Tax Issues in Custody and Divorce

As we come to the end of the year, I am often asked about different tax issues applicable to my clients’ situations.

If my client’s divorce will not become final before the end of the year, the parties can still file a joint tax return. Once the judgment of divorce has been filed, an ex-spouse can file the return as a head of household, if he or she has paid for over half the maintenance of the household, and has a dependent living at his or her home for over half the year.

When the parties are divorced, only one of them can claim the $3,500 child dependency exemption on their tax returns for 2008. The parent claiming the dependency exemption is also allowed a $1,000-per-child tax credit for children younger than 17, as long as his or her income is not above the following cut-offs. For a married couple filing jointly, it is $110,000, for a married couple filing separately, it is $55,000 per spouse, and for all others, it is $75,000. If the applicable income exceeds the above thresholds, the amount of the child tax credit is reduced proportionately.

Usually, it is the person named as the custodial parent in the child custody portion of the divorce decree that is allowed to claim the child as a dependent. If the divorce decree does not name a custodial parent, then the parent with whom the child has lived with the longest throughout the year is the custodial parent.

A non-custodial parent, however, can claim the child dependency exemption, as long as the custodial parent signs a waiver promising not to claim the exemption. This is typically accomplished by the use of IRS Form 8332. However, the recent amendments of the IRS regulations dealing with this issue have complicated this issue. The final regulations provide that a release not on a Form 8332 must be a document executed for the sole purpose of releasing the claim. A court order or decree or a separation agreement cannot serve as the written declaration. If a release of a claim to a child is for more than one year, the noncustodial parent must attach a copy of the written declaration to the parent’s return for the first tax year for which the release is effective. Copies must also be attached to returns for later years. Under the final regulations, a custodial parent who released the right to claim a child, can revoke the release for future tax years by providing written notice of the revocation to the other parent. The final regulations require that the parent revoking the release notify, or make reasonable attempts to notify, in writing, the other parent of the revocation. What is a reasonable attempt is determined under the facts and circumstances, but mailing a copy of the written revocation to the noncustodial parent at the last known address or at an address reasonably calculated to ensure receipt satisfies this requirement. A revocation can be made on Form 8332, or successor form designated by IRS. A revocation not on the designated form must conform to the substance of the form, and be in a document executed for the sole purpose of revoking a release. A taxpayer revoking a release may attach a copy rather than an original to the taxpayer’s return for the first tax year the revocation is effective, as well as for later years.

Yet another related issue is who can claim the child as dependent under the group health plan coverage and health savings account (“HSA”) distributions. Under the final regulations, for purposes of group health plan coverage and health savings account (HSA) distributions, both parents can claim the child as a dependent if: (1) the child qualifies as a dependent of one of the parents; (2) the parents (both parents together) provide more than ½ of the child’s support for the calendar year; (3) the child is in the custody of one or both parents for more than ½ of the calendar year; and
(4) the parents are divorced, legally separated under a decree of separate maintenance, separated under a written separation agreement, or live apart at all times during the last six (6) months of the calendar year.

If a non-custodial parent claims the child exemption first, and without the custodial parent’s permission, he or she is likely to receive the exemption temporarily. However, once the custodial parent files his or her tax return including the exemption, and IRS notices that a child’s social security number has been included on two different tax returns, then both parties would be notified by IRS that only one party is entitled to the exemption, and the tie-breaker rule would be used to resolve this situation. This rule says that if two parents claim that a child as a dependent, the parent with whom that the child lived with the longest during the year, receives the exemption. If the child had spent the same amount of time with both parents, then the parent that had the higher adjusted gross income would get the exemption. The parent who was not entitled to the exemption would have to repay the tax, plus penalties and interest.

Regardless of who the custodial parent is, if the non-custodial parent pays for any of the child’s medical bills, these costs can be a deduction, subject to appropriate income limits. Child-care credit for work-related expenses can be claimed for children younger than 13.

The spouse who pays maintenance or spousal support can also receive a tax deduction for these payments, even if they aren’t itemized—as long as the payment amounts are stated in the divorce agreement or the judgment of divorce, and actually paid. The spouse who receives maintenance must pay taxes on it. For child support, however, there is no deduction for paying it and no taxes are paid by the parent receiving it. Assets transferred from one spouse to another during a divorce are not generally taxed.

Please note that the above discussion is not a tax advice and these issues should be discussed with your tax professional.

Divorce, Immigrant Spouse, Maintenance and Affidavit of Support

When either a husband or wife marries someone who is not a legal resident of the United States and brings them to this country, as a part of his/her immigration application, the spouse who is a citizen of the United States certified that he/she would provide support for their spouse once that spouse is in the United States and would not allow her to become a public charge. See 8 U.S.C. §1182(a) (which prohibits immigration when the immigrant has no means of support and is likely to become a public charge). This requirement is satisfied by what is known as an affidavit of support, I-864 form. By signing it, the party certifies that he/she would provide to their spouse with income of 125% of the Federal Poverty Level guidelines. For 2008, the Federal Poverty Level guidelines state that the poverty level income for a household of one is $10,400.00, and the corresponding income level under the affidavit of support is $13,000.00.
According to the Appellate Division, Fourth Department, where a party signs an affidavit of support, from I-864, that affidavit is a legally enforceable contract. Moody v. Sorokina, 40 A.D.3d 14 (4th Dept. 2007). In that case, a Ukrainian national emigrated to the United States to marry her eventual husband in New York. When the husband filed for divorce several years later, the wife sought to enforce the Affidavit of Support for purposes of determining the amount of support payments to be made by the husband. While the trial court rejected the wife’s argument and held that the affidavit could not be enforced in court by private parties, the Appellate Division, Fourth Department reversed the lower court and held that the affidavit of support was enforceable. The Appellate Division held that the execution of a affidavit of support creates a legally enforceable agreement between the parties involved that can be enforced by the sponsored immigrant in any federal or state court. Id. at 401. Moreover, the Fourth Department explained that the terms of the agreement are not affected by a subsequent judgment of divorce. As such, the agreement remains fully binding on all parties until the sponsored immigrant “has worked 40 qualifying quarters of coverage,” as defined by the Social Security laws. The enforcement of the right of support also includes attorneys fees. Id.
Therefore, when the spouses separate and the immigrant spouse is unable or unwilling to work, the spouse who is a citizen of the United States will be responsible for their spouse’s support until such time as that spouse becomes self-sufficient, or perhaps even indefinitely.

Basics of Maintenance

Maintenance is set forth in the Equitable Distribution Law, DRL, Section 236, Part B. Prior to the enactment of DRL Section 236 was enacted, the statute used the term “alimony”.

The statutory factors, pursuant to Domestic Relations Law Section 236(B)(6), relative to the consideration of maintenance are as follows:

(1) the income and property of the respective parties including marital property distributed pursuant to Domestic Relations Law Section 236(B);
(2) the duration of the marriage and the age and health of both parties;
(3) the present and future earning capacity of both parties;
(4) the ability of the party seeking maintenance to become self-supporting and, if applicable, the period of time and training necessary therefore;
(5) reduced or lost lifetime earning capacity of the party seeking maintenance as a result of having foregone or delayed education, training, employment, or career opportunities during the marriage;
(6) the presence of children of the marriage in the respective homes of the parties;
(7) the tax consequences to each party;
(8) contributions and services of the party seeking maintenance as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party;
(9) the wasteful dissipation of marital property by either spouse;
(10) any transfer or encumbrance made in contemplation of a matrimonial action without fair consideration;
(11) any other factor which the parties or the Court expressly find just and proper.

In resolving the issue of the appropriate amount of spousal maintenance, the parties in settlement, or a court in trial, must have regard for the standard of living of the parties established during the marriage, whether the party in whose favor maintenance is granted lacks sufficient property and income to provide for his or her reasonable needs, and whether the other party has sufficient property or income to provide for the reasonable needs of the other and the circumstances of the case and of the respective parties.

The court is charged with looking at all sources of income and property that the parties are able to receive in equitable distribution. Income derived from separate property may also be considered by the court. Maintenance (similarly to child support) are determined on the basis of earning capacity, not necessarily earnings! It is, therefore, well within the purview of the court to impute income to one or both parties in determining the basis for the award of maintenance.

The court is required to look at the present and future earning capacity of both parties so be sure to address for both not only their current situations, but respective abilities to be self-supporting in the future, ability to continue to earn in the future and for what period of time, skills and training, and future prospects. The ability to be self-supporting is very fact sensitive and requires careful analysis. Do not just think of Factor #4 as relating to a spouse in a longterm marriage who has not worked in over 20 years, is in mid- to late-50’s, etc., but apply facts to a spouse with young children, still nursing, etc. Self-sufficiency depends upon the ability to achieve a lifestyle equal to that enjoyed during the marriage.

It is the responsibilities of the attorneys for the parties to make the court aware of the tax consequences to a payor spouse and payee spouse. Expert
testimony will be needed to provide the court with the tax impact upon each party of various maintenance scenarios, to allow the court to determine which amount most meets the demonstrated needs of the payee and the ability of the payor to make the payments.

Most often considered under the catch-all factor #11 is the issue of fault. While fault may not be considered in the equitable distribution of the marital estate unless it is egregious, there is no such standard applicable to fault as it relates to an award of maintenance. While marital fault does not preclude an award of maintenance, it is a relevant factor which can be considered. Maintenance can be directed by the court, or can be provided for in a “valid” agreement between the parties. An award of maintenance is ultimately in the discretion of the court. The overriding purpose of spousal maintenance is to enable the receiving spouse to achieve financial independence.

The reason for imposing a time limitation upon a maintenance award is usually to give the supported spouse a reasonable period of time in order to learn or update work skills and enter the work force with a view to being self-supporting. The court may award permanent maintenance. DRL Section 236(B)(9). Permanent, or non-durational, maintenance may be appropriate where one spouse’s energies during the marriage where primarily devoted to homemaking and childrearing to the detriment of being able to become self-sufficient and maintain the pre-divorce standard of living. The court cannot make an open-ended award in terms of the amount that is to be paid; there must be a set number.

On the other hand, durational maintenance is that which is required for a fixed period of time to allow the receiving spouse to become self-supporting and in recognition of the predivorce standard of living. Maintenance terminates upon the death of either party or upon the recipient’s valid or invalid marriage. DRL Section 236(B)(6)(c).

Maintenance is deductible by the payor spouse and is includable in the recipient spouse’s income. However, if a payment is not true maintenance, the IRS will not allow it as a deduction. A person’s marital status is determined, for tax purposes, as of the end of the calendar year. IRC Section 143(a)(1). Therefore, a person who weds on December 29th is considered married for the whole year and, conversely, a person whose divorce is finalized on December 29th cannot file as a married person. A divorce becomes final on the date the judgment is filed in the county clerk’s office. However, the parties can agree, or the court can order, that the maintenance payments are not taxable to the recipient and not an adjustment to the income of the payor. 26 USCA Section 71(b)(1)(B). The court must have a clear rationale for ordering the payments non-taxable.

Where maintenance and child support are both payable, the amount of maintenance must first be deducted before calculating child support. Family Court has jurisdiction to provide support to a spouse, rather than a former spouse.

Bankruptcy and Divorce

When your ex-spouse files for bankruptcy, all efforts to collect any debts have to stop unless they fit within one of the exceptions in the bankruptcy statute. This is known as the “automatic stay.” One exception to the automatic stay is the one that allows the commencement or continuation of a proceeding to establish or modify a support award or collect support from property that is not property of the bankruptcy estate. 11 U.S.C. 362(b)(2).

Current support debts survive a bankruptcy without the need for you to have to go to bankruptcy court. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, among the changes in creditor priority is that unpaid child support and alimony has priority over any other creditor, including taxes owed. If you are owed back support it is very important that you file a “proof of claim” with the bankruptcy court to receive payment.

The bankruptcy law requires the trustee in bankruptcy, if there is a claim for a domestic support obligation in a case, to provide written notice to the party to whom the domestic support obligation is owed, and to the state’s Child Support Enforcement Agency. A notice at the time of filing and a second notice at the time of discharge are required. In the notice to the creditor, the trustee must provide contact information for your state’s Child Support Enforcement Agency.

The new bankruptcy law made non-support obligations from a divorce or separation non-dischargeable in a chapter 7 bankruptcy, if the discharge of the obligation would harm the spouse to whom the obligation is owed more than it would harm the person who owes it, your ex-spouse. 11 U.S.C. 523(a)(15). A debt that is non-dischargeable means that your ex-spouse is still responsible for it. You would need to file a complaint in bankruptcy court to get the property settlement debt excepted from discharge. If you don’t file a claim with the bankruptcy court, the debt may be wiped out and you won’t be able to collect it later.

The discharge in a chapter 13 case is somewhat broader than in a chapter 7 case. Debts dischargeable in a chapter 13, but not in chapter 7, include debts arising from property settlements in divorce or separation proceedings.

How do bankruptcy courts decide what’s a support obligation and what’s a property settlement? The courts have based their decisions on such questions as:

Does the obligation terminate or reduce with the occurrence of certain events, like remarriage or a child turning 18?
Is the obligation in installments or a lump sum?
Are there minor children?
What is the relative health and education of the parties?
Was there a need for support at the time of the divorce?

The way in which the judgment of divorce is drafted can reduce the chance that the bankruptcy court will discharge the debt. The likelihood that the debt will not be discharged by labeling the debt payments as either support or alimony in the decree.

If you’re listed as a creditor on your ex-spouse’s bankruptcy petition, you should receive notice from the bankruptcy court of the filing and information about the date and time of the first meeting of creditors (known as a “341 meeting”). You should also receive information on the deadline for filing a claim and a proof of claim form for filling out.

“Cohabitation” and Interpretation of Separation Agreement’s Provisions Applicable to Maintenance

A typical separation agreement that provides for post-divorce maintenance will have a number of provisions describing circumstances under which such maintenance can be terminated. One of the more common clauses speaks of the spousal maintenance being terminated where the former spouse is cohabitating with another adult of opposite sex for a period of time. Most separation agreements do not define cohabitation, but the courts have held that in order for cohabitation to take place, there must be a sexual relationship, as well as a degree of economic partnership between the former spouse and the unrelated adult of the opposite sex. In Graev v. Graev, __ N.Y.3d __ (October 21, 2008) the Court of Appeals had to decide whether the term “cohabitation” as included in the parties’ separation agreement was unambiguous, and whether the prior standard utilized by the courts was still valid. In a 4-3 opinion, a divided Court of Appeals ruled yesterday that “cohabitation” is an ambiguous term whose definition for purposes of potential violations of separation and divorce agreements depends on what the parties understood it to mean when making their settlements. While all of the judges agreed that a couple need not share household expenses or function as a single economic unit to be cohabitating, the Court was divided over how to resolve the dispute between Linda and Lawrence Graev and the $11,000 in monthly maintenance fees he contends she forfeited by living with a boyfriend for at least 60 straight days in violation of their separation agreement. Since the Court of Appeals held that the term “cohabitation” as contained in the parties’ separation agreement was ambiguous, it remanded the case back to the trial court to hold a fact-finding hearing to determine what the parties’ understanding of this term was at the time the separation agreement was executed. As the Court of Appeals pointed in the footnote, “[t]he wisest rule, of course, is for parties in the future to make their intentions clear by careful drafting.”

Change in Health Condition and Maintenance

In order to obtain a reduction of maintenance, the party seeking the reduction bears the burden of establishing a substantial change of circumstances. Lipow v. Lipow, 110 A.D.2d 756 (2d Dep’t 1985); Patell v. Patell, 91 A.D.2d 1028 (2d Dep’t 1983); Hickland v. Hickland, 56 A.D.2d 978 (3d Dep’t 1977). Some courts have held that an unanticipated medical condition which befalls a party after a judgment of divorce was entered, may be a basis for modifying that party’s maintenance obligation. Bischoff v. Bischoff, 159 A.D.2d 404 (1st Dep’t 1990); Wantuch v. Wantuch, 56 A.D.2d 866 (2d Dep’t 1977).

In Praeger v. Praeger, 162 A.D.2d 671 (2d Dep’t 1990), a husband agreed to certain maintenance obligations with knowledge that he had a history of heart disease, heart surgeries and several heart attacks. Thereafter, he suffered a stroke which he claimed rendered him permanently disabled and unable to perform his profession. The husband pointed to that stroke as a basis for modifying his maintenance obligation. In light of his condition at the time of the divorce, the court refused even to grant a hearing, absent additional medical and financial evidence that a substantial change of circumstances had occurred.

If after the judgment of divorce is entered, the party paying maintenance develops a health condition that impairs his/her ability to pay maintenance, any application seeking modification of maintenance must be supported with admissible medical evidence and an evidentiary showing must be made that the health condition has impaired that party’s financial situation.

Duration and Amount of Maintenance

Domestic Relations Law §236(B)(6)(a) sets forth a number of factors which, in combination, allow the court to determine the appropriate duration and amount of maintenance. The following discussion of recent cases describes how the courts applied statutory criteria to various factual situations.
It is well settled that the amount and duration of maintenance are matters committed to the sound discretion of the trial court. Frost v. Frost, 49 A.D.3d 1150 (4th Dept. 2008); Booth v. Booth, 24 A.D.3d 1238 (4th Dept. 2005). Each case must be considered based on the unique facts and circumstances it presents. Xikis v. Xikis, 43 A.D.3d 1040 (2nd Dept. 2007), appeal denied, 10 N.Y.3d 704 (2008).
When fashioning a maintenance award, the trial court is required to take into account the parties’ pre-separation standard of living. Fitzpatrick v. Fitzpatrick, 43 A.D.3d 991 (2nd Dept. 2007). The court must also consider the reasonable needs of the recipient spouse, and the pre-separation standard of living in the context of the other factors set forth in Domestic Relations Law §236(B)(6)(a), and then, in its discretion, determine a fair and equitable maintenance award. Id.
In Booth v. Booth, 24 A.D.3d 1238 (4th Dept. 2005), the Fourth Department perceived no abuse of discretion in the award of maintenance to the plaintiff, where the record established that defendant had steady employment and received supplemental income from Air Force disability payments and rental properties. In addition, defendant received Social Security payments for each child based on plaintiff’s disability, and plaintiff had been ordered to pay child support to defendant. In comparison, plaintiff’s income consisted of Social Security disability payments and minimal wages from part-time employment at a fast-food restaurant. Although her income exceeded her expenses, plaintiff had health problems that affected the stability of her employment. The lower court’s award of maintenance to the plaintiff thus was upheld on appeal. Id.
In Pickard v. Pickard, 33 A.D.3d 202 (1st Dept. 2006), appeal dismissed, 7 N.Y.3d 897 (2006), lifetime maintenance of $3,500.00 per month was appropriately awarded to the plaintiff in view of the 23-year duration of the parties’ marriage, plaintiff’s role in raising and educating the parties’ children, plaintiff’s minimal job skills, plaintiff’s extended absence from the workforce, and the parties’ respective financial positions. Id.
Similarly, in Xikis v. Xikis, 43 A.D.3d 1040 (2nd Dept. 2007), appeal denied, 10 N.Y.3d 704 (2008), the parties lived together for 28 years and were married for over 18 years. The defendant was not employed during most of the marriage, had limited education and skills, and was 60 years old at the time of the judgment. In addition to the properties awarded to the defendant by the Supreme Court, in the exercise of discretion and upon consideration of all relevant factors, an award of $1,500 as monthly non-durational maintenance was deemed to be appropriate. Id.
In Fitzpatrick v. Fitzpatrick, 43 A.D.3d 991 (2nd Dept. 2007), the Supreme Court was found to have providently exercised its discretion in awarding maintenance to the plaintiff-wife in the sum of $3,000 per month until she reached the age of 65.
Likewise, in Nichols v. Nichols, 19 A.D.3d 775 (3rd Dept. 2005), Supreme Court did not abuse its discretion in fixing maintenance at $350 per week until the plaintiff turned 62, a period of six years. In rendering its decision, the court noted that the Defendant earned $96,910 annually, while the plaintiff received only $18,056 annually from a disability retirement pension and earnings from part-time employment. The court also considered the plaintiff’s age and poor health, the gross disparity between the parties’ incomes, and the unlikelihood of plaintiff becoming self-supporting. Id.
In Taylor v. Taylor, 300 A.D.2d 298 (2nd Dept. 2002), the defendant contended that the Supreme Court erred in continuing his maintenance obligation until the plaintiff-wife attained the age of 65 or until he retired, whichever occurred later. The parties were married for over 27 years when the action was commenced. The plaintiff had ceased working outside the home to raise the parties’ children, and the parties stipulated that her medical condition precluded gainful employment in the future. In contrast, the defendant was steadily employed during the marriage and had the potential to increase his future earnings. Given the disparity in the parties’ financial circumstances, the lower court was found to have providently exercised its discretion in directing the defendant to pay maintenance until the plaintiff became eligible for full Social Security benefits at the age of 65, or until the defendant retired, whichever occurred later, or until the death or remarriage of the plaintiff. The appellate court opined that, considering the factors relevant to an award of maintenance, particularly the plaintiff’s inability to earn any income, the Supreme Court providently exercised its discretion in determining that the plaintiff was entitled to maintenance payments sufficient to meet her reasonable expenses.
In Brzuszkiewitz v. Brzuszkiewitz, 28 A.D.3d 860 (3rd Dept. 2006), the appellate court rejected defendant’s contention that Supreme Court abused its discretion by awarding plaintiff non-durational maintenance. The matrimonial action was filed after the parties had been married for 23 years and had three children, one of whom still was under 21 years of age at the time of the appeal. The record reflected that Supreme Court considered the relevant statutory factors, giving particular emphasis to the disparity between the parties’ incomes, plaintiff’s age, her lack of assets, and defendant’s dissipation of assets. The defendant earned $55,000 per year, and his income was likely to increase before he retired. The plaintiff received only $22,000 per year from her employment and had little prospect of any significant increase before she retired, given that she was 57 years of age at the time of trial and had limited earning capacity due to her arthritis and severe hearing loss. The record also supported Supreme Court’s finding that plaintiff’s income from her pension and Social Security after retirement would be less than her current earnings, which were already insufficient to meet her modest monthly expenses. Those factors all militated in favor of an award of permanent maintenance, and the record showed that the lower court appropriately balanced plaintiff’s needs with defendant’s ability to pay.
Likewise, in Cameron v. Cameron, 51 A.D.3d 1165 (3rd Dept. 2008), inasmuch as the record reflected that Supreme Court gave appropriate consideration to the pertinent factors set forth in Domestic Relations Law §236(B)(6)(a), the appellate court rejected plaintiff’s argument that the court abused its discretion in awarding defendant non-durational maintenance.
In Kaplan v. Kaplan, 21 A.D.3d 993 (2nd Dept. 2005), the mother was awarded maintenance in the sum of $7,500 per month for 5 years. Contrary to the father’s contention, the maintenance award was a proper exercise of the trial court’s discretion, taking into consideration the relevant factors, including the parties’ pre-separation standard of living, the separate property retained by each party and their respective net equitable distributive awards of marital property, the mother’s absence from the work force as a certified social worker for most of the period following the birth of the parties’ special needs child, the mother’s continued role as the primary caretaker of a special needs child, the father’s significantly higher earning capacity as a successful partner in a radiology practice, and the short duration of the parties’ marriage.
In Saylor v. Saylor, 32 A.D.3d 1358 (4th Dept. 2006), the record established that the parties were married for 30 years, that the defendant was the primary breadwinner throughout the marriage, that the plaintiff stayed at home with the children or worked part-time for most of the marriage, thereby delaying her career prospects, and that there was a large disparity in the incomes of the parties. The Fourth Department upheld the lower court’s maintenance award on appeal, determining that the Supreme Court properly set forth the factors it considered in determining the amount and duration of the maintenance award.
Thus, each divorce case where maintenance is sought needs to be carefully evaluated on its merits to establish whether maintenance would be appropriate under the pertinent factors set forth in Domestic Relations Law §236(B)(6)(a).

Temporary Maintenance and Prenuptial Agreements

While a pre-nuptial agreement might restrict or waive a spouse’s right to maintenance and equitable distribution, it may not bar temporary relief, including temporary maintenance, interim counsel fees, and a temporary injunction against the disposing of marital property. Solomon v. Solomon, 224 A.D.2d 331 (1st Dept. 1996). In cases where the parties’ pre-nuptial agreement specifically provides that no maintenance will be awarded pendent lite, however, courts have held that no temporary maintenance should be awarded. See, e.g., Arzin v. Covello, 175 Misc.2d 453 (Sup. Ct., New York County 1998).

In Forsberg v. Forsberg, 219 A.D.2d 615 (2d Dept. 1995), the Second Department upheld the validity of the parties’ pre-nuptial agreement. Nevertheless, the appellate court found that Supreme Court did not improvidently exercise its discretion in awarding the wife $200.00 per week in temporary maintenance. The Second Department noted that, “Generally, the remedy for any seeming inequity in the award of temporary maintenance is a speedy trial at which the rights of the parties may be fully determined.” Id. at 617.

Thus, any pre-nuptial agreements must be carefully drafted to specifically prohibit any claims for temporary maintenance.

Family Court Lacks Power to Modify Maintenance Provision in Separation Agreement

In a recent decision, Johna M.S. v. Russell E.S., the Court of Appeals held that the Family Court lacks power to modify maintenance provisions contained in the parties’ separation agreement. The separation agreement that the wife and the husband both signed, explicitly stated that the wife is “completely disabled” and will be in need of maintenance “for the remainder of her life”. The agreement provided for current maintenance payments of $100.00 per week payable to the wife and recited that this being only a determination of her “present” need and his “present” economic circumstances. It further stated that the wife could if need be seek a “modification” of those sums in a “de novo” proceeding in a court of “appropriate jurisdiction”. A divided Court of Appeals held that the Family Court is not such an “appropriate” court and that in respect of spousal (as opposed to child) maintenance, family court lacks subject matter jurisdiction of a “modification”.

The Court pointed out that there was no risk that the wife would become a public charge. According to the Court of Appeals, the danger of a spouse becoming a public charge is the only circumstance in which, under Family Court Act § 463, the Family Court can modify a separation agreement when the matrimonial action has not been brought as of yet.

A key factor in Johna M.S. was that Family Court lacks “equity” jurisdiction. As Judge Smith points out in his dissent, the prior cases held that Family Court’s attempt to “modify” such a separation agreement amounts to a kind of “reformation or rescission”, which are equitable remedies: they seek to alter the parties’ agreement and there was no effort by the wife to do that here. On the contrary, the agreement itself contemplated modification, wholly negating the “equity” analogy. As a result, the disabled wife’s only choice is to either accept maintenance of $100.00 per week as permanent, or to sue in supreme court for a divorce or separation, where she will be able to seek a greater amount of maintenance.