, are treated like the lunatic fringe. To the judges and everyone else involved, the issue is no longer whatever substantive question was originally in dispute. The issue is now the disgruntled litigants' extremism and behavior. They are sometimes put under special orders keeping them from filing anything unless and until a single, permanently-designated judge has reviewed it and allowed it.
These litigants too often put their "last stands" on principle ahead of their actual parenting of their children. They are unwilling to bow and bend to a system they see as illegitimate and corrupt, even if they understand that that is the way to be treated better and get more time with their children.
Is the system a racket? No. Not where I work, anyway. But it doesn't have to be. It still works in a way that looks irrational to most people. It still takes people, some already cranky, and some fairly normal, perhaps even too nice, processes them, and cranks out a huge number of cranks.
When our state legislators and all those of us who help mold our culture, all the "second-hand dealers in ideas," as Hayek called us, decided decades ago to encourage widespread divorce, this was a major part of what we created.
Americans are not brought up and educated in how a family court system works. In the courts which we learn about on TV and in civics class, a jury of 12 average local people makes the big decisions, and the judge is just a referee. And those decisions are about who did something wrong and who gets punished.
Parents who have chosen divorce or unwed parenthood, or had it thrust upon them, have no idea that instead of that system, they are going into a system where regardless of fault or faultlessness, a judge will tell them in great detail how to live and move and raise their children, now and forever until they all are grown. Nor that instead of one big trial to establish guilt or innocence and resolve everything, they may be back in court every few weeks, months or years, for enforcement, monitoring, and revision of those orders.
In that way, the family law courts work like the ecclesiastical and chancery courts that used to handle family issues, the ones that Dickens savaged in novels like Bleak House. And for good reasons, because a family is not like a business contract or a car accident.
But they also feature the most delaying, expensive, and inflammatory features of the American legal system, because this is America -- you always have the right to your day in court, to litigate about everything, to insist on strict compliance with the rules of evidence -- even when dealing with areas of life where people don't generally keep the relevant evidence, or where no witnesses are there when the really important stuff happens, or where evidence and testimony are easily faked. You can always appeal, and appeal. You have to go through all the expensive, exhausting procedures that were designed for big business litigation. Your lawyers have the ethical duty to do what you say you want, after doing their ethical duty to advise you about a bewildering array of awful things that you could do to your ex and your ex might even now be doing to you. And each of these individual things is necessary and proper, as part of the greatest legal system in the world. Even if you hate to comply with them and hate it when the other side does those things, you want the other side to comply and you want to be able to do those things to them.
That's the system we put far more families into when we tried to make divorce easier and more humane by enacting quick, unilateral, no-fault divorce, letting far more people jump straight into court without first working things out in an agreement.
-- from "ABATEMENT OF DIVORCE AND ANCILLARY PROCEEDINGS UPON THE DEATH OF A PARTY" by the National Legal Research Group, Inc.
"Ignore the clickbait headline and actually read this," my friend Bonnie Algera writes. How right she is.
A study of federal judges finds that they don’t just rely on facts and legal precedents when making decisions