During the divorce process clients must deal with the very burdensome process of discovery.  The record keeping process does not end with the end of a case.  When there is an award of spousal support, both parties should continue to keep very careful records.  In some instances, spousal support will be withheld from a person’s wages.  The benefit of having state enforced support is that the state will take on the burden of record keeping.  Unfortunately the state does make mistakes, and it is important to keep backup records.  These records are important for both tax purposes and for potential future litigation purposes.

The person paying spousal support should:

• Make a detailed spreadsheet which lists all payments made.  The method of payment, check number, date, and the address to which the check was sent or direct deposit made should all be listed.  In addition, a copy of the outgoing payment should be kept;
• If payments are going to be made in cash, then the payee should sign a receipt at the time payment is accepted. 

The person receiving support should:

• Make a detailed spreadsheet which lists all payments received.  Including, the date the payment was received, the amount received, the check number or electronic payment record, the bank and account from which the payment was made.
• In addition, a copy of the payment should be kept.

Both parties should be aware of the tax impact of spousal support payment or receipt and should discuss how to appropriately deal with tax issues with his/her CPA.  You should contact a lawyer if you have any questions about your current spousal support award.

The Oregon Court of Appeals filed an opinion in Quant and Carrier on March 17, 2010.  The entire opinion can be read here:  http://www.publications.ojd.state.or.us/A136186.htm

The case dealt with what the proper amount of maintenance spousal support should be pursuant to ORS 107.105.  Wife assigns error only to the trial court’s award of transitional spousal support, in the amount of $2,000 per month for two years, arguing that, because of her health problems and the disparity in the parties’ earning capacities, the trial court should also have awarded indefinite maintenance support. The trial court recognized the disparity in the parties’ earning capacities– that wife had no income and some fixed expenses, and that husband had significant income and the ability to assist wife with her expenses.  The court further found that it was highly unlikely that, even with retraining, wife would ever attain the earning capacity of husband.  The court found, however, that because the parties kept their finances largely separate, wife has had little benefit from husband’s earnings during the relationship and has not enjoyed during the marriage a standard of living that would be commensurate with that level of income.  The court found further that wife has the ability to supplement her income and that, given wife’s employment skills and talents, she could be self-sufficient.  The court found that wife’s employment possibilities would be only minimally impacted by her physical problems.  Because husband had been providing wife with some financial help, the court awarded wife transitional support of $2,000 per month for two years so that she could retrain as a medical coder.

The court of appeals, basing its decision on the fact that maintenance support is designed not to allow the dependent spouse to become financially independent and self-supporting, ruled that wife should be granted an award of maintenance support in the amount of $1,500 per month for a period of seven years.

Spousal support awards are very fact specific. It is important to clearly tie the facts of a person’s need for support to the reasons articulated in Oregon’s statutory framework.

The Court of Appeals decided the case of Bolte and Bolte on February 17, 2010.  The case is an appeal from a divorce trial.  The Court of Appeals modified the spousal support award made by the trial court.

Husband and Wife were married for 22 years, and separated a few years prior to trial.  Wife gave up employment opportunities of her own to further Husband’s career.  The parties had a household income of $14,000 per month, consisting of Husband’s income of $10,700 and Wife’s income of $3,300. 

Husband argued that his income should be only $7,900 per month because the remainder was from a position that he termed temporary.  Husband also argued that Wife’s income should be presumed to be higher because she was underemployed.

Trial court awarded indefinite support in the amount of $1,500 per month. 

The Court of Appeals held that Wife was not underemployed as she was already working full time and is not, for spousal support purposes, required to work at the highest possible salary.  The amount of spousal support must be “just and equitable” under the totality of the circumstances.  Specifically, ORS 107.105(1)(d)(C) provides a nonexclusive list of factors that we consider in establishing a just and equitable support award for spousal maintenance support, which include (1) the duration of the marriage; (2) the standard of living established during the marriage; and (3) the parties’ age, income and earning capacities, training and employment skills, work experience, and financial needs and resources.  The Court of Appeals modified the support award up to $2,500 per month indefinitiely because “without a substantial award of spousal support, wife’s standard of living following the dissolution will be significantly diminished when compared to the parties’ predissolution lifestyle, which was based on a monthly household income of approximately $14,000.”

The opinion can be found here:  http://www.publications.ojd.state.or.us/A139055.htm

As a Portland Oregon divorce law firm, Stephens Margolin P.C. is dedicated to keeping up to date on Oregon Court of Appeals and Oregon Supreme Court opinions. As a service of The Oregon Divorce Blog, we will be providing updates as new opinions come out.

On August 5, 2009, the Court of Appeals ruled in the case of Morales and Morales, in which the court modifies the trial court’s ruling with respect to spousal support based upon the wife’s appeal.

Husband and Wife married when he was 22 and she was 17.  Their marriage lasted for over 35 years.  Wife raised the parties’ children, never working outside the home, while Husband served in the army.  Husband retired from the army in 1992, after 20 years of service, for medical reasons. 

Wife was awarded $2,000 per month in support at a temporary hearing, in order to cover joint family expenses along with her own individual expenses.  At the hearing, the trial court imputed minimum wage income to wife and advised her to obtain a job.

At the time of trial, husband’s income totaled approximately $5,200 after subtracting taxes and payment for his child’s health insurance.  His income included $3,210 in nontaxable disability payments.  Wife had attempted to find a job, but was still unemployed.  The trial court awarded wife spousal support in the amount of $1,000 per month for one year, $800 per month for two years, and then $500 per month indefinitely.  The court imputed minimum wage income to wife and made a ruling that the nontaxable disability income for husband could not be divided by the court.

On appeal, wife argues that the award of $500 per month is inequitable and husband counters that the award is appropriate based upon husband’s non-disability income. 

The court of appeals explains that husband’s nontaxable disability income is in to be considered income for support purposes, regardless of whether it can be divided as part of a property distribution.  Oregon law defines “income” for purposes of support payments, as, among other things, “any program or contract to provide substitute wages during times of unemployment or disability.”  ORS 25.010(7)(f); see also OAR 137-050-0340 (for purposes of support, “gross income includes income from any source including, but not limited to * * * disability insurance benefits” (emphasis added)).  In addition, the court held that federal law does not restrict the court’s ability to consider the disability payments as income. 

The court of appeals then goes on to consider what amount of support is “just and equitable.”  Based on the length of the parties marriage, the parties’ respective situations, and the parties’ respective incomes or ability to obtain employment, the court of appeals held that wife should be awarded an amount of $1,400 per month indefinitely. 

The entire opinion can be viewed here:  http://www.publications.ojd.state.or.us/A134242.htm
The lawyers at Stephens Margolin P.C. can assist you with your family law appellate questions. If you have any questions about Oregon appellate law please contact Daniel Margolin, who focuses part of his practice on family law appeals, or C. Sean Stephens at Stephens Margolin P.C.

As a Portland Oregon divorce law firm, Stephens Margolin P.C. is dedicated to keeping up to date on Oregon Court of Appeals and Oregon Supreme Court opinions. As a service of The Oregon Divorce Blog, we will be providing updates as new opinions come out.

On April 15, 2009, the Court of Appeals ruled in the case of McLauchlan and McLauchlan.

Husband appealed from the trial court’s ruling in his divorce with regard to the division of property and the award of spousal support to his ex-wife.

As part of the division of assets, the court awarded the “Butte Falls” property to wife provided that she could come up with a plan to refinance the property in order to pay to husband his equalizing judgment. On appeal, husband argued that the trial court did not have the authority to incorporate wife’s refinance plan into the divorce judgment, and that the trial court should have ordered the property sold rather than awarding it to wife. At issue was husband’s claim that wife, and thus the trial court, undervalued the property at trial. The court of appeals held that husband did not property preserve the error at the trial court level because he did not argue that the court lacked authority to do what it did and further that husband had the opportunity to present evidence regarding the value of Butte Falls but did not.

With regard to spousal support, the trial court ordered that husband pay spousal support to wife and reduced the amount of support to a “lump sum present value.” Husband disagreed witht both the amount and the reduction to a present value. Despite the fact that wife agreed with husband that it was error for the trial court to provide for a lump sum present value for spousal support, the court of appeals held that the parties misunderstand the law and that the trial court acted properly.

ORS 107.105 provides that a divorce judgment may provide for spousal support both “in gross or in installments or both.” The trial court awarded wife $1,000 per month for a period of five years and also provided that as part of the refinance of Butte Falls, she can deduct $54,000 (which the court deemed as the present value of the spousal support award). The court of appeals held that it was proper for the trial court to provide for alternative awards, both of which are proper under the terms of the statute.

The entire opinion can be viewed here: http://www.publications.ojd.state.or.us/A134002.htm

The lawyers, including Daniel Margolin, who focuses part of his pratice on family law appeals, at Stephens Margolin P.C. can assist you with your family law questions. As this case shows, it is crucial to have a competent attorney at both the trial court and appellate level. If you have any questions about Oregon appellate law please contact Daniel Margolin or C. Sean Stephens at Stephens Margolin P.C.

Clients often feel very upset about having to provide a life insurance policy to secure their spousal or child support obligation. The most common complaint is with regard to the beneficiary designation for securing child support. Generally the other parent is designated as the trustee over the proceeds of life insurance for the benefit of the children. Clients feel upset that the other parent will receive a good sum of money at the time of their death.

As part of any life insurance provision in a judgment, a clause is always added stating that a “constructive trust” will be established over the life insurance proceeds. On April 15, 2009, the Oregon Court of Appeals ruled on this issue in the case of Tupper v. Roan v. Tupper.

Jerry Tupper and Heather Tupper divorced in 2004. As part of the divorce, Jerry was required to provide a life insurance policy in the amount of $100,000 to secure his child support obligation. In addition, the judgment stated that a constructive trust would be established over the proceeds of any life insurance policy if a party designates a different beneficiary on the policy.

Jerry started living with Danette Roan shortly after the divorce and designated her as the beneficiary on his life insurance policy in direct violation of the terms of the judgment. Jerry died in 2006 and the proceeds of his policy went to Danette. Danette received $600,000 and no money went to Heather to secure Jerry’s child support obligation.

Heather sued Danette claiming that she improperly kept $100,000 in violation of the terms of the judgment. Danette’s response was that she was not aware of Jerry’s obligation to maintain a life insurance policy for child support before he died. Danette further asserted that the court could not impose a constructive trust over the $100,000 because Heather could not prove that Jerry transferred property to Danette that rightfully belonged to Heather and that Danette either knew or should have know of that wrongful conduct.

The court of appeals ruled in Danette’s favor, holding that since Jerry created the life insurance policy after the divorce, Heather did not have an interest in it at the time of the divorce and it was therefore never her property.

For clients, this case creates a difficult situation. Unless a party has a life insurance policy in place at the time of the divorce, the other spouse will likely have a very difficult time obtaining the funds from that policy unless the other spouse follows the requirement to maintain the beneficiary designation required by the terms of the judgment.

If you have questions about life insurance provisions in divorce, custody, or other support situations, the lawyers at Stephens Margolin P.C. would be happy to answer your questions. The entire opinion can be viewed here: http://www.publications.ojd.state.or.us/A136095.htm.

It is important to note that, in this economy, both the person paying spousal support and the person receiving it can experience a substantial, unanticipated change in circumstances. For example, if the purpose behind an original award to a party was to allow that party the time to increase his/her earning capacity through education or other means (often the purpose of a “transitional” support award), and that party, as a result of the unanticipated economic downturn, is not able to find the anticipated employment at the anticipated income rate, then the receiving party may also be justified in requesting a modification of support.

There are two important things to note when attempting to modify support, whether as the party paying support, or the party receiving support. The first is this: courts can only make support modifications retroactive to the filing of a motion to modify support. In other words, if your suffering to make support payments, taking action sooner rather than later is extremely important. Next, for those who are receiving support, if circumstances haven’t panned as anticipated at the time of dissolution, your right to modify support expires when the support obligation is over. In other words, you must move to modify (either to extend the duration of support, or to modify the amount, or both) before the time when your right to receive support under the original judgment has passed.

There are a number of considerations which go into any request to modify spousal support. This blog is specific to the current recession. It must be remembered that a decrease in income, or the inability to find a job, is but one consideration among potentially many others in a modification case. Nevertheless, it may well be an important consideration. There aren’t many people who anticipated the current economic downturn. If the payment of support under a judgment drafted when things were good has become near impossible, or if the support being paid under an old judgment has proven inadequate, then you may need help to modify the situation. If you are like the “regular guy” who I overheard while watching basketball, you shouldn’t feel bad about circumstances that may be out of your control. Spousal support is not meant to be a punishment (though it may seem that way to some). It is not meant to leave a party with no resources. If the economy has caused an impossible situation for you, whether you are paying or receiving support, you may want to contact an attorney to see what can be done about it.

If you would like more information on spousal support modification, please contact Stephens Margolin P.C. in order to schedule a consultation.

Please view parts 1 and 2 of this post:  Part 1 (http://oregondivorceblog.com/wordpress/?p=404); Part 2 (http://oregondivorceblog.com/wordpress/?p=407)

Oregon law permits courts to modify awards of spousal support upon a showing of a substantial change in circumstances. The party seeking to modify an award carries the burden of proving that such a substantial change has occurred. Typically, courts require that the change in circumstances is one that was not anticipated by the parties at the time of the original award. Thus, in one recent case, a court denied a business owner’s motion to reduce his spousal support obligation based upon his claim that his business had experienced a down year. The court held that, though the business owner was able to demonstrate a decrease in his income, he was unable to show that the decrease would be sustained. However, the court went on to state that if the business continued to suffer (that if the downturn was more than just the “economic ups and downs” inherent to most businesses), then a reduction in spousal support would have been warranted. This case was decided by the Oregon Court of Appeals in 1998, when the economy was still hitting on all cylinders.

Now, in 2009, the hypothetical situation to which the Oregon Court of Appeals referred back in 1998, has become familiar to many people; that is, most experts believe that the current economic downturn is something more than just a temporary occurrence. Whereas once courts may have been reticent to find that a decrease in a person’s income, or even the loss of a job, was something other than a temporary occurrence, courts now, like the rest of our society, have become more sensitive to the unfortunate realities with which many people are currently faced. Judges read the papers and listen to the news just like the rest of us; they are aware that things are tough, and they are not insensitive to alleviating difficult or impossible situations.

When a court finds that there has been a change of circumstances sufficient to warrant reconsideration of an existing order of support, the court takes into account the original purpose of the award. Judgments are often vague as to the purpose of a spousal support award. In making a spousal support award, courts are directed by statute to designate one or more categories in which the support award falls. Spousal support can be deemed maintenance support, transitional support and/or compensatory support. Some combination of maintenance and transitional support are often awarded in long term marriages, whereas transitional support by itself is often awarded in shorter marriages. Compensatory support is only awarded as the result of very specific fact patterns, and will not be addressed here. Without going into too much detail regarding the difference between the other categories of spousal support, one of the primary reasons behind an award of maintenance and/or transitional spousal support is to enable the parties to live separately at a standard of living “not overly disproportionate” to the one they enjoyed when they were together. Interestingly, as a result of the recent economic downturn, the standard of living of the party receiving spousal support has, in many instances, become overly disproportionate to the party paying it. This is not surprising when you think about it. If the amount of support originally ordered to keeps things “not overly disproportionate” between the parties remains constant, but the payer’s income decreases substantially, then the amount originally ordered will no longer place the parties in a “not overly disproportionate” position to one another. Thus, the original purpose behind the award is no longer being met, and a court would presumably “adjust” the award to maintain its original purpose. This was essentially the logic behind a 1999 Court of Appeals case where the Court found that it was not originally anticipated that the husband would have to draw upon his retirement account to fund his spousal support obligation. In other words, the Court of Appeals held that when a party’s circumstances have changed to the point where his/her continued payment of support would drive that party to the “poorhouse”, the purpose of that support award was no longer being met, and modification would be justified.

The “not overly disproportionate” language can be viewed as another way of saying that the purpose behind many spousal support awards is to make up for the disparity of the parties’ earning capacities at the time of dissolution. Whether the support is deemed maintenance, transitional, or both, courts will often consider this factor when determining the amount, if not the duration, of an award. When the substantial purpose behind an award is to make up for the disparity of the parties’ earning capacities, and no other express reason is provided, the Court of Appeals determined in 1987, that, upon a showing of a substantial change in circumstances, the task of the court is to maintain the “relative positions of the parties as established in the initial decree in light of the changed circumstances.” The Court of Appeals affirmed it’s 1987 decision in more recent cases, finding in 2002 that it would be just and equitable to reduce spousal support to “preserve the overall percentage division of income” between the parties provided by an initial award, and in 2003 modifying a support award due to a party’s decrease in earnings to an amount equal to the “same proportionate share” of the parties’ total income as the original award.

Please continue to Part 3 of this post:  http://oregondivorceblog.com/wordpress/?p=409

Though my girlfriend might be insulted to discover that my attention can, in fact, be diverted from the madness of college hoops in March, that’s exactly what happened last Saturday as I watched A.J. Price drain his forth 3-pointer of the game, sealing yet another Final Four berth for the Huskies. Let me clarify. First, though the Huskies of Washington put forth a valiant effort this year, I’m a UCONN man, so I’m talking about the Connecticut Huskies. Second, my attention was only diverted after UCONN took an insurmountable lead. Nevertheless, the clock was still ticking, and instead of watching the screen, I found myself staring at my french fries, contemplating something that I had just overheard at the table next to mine.

“I don’t know what to do… I won’t be able to make my spousal support payment this month… I feel horrible.” The man who spoke these words was well-dressed, middle-aged and an obvious sports fan. By all accounts, he was a “regular guy.” This does not surprise me, because if there is one near constant among family law matters it is this: folks don’t like paying spousal support.

The payment of any monthly obligation can be tedious; keeping up with consumer obligations (paying high interest credit cards), or even providing for more basic needs (paying the mortgage), is a dreary process which is constantly eating away at our disposable income. Nevertheless, whereas we have presumably derived some benefit from accruing consumer debt (e.g., the purchase of new clothes, an automobile, vacation, etc), and whereas we derive current and future benefits by making our monthly mortgage payment, there does not appear to be any comparable benefit derived from the payment of spousal support. This seemingly thankless obligation, coupled with the probability that the person to whom this obligation is owed is often someone who we may not particularly like very much, can make the payment of spousal support particularly loathsome.

And so this is exactly what struck me about the comment made by this “regular guy.” I got to thinking that, perhaps, for some, once the obligation to pay support has “sunk in”, and after the pain and hurt feelings associated with divorce have passed, the payment of spousal support may appear different to the person paying it then it once did. Perhaps the notion of helping out a former (or maybe even a current) loved one starts to feel pretty good.

The economy is clearly in bad shape and the downturn has affected everyone. While many companies are trying to avoid lay-offs by reducing employee salaries, other employers are having to take more drastic measures. For some, this means lay-offs and severance packages. For others, it means unemployment checks. Whatever the situation, for many, the economic downturn means a decrease in income.

Please continue to parts 2 and 3 of this post:  Part 2 (http://oregondivorceblog.com/wordpress/?p=407); Part 3 (http://oregondivorceblog.com/wordpress/?p=409)

On March 4, 2009, the Oregon Court of Appeals published an opinion in Boyd and Boyd.  In the Boyd case, wife appealed from a divorce judgment, claiming the trial court erred in dividing the marital property, awarding husband attorney fees, and in the amount of her spousal support award.  The parties had been married 30 years, and had been gifted substantial monies during the marriage from wife’s family.  Husband was making $4000 per month at the time of the dissolution, and wife was not working, nor did she work during the marriage. Wife also received by inheritance real estate worth approximately $133,000.  The trial court included wife’s inherited property in the property distribution and awarded it to wife (rather than awarding it as wife’s separate property).  The court’s original math had wife receiving approximately $15,000 more in property than husband.  The trial court also awarded husband $13,274.70 in attorney fees, and gave wife $200 per month indefinite spousal support.  The trial court’s logic was that wife would receive reduced spousal support and the long half of  the property in exchange for not having to pay an equalizing judgment.