Articles

DOLLARS IN DIVORCE - 2005

The 2005 Appellate Court Cases, Rules and Statutory
Amendments Involving Support and Divorce

Mary Cushing Doherty, Esquire
High Swartz LLP
610-275-0700

The summary of the developments in Pennsylvania law in late 2003 and late 2004, included reference to the pending Support Guidelines. The Guidelines are finally here. They were published on September 27, 2005. The Support Guidelines will be effective in four months, January 27, 2006. Those changes are not as dramatic as expected. Long-awaited Amendments to the Divorce Code, which followed ten years after the Domestic Relations Committee of the Joint State Government Commission began work on drafting a statute, finally passed in 2005. Since the 1980 Divorce Code these are the most comprehensive amendments to the Code in 25 years. For accountants, the most significant change to the Divorce Code is the tax considerations, and there are key changes to pension valuation. See Section X below.

As always, there are interesting cases to discuss. These include the Supreme Court decision Sternlicht v. Sternlicht, issued June 20, 2005, on the issue of donative intent and payments into a custodial PUTMA account. In terms of Superior Court decisions, the Novinger case on earning capacity has taken a kinder, gentler approach to the problems of a tight job market. The Superior court in Spahr v. Spahr interpreted the Husband's earning capacity with much less generosity of spirit when he seemed to have funds available for the asking for tax obligations when and if he chose to pay them. In Jacobs, the Superior Court extends the reasoning of Humphreys to gifts, but also reinforces the Court's view of the importance of deviation from guidelines. When one realizes that deviation from the Guidelines was cause for slapping the hands of many trial judges several years ago, this development in the law cannot be overlooked, and it opens the door for good lawyering, and good financial guidance from the forensic accountants who can assist in the preparation of a support case. The highlighted cases discuss support, review of equitable distribution and an arbitrator's award, and enforcement of equitable distribution. The cases on enforcement of an agreement often deal with Qualified Domestic Relations Orders. Attorneys and pension consultants need to be clear at the time of settlement so there is less confusion later. Finally, a few common-law marriage cases will cross our desks for a short time since common-law marriage has been abolished in Pennsylvania prospectively. As always, it is fascinating which cases rise to the Superior and Supreme Courts, reinterpreting a subtle concept in the law, or knocking our socks off by taking a stance that one would not have predicted the day before the Opinion issued. Read on to keep up with the competition.

I. CUSTODIAL ACCOUNTS

Sternlicht v. Sternlicht, 822 A.2d 732 (Pa. 2005), decided June 20, 2005. Father and Mother were the parents of a four-year old when they separated in 1997. Father had funded a custodial account pursuant to PUTMA during the marriage. By separation the value was $5,600. After separation Father deposited another $46,500 using post-separation earnings and an inheritance. At the time of the divorce, Father testified that the funds in the account were maintained as a college fund for his daughter. By 1999, he withdrew over $59,700. Mother called him to task for dissipating PUTMA funds. Father argued that under the Common Law, in order to create a gift there must be donative intent, delivery, and acceptance of the gift. Father claimed that his daughter, (then 6 years old), had never "accepted the gift", so he could take the money out. Supreme Court Justice Max Baer, writing for the majority, found that the clear statutory language of PUTMA, a Uniform Statute, could contradict the Common Law. No acceptance was required, and Father's donative intent and delivery was sufficient to complete the gift. Interestingly, the concurring Opinion of Justice Cappy went further. Consistent with other states that have interpreted the Uniform Statute under PUTMA, Cappy found that while the deposit in an UTMA account is highly probative on the issue of donative intent, it does not create an irrebutable presumption. Father tried to argue that those states that allowed the presumption be rebutted should allow him to remove the funds. But Cappy noted that Father is confusing intent with motive. Father admitted he put the funds in the PUTMA account with the intent of saving taxes. Justice Cappy found that once he filed a tax return on the basis of the transfer of the funds to his daughter, as a matter of law, Father showed he considered the transfer of funds gifts to his daughter for tax purposes which could not be rebutted later when he wanted the money back.

Sebastianelli vs. Sebastianelli, 876 A.2d 431 (Pa.Super. 2005), decided May 25, 2005. During the course of their divorce, Father claimed that Mother inappropriately removed funds from a custodial account without establishing that she had done so for the benefit of her son. Instead of filing Exceptions on a timely basis, to appeal the Master's decision, Father belatedly filed a Petition for Special Relief. The Master had already pronounced that a Master in Divorce does not have authority to resolve the issue. The Court found that Father's Petition for Special Relief was not a proper Petition, as in fact he was questioning the Master's conclusion that proper jurisdiction was with the Orphan's Court. Failure to properly file Exceptions resulted in a waiver of Father's claims on appeal.

II. EARNING CAPACITY

Doherty v. Doherty, 859 A.2d 811 (Pa.Super. 2004), decided September 21, 2004. Mother appealed an Order of Child Support on the basis that the Trial Court failed to apply the "nurturing parent doctrine". That doctrine recognizes that a custodial parent who stays at home and cares for a child does, in fact, support the child. At the time of trial the children were three and nearly six years old. Father brought in a vocational expert to testify as to Mother's earning capacity. The evidence showed affordable child care was available through Father's family and through the preschool/kindergarten program. Mother had worked part-time after the children were born. The Opinion does not tell us the income ascribed to Mother. It does tell us that the child support totaled approximately 44% of Father's net earnings. The Superior Court would not overturn the reasoning of the Trial Court on appeal.

Culver v. Pilkauskas, A.2d (Pa.Super. 2004), decided September 22, 2004. In an interesting twist, Mother was found to be receiving almost $600 per month in "income" in the nature of flex credits from her employer. She applied this money towards her health insurance for herself and the minor child in the amount of $676. The Trial Court first added the flex credit valued to Mother's income, and then directed Father to pay his percentage share of the health insurance benefit. Although Mother was the one who was assigned the flex credits as income, which seems unfair, it was Father who appealed because he was paying for a percentage of the benefit which was basically covered by the flex credit. The court found that since Mother would not receive the flex credit if she did not buy health insurance, the flex credit was really in the nature of an employer-paid benefit, in this case the health insurance premium. The Appellate Court found it was not fair to give mother credit for a cost, (the health insurance), that she did not pay. So the case was reversed and remanded.

Arbet v. Arbet, 863 A.2d 34 (Pa.Super. 2004), decided November 15, 2004. In a case poorly presented by Father and his counsel, Father requested that the Appellate Court overturned the decision of the Trial Court to include in his available income the value of his employees benefit package and the interest from a non-marital annuity. Father also objected to the Court relying on Mother's earnings, when Father felt her earning capacity was higher. One has to wonder if Father went too far and lost sympathy with the Court. Mother, who returned to work as a pharmacist, had custody of the children half the time, on alternating weeks. During her non-custodial weeks, she worked a grueling schedule of 72 hours in 7 days, earning gross salary of over $82,000 per year. Father's income was over $112,600, but his percs, including health insurance, life insurance, disability insurance, pension, professional development and employee services, were valued over $35,800. The entire package was included in his income. Also included was actual annuity interest, less administrative costs, of $31,100. If Father withdrew his interest on a current basis, he would suffer a 10% tax penalty which the Court deducted to find annuity interest income of $28,500, rounded. The Court entered the child support order based on Father's income, including the benefits package. But then in sympathy for Father, the Court reduced his obligation to pay a mortgage adjustment, (a supplemental support obligation because Mother's mortgage expense was more than 25% of her net income plus child support), Father's potential would be to pay 50% of the excess, but he was only ordered to pay 25%. The Appellate Court was critical of Father's efforts at the Trial level. It was his obligation to provide information to the Court with regard to the actual benefits paid from the percs. He only gave information regarding health insurance premiums, which led to a $12 adjustment. Without further evidence that the inclusion of the percs should not be income for support purposes, the Appellate Court would not reverse and would not find the Trial Court abused its discretion. Furthermore, the Appellate Court found since Father could have access to the income from his annuities, his children should reap the benefit of his investment. The Court agreed with the determination that Mother's $82,000 income was a reflection of her earning capacity. Three strikes, Father was out.

Willoughby v. Willoughby, 862 A.2d 654 (Pa.Super. 2004), decided November 22, 2004. In this case, a Husband who was subject to a permanent alimony obligation to his disabled Wife, lost his job when criminal charges were brought against him for drunk driving. A little over 18 months later, he pled guilty to numerous crimes which resulted in three to seven years in prison. A year later he filed to modify his alimony obligation, distinguishing his case from the Supreme Court's decision in Yerkes, 824 A.2d 1169 (Pa. 2003), where child support modification was dismissed on the basis that incarceration alone is an insufficient basis for modification. The Superior Court found the reasoning of Yerkes should extend to the benefit of an alimony recipient.

Spahr v. Spahr, 869 A.2d 548 (Pa.Super. 2005), decided February 22, 2005. In response to a decision of Judge Leslie Gorbey of Lancaster County, a businessman Father appealed the determination of his earnings. The parties separated in February, 2002, and in mid-year 2003, Mother filed for child and spousal support. Father was the 50% owner, president and CEO of two Subchapter S corporations. After a terrific year in 2002, when Husband's income peaked at $804,000, 2003, the companies suffered setbacks and Husband's income dropped to $365,000. Husband argued that his income for 2003 should be based on $365,000, and the taxes attributed to that income only. The Trial Court found, however, that the companies had sufficient liquidity to distribute an extra $126,189 to Husband in 2003. Husband admitted he inadvertently failed to make tax payments of $59,000 for 2002, which led to his increased net tax liability in April, 2003. Also, in 2003, Husband paid all 2003 taxes, even though he would normally pay them quarterly, with some payments deferred to 2004. The Appellate Court felt it was not inappropriate for the Trial Court to include in Husband's income the distribution of cash flow to Husband in 2003. The Court noted that it would be inappropriate to permit a payor to overpay taxes all year and then pay child support based on that reduced net. If the Corporation can make distribution for the 2002 tax liability in 2003, a distribution could have been available for 2003 child support.

Novinger v. Smith, 880 A.2d 1255 (Pa.Super. 2005), decided August 2, 2005. In an important case on earning capacity, Mother argued successfully on the Trial Court level that Father should be assigned a $40,000 per year earning capacity. The Superior Court reversed and directed the Trial Court to focus on Father's current earning capacity considering the current economic circumstances. Father had worked all his life as a carpenter/roofer. During a one-year period from 1999 to 2000, he worked as a welder earning $40,000 per year as a result from help of his brother-in-law, who "pulled some strings". Father did not have the training or certification as a welder. He took a leave of absence to enter drug rehab, and his job was terminated. He returned to work as a carpenter/roofer with earnings of $25,000. The Appellate Court found the Trial Court had improperly based the determination of earning capacity on a job that occurred five-years ago, for which Father had no education, training, or an ability to earn.

Jacobs v. Jacobs, 884 A.2d 301, 2005 WL 2277505, (Pa.Super. 2005), decided September 20, 2005. Husband received large sums of money from his uncle during the marriage. When Wife sought discovery, Husband balked. After Husband repeatedly refused to cooperate, Wife's Motion for Sanctions led to a hearing that Husband and his counsel failed to attend. Wife presented her evidence and the court entered an order detailing various assets, values, and which should be considered gifts. Husband was precluded from disputing the values and rulings. Husband appealed these decisions after divorce, but the sanctions were found within the discretion of the Court. Wife disputed the determination that the holding in Humphreys v. DeRoss, 790 A.2d 281 (Pa. 2002), should apply to exclude from the definition of income the gifts received by Husband from his uncle. The Appellate Court also recommended deviation from presumptive guideline support and approved an increase of $1,000 per month. Wife's counsel fee award, only $5,000, was also affirmed.

III. APPLICATION OF THE GUIDELINES TO OVERSEAS FAMILY

Nischal v. Nischal, 879 A.2d 813 (Pa.Super. 2005), decided July 14, 2005. Father moved to the United States from India in 2001, leaving behind his pregnant Wife. He found employment in the US, and his baby was born in India in October, 2001. (Apparently Father required paternity tests to confirm the child was his.) Father argued that a Guideline support award would make Mother and child "millionaires" in their native country, and therefore, a downward deviation was warranted. Citing Ball v. Minnick, 648 A.2d 1192 (Pa. 1994), the Rules of Civil Procedure mandate that the Court may not deviate downward on the grounds the child does not need that amount of money. Citing Mascaro v. Mascaro, 80 A.2d 1186 (Pa. 2002), the Superior Court affirmed the Trial Court and noted that the reasonable needs of the children depends on the standard of living the obligor can afford, not what he is willing to pay.

IV. SUPPORT MODIFICATION/UNDERLYING AGREEMENT

McClain v. McClain, 872 A.2d 856 (Pa.Super. 2005), decided April 11, 2005. Father sought a decrease in child support and appealed the determination of the Trial Court that found there were no change of circumstances since the parties entered into their Agreement as confirmed in the Decree in Divorce which issued out of Texas. It was Father who registered the Texas Decree in Pennsylvania. The Texas Decree refers to the parties' "Agreement Incident to Divorce". In that Agreement, it was specifically acknowledged that the child support Father agreed to pay was in excess of Texas Guidelines, but the parties specifically agreed to the amount to provide for the best interest of the child, and in recognition of Father's disproportionate share of the property division. The Pennsylvania Courts found that whereas the Divorce Decree allowed for support modification, the language of the Agreement was silent; but both the Decree and the Agreement included language expressing the parties' intent that the two documents should be considered as one. Therefore, it was found it was appropriate for the Court upon the request for modification to look at the circumstances at the present time, compared to the circumstances at the time of the Agreement. Since Father's financial circumstances at the time of trial were comparable to that at the time of the Divorce Agreement and Decree, the Court found no basis for modification. His remarriage and the birth of a new child was not found by the Trial Court to be a basis to modify, and the Appellate Court would not find abuse of discretion.

V. ENFORCEMENT/CONTEMPT OF SUPPORT

Drevenik v. Nardone, Trustee, 862 A.2d 635 (Pa.Super. 2004), decided November 17, 2004. The Defendant/Appellant in this case was not the Father-Obligor, but rather the Trustee for the Father. The Court directed that Father's child support arrears be paid from the principal and income of the spendthrift trust established for Father's benefit by his mother's will. While the Trustee tried to rely on Humphreys v. DeRoss, 790 A.2d 281 (Pa. 2002), and Maher v. Maher, 835 A.2d 1281 (Pa. 2003), for the proposition that trust principal is not considered income for support purposes, the Trial Court and Appellate Court disagreed that those cases applied. While the corpus of the inheritance could not be included in the definition of income, the present case addresses whether the trust assets are principal from which support arrears can be satisfied. The testamentary language of the spendthrift trust provides it was established for the "support, welfare and education" of Father. The Court found that among the reasonable daily living expenses of Father included his obligation to support his children. As such, the Court found that the language of the trust permits the use of both trust principal and income to support Father's children because if they had lived with him, trust assets would be used to meet their daily needs as well. No abuse of discretion was found.

Hyle v. Hyle, 868 A.2d 601 (Pa.Super. 2005), decided February 8, 2005. In January, 2000, when Husband was ordered to pay $1,100 per month in support and arrears for his son and his Wife, he quit his job and thereafter made no payments. Eventually, Father was found in civil contempt on seven occasions, each time spending up to six months in prison. Each time the Order adjudicating Father in civil contempt included a monetary amount as a condition for purge. Father never paid the amount to be purged of contempt. Father also was offered work release, which he rejected saying, "I just don't want to go to work". A further Order finding contempt, entered February 10, 2004, sent him to six months in prison and set a $2,500 purge amount. The Court reasoned that he would eventually be able to meet the condition if he went on work release. An appeal was taken. While the Appellate Court found that the Trial Court properly found contempt was warranted, it could not agree that the Trial Court had a right to set a purge payment of $2,500. There was no evidence on the record that Father had present ability to pay $2,500. He only had $21 in his prison account and a 1987 Crown Victoria. Since Father would only be able to satisfy the purge amount in the future, after he sought employment, it was not a proper Contempt Order. While the Superior Court empathized with the Trial Court's frustration, the matter was remanded. As a final suggestion, however, the Superior Court noted that Father might be eligible for indirect criminal contempt, assuming Husband was afforded the procedural rights and safeguards due criminal defendants.

VI. EQUITABLE DISTRIBUTION/ALIMONY

Haentjens v. Haentjens, 860 A.2d 1056 (Pa.Super. 2004), decided October 15, 2004. Husband and Wife were married twenty years when they separated in 1996. In 1987, when Husband's Father died, Husband inherited 44.47% of the family business, which was valued for estate tax purposes at $711,459. Two years before separation, the business was sold and Husband received $2,194,031, pre-tax, in 1996, the year of separation. Wife's expert testified in 2002 that the increase in value of the business should be based on Husband's after-tax proceeds, $1,861,000, less the estate value. The Trial Court disagreed with the Master because the Master used the IRS valuation in 1987, which was subject to a minority discount, which was appropriate in the context of the estate valuation. But the Trial Court found that considering that there was an actual arms-length sale, before separation, which yielded an undiscounted award, the 1987 valuation must look at the undiscounted interest of Husband at that time. By using the 1987 IRS valuation without the discount, the Court found the increase in value between 1987 and 1996 to be only $12,763. Both as of the 1987 inheritance and at time of sale, the Court compared the pre-tax undiscounted valuation and an undiscounted pre-tax valuation. The Trial Court also noted that the small increase was consistent with the actual performance of the business. The overall growth of the business had been minimal, so this modest increase in value made sense. The Trial Court went on to award Wife 75% of the marital assets, plus alimony pendente lite was paid during the appeal period, (at $4,800 per month), and the Appellate Court remanded to the Trial Court to clarify and confirm the award of alimony, $2,000 per month for 18 months.

Baker vs. Baker, 861 A.2d 298 (Pa.Super. 2004), decided October 26, 2004. Husband, a veterinarian, objected to the determination by the Court that the fair market value of his sole proprietorship veterinary practice included enterprise goodwill due to the location of the practice and the customer list. Husband had purchased an established veterinary practice from the estate of a vet who had operated on that location for a previous ten to fifteen years. Wife hired a business valuation expert who testified. Husband has no expert, but testified as to his opinions to dispute the determination of the value of his practice, his equity interest and his income. The Appellate Court found that Husband had no expert testimony to contradict Wife's, and the Trial Court properly relied on Wife's experts. Husband also objected to the alimony award, but the Court noted that Wife contributed her earnings and her investments in the early years of marriage, selling a horse a year to pay for Husband's veterinary school. Trial Court was affirmed on all points.

Kennedy vs. Kennedy, 865 A.2d 878 (Pa.Super. 2004), decided November 29, 2004. Husband and Wife entered into an agreement to submit all economic claims to an arbitrator, (Michael Fingerman), whose decisions would bind both. The further agreed that the Arbitrator should fashion an equitable distribution award based on marital assets at year-end 1999, and the assets contained in Husband's 1999 Grantor Retained Annuity Trust should not be considered marital. Under the terms of the Grantor Retained Annuity Trust ("GRAT") Arbitrator Fingerman determined that 2,187 shares of Radnor stock reverted to Husband under the terms of the GRAT and constituted marital assets subject to equitable distribution. The Arbitrator specifically made certain observations on the record, including that it was undisputed that the assets in the GRAT which reverted to Husband, the "retained annuity", was subject to equitable distribution. The Arbitrator noted that Husband wanted to use the dollar value of the stock as assigned by the GRAT, and Wife instead wanted the stock's fair market value as of December 31, 1999. The Arbitrator submitted that an Agreement had been reached that he would value the stock that reverted to Husband. Husband never challenged Arbitrator Fingerman's characterization of the reversionary interest as a marital asset. On appeal to the Trial Court, the Philadelphia Court found the Arbitrator exceeded his authority under the terms of the parties' preliminary agreement. On appeal, the Appellate Court found that Husband's failure to object to the agreement on the record to value the stock as of December, 1999, was binding on Husband and remanded for reinstatement of the original arbitration award. In addition, the lower court was directed to order Husband to pay post-judgment interest at a rate of 6% per annum on any overdue equitable distribution payments since the date of the award.

Schenk vs. Schenk, 880 A.2d 633 (Pa.Super. 2005), decided July 19, 2005. In a case which addressed several issues about very little money, the Superior Court confirmed the decisions of the lower court regarding the value of marital assets and the award of equitable distribution. But the Superior Court found that mathematical errors had been made in the calculation of alimony pendente lite. Although some deviation from a Guideline award of alimony pendente lite may be warranted if a Wife is cohabiting, the Trial Court improperly awarded the discounted a.p.l. amount during the time Wife was not cohabiting and the court awarded no a.p.l. during the period of cohabitation. The case was remanded to correct the alimony pendente lite, and the Court confirmed that Wife had a right to receive alimony pendente lite during the pendency of the appeal.

VII. ENFORCEMENT OF EQUITABLE DISTRIBUTION

Bianchi v. Bianchi, 859 A.2d 511 (Pa.Super. 2004), decided September 23, 2004. Under the terms of the Master's Report, Wife was to receive her share of the marital portion of Husband's pension equal to 36% of the total value at the date of the Master's hearing, which was calculated to be $62,639. Although the matter was on appeal de novo to the Trial Court, the parties executed an agreement and referenced the contemplated QDRO award terms in the Master's Report. When Husband prepared the QDRO, however, he defined Wife's interest based on 36% of the marital portion as of the date of separation. Wife refused to execute the Order. The Trial Court found Wife in contempt, and Wife appealed. The Superior Court agreed with Wife that since a sum certain had been identified, the QDRO must conform to that, and the Trial Court improperly sanctioned Wife for failure to sign the incorrect QDRO. The Superior Court found that nothing should prevent Husband and Wife from agreeing to give Wife more assets than she was apparently entitled to, absent fraud, accident or mistake. Therefore the Trial Court lacked authority to interfere with the parties' arrangement. The Superior Court also noted that neither party to the appeal asserted a possible mistake in the formulation of the agreement, and therefore the issue was not before the Appellate Court.

Johnson v. Johnson, 864 A.2d 1224 (Pa.Super. 2004), decided December 21, 2004. The parties were married for seventeen years, and were subject to a 1986 equitable distribution award that required Husband to pay Wife $385,381 plus 10% interest in exchange for Husband retaining his mill business. Wife did not receive alimony or alimony pendente lite. Husband was required to pay monthly installments in excess of $4,000 per month; payments abruptly ended in June, 1993. Petitions for contempt and Petitions for enforcement were filed by Wife. Husband was granted leave to pay $2,000 per month until he sold certain assets. Husband filed for bankruptcy, which was eventually dismissed. In 2004, by which time the parties were in their early 60s, Husband filed to modify the Trial Court Order of 2001, and Wife sought dismissal. The Trial Court ultimately ordered the Domestic Relations Office to attach 40% of Husband's income to pay his equitable distribution debt. On review, the Superior Court found that such a modest payment was entered in error. It would take 29 more years for Husband to satisfy his debt, by which time he would be 102 and Wife would be 99. This effectively would lead to forfeiture, and the Order was reversed.

Hayward vs. Hayward, 868 A.2d 554 (Pa.Super. 2005), decided February 3, 2005. The Superior Court affirmed the decision of Judge Lawrence Kaplan of Allegheny County. The parties settled their divorce in 1989, which required two QDROs be entered. Wife's counsel prepared the QDROs. Husband refused to sign. A hearing was held, Husband did not appear, and the Court entered the Orders. Thereafter, Husband surreptitiously placed his civil service pension into pay status and had his military pension benefits transferred to VA disability benefits to avoid being subject to a QDRO. Upon determining this, the Court found that Husband owed Wife arrears based on her share of the civil service pension and the military pension. An Order was entered by the Court to enforce the QDROs and to award a supplemental payment on arrears. Husband relied on Mansell vs. Mansell, 490 U.S. 581, 594-95 (1989), in which the United States Supreme Court held that, the Former Spouses' Protection Act does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans' disability benefits". Pennsylvania recognized that numerous other jurisdictions had addressed the application of Mansell, and like those jurisdictions, Mansell was found to be inapplicable to the facts of the present case. The Trial Court found that the record was clear that Husband had agreed to pay Wife 50% of his military retirement benefit, and this was not limited to his disposable retirement benefit. Therefore, he was bound by that agreement, even if the payment must come from other available funds, including the disability benefit. The Superior Court found no abuse of discretion.

Rhoades v. Pryce, 874 A.2d 148 (Pa.Super. 2005), decided April 28, 2005. An Order for equitable distribution was entered requiring Husband to acquire life insurance naming Wife as the irrevocable beneficiary to secure an equitable distribution award to be paid in installments. The Order further permitted Husband to reduce the insurance coverage to the extent the equitable distribution award was satisfied. When the insurance company required Wife to sign off on the reduction in benefit, Husband went to Court to force Wife to comply. Wife refused, contempt was found, and Wife was directed to pay a total of $2,250 in counsel fees, which Husband was permitted to withhold from his equitable distribution installment payment. The Superior Court found that it was appropriate that Wife be adjudicated in contempt. The Court further found that the sanction of an award of counsel fees was appropriate. The Superior Court noted that if Sonder v. Sonder, 549 A.2d 155 (Pa.Super. 1988), has been interpreted to suggest that counsel fees cannot be considered a sanction, that interpretation is rejected. The Trial Court was affirmed.

Smith v. Smith, 881 A.2d 855, 2005 WL 1838336, (Pa.Super. 2005), decided August 4, 2005. The parties were divorced and an award of equitable distribution issued in 1998, but the QDRO still had not been entered by 2001. Wife sought a hearing which was held in May, 2004, two years after Husband retired. After separation and divorce, and shortly before retirement, Husband had the opportunity to select an increase in pension benefits, subject to increased contributions to the Plan. It was fortuitous that Husband was able to opt for this benefit, even though he was due to retire later that year. Wife sought to have the Qualified Domestic Relations Order be based on the higher benefit. The Trial Court agreed, but the Superior Court reversed. The Superior Court found that the increased benefit was given in exchange for an increase in contributions, post-separation, and Wife should not share in that benefit, even though it appeared to be a windfall to Husband.

Cioffi v. Cioffi, ---- A.2d ----, 2005 WL 2140804, (Pa.Super. 2005), decided September 7, 2005. The parties were divorced in 1994, and along with the decree, two Qualified Domestic Relations Orders issued. Five years later, Husband was awarded disability and applied for a disability pension under both plans. Since the Qualified Domestic Relations Orders provided for Wife to receive 60% of Husband's pension plans, the Trial Court ordered that Wife receive 60% of the disability pension, plus 15% to pay arrears. Husband appealed. In this instance, the Plans provided for both a disability pension and retirement benefits. Under the terms of the Plans, the fact that Husband became disabled at the age of 50 would not diminish his right to receive the full measure of Husband's marital pension at normal retirement age. In other words, at normal retirement, Wife would be eligible to receive 60% of the monthly marital pension and/or death benefits, undiminished by years of Husband's receipt of disability. Therefore, on appeal, the Superior Court found that Wife was not entitled to disability pension. She would wait for normal retirement and receive what the Divorce Decree anticipated.

VIII. PROPERTY SETTLEMENT AGREEMENTS

Jones v. Jones, 878 A.2d 86 (Pa.Super. 2005), decided June 8, 2005. In a case arising out of Delaware County, the parties were engaged in divorce litigation from June, 1999, until April, 2004, when the divorce was finalized and Wife filed the instant appeal. Wife had refused to comply with the January, 2003, Order of Court to sign a property settlement agreement drafted by Husband; Wife had also previously refused to submit her own agreement terms, notwithstanding the fact that an agreement had tentatively been reached in February, 2000. The Superior court found that the Appellant-Wife failed to follow the Rules of Civil Procedure by failing to submit a concise statement of matters on appeal. Since the Appellant was unable to identify the issues, it became impossible for the Trial Court to analyze the basis for the appeal and the appellate court to respond. The Superior Court found that Wife filed excessive 1925(b) statements demonstrating her complete disregard for the Rules of Appellate Procedure causing an undue burden on the Court. Her appeal was dismissed and the matter was remanded to the Trial Court to determine reasonable counsel fees to be awarded to Husband, paid by Wife.

Paroly v. Paroly, 876 A.2d 1061 (Pa.Super. 2005), decided June 10, 2005. Wife appealed the decision of the Trial Court to uphold a marital settlement agreement. Wife felt Husband failed to delineate the value of his business interests. In this instance, the parties, who settled their matter in Bucks County, chose to hire a scrivener, and specifically waived the right to separate legal representation. Documentation was provided to the Trial Court that the scrivener was assured by Wife that she was aware of the parties' financial situation, including the value of the business. Wife had been an employee before marriage, and worked at the business for seven years during marriage. Thereafter she continued to execute corporate tax returns in her capacity as corporate secretary. It was agreed that the parties estimated the lump sum cash value of the business was between $125,000 and $150,000, and on this basis settlement was reached. The Agreement also specifically provided that the parties acknowledged full and complete disclosure and waived further enumeration or specificity regarding the value of assets and liabilities. Six months after the divorce, Husband entered into an Asset Purchase Agreement to sell the business under which terms he would receive annual salary of $70,000 per year for eight years, (his prior earnings as owner), and he would serve as a consultant to the new owner. The Trial Court found, and the Superior Court affirmed, that under the circumstances that Wife had personal knowledge and where the Agreement recited that full and fair disclosure has been made, the Agreement would not be overturned.

Delcamp v. Delcamp, ---- A.2d ----, 2005 WL 1805594 (Pa.Super. 2005), decided August 2, 2005. Wife sought to take exception to the recommendation of a special Master in divorce. The parties filed cross-exceptions. Husband petitioned to dismiss Wife's Exceptions for failure to follow a local Rule requiring her to pay for a transcript of the proceedings from which Exceptions were being taken. The Order to dismiss was granted. Husband's Exceptions were withdrawn, and a Decree issued. On appeal, the Superior Court found that Wife's failure to comply with the Rule was a critical error. The transcript of the proceedings below was vital to a review by the Trial Court. Therefore, the Superior Court would not reverse the decision and the Order was affirmed.

IX. THE VESTAGES OF COMMON LAW MARRIAGE

Stackhouse v. Stackhouse, 862 A.2d 102 (Pa.Super. 2004), decided November 10, 2004. The Trial Court denied a claim for alimony pendente lite by Ms. Stackhouse because she was relying on a common-law marriage as the basis for her rights under the Divorce Code. Although the Commonwealth Court decision PNC Bank v. Workers' Comp. Appeal Bd. (Stamos), 831 A.2d 1269 (Pa. Cmwlth. 2003) had issued, Ms. Stackhouse legitimately claimed common-law marriage based on an exchange of vows in 1993, ten years earlier. The Trial Court did not take evidence, but dismissed Ms. Stackhouse's claim after oral argument. It was found to be error to apply the decision of PNC Bank to a common-law marriage that may have taken place at least ten years prior. The matter was remanded for a determination of the merits of the common-law marriage claim.

Perrotti v. Meredith, 868 A.2d 1240 (Pa.Super. 2005), decided February 14, 2005. In 2003 Ms. Perrotti sought support and filed for divorce on the basis of a common-law marriage which she claimed dated from April, 1998. The court reviewed the facts and circumstances, and found that Ms. Perrotti had failed to meet her burden of proof. She had failed to show the parties exchanged words in the present tense for the purpose of creating a husband and wife relationship. Both parties provided credible and contradictory testimony, and the Trial Court had a right to determine that Wife had not met her burden. The Order was affirmed.

X. NEW STATUTE/NEW SUPPORT GUIDELINES

On November 29, 2004, the governor signed amendments to the Divorce Code, Title 20, which became effective thirty (30) days thereafter, January 28, 2005. The draft amendments have been pending for years, and some amendments trigger significant changes in the law. For the most part, however, the changes are intended to update the statute to conform with the best practices and case law developments to date. Here are the highlights of the most significant changes:

• While in the past, if one of the parties died during the pendency of the divorce, the divorce issues would expire or "abate". Now if grounds for divorce have been established during the course of the litigation, the divorce will proceed even if one party dies. The estate of the deceased will stand in the shoes of the party who has passed. Sections 3323 (d.1) and 3323 (g).

• There is now a rebuttable presumption that the date of separation will be no later than the date a divorce complaint is served, (Remember, this is later than date of filing). Section 3103.

• There are statutory directives regarding the treatment of increase in value of non-marital assets during the marriage for the purpose of calculating the marital component of a non-marital asset at date of separation or trial. The date of the increase is measured from the date of marriage, or the later acquisition if acquired through non-marital source during marriage, through the date of separation or the date of the hearing, whichever produces the lesser increase in value. If a party has multiple items of separate/non-marital property, any decreases in value for certain separate property assets will be offset against the increase in value of other separate property assets. In any event, a net decrease in value will not be charged as a reduction of the marital estate or an offset against the separate property of the other party. Section 3501 (a.1).

• With defined benefit pensions, the marital portion of the pensions must be calculated based on coverture fraction only. The fraction will be applied to all parts of an employee's defined benefit pension, including post-separation enhancements. The only exclusion is if an employee acquires an enhancement after separation by putting funds into the plan, that will not be considered. The Holland approach is approved. The cases of Barrington and LaBuda will no longer be followed. Section 3501(c).

• Likely taxes, costs of sale and the tax consequences of distribution are relevant factors in every case, as the tax consequences or expenses need not be immediate and certain to be considered with reference to equitable distribution. Sections 3502(a)(10.1) and 3502(a)(10.2).

• It is now clear that the courts have an ability to direct advance interim distribution of marital assets between the parties. Therefore, an application can be made for partial distribution if the facts warrant. This may allow access to funds if a claim for interim counsel fees is not strong. Section 3502(f).

New Support Guidelines issued September 25, 2005, effective January 27, 2006. Although the proposed Guidelines circulated for comment included a dramatic departure in favor of partial custodians, the consideration for partial custodians was dropped. The cliff remains such that a partial custodian who has less than 40% partial custody will see no adjustment in child support. Keep in mind that a 40% partial custodian gets a 10% discount; 45% gets a 15% discount; and a 50/50 custodian gets only a 20% discount. There were a few technical changes to more fairly deal with the allocation of child care and to further clarify the payment for medical insurance. The most dramatic change is that the Guideline grids now extend to combine parental net income of $20,000 per month. Overall, the awards for child support when the combined family income is $5,100 or more will be reduced when the cases are reviewed. If you download the recommendation at www.aopc.org/supremecourt/opinions, the recommendation reflects the old and new guideline grids, which is helpful for comparison purposes. There is no straight-line progression. Once the new Guidelines are in effect, modification will be allowed based on the change in the Guideline amount, so we can expect that many higher income payors will be filing to obtain relief under the new Guidelines.