Norristown Family Law Blog

Family Law Case Law Update - Divorce: Equitable Distribution, May 2012

By Cynthia Bashore, Esquire, Attorney, www.mbfamilylaw.com

In Goodemote v. Goodemote, 2012 Pa Super 24, the Court held, in divorce, that the increase in value of Husband's investment account, funded by his pre-marital deposits of his federal veteran's disability benefit payments, is marital property, subject to equitable distribution. Husband had never withdrawn any funds from his pre-marital investment account, and he never used those funds for his support and maintenance. As of the date of marriage, the value of the investment account was $74,374. Although no post-marital contributions were made to the account, when the parties separated 16 years later, the value was $158,932, an increase in value of $84,557.

In this case of first impression, the Court addressed the United States Supreme Court's decision in Porter v. Aetna Casualty & Surety Co., 370 U.S. 159 (1962). In that case, the guardian of an incompetent veteran deposited a portion of the veteran's disability payments into a savings and loan account, and a creditor thereafter sought to attach those funds to satisfy a judgment. The Supreme Court held that the veteran's disability payments retained their exempt status under 38 USCA §5301 even after being deposited into a federal savings and loan account. The Court reasoned that Congress intended that veterans, in the safekeeping of their benefits, should be able to utilize those "normal modes adopted by the community for that purpose," provided that the benefit funds (1) are readily available as needed for support and maintenance, (2) actually retain the qualities of moneys, and (3) have not been converted into permanent investments. To determine whether the benefits had been "converted into permanent investments," the Court applied a 3-prong test: (1) whether the funds were "of a speculative character"; (2) whether the veteran used the moneys from the savings and loan fund for his support and maintenance requirements; and (3) whether other funds were then available to him, his disability payments having been cut off.

In the instant case, the Court ruled that the increase in value of Husband's veteran's benefits were marital property subject to equitable distribution because Husband failed to meet the third prong of the Porter test, as he had converted the VA payments he deposited in the investment account into permanent investments. Moreover, Husband's VA payments were not his only means of support, he never withdrew any funds from the investment account, nor did he use the funds for his maintenance and support. Therefore, Husband's VA payments lost their exempt status when Husband converted the funds into permanent investments by placing them in his investment account.

If you have questions regarding this case or if you are experiencing a similar issue, please contact Cynthia Bashore, Esquire to discuss the details of your specific situation.

Divorce Case law updates - April 2012 By Cynthia Bashore, Esquire, Attorney with Law Offices of Maribeth Blessing, www.mbfamilylaw.com

In SMC v. WPC, 2012 PA Super 92, Husband appealed the Trial Court's rulings that (1) Wife's post-separation affair is irrelevant to a spousal support entitlement; (2) Wife's vacation cruise with friends, over the objection of Husband, does not constitute "indignities" against Husband; and (3) Wife's decision to leave the marital residence as a result of Husband's verbal abuse did not constitute desertion. In determining spousal support entitlement, the Court must look at a party's conduct during the marriage to determine whether a fault grounds exists for divorce. Since a party cannot establish fault grounds based upon post-separation conduct, Wife's post-separation relationship was irrelevant to her entitlement to spousal support. The Court also found that leaving the marital residence as a result of Husband's verbal abuse, over Husband's objection does not constitute desertion. Wife did not leave maliciously or on a casual whim; rather, Husband was emotionally abusive. The Court also found a significant disparity in the incomes of the parties and ordered Husband to pay a portion of Wife's attorney's fees. Not a good day for Husband...

In MacDougall v. MacDougall 2012 Pa. Super 83, the Court decided the issue of whether post-separation cost of living adjustments to Husband's pension benefits are considered marital property subject to the terms of an equitable distribution order, where Wife was awarded a share of the marital portion of Husband's defined benefit pension plan. The Trial Court ruled that the marital component of Husband's pension did not include post separation cost of living increases. The Superior Court reversed, citing the general rule that post separation increases in pension benefits are marital as long as they are not the result of efforts attributable to the spouse. Therefore, the post-separation cost of living increases are considered marital property because the increases were not merit based nor due to post divorce efforts of Husband. Rather, they are considered "passive adjustments." The court concluded that post-separation cost of living increases in the benefit are marital and subject to equitable and proportionate distribution.

Notably, the Court also discussed the factors that must be proven for civil contempt: To sustain a finding of civil contempt, the complainant must prove, by a preponderance of the evidence, that: (1) the contemnor had notice of the specific order or decree which he is alleged to have disobeyed; (2) the act constituting the contemnor's violation was volitional; and (3) the contemnor acted with wrongful intent. The Superior Court reversed and remanded to determine whether Husband acted in contempt under these factors when he refused to provide Wife with her proportionate share of the cost of living increases.

In Reber v. Reiss, 2012 PA Super 86, Husband appealed a trial court's ruling that awarded Wife the parties' frozen pre-embryos created from Husband's sperm and Wife's eggs as part of an equitable distribution award in the parties' divorce. Affirming the Trial Court's ruling, the PA Superior Court concluded that although the party desiring to avoid procreation should ordinarily prevail, the Court balanced the facts unique to this case and found that Wife's inability to "achieve biological parenthood without the use of the pre-embryos" is a significant interest that outweighs Husband's desire to avoid procreation.

Even as the national economy begins to rebound, many Pennsylvania residents no doubt continue to suffer from the aftermath of the financial crisis that hit the nation in 2008. Those impacted may well experience tremendous difficulty in meeting their financial obligations, which may include child support. However, failing to pay child support may subject the non-custodial parent to serious criminal penalties, not to mention place the well-being of the child in jeopardy.

In that vein, readers of this blog may be interested to hear that on April 10, a federal grand jury in Pennsylvania indicted a 49-year-old man for willful failure to pay a child support obligation. In 1998, the man was ordered by a county court to pay child support, and he continued to do so up until February 2008. At that time though, he stopped making the payments for unknown reasons.

Most in Pennsylvania are probably quite aware that divorce can be an emotionally trying and stressful time. However, what many may not necessarily know, or at least fully realize, is that it can be a strain on one's finances as well. When going through a divorce, it is vital to gather together all of one's financial documents in one place.

Keeping good records can prove important in securing a favorable result in the divorce proceeding. That is, knowing not only what one owns but also what one owes can help with putting together a spending plan for during the divorce. This way, while the process remains ongoing, one can spend appropriately and thereby ensure that they are not left penniless.