Dec 08

The Senate Passed it’s Version of Tax Reform

The Senate passed it’s version of tax reform just before 2:00 a.m. Saturday by a slim 51 to 49 vote. This week the House and Senate Conference Committee will try to work out the differences. President Trump has said he will sign tax reform legislation before the end of the month. Since passing tax reform is likely more difficult to achieve in the Senate, we expect the most of the differences in the two tax reform bills will lean to the Senate version where there are differences. Here are the key differences between the Senate and House bills:

The House bill sunsets after 2027 and the Senate bill sunsets after 2025. After the final bill sunsets, the tax law would revert to what it was immediately before passage.

• The House bill would create four income tax rates for individuals at 12%, 25%, 35% and 39.6%, while the Senate bill would employ a seven-bracket system, with tax rates of 10%, 12%, 22.5%, 25%, 32.5%, 35%, and 38.5%. The 38.5% rate would start for single taxpayers with taxable income over $500,000 and for married taxpayers filing jointly with taxable income over $1 million, which are the same thresholds in the House bill.

The Senate bill would allow individuals to deduct 23% of “domestic qualified business income” passed through from a partnership, S corporation, or sole proprietorship. The percentage was 17.4% in the Senate Finance Committee plan. The House bill reduces the tax rate on partnership, S corporation, or sole proprietorships to 25%. Many passthrough business owners would be eligible for the 25% rate 30% of their income with the balance being taxed as ordinary income at and be subject to self-employment tax.

• The Senate bill would increase the child tax credit to $2,000 (as opposed to $1,600 in the House bill). The child tax credit would be modified to allow a $500 nonrefundable credit for qualifying dependents other than qualifying children. The Senate bill would also keep the adoption tax credit and the child and dependent care credit, which would be repealed by the House.

• The Senate and House bills now would allow a deduction for state and local real property taxes, up to $10,000. The Senate Finance Committee would have totally eliminated all state and local tax deductions. Both plans repeal the state and local income tax deduction.

• The Senate bill would retain the current deduction for medical expenses that exceed 10% of a taxpayer’s adjusted gross income. In addition, unlike the House bill, the Senate bill would not change the current alimony rules.

• The Senate would allow medical deductions with a 7.5% AGI threshold staring in 2017 while the House eliminates the medical deduction.

• The House plan would limit the deductibility of mortgage interest to $500,000 of acquisition indebtedness, the Senate bill would retain the current limit of $1 million but would repeal the deduction for interest on home equity indebtedness. The House bill would grandfather mortgages incurred before November 3, 2017.

Alimony would not be deductible or taxable under the House bill and remain as under current law under the Senate bill.

• The House would repeal the alternative minimum tax and the Senate would NOT repeal the individual and the corporate AMT. The Senate does propose to increase the AMT exemption amounts. This is a change from the Senate Finance Committee plan.

• The Senate would limit the amount an individual could deduct from business losses to $500,000 for married persons and $250,000 for single persons. This limitation would be applied at the entity level first. Any disallowed loss would be treated as a net operating loss carryover.

• The House and Senate would require an individual to use their primary residence for 5 out of 8 years to qualify for the $250,000/$500,000 gain exclusion. However, the House version would phase out the exclusion altogether if an individual has average AGI over $250,000 for single persons and $500,000 for married persons. The average is the year of sale and the prior two years.

• The Senate bill would eliminate the individual health care mandate and related subsidies projected to save over $300 billion over 10 years. The House does not propose to eliminate the individual mandate.

• The Senate bill would not repeal the estate tax but would double the exemption amount, the same as the House bill.

• The Senate bill would lower the corporate tax rate to 20%—like the House bill—but would delay that lower rate until 2019.

• The Senate phases the 100% bonus depreciation to 80% in 2023, 60% in 2024, 40% in 2025 and 20% in 2026. The House would allow the 100% bonus deprecation until 2023.

• The Senate increases the 179 deduction to $1 million and the House increases the expensing deduction to $5 million.

• The Senate would shorten the real estate depreciation life for both commercial and residential property to 25 years while the House has no proposal to change.

• The Senate bill does allow a full interest deduction for floor plan financing as does the House. For other businesses, the House and Senate limit business interest expense to the amount of business interest income plus 30% of taxable income.

• The Senate reduces the NOL deduction to 90% of taxable income for losses arising after 2017 and then 80% after 2022. The House would limit an NOL deduction to 90% of taxable income after 2017. The House appears to allow the full deductibility of NOLs incurred before 2018.

• There is no trigger in the Senate bill that would increase taxes if revenue targets are not met. The Senate plan reduces the projected tax cuts by about $350 billion over the period from 2018 to 2023.

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Nov 03

Tax Bill

I have reprinted below the exact language of the proposed change to the tax law regarding the deductibility and/or inclusion of spousal support payments. The proposed law provides as follows:

“this section shall apply to- (1) any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986 as in effect before the date of the enactment of this Act) executed after December 31, 2017, and (2) any divorce or separation instrument (as so defined) executed on or before such date and modified after such date if the modification expressly provides that the amendments made by this section apply to such modification.”

Read More: The Tax Bill’s Fine Print: Tuition, Medical Expenses and Alimony

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Nov 22

The Hague Convention: International Recovery of Child Support and Family Maintenance

A Brief Overview of the Convention on the International Recovery of Child Support and Other Forms of Family Maintenance and Its Application

The Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance was concluded on November 23, 2007 with the purpose of building on existing Hague Conventions and other international instruments, specifically, the United Nations Convention on the Recovery Abroad of Maintenance which was enacted on June 20, 1956. In attempting to keep up with the advances in technology to create a more efficient and flexible system, the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance has created a unique framework to secure the recovery of maintenance for the child from the parent(s) or other responsible persons as a way to create the conditions of living necessary for child.

This article will serve as a broad overview of the mechanisms put in place by this Convention to create an environment in which Contracting Parties can more openly co-operate for the international recovery of child support and other forms of family maintenance. To obtain a better understanding of the framework within the Convention, it is important to know that it is divided into nine interrelated chapters with sixty-five articles addressing various aspects involved in the recovery of child support and other forms of maintenance. Chapter I of the Convention addresses its objective, scope and definitions. A selection of the more important Articles within Chapter I of the Convention is noted as follows: Article 1 is emblematic of the objectives the Convention is attempting to achieve by creating a comprehensive system of co-operation between the authorities of Contracting States, making available applications for the establishment of maintenance decisions, providing for the recognition and enforcement of maintenance decisions and requiring effective measures for the prompt enforcement of maintenance decisions. The scope of the Convention is further expounded upon in Article 2, which applies the Convention to maintenance obligations arising from a parent-child relationship towards a person under the age of 21 years. It should also be noted that Article 2 does provide Contracting States with the ability to limit the Convention’s application to persons who have not attained the age of 18 years.

Chapter II relates to the administrative co-operation between the Central Authorities of each Contracting State. A summation of the relevant Articles are as follows: Article 6 of the Convention details the specific functions of Central Authorities and their impact on the implementation and facilitation of applications for the enforcement of decisions made or recognized in the requesting Contracting State. Article 8 is an important part of the Convention as it requires each Central Authority to bear the costs of applying the Convention and not impose any charges on applicants save for exceptional circumstances. Article 10 details the categories of available applications to a creditor in a requesting State seeking to recover maintenance and Article 11 examines the contents of that application. It is also important to note Article 12, which involves the transmission, receipt and processing of applications through Central Authorities.

Another important aspect of the Convention is the recognition and enforcement of maintenance obligations in the Contracting State under Chapter V. Some of the relevant Articles in this Chapter include: Article 19 determines the scope of this Chapter and defines the concept of a “decision” by a judicial or administrative authority, Article 20 provides the basis for one Contracting State to recognize and enforce a decision in another Contracting State, Article 22 addresses the grounds for refusing recognition and enforcement, Article 23 details the procedure on an application for recognition and enforcement and Article 30 discusses the key concepts of “maintenance arrangements.”

Enforcement is also a significant aspect of the Convention for the Contracting State implementing the maintenance obligation and is addressed extensively in Chapter VI. Some of the significant Articles within this Chapter include: Article 32 provides that enforcement of such “decisions” shall take place in accordance with the law of the State addressed and Article 34 details the available enforcement measures including wage withholding orders, garnishments and deductions. Chapter VIII provides for general provisions of the Convention including the following Articles: Article 37 addresses direct requests to competent authorities, Article 38 provides for the protection of personal data and Article 40 details the non-disclosure of information detrimental to a person’s health, safety and liberty.

Chapter IX addresses the final provisions of this Convention and details ratification and accession of Contracting Parties. The relevant Articles are as follows: Article 58 deals with the signature, ratification and accession of Contracting States, Article 60 provides the Convention’s entry into force for Contracting States, Article 62 allows for Contracting State to make reservations, Article 63 permits Contracting State to make declarations at the time of signature, ratification, acceptance, approval or accession of the Convention and; lastly, Article 65 provides that the depositary shall notify the Members of the Hague Conference on Private International Law and Other States and Regional Economic Integration Organizations which Contracting States have signed, ratified, accepted, approved or acceded to the Convention.

Seeking to build upon the Convention on the Recovery Abroad of Maintenance of 20 June 1956, multiple Countries have entered into force the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance including Albania, Bosnia-Herzegovina, the European Union, Norway, Turkey, Montenegro and Ukraine. The European Union became a party in 2014 as a Regional Economic Integration Organization. Because the subject matter of the convention fully falls within EU competency, the EU rather than the individual member states became a party. The convention is applicable to all 28 member states except Denmark.

In September 2016 President Obama signed legislation which made the convention enforceable in the United States. Effective January 2017 the Convention will provide many substantial benefits for the member countries analogous to the Uniform Interstate Family Support Act. In addition to increasing the cooperation between Contracting Countries (and called “States” under the provisions of the treaty) and providing efficient procedures to process international child support cases, the Convention, as Article 8 indicates, provides cost-free services for US citizens needing assistance with child support enforcement in other Contracting States (countries). Overall, the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance, once entered into force, will provide significant benefits to individual states within the United States and create an efficient procedure for the processing of international child support cases.

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Oct 03

Military Pension Division – Major Change Looming

military pensions

This is being posted on behalf of Steve Lynch and the Military and Veterans Affairs Committee Member Community.

Family law practitioners who handle military divorces should be aware of a proposed revision to the Uniformed Services Former Spouses’ Protection Act (“FSPA”), 10 U.S.C. § 1408, that may go into effect later this year. The change would mandate use of a single formula nationwide for military pension division (MPD) known as the “Frozen Accrued Benefit” (FAB) method.  FAB divides military retired pay based on the rank and years of service of a servicemember (SM) as of the date of the pension division order (rather than the date of retirement).  The change would invalidate the “Time” rule, used by Ohio and most other States, which calculates MPD based on a formula applied to the actual retired pay of the SM.

The proposed revision is contained in both the House and Senate versions of the National Defense Appropriations Act (NDAA) for FY 2017.  If passed, it is expected to generate some confusion as States adjust to the new methodology; in addition, the revision fails to address key issues, such as the enforceability of settlements that provide for pension division using a non-standard formula.  For more information on the proposed change, including a detailed comparison of the FAB method and the “Time” rule, please consult the attached analysis prepared by Mark E. Sullivan, COL, USA (Ret), Member, Military Committee, ABA Section of Family Law.

Stephen Lynch
U S Coast Guard
Cleveland OH

Melissa Quick
Manager of CLE Certification and Specialization
Ohio State Bar Association
Columbus OH
+1 (614 ) 487-2050 x4411

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Sep 13

NSCS: Ned Price – The Hague Convention on International Recovery of Child

NCS Ned Price on the Hague Convention and International child recovery

Statement by NSC Spokesperson Ned Price on The Hague Convention on International Recovery of Child Support and Other Forms of Family Maintenance

Today, the President signed the instrument of ratification for the Hague Convention on International Recovery of Child Support and Other Forms of Family Maintenance. This Convention contains numerous groundbreaking provisions that, for the first time on a global scale, will establish uniform, simple, fast, and inexpensive procedures for the processing of international child support cases, which benefits children and those responsible for their care. While similar procedures are already the norm in the United States, establishing them as the international standard represents a considerable advance on prior child support conventions. Ratification of the Convention will mean that more children residing in the United States will receive the financial support they need from their parents, whether their parents reside in the United States or in a foreign country party to the Convention.

Read more about The Hague Convention

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Feb 29

How to Split Child’s College Funds during Divorce

divorce law columbus ohio.  How to split a child's college fund

In many divorce cases there arises an issue with regard to how to address and/or divide the children’s “college funds.” These college funds which many time are held in accounts established under the Ohio Uniform Gift to Minors Act( or UTMA) and can be a source of contention as well as source of funds which a parent may wish to use for purposes other than the payment of the costs for a child’s college education. In a recent case, the First District Court of Appeals took the opportunity to address college accounts and the manner in which they are to managed.

In the case of Durisala v Durisala ( First District Court of Appeals) 2014 Ohio 5229 ( 2014) the parties during their marriage had established several UTMA accounts. The purpose of these accounts was to provide a fund to pay for the costs associated with their daughter’s college education. The evidence in the case also established that these accounts had been funded during the parties marriage with marital funds. At trial the court designated the Mother as the custodian of these accounts, ordered the Mother to preserve the funds so that the child could access the funds for educational expenses upon her graduation from high school. The trial court also ordered the Mother to provide Father with copies of annual statements associated with these accounts. Mother appealed that decision to the First District Court of Appeals.

In reversing the trial court’s decision, the Court of Appeals for the First District said that a “custodial account” held for the benefit of a minor child is the sole property of the child and it is neither the “separate property nor marital property” of the parents. The Court in it’s decision also said that any changes to the accounts or regulation of the custodial account must be made by the Probate Court and not the domestic relations court. According to the Court of Appeals the trial court lacked jurisdiction to enter any orders regarding these custodial accounts.

Although this is a decision out of the First District and therefore is not binding on any other trial courts in Ohio other than the trial court’s which are within the First District, the decision of the Court of Appeals in Durisala does provide some guidance on how to address the disposition of funds accumulated for the children and which were intended to be used for their college education.

Your Columbus OH Divorce Attorney

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Feb 18

International Child Custody Case | Columbus Family Law

Gottfried Law Hague Convention Minette v Minette Younger Abstention Docterine

Gottfried Law Successfully Stays Federal Court Proceedings in Minette v. Minette Pursuant to the Younger Abstention Doctrine

In what appears to be a rare instance in which the federal court has applied the Younger Abstention Doctrine in a Hague Convention case, Gottfried Law has successfully petitioned the United States District Court, Southern District of Ohio to stay its federal court proceedings pending an outcome in the state courts of Delaware County, Ohio.

The Younger Abstention Doctrine is a narrow doctrine used only in exceptional circumstances by the federal court when the exercise of federal jurisdiction would disrupt or interfere with ongoing state civil proceedings based upon the principles of equity, comity and federalism.

In the Court’s Opinion and Order issued on February 9, 2016 regarding the Hague Convention Petition filed by the Plaintiff, the Court noted that for the federal court to proceed on the Hague Convention Petition in this matter it would unduly interfere with the state court’s ability to proceed with its review of the magistrate’s order issued in state court on October 7, 2015. The Court further noted that the Plaintiff’s Motion to Set Aside puts before the state court the question whether the proceeding will resolve the Hague Convention claim; therefore, the federal court should abstain from the Hague Convention matter pending the state court’s decision. Thus, the Court stayed the federal court proceedings as it related to the Hague Convention Petition pursuant to the Younger Abstention Doctrine.

The Court’s decision based upon the Younger Abstention Doctrine is a key victory for Gottfried Law and highlights the firm’s ability to handle complex matters that relate to the Hague Convention on the Civil Aspects of International Children Abduction in 1980 in an efficient and creative manner.

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Sep 22

Lesbian Adoption Granted, Refused by Alabama Supreme Court

Alabama court refused to recognize adoption granted to lesbian woman in 2007 by Georgia court

The Alabama Supreme Court in the case of E.L. v V.L has refused to recognize an adoption granted to a lesbian woman in 2007 by a Georgia court.

The Alabama Supreme Court ruled on Friday in a per curiam decision with one dissent, report Reuters, and the Associated Press.

The woman who adopted the three children, conceived by her partner through artificial insemination, had sought visitation in Alabama. The Alabama Supreme Court said Alabama courts didn’t have to recognize the adoption because the Georgia court did not properly apply Georgia law and had no subject matter jurisdiction.

Georgia law doesn’t allow a nonspouse to adopt unless the biological parents’ parental rights are terminated, the Alabama Supreme Court said. In the present case, the biological mother had not relinquished her parental rights.

The Alabama Supreme Court said it wasn’t reviewing the merits of the Georgia judgment, which would be prohibited by the full faith and credit clause of the U.S. Constitution. Instead, the court said, it found that the Georgia court “was not empowered” to grant the adoption.

Among the justices who overturned the adoption was Chief Justice Roy Moore, who had argued that a federal court ruling striking down the state’s gay-marriage ban doesn’t bind state judges.

A dissenting justice, Greg Shaw, said the Alabama court was actually deciding the merits of the Georgia ruling in violation of the full faith and credit clause. “I fear that this case creates a dangerous precedent that calls into question the finality of adoptions in Alabama,” he wrote. “Any irregularity in a probate court’s decision in an adoption would now arguably create a defect in that court’s subject matter jurisdiction.”

The woman seeking visitation was identified as V.L. in the opinion. Her lawyer, Cathy Sakimura of the National Center for Lesbian Rights, said the next possible step is to seek Supreme Court review.

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Sep 15

International Child Custody Case | Columbus Family Law

International Child abduction for Dominguez using Hague Convention

Gottfried Law acts as Lead Counsel for Dominguez in a recent international child abuse case.

Custody disputes are often a serious result of a divorce case. It becomes very complicated when a parent removes a child or children from the home country and crosses into a foreign country without the other parent’s consent. This is where Gottfried Law comes into handle international child abduction and international child custody cases.

The US enacted the Hague Convention on the Civil Aspects of International Child Abduction in 1980 in order to deter international child abduction and allow for a process of legal action to return the children back to the home country. This case goes into great detail about how Gottfried Law won the Dominguez v Duty case in order to return Dominguez’s three children back to Mexico, the respective home country.

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Aug 28

Parent Cannot View Records of Alleged Child Abuse Investigation

In a recent Supreme Court decision regarding confidentiality of Children Services Records, the court held that a parent cannot view records of alleged child abuse investigation. As reported by Kathleen Maloney of the Supreme Court in the Case of State ex rel. Clough v. Franklin Cty. Children Servs., Slip Opinion No. 2015-Ohio-3425, the Ohio Supreme Court ruled that The records of a children’s services agency’s investigation of suspected child abuse are confidential and cannot be released to the child’s parent. The records related to a child abuse investigation by a children’s services agency are confidential, and the mother requesting the documents did not show good cause to override that confidentiality, the Ohio Supreme Court decided today in a case from Franklin County.

The per curiam decision denies the writ of mandamus requested by Stephanie Y. Clough to force Franklin County Children’s Services (FCCS) to give her access to agency files about the investigation of suspected abuse of Clough’s minor daughter.

Case Background

Clough made verbal and written requests to FCCS in spring 2014 to review records about her daughter. After the agency denied her requests, Clough filed a complaint with the Ohio Supreme Court on July 3, 2014, asking for the writ.

She argued that an FCCS document spelling out the agency’s board policies allows her to access and review the content of case records about her and her children. Noting that an FCCS investigation of possible abuse of her daughter was found to be unsubstantiated, Clough stated she was later told the conclusion was going to be changed to “indicative of abuse.” She wanted to find out why the agency altered its decision.

Court’s Analysis

The court noted in today’s opinion that the agency’s policy does give adults and children who are FCCS clients the right to examine their case records as long as that access is not barred by law. In seeking a writ of mandamus, Clough had to show the agency had a clear legal duty to provide the records. However, the court explained, a duty does not exist in a mandamus action unless the General Assembly has enacted it in statute. The court concluded that the FCCS internal board policy does not reflect a duty that has been created by the legislature.

In addition, the court reviewed whether public records law applied to the case. A children’s services investigatory record generated from a report of suspected child abuse is explicitly made confidential in state law. Kenneth J. Spicer, a retired judge from the Delaware County Common Pleas Court, conducted a private review of the requested materials for the Supreme Court and determined that, with possibly a few exceptions, the file contained investigatory records of a report of possible child abuse. Spicer stated the file showed that a suspected abuse report had been received, was investigated, and was closed after a decision that the allegations were unsubstantiated. The file indicates the parents were notified.

The court concluded that the bulk of these records fall under the state law making them confidential and therefore exempt from disclosure as a public record.

For the documents in the file that might not be confidential, the court explained that another statute, R.C. 5153.17, opens those records only to the agency, the director of job and family services for the state and for the relevant county, and other people given written permission by the children’s services agency’s executive director.

The executive director may provide access if the requester shows “good cause” by showing that disclosure is in the child’s best interest or that the requester’s due process rights are involved. The good cause must outweigh the reasons for confidentiality, the court pointed out.

“Clough’s argument in support of disclosure is that FCCS did not follow its own policies and procedures in denying her request,” the opinion stated. “This does not qualify as good cause. While her case is sympathetic, and she is no doubt concerned about the investigation of her daughter’s possible abuse, she has not alleged that the child is currently in any specific danger, that her due process rights are in jeopardy, or that there is any similarly compelling reason to depart from the statutory mandate of confidentiality.”

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