Tag Archives: divorce

How to Attack a Colorado Prenup

Previously we went over the general requirements for a prenuptial agreement in Colorado. There are some important changes to Colorado law on prenups coming next week, but we’ll first discuss the ways a prenup agreement may be invalidated. These concepts apply to both prenups and agreements made after people are married.

Change in Circumstances

Although nearly impossible, a spouse seeking to attack the validity of a Colorado prenup may successfully argue that a change in circumstances justifies a court finding that the state’s interest in the welfare of a divorced spouse outweighs the freedom to contract. A court may consider factors such as (a) whether there are children, (b) the length of the marriage and (c) if there was a detrimental reliance on the marriage. But a person considering a Colorado prenup should never assume that a change of circumstances will allow them to wiggle out of an otherwise valid agreement.

Violation of Public Policy

Similar to a change of circumstances, there are several topics where the sanctity of contract will be overridden by Colorado public policy. For example, a provision on child support or religious training for children will be invalidated by a Colorado court. Moreover, agreements where a party waives spousal maintenance or attorneys’ fees may be unenforceable if it would be “unconscionable” under Newman v. Newman and In re Marriage of Ikeler, respectively. Whether a provision is unconscionable is determined at the time of the Colorado divorce.

Fraud, Duress or Undue Influence

A contract must be agreed to voluntarily. The same principle applies to a Colorado prenup. If a person is forced into signing a prenup, it will be unenforceable. Factors such as the time between the execution of the prenup and the wedding, or whether Colorado lawyers are involved will be relevant. But the threat of calling off the wedding is not enough for duress or to invalidate a prenup.

Lack of Disclosure and Independent Counsel

Parties to a Colorado prenup need to disclose their financial circumstances. However, there isn’t a bright-line rule on what is sufficient disclosure for a binding prenup. And as referenced above, lack of independent counsel may be considered when a court evaluates whether parties voluntarily and knowingly entered into the agreement. The best practice is for a party negotiating a prenup to (a) hire a Colorado lawyer, and (b) produce as much detail about their finances as possible. Those details should include bank, mortgage and investment statements,  copies of pay stubs, appraisals for businesses or real estate and information about any contingent or prospective assets such as trusts or inheritances.

Coming soon is a post about the new changes to the Premarital and Marital Agreement Act in Colorado.

Child Support and Taxes

Tax season is upon us and I’ve been getting a lot of questions about child support and taxes. First, Colorado child support is generally not taxable. Unlike maintenance/alimony, the payor of child support cannot deduct paid child support from their taxable income. Similarly, a parent receiving child support need not report that money on their tax return.

Second, a minor child can be claimed as a dependent on a parent’s tax return. Who gets the dependency exemption? Pursuant to C.R.S. 14-10-115(12), the Colorado court is required to allocate the right to claim a child as a dependent in proportion to the parents’ contributions to the costs of raising the child. If a mother has more parenting time than the father and she pays for the child’s sports, tutoring, health insurance, daycare, etc., the court will likely give her the right to claim the child as a dependent.

Nevertheless, the parties can always voluntarily agree on which parent gets to claim a child in a particular year. Although Colorado has done away with the term “custody” in favor of “parenting time,” the IRS predictably is behind the times. The “custodial parent” matters for IRS purposes and is defined as the parent with the most overnights. Because there are an odd number (365) of days in a year, one parent will almost always have more than the other even when they are “50/50 parents” or have “equal time.” That parent is then the “custodial parent” under the current IRS regs and the one eligible to claim the child as a dependent. There are times when the IRS regs conflict with the Colorado law on who gets to claim the child as a dependent. As a result, it is usually a good idea for parents to sign IRS Form 8332 along with their divorce or allocation of parenting rights agreements to ameliorate any issues down the road if the parties agree to split the right to claim a child on future tax returns.

In addition to the dependency deduction, the current tax code allows for a separate deduction for work-related day care and a credit (different from a deduction) for each child. The rules on those deductions and credit are complex because they hinge on the taxpayer’s income and other factors. Tax laws change all the time and my advice is always for a client to consult with a CPA or tax attorney before signing a deal.

Although parties going through a Colorado divorce or dispute over parenting rights often times will disagree about the color of the sky on particular day, there are times when it makes sense for them to strategically work together on taxes. For example, if one parent cannot benefit from the tax credit because they make too much money, they can offer to give the other parent the right to claim that child and split the amount of the credit. It results in a “win-win” for both parents. It is rare to characterize anything as a “win-win” in a Colorado divorce or when discussing anything related to taxes, but it is possible if the parties have thoughtful divorce lawyers and CPAs.

How to Win (and lose) a Trial

I was in trial recently and it’s always helpful for me to write down a few thoughts for future reference. Below are some random musings on how to win or lose a trial.

  1. There is a wart or booger in every case – the bad fact or law that is driving the case to trial. Instead of running away from weaknesses in a dispute, a good trial attorney will directly confront the wart/booger and strategically figure out a way to mitigate its impact. This requires a solid relationship between an attorney and his client. If the client doesn’t trust her attorney, they will revert to their natural inclination to avoid or deny weaknesses in their case. A witness that admits they were wrong in one instance, gains credibility for when they say the booger in their case doesn’t really matter. In contrast, a party that simply ignores or denies the other sides argument will come across as unbelievable, ignorant and selfish.
  2. Controlling the narrative of the case is critical. If a case goes to trial it’s because two or more sides disagree about the key facts and law involved. Each side has a story to tell. Whatever party controls the narrative is more likely to win. If a trial lawyer is able to dictate the issues discussed during trial, it steers the focus away from the wart or booger referenced above. Thinking deeply about the a compelling theme and clearly articulating a party’s story is fundamental in controlling the narrative.
  3. Technology matters. I now use an iPad in every trial or hearing. The TrialPad app has revolutionized how evidence is presented. Using an Apple TV, I wirelessly linked into the court’s audio/video system. It’s a slick setup. With TrialPad, I’m able to blow up documents, highlight key sections, and compare documents side by side. It is engaging, quick and easy. During this most recent trial, the opposing attorney dropped his exhibit notebook twice. Papers went flying everywhere, he exclaimed, “Shit!” which likely made it onto the record, and it was cumbersome for everyone to switch back and forth between paper exhibits. People today expect videos, charts and professional presentations.
  4. Organizing the closing argument first drives everything else. As a DA, I learned the importance of thinking about what I wanted to say in my closing argument and then working backwards. I typically create a basic slideshow (PowerPoint or Keynote) with the applicable law and key evidentiary points.  This process is intertwined with developing a theme and narrative for the case. The evidence I want to bring in – whether it be on direct or cross examination – is driven by my closing argument. My opening statement and theme are driven by my closing argument. Everything is driven by the closing argument. There’s no point in asking a question or introducing a document if it doesn’t support a point made in closing.
  5. Researching legal issues in advance is necessary. The best evidence in a case is usually derived from the other side. Especially for trials to a judge, knowing the applicable law cold is essential. In my recent trial it was evident that the opposing attorney hadn’t done his homework. His client admitted to a number of key things on cross-examination  without understanding the implications. Only after my closing argument did opposing counsel and his client appreciate the significance of a seemingly innocuous admission on cross.
  6. Checklists are helpful. An issue in this trial was attorneys fees. In a divorce, a party may be awarded all or part of their attorneys fees from the other party under C.R.S. 14-10-119. There are necessary elements that must be proved to obtain an award of fees. We were at the end of the trial, everyone was tired, and the opposing Aspen lawyer made a critical mistake – he forgot to ask his client how much fees were owed. Realizing his mistake after he rested his case, the lawyer pleaded for the court to allow him to ask a few more questions. The court allowed him to do so, but stated he was only considering it for a limited purpose. It remains to be seen whether the Aspen attorney made a $50,000+ mistake, but a checklist for what evidence was needed would have likely prevented such a gross oversight.

The above is obviously not an exhaustive list of what it takes to win or lose a trial; each case warrants special consideration. The bottom-line is that trials require a lot of thought and preparation. If a lawyer or party thinks they can “wing it,” they’ll likely be in store for an unpleasant surprise.

DUI, Divorce and Marijuana Laws in 2014

Welcome to 2014. New laws are now in effect for Aspen DUIs and Vail DUIs, especially how those cases are handled with the Colorado DMV. Read more here.

In addition, those filing for divorce must aware that Colorado now has a significantly different law on how maintenance/alimony is analyzed in 2014 and beyond. Make sure your Aspen divorce lawyer knows about the change. To see more about the amendments, click here.

Finally, as has been widely reported in the news, recreational marijuana is now perfectly legal in Colorado. By all accounts, the transition went smoothly. There are no retail marijuana stores currently open in Garfield County or Aspen. They are coming, though.  Contrary to other mountain communities, both Vail and Eagle County are holding off on allowing recreational marijuana for now.

We are in the midst of Aspen’s prime tourism season. It will be interesting to see the effect of “marijuana tourism” in Aspen next year.

Parental Relocation in Child Custody Battles – Part III

This is the third installment on our series about Colorado relocation or “removal” cases.  We first kicked things off by discussing ski racer Bode Miller’s contentious child custody battle and how it relates to Colorado’s legal framework for when a parent wants to move away from the other parent. Next, we looked at the seminal Colorado case from 2005, Spahmer v. Gullette, and relocation cases that occur when a court is allocating parental responsibilities for the first time. Below we deal with cases where a party wants to move after a divorce has been finalized.

The case on point for post-decree relocation cases is In re Marriage Ciesluk. In contrast to Spahmer where the Court must assume that a parent has already moved, Ciesluk allows a trial court to order a parent stay put in their existing place. Spahmer and Ciesluk were decided by the Colorado Supreme Court on the same day in 2005. To fully understand the differences between how pre- and post-decree cases are decided, Spahmer and Ciesluk should be read together. We’ve discussed Spahmer before so let’s shift our focus to Ciesluk.

In Ciesluk, the parents finalized their divorce shortly before mother filed a motion to relocate to Arizona with the parties’ little boy. The trial court denied mother’s motion to relocate on the basis that her move would harm the boy’s relationship with his father. The trial court relied heavily on an article by Sanford Braver. In doing so, the court effectively created a presumption in favor of the father.

The Colorado Supreme Court upheld the trial court’s application of the relocation statute, C.R.S. 14-10-129(2)(c), but found that the trial court unconstitutionally infringed on the mother’s right to travel by creating a presumption in favor of the father. The Supreme Court held that the relocation statute puts both parents on a level playing field by not assigning a burden to either parent.

Under Ciesluk, a trial court must consider the factors set forth in the relocation statute in addition to the statute on the best interests of the child under C.R.S. 14-10-124. The factors for C.R.S. 14-10-129(2)(c) are listed below.

  1. The reasons for relocation with the child;
  2. The reasons the opposing party is objecting to the proposed relocation;
  3. The history and quality of each party’s relationship with the child since the entry of any previous parenting time order;
  4. The educational opportunities for the child at the existing location and at the proposed new location;
  5. The presence or absence of extended family at the existing location and at the proposed new location;
  6. Any advantages to the child’s remaining with the primary caregiver;
  7. The anticipated impact of the move on the child;
  8. Whether the court will be able to fashion a reasonable parenting time schedule if the change requested is permitted;
  9. Any other relevant factors bearing on the best interests of the child.

These factors undoubtedly result in a much more robust analytical framework when compared to a pre-decree (Spahmer) case. And many divorce attorneys believe that there is a bright line between pre- and post-decree cases. That’s understandable if Spahmer and Ciesluk are merely skimmed.

However, the line is blurred when Spahmer and Ciesluk are closely examined. We’ll discuss what lines of argument are possible in our fourth and final post on Colorado relocation cases.

Parental Relocation in Child Custody Battles – Part II

Bode Miller can take his son to the Winter Olympics in Sochi, Russia during the pendency of his child custody dispute. That sort of agreement would be unlikely in a Colorado case where one parent wanted to permanently relocate. The obvious difference in Bode’s situation is that he’ll be returning to the U.S. after the Games.

Speaking of differences, the last time I wrote about parental relocation I mentioned that there was a significant difference in Colorado between a pre- and post-decree relocation dispute. What are they? The short answer is that it is easier for a parent wanting to relocate before a court issues a final order (decree) allocating parental responsibilities versus after.

In Bode Miller’s case, the court has yet to finalize anything. Yes, he can go to the Olympics with his son. But that agreement was recently approved by the court as a “temporary order.” An agreement or judicial determination on where the child will permanently live has yet to be made. Miller and the mother, Sara McKenna, are still in an unsettled state. They can’t even agree on what to call the child – Miller calls him “Nate,” McKenna calls him “Sam.”

The uncertainty of Miller’s situation exemplifies one of the reasons why the Colorado Supreme Court held that a trial court must accept the location where each parent intends to live during the initial determination to allocate parental responsibilities. The name of that case is Spahmer v. Gullette. The Colorado Supreme Court reasoned that parents are on equal ground when initially determining parental responsibilities such as a divorce. For example, neither Miller nor McKenna has definitive parenting time or decision-making authority yet — indeed, that is the end result of the action itself.

In contrast, after a divorce (or an order is issued for unmarried parents) is finalized, each party has vested parenting rights. If one parent wants to move, it will undoubtedly reduce the other parent’s legally-recognized rights. Moreover, there is a degree of stability achieved for the child after a decree setting a parenting schedule has been issued. We’ll examine post-decree relocation cases in detail later, but it helps to understand the basis for Spahmer.

Spahmer requires everyone involved – the judge, attorneys, parties and any expert parent evaluators – to view the situation through an overly simplistic lens. The parent intending to move cannot leave the state with the child during the pendency of the case unless they have permission from the other parent or there is an extraordinary circumstance that would justify a court order. McKenna gave Bode Miller permission to take their son to the Olympics because she knew he’d return home. For a parent intending to permanently move, the risk of allowing them to travel out of state with the child is that they will never come back. Therefore, Spahmer results in a legal fiction where both parents are physically in Colorado, but one parent is looked at as if they’ve already moved.

So what does the Court consider when dealing with a Spahmer case? The “best interests of the child.” The statute, C.R.S. 14-10-124, for the best interests of a child explicitly contemplates the following factors:

  1. The wishes of the child’s parents as to parenting time;
  2. The wishes of the child if he or she is sufficiently mature to express reasoned and independent preferences as to the parenting time schedule;
  3. The interaction and interrelationship of the child with his or her parents, his or her siblings, and any other person who may significantly affect the child’s best interests;
  4. The child’s adjustment to his or her home, school, and community;
  5. The mental and physical health of all individuals involved, except that a disability alone shall not be a basis to deny or restrict parenting time;
  6. The ability of the parties to encourage the sharing of love, affection, and contact between the child and the other party; except that, if the court determines that a party is acting to protect the child from witnessing domestic violence or from being a victim of child abuse or neglect or domestic violence, the party’s protective actions shall not be considered with respect to this factor;
  7. Whether the past pattern of involvement of the parties with the child reflects a system of values, time commitment, and mutual support;
  8. The physical proximity of the parties to each other as this relates to the practical considerations of parenting time;
  9. The ability of each party to place the needs of the child ahead of his or her own needs.

Arguably the above list opens the door to a discussion about the difference in crime rates, schools, familial support, jobs, and cost of living between the new and existing locations. For example, a parent who wants to stay in Aspen would inevitably cite the quality of schools. In contrast, a soon-to-be single-mother in Vail will justify her planned move because she’ll have the support of her family in a less expensive place like Denver or elsewhere.

As we’ll see next time, those sorts of arguments may not come in under the simplistic analysis of Spahmer because they’re explicitly reserved for post-decree relocation disputes under C.R.S. 14-10-129.

Parental Relocation in Child Custody Battles

As noted previously, Bode Miller’s ongoing child custody saga provides a good backdrop to analyze Colorado law for relocation cases. A brief summary of Miller’s situation is necessary.

Miller and Sara McKenna briefly dated in the spring of 2012 in California. She got pregnant in May, which, coincidently, was the same month that Miller married another woman. McKenna decided to go to college and sent Miller a text in October: “Just a heads up, I met with an advisor from Columbia [in NYC] today and we will probably be moving there in the fall.” Before the baby was born, Miller filed a “Petition to Establish Parental Relationship” in California. McKenna moved to New York in December when she was seven months pregnant. Their son was born in New York and the legal wrangling over custody began.

While there are complicating jurisdictional issues between New York and California in Miller’s matter, at its core, the case is about a parent’s right to relocate with a child. These types of cases frequently come up in divorces or general child custody disputes in places like Aspen or Vail because of the high cost of living. Parents going through a divorce realize that living alone is more expensive and challenging in terms of a work-life balance. Often times a parent will determine that moving closer to family or a less expensive area is necessary even though it will result in the other parent having significantly less time with the children.

In Colorado, relocation cases are separated into two distinct categories: (1) initial allocation of parental responsibilities and (2) post-decree modifications. For example, the analysis for a mother going through a divorce in Vail who wants to relocate to New York City is different than the same mother who wants to leave Vail five years later.

The former situation — where a parent is going through an initial allocation of parental responsibilities — is guided by Spahmer v. Gullette and C.R.S. 14-10-127. The latter — a post-decree relocation — is controlled by In re Marriage of Ciesluk and C.R.S. 14-10-129. The differences between how a Colorado court deals with these two scenarios will be the subject of my next substantive post.

Voluntary Unemployment for Colorado Family Law

Voluntary unemployment is when an award of spousal maintenance or child support is based on imputed income that is not actually being earned by a parent or former spouse. The same concept applies whether the person is completely unemployed or working below their true earning capacity, i.e. “underemployed.” Voluntary unemployment frequently comes up in Colorado divorces where maintenance is at issue or any case involving child support.

Both parents are obligated to support their children. If one parent isn’t earning as much as they could, the child suffers. A party may lack the initiative to find or keep work. They may be purposefully turning down work to spite the other party. Whatever the reason, they are shirking their obligation to support the child. The policy of spousal support vis-a-vis maintenance (alimony) is no different.

The dispute comes down to (a) whether a parent is making less than what they should be, and (b) what is the potential income for the parent. A few examples may help.

  • In re Marriage of Bregar – court imputed income to former lawyer who had started a cattle ranch.
  • In re Marriage of Yates – imputed income based on former pay rate when father was involuntarily terminated from job, but turned down jobs that required travel.
  • In re Marriage of Elmer – licensed attorney imputed income because he decided to pick apples at $10/hour.
  • In re Marriage of Zisch – mother with teaching certificate was imputed income even though she testified that she was actively looking for a full-time teaching position.

Exceptions

Under Colorado law, there are a few notable situations where a court cannot impute income based on a parent or former spouse being unemployed. These exceptions are listed below:

  1. A party is physically or mentally incapacitated.
  2. A parent is caring for a child under the age of 30 months.
  3. A parent that is in prison for 1+ years.

Similarly, a party will not be underemployed if:

  1. They’re working in a position that is temporary and reasonably intended to result in higher income in the foreseeable future; or
  2. They’re job is a good faith career move that isn’t intended to deprive the other party of child support. The lower position cannot unreasonably reduce the support available to a child; or
  3. They’re in an education program that will likely result in higher income within a reasonable period of time.

Calculating Imputed Income

As previously discussed, Colorado law is fairly specific in determining a party’s income. How should a court calculate income when a party is unemployed or underemployed? Case law suggests that a court can use past earnings, education level, or wages of an average person with similar qualifications in finding the appropriate amount of income for calculating child support or maintenance.

Colorado divorce attorneys have multiple arrows in their quiver when handling a case involving allegations of underemployment or unemployment. Using employment statistics from the department of labor or formal discovery requests can break a case. Familiarity with the judge presiding over the case will drive the strategy behind the presentation of evidence and line of argument.

What is “Income” for Child Support and Maintenance in a Colorado divorce?

To kick off our multi-part series on Colorado’s new law on spousal maintenance (alimony), we first started with a general overview of the guideline formulas in C.R.S. 14-10-114. Next, we considered when a spouse going through a divorce is eligible for maintenance under the “threshold test.” Now we turn to “income,” a benign term that on its face appears to be relatively simple. As detailed below, determining income for a party in a Colorado divorce can be complicated.

Before the recent amendments to Colorado’s law on maintenance, C.R.S. 14-10-114, it was unclear how a court should determine income for cases where long-term, i.e. permanent, maintenance was requested or the parties annually made $75,000 in total. Colorado divorce attorneys relied on inferences in the maintenance statute to the more specific definition of income for child support and cases such as In re Marriage of Swing. And even relying on the definition of income for child support proved to be problematic when a party was self-employed or was part of a partnership or close-held corporation.

Fortunately, however, the General Assembly clarified what exactly is “income” in determining both maintenance and child support in Colorado. Starting on January 1, 2014, the amount of income that is used in the Child Support Worksheet or Maintenance Guidelines is the same.

The first concept that must be understood is the difference between gross and net income. Gross income is before taxes and deductions like health insurance or 401(k) contributions are taken out. Net income is the money left after taxes and deductions; the amount a salaried employee gets if they do direct deposit. In Colorado, gross income is what matters for maintenance and child support.

“Gross income” includes the following:

  • Income from salaries
  • Wages
  • Tips declared to the IRS or imputed by the court
  • Commissions
  • Payments received as an independent contractor
  • Bonuses
  • Dividends, capital gains, trust distributions, annuity payments and interest
  • Rents
  • Social security, workers comp, and disability benefits
  • Gifts, including from family members
  • Expense reimbursements or in-kind benefits such as free housing, food, transportation, etc.
  • Moneys drawn by a self-employed individual for personal use that are deducted as a business expense

The above is not an exhaustive list. And income does not include child support payments received, or money received from additional jobs or work beyond 40 hours per week.

Things get tricky when a party is self-employed or involved in a partnership or closely-held business. Generally, income for someone self-employed or an owner of a small business is calculated by taking the gross receipts/revenue and subtracting “ordinary and necessary expenses.” That last term is where parties frequently disagree on whether an expense is a legitimate business deduction. The debate doesn’t end with a cursory review of a tax return.

People frequently run much of their personal expenses through their business because the risk of an audit by the IRS is somewhere in the neighborhood of 1%. For example, a self-employed project manager may deduct his entire monthly cell phone bill or gas expenses even though he undoubtedly uses his cell phone for personal use, or drives up to Aspen on a weekend to ski. He may not get caught by the IRS, but a competent Colorado divorce lawyer will successfully argue that his income is higher for analyzing maintenance and child support.

Finally, the amendments to Colorado law clarify how income is determined for a “silent partner” or someone that owns part of a business, but isn’t a manager. In that scenario, income for maintenance and child-support purposes may be limited to actual cash distributions. That income may be lower than merely taking the gross revenue of the company and reducing by ordinary business expenses.

We’ll continue our discussion on Colorado maintenance (alimony) and child support by examining voluntary unemployment or underemployment.