A Practical Guide to Divorce in Hawaii 9780824841546

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A Practical Guide to Divorce in Hawaii

A Practical Guide to Divorce in Hawaii Second Edition

PETER J.

HERMAN

A Kolowalu Book University of Hawaii Press Honolulu

© 1986, 1991 Peter J. Herman All Rights Reserved Printed in the United States of America 91 93 94 95 96 97 5 4 3 2 1

Library of Congress Cataloging-in-Publication Data Herman, Peter J., 1947A practical guide to divorce in Hawaii / Peter J. Herman. — 2nd ed. p. cm. — (A Kolowalu book) ISBN 0-8248- 1360-X (alk. paper) 1. Divorce—Law and legislation—Hawaii—Popular works. 2. Divorce suits—Hawaii—Popular works. I. Title. KFH100.Z9H47 1991 346.9690 l'66—dc20 [349.6906166] 90-48159 CIP

University of Hawaii Press books are printed on acid-free paper and meet the guidelines for permanence and durability of the Council on Library Resources.

To my parents, Murray and Marlene, and to my brother, Edward, with thanks for their always generous support and encouragement over the years.

Contents Note to the Second Edition

ix

1. Introduction

1

2. Questions Before You File for Divorce Do You Really Want a Divorce? Will You Need an Attorney? What Is a No-Fault Divorce? How Long Does It Take to Get a Divorce?

6 6 7 9 9

3. Filing the Divorce Complaint Who Can File for Divorce? Serving the Complaint

12 12 16

4. Financial Statements and Negotiations Asset and Debt Statement Income and Expense Statement The Negotiation Process

18 19 24 28

5. Child Custody and Visitation Legal Custody Physical Custody Resolving Disputes over Physical or Legal Custody Custody Awards to Third Parties Contesting Custody Summary

31 31 36 38 47 47 48

6. Child Support The Child Support Guidelines Payment through Child Support Enforcement Agency Health Insurance Coverage for Children Tax Impact of Child Support Summary

49 49 53 53 53 54

7. Alimony Temporary Alimony Post-Divorce Alimony Tax Impact of Alimony Summary

72 72 75 83 84

viii

Contents

8. Division of Property Hawaii's Equitable Division Law Factors Considered by the Court in Property Division Things to Keep in Mind in Property Division Debts Tax Impact of Property Division Joint or Separate Tax Returns? The Effect of Bankruptcy Summary

85 86 87 96 104 104 106 106 106

9. Special Problems of the Military Where Should You File Your Divorce Complaint? Service of Process Problems Military Retirement Benefits Payment of Military Retirement Benefits Survivor Benefit Plans Other Military Benefits Summary

108 108 109 110 111 112 113 113

10. Going to Court: Uncontested Cases, Trials, and Appeals Who Goes to Court and When? Going to Trial The Courtroom Experience Appeals after Trial Summary

114 114 114 116 117 118

11. Modification and Enforcement of Court Orders Modification of Decrees Enforcement Interstate Problems Summary

119 119 121 121 123

12. Pre- and Postmarital Agreements and Palimony Premarital Agreements Postmarital Agreements Palimony Summary

124 124 124 125 127

13. Estate Planning (Wills and Trusts) Before Your Divorce After Your Divorce Summary

128 128 130 130

Index

131

Note to the Second Edition

T H I S revision comes five years and over 500 cases after the first edition. The most gratifying aspect of the first edition was to hear from many of the people who in reading it found comfort, guidance, and knowledge. I hope the second edition will have the same results.

i Introduction IT is hardly a revelation to most of us that divorce is becoming more common. There were 1,865 divorces in Hawaii in 1968; in the 1980s the figures averaged near the mid-4,000s. If you get married today, your chances are one out of two that you will get a divorce. Yet despite the prevalence of divorce, most people know little about how the divorce process works. Of course, we all know someone who has been divorced and probably have heard "war stories" from friends or relatives about their divorces. Unfortunately, to depend on this kind of knowledge in preparing yourself for a divorce is like letting the blind lead the blind. Even if understood completely, the information you may gain from a divorced friend most probably cannot be applied to your situation. This book is written for you, the nonlawyer, if you are thinking about a divorce, going through one, or having post-divorce problems. It is designed to clarify the proceedings, rights, and responsibilities involved in a divorce. The ordinary person's confusion about these matters is evidenced by the fact that almost all of my clients ask me the same questions at some point during the divorce process: 1. Will I pay alimony or receive it? If so, how much and for how long? 2. How do I get custody of my children, or will I lose them? 3. How is child support calculated? How long will I pay or receive it? 4. How is our (or my) property divided? 5. How long will it take me to get a divorce? 6. How much will it cost me? There are also questions that arise after the divorce, such as: 1. If I live with someone after my divorce but do not remarry, do I risk having to pay "palimony" or to share my property with that person?

2

Introduction

2. If I remarry, will a prenuptial agreement protect me? 3. If my spouse (or I) remarry, what happens to the alimony or child support payments? The answers to these questions depend on a number of complex legal considerations and differ from case to case. Each divorce is unique and requires special consideration. To make matters even more confusing, the answers will vary from state to state. The law of divorce under our federal system is generally left to each state to address. The law is different in Hawaii in a number of ways, as are the procedures followed by Hawaii's Family Court. This book therefore addresses itself to divorce laws and procedures in the state of Hawaii, taking into account the special problems of military personnel. Whether your divorce goes to trial or is settled without going to trial (almost 95% of all divorce cases are settled without a trial), you need to have some understanding of what the outcome is likely to be. Do you know your rights as well as the duties imposed upon you by law? Here are a few examples. Alimony: Did you know that in the state of Hawaii, unlike other states, there are no specific time limits for how long alimony may last? Did you know further that Hawaii does not recognize marital misconduct as relevant in the granting of alimony? Over a dozen factors are applied to each case to determine whether alimony is appropriate. Each case depends on its own facts. You might, for example, be able to receive alimony even though you have a steady job. The court might determine that financial help is justified in the transition from married to single life for one spouse if the other earns significantly more or if one spouse is just starting in the job market at the entry level. Child custody and visitation: The law appears to be very simplecustody awards are based on what is in the "best interests of the child" —but did you know that there are, in fact, dozens of variations in custody arrangements? Your awareness of the range of possibilities and the pros and cons of each can prevent future problems by anticipating sensitive areas and by clarifying them in your divorce agreement. Property: Did you know that if part of the down payment on your jointly held marital residence came from a gift or inheritance you received during the marriage or from your own premarital funds, you might be able to get these funds back before the remaining equity in the house is divided between you and your spouse? Hawaii's law is more flexible than that of other states, providing a basis to argue a

Introduction

3

number of reasonable positions about how to divide your property. In determining whether to go to trial or negotiate a settlement, you should know the range of options and be able to assess the risks if you go to trial. Retirement interests: Did you know that you have a right to a portion of your spouse's pension and profit sharing or stock ownership plan interests? Hawaii, unlike many states, divides pensions and other retirement interests whether or not they have vested or matured. Even if you know this, you may not know that under current federal law you might be able to receive your share of your spouse's pension starting on the date your spouse can elect early retirement whether or not he or she actually retires on that date. You might also receive your share of the vested pension when your spouse leaves current employment. You might even be able to obtain an agreement whereby your spouse (the pensioner) is awarded the entire pension while you are awarded a larger share of the marital residence. Property fully and fairly divided at the time of divorce eliminates the problem of trying to obtain your share decades later. Military retirement benefits: Did you know that if you are in the military and have accrued these benefits and file for a divorce, Hawaii will divide your benefits and award a portion to your spouse even if your state of permanent residence is not in Hawaii? However, if your nonmilitary spouse files here and your own permanent residence is not in Hawaii, Hawaii may not divide your retirement under certain conditions. Taxes: Do you know the full tax consequences of divorce? Did you know, for example, that under current tax law, your child's primary caretaker will be able to claim the tax exemption for your child regardless of how much child support each parent contributes? You may, however, agree with your spouse to give the exemption to the parent in the higher tax bracket, who is often the parent making the monthly child support payments. There are complex tax rules concerning alimony as well. Another instructive example is the taxation on property division. Would you think you made a fair deal if you get the house and your spouse gets the shares of stock worth equal fair market value? Sounds good, but there may actually be some inequity in the arrangement. Suppose, for example, the fair market value of the shares and the house is $140,000 each. If, however, the cost basis of the home is $100,000 and that of the stock $130,000, the tax you pay on the sale of

4

Introduction

the home will be much higher than the tax your spouse will pay on the sale of the stock. Tax is a very crucial issue—proper advice can save you a great deal of money and improper advice can prove costly. I could go on and on, but I'm sure you get the point. Divorce is a complex process with potentially serious long-term implications. It is only reasonable that anyone contemplating or currently involved in a divorce would want to be properly informed. This book is a guide to information that can help you in a number of ways: it will give you a broad understanding of the law and local practice; it will answer many of your questions, such as those stated earlier; and it will help you to protect your own interests. What this book is not is a handy reference for a do-it-yourself divorce. It is not designed to help you draw up your own divorce agreement or save on a second attorney's fees by letting your spouse retain an attorney to draft your agreement while you represent yourself. To rely on this or any other book on divorce as the sole means of obtaining an agreement by either of these two methods is to court disaster. You might say, "But we have no property, no children, and were married only a year. Since communication between us is still pretty good, can't we just read your book and do the divorce by ourselves?" The answer is probably yes, but my review of many do-it-yourself divorce agreements has revealed that in even the simplest of situations at least one important item has not been properly addressed. In doing your own divorce agreement, you and your spouse might, for example, neglect the issue of who will pay the joint debts, or you might fail to consider what will happen if the spouse who agrees to pay them defaults. It is amazing how often people fail to think of these and even more serious things at the time of divorce. It is not at all amazing to an experienced family lawyer. You may now think that since an attorney is the author of this book, he's going to recommend that you have an attorney represent you. You're right. This book will make you familiar with the many rules and general guidelines involved in reaching a divorce agreement, but it cannot give you the background to apply them to your particular case. Even after reading this book carefully, you will not have the knowledge of the latest laws, cases, and procedures followed by the Family Court. And you will not have the experience of having negotiated many divorce agreements. The bottom line is that even if you are knowledgeable, even if your

Introduction

5

marriage lasted only a few years, and even if you think you and your spouse have reached complete agreement, it is still prudent for you to have your own attorney spend a few hours reviewing the agreement. You can be advised if there are any problems with the agreement and whether it is drafted with the appropriate legal language that will produce the results you and your spouse intend to achieve. For most of us, however, things are not so simple. In the majority of cases, consultation with an attorney before beginning negotiations is advisable. The fact is that regardless of the circumstances of the divorce, the combination of an informed client and an experienced family law attorney will probably save money, prevent future problems, and considerably lessen anxiety. Although you and your attorney together can address many of your legal and financial problems, there remains the issue of how you will get through what is likely to be one of the most stressful periods of your life. Family law attorneys are only too aware of the emotional aspect of divorce. They are not, however, mental health professionals or counselors. You should give serious consideration to using counseling services before or early on in the divorce process. Perhaps you will discover that divorce is not your only option, or if it is, some form of professional counseling can help you cope with what lies ahead. The nicest compliment I ever received, apart from the fruit basket given me by a grateful parent after a child custody case, was when a client told me a few years after his divorce, "You really helped me through a tough time, and I came out of it okay." If this book helps you get through a difficult time a little more comfortably and economically, it will have accomplished its goal.

2 Questions Before You File for Divorce Do You Really Want a Divorce? for divorce is a major decision in anyone's life, even if it is not for the first time. The breakup of a marriage is considered one of the most stressful events anyone can experience. By the time you file, the period of most intense emotional stress may have already occurred, as you made the decision to end your marriage. The act of filing, indeed, may be anti-climactic. But in most cases, the divorce process, after filing, is still a period of great tension. Many people will find it helpful to seek professional counseling with a psychologist, psychiatrist, or other mental health specialist. Clergy, family, and friends can also give valuable support. Your attorney should be able to provide you with a list of counseling services and other resources in your community. In fact, I often encourage my clients to find an appropriate person to talk to during this difficult period. When I first meet with clients, I ask them if they are sure they want a divorce, if they have tried to reconcile, if they want to try one more time. It is, in my view, the attorney's obligation to establish whether a possibility of reconciliation still exists. If it does, I suggest professional counseling. If, on the other hand, the clients maintain their desire to proceed with the divorce, I begin to move the case forward as soon as possible. If you are not absolutely sure you want a divorce, you probably should not file. Once it is done, a lot of people—sheriffs, lawyers, judges, and others—become involved in your marital problems. Friends, family, and fellow employees will probably hear about it. Your spouse may react very negatively to your action and may use it to blame you for the divorce or to try to turn your child against you. Alternatively, it is just possible that filing will so jar your spouse as to FILING

Questions Before You File

7

cause reconciliation—but that appears to be the exception, not the rule. In most cases, the spouse who files clearly wants and will obtain a divorce.

Will You Need an Attorney? If after reading this far you still think you can proceed with a divorce unassisted, I urge you to think again. Think of the last time you welded your own car radiator, filled your own tooth, or drafted your own will. You usually hire an expert who has the training and experience to perform such tasks. Divorce is no different. Remember also that, unlike a rusty radiator or a cavity, divorce is one of the most emotionally trying experiences you will ever undergo. No matter what you believe, you are not likely to be thinking as clearly about your future under these stressful circumstances as you ordinarily would. I have already outlined in the preceding chapter some of the reasons for having your own attorney, but let me cite two more examples of what can happen if you choose to go through a divorce on your own. One case involves a couple who, because of their education and intelligence, thought they did not need an attorney. The agreement that they drew up never addressed the issue of the wife's interest in the husband's retirement benefits. They continued, furthermore, to hold their home in both their names after the divorce. The husband lived in the home while the wife rented an apartment. By continuing to live in the home the husband reaped the tax benefits, while the wife, because she rented, qualified for no such benefits. Or how about the unrepresented husband who agreed to pay his wife, who was represented by counsel, a percentage of any increases in his income to be used for alimony regardless of his wife's financial needs? If he had had his own attorney he probably never would have signed such an open-ended agreement. Can one attorney represent both of you? No, this would be unethical. However, one attorney can handle an uncontested divorce if full disclosure is made to the unrepresented spouse that the attorney represents only one spouse and the other spouse waives his or her right to counsel. The unrepresented spouse may be asked by the other spouse's attorney to read and sign a waiver of counsel form. One spouse, often the wage-earning husband, may retain an attorney and tell his wife, "Don't worry, my (or "our") attorney will look out for both our interests." This is untrue, and even dangerous because it may result later in

8

Questions Before You File

a challenge to the divorce. The husband's attorney must look out for the husband's interests, not the wife's. The husband's attorney is an officer of the court, and, though he (or she) recognizes that there are limits to the type of agreement the court will approve, you can be sure that the husband's attorney, even given these limits, will propose an agreement more favorable to him. That's why having your own attorney balances the negotiations. * If one spouse does not have an attorney, the court will scrutinize the proposed agreement more carefully. There is a chance the court will reject the agreement or that the unrepresented spouse will eventually confer with an attorney and then attack the divorce decree after it is approved. To prevent such problems, it is best for each spouse to be represented by counsel from the time the divorce proceedings begin. What does it cost to get a divorce? Attorney's fees can run from several hundred to thousands of dollars, depending on the extent of negotiations and whether you go to trial. Apart from attorney's fees, out-ofpocket costs include filing fees, sheriff's fees, depositions, experts' fees, photocopying, long-distance telephone calls, and so forth. Your attorney can give you a rough estimate of expected total fees and costs at your initial meeting, but this estimate can change dramatically as your divorce moves forward. Be sure to discuss fees and methods of payments with your attorney at the earliest possible time. Do not wait until you get your first bill. Often your attorney will require you to sign a "retainer agreement" before proceedings begin. What if you can't afford an attorney? Some attorneys will accept small retainers—initial deposits against which fees are charged—and then reasonable monthly payments. Or your attorney may recognize that you will receive a substantial amount of property out of the divorce which you can then use to pay your fees. Finally, your attorney can file what is called a "Motion and Order to Show Cause for Temporary Relief" or, simply, an "OSC" to ask the court to order your spouse to advance funds to you for your attorney's fees. You should also contact Hawaii Lawyers Care on Oahu and the Legal Aid Society to see if you qualify for free legal assistance. *For convenience, in the discussions that follow, it is usually assumed that both spouses have attorneys.

Questions Before You File

9

What Is a No-Fault Divorce? Unlike many other states which have various grounds for divorce, all divorces in Hawaii are granted on a "no-fault" basis. This means that the personal conduct of either spouse toward the other or the child, if any, is not relevant to your right to a divorce. Your spouse can abuse you and your child, commit adultery repeatedly, and live "in sin," but may still obtain a divorce, a portion of the marital property, and possibly even alimony. Similarly, "no-fault" also means that if you file the complaint, the personal conduct of your spouse does not serve as a defense to prevent the divorce. This is hard for some people to accept. However, most people feel that the no-fault rule is a positive development because it allows the court to focus on the financial needs of each spouse and their children rather than on each spouse's "dirty linen." All you will have to prove to obtain a no-fault divorce is that you have been separated for two years or that your marriage is irretrievably broken. To justify the latter, you can simply testify that "we can't communicate and don't love each other anymore"; or "he's constantly abusing me and he's told me he doesn't want to remain married to me"; or "she's leading a separate life from mine and our values are no longer the same." Rarely, if ever, does the other spouse ask the court to deny granting the divorce. If this should happen, however, the court would probably grant the divorce anyway, although it might first require you (the plaintiff) to participate in conciliation efforts, in the hope of saving the marriage.

How Long Does It Take to Get a Divorce? In very rare cases, your divorce can be granted within a few weeks after filing. This can happen when, at the time of filing, (1) you have reached complete agreement with your spouse on all matters relating to alimony, your child, and your property and debts; (2) both of you cooperate in completing all required court forms; and (3) the court staff assists in allowing you to have an early hearing date—for example, if you need to leave the island permanently or have plans to be remarried immediately. On the other extreme is the situation in which you and your spouse

10

Questions Before You File

negotiate for months over alimony, child custody and support, and property division, but fail to reach agreement. Then you go to trial. This process can take more than a year from date of filing. A case that goes to trial is called a "contested case." However, the great majority—perhaps 95% or more—of all divorces in Hawaii are resolved by negotiated agreement. These are called "uncontested" cases. The court has two choices: to approve the agreement you and your spouse have reached (which the court almost always does) or, in rare instances, to require both of you to appear either to confirm your agreement or to hear the court make orders contrary to the parties' agreement if it rejects the agreement as being too one-sided or unfair. But the term "uncontested case" is misleading. The two of you may spend months arguing over the terms of an agreement before you resolve your differences. You may, in fact, spend more on attorneys' fees in an "uncontested case" than if you went directly to trial without a lot of negotiations. One rare exception to the above is what is called a "bifurcated" divorce. With the court's permission, which is very reluctantly granted, you can obtain a divorce first and then resolve the remaining issues later. You will have to provide clear justification to obtain approval for this procedure. For example, the husband's prospective wife may be pregnant. In order to legitimize the child, he needs to get divorced now even though he and his current spouse cannot agree on property division. The truly uncontested cases—and there are many—occur where there is complete agreement at the time of filing and little need for negotiation. The required court forms are quickly completed, filed with the court, and a hearing date is set. Whether or not you can have such an uncontested case will be more clear to you after you have read this book. Finally, as a possible alternative to divorce, our statutes provide for a legal separation. A separation means that the court can award temporary alimony, child custody, visitation, and support, but cannot make a final property division or grant a divorce. A legal separation can last a maximum of two years. Separation can act as "one last effort" at reconciliation. However, this procedure appears to be a relic of a bygone age when divorce was uncommon. Now it's easier and less expensive to file for divorce and then call it off if reconciliation occurs. If you do not reconcile, then after filing a divorce complaint, you can move for a

Questions Before You File

11

final division of property and a divorce, which you cannot do if you file a separation complaint. In a separation, after two years you will still have to file a complaint for divorce. Even during the two-year period, either spouse can seek a divorce which, when granted, will automatically terminate the legal separation.

3 Filing the Divorce Complaint Who Can File for Divorce? IN order to obtain a divorce in Hawaii, you must be a resident of the state or physically present here for a specific period of time. Only then can you file a complaint for divorce that will be protected from later attack by your spouse. In order for the Hawaii Family Court to use its power to make orders binding on you and your spouse, it must have "jurisdiction" over your marriage, your children and property, and each of you individually. The court obtains such jurisdiction when one or both of you meet the residency (often called domicile) or physical presence requirements. If Hawaii is your permanent home, you are domiciled here. Domicile refers to your place of permanent residence even if you are absent from this place temporarily. In order for you to file a divorce complaint in the Family Court,* (1) either spouse must be domiciled or physically present in this state for six consecutive months, and (2) you —the person filing—must be domiciled or physically present in the Judicial Circuit in which you file (Honolulu, Maui, Kauai, or Hawaii county) for three consecutive months immediately before you begin your divorce proceeding. If you are the person filing the complaint, you are called the plaintiff; your spouse is then the defendant. The filing of the complaint starts the legal divorce process. There is a $30 fil* Hereafter, unless otherwise specified, the word "court" refers to the Hawaii Family Court, the Hawaii Intermediate Court of Appeals, or the Hawaii Supreme Court, whichever is appropriate in the context. Unless otherwise noted, "cases" refer to actual decisions of these courts.

Filing the Divorce Complaint

13

ing fee for the complaint, which is actually filed with the clerk of the court in your county. In the divorce complaint you allege that you meet the above "jurisdictional" requirements, and you indicate (1) whether you should receive alimony, (2) how many children, if any, are dependent on you for support, (3) which of you should have custody and pay child support, (4) whether you are entitled to have your marital property divided and your debts allocated, and (5) that your "marriage is irretrievably broken" or that you have been separated for two years, which are the basic grounds in Hawaii for granting a no-fault divorce. Finally, the complaint requests the Family Court to grant you a divorce and make appropriate temporary and permanent orders relating to custody and support of your children, spousal support, and disposition of your assets and debts. Figure 1 is a copy of the court's complaint form. As you can see, it is fairly simple and straightforward. At the time you file your complaint you will also have to complete and file a "Matrimonial Action Information" form, which requires information about you and your spouse as well as your child or children. * Example 1: John and Louise have lived in Hawaii all their lives. They obviously meet both the domicile and physical presence requirements, although meeting either requirement satisfies the above conditions. Example 2: Ken and Susan came here on vacation last year and liked Hawaii so much that they moved here permanently last month. They must wait five more months before either can file. Example 3: Charles and Jean have lived here all their lives. After a big argument, Jean left their marital residence on Kauai and moved in with her parents in Honolulu. A month after her arrival, she filed a complaint in the Honolulu Family Court. This complaint is subject to attack by Charles because Jean has not been domiciled or physically present on Oahu for at least three months immediately before she filed. Example 4: Stuart is in the air force, stationed at Hickam Air Force Base. He and his wife Joyce came to Hawaii eight months ago and live on the base. Their permanent domicile remains in Georgia where they will

•Hereafter, the word "child" will be used to refer also to "children" if more than one are involved.

CASE NUMBER

STATE OF HAWAII COMPLAINT FOR D I V O R C E

FAMILY C O U R T FIRST CIRCUIT

FC-D

NO.

P L A I N T I F F ' S A T T O R N E Y O R P L A I N T I F F (Nam«, A d d r e s s a n d Phone No.)

PLAINTIFF VS.

DEFENDANT Plaintiff, in s u p p o r t of this C o m p l a i n t f o r D i v o r c e , alleges: I Either or both parties have been domiciled or have been physically present in the State of Hawaii for a continuous period of at least six months and the Plaintiff has been domiciled or has been physically present in this circuit for a continuous period of at least three months immediately preceding this application for divorce. 2. The parties are lawfully married to each other. 3. • •

•

The parties have no children born during this marriage. The parties have child(ren) below age 18 child(ren) above 18 but still dependent on the parties for educational support.

4. The best interests of the minor child(ren), require that custody be awarded to D

Plaimiff • defendant and that the noncustodial parent • should • should not be required to provide support for them.

•

both parties jointly

5. The parties possess certain property and Plaintiff is entitled to an award of • a portion • all • none of the property of the parties. 6. Plaintiff is entitled to an order that Defendant pay • a portion • all of the debts or liabilities of the parties.

• none

7. Plaintiff • is • is not entitled to an order that Defendant provide support for Plaintiff. 8. Plaintiff alleges grounds for divorce as follows: (Section 580-41) (A) (B) (C) (D)

• • • •

Marriage is irretrievably broken. Parties lived separate and apart for a period of 2 or more years under a decree of separation from bed and board. Parties lived separate and apart for a period of 2 or more years under a decree of separate maintenance. Parties lived separate and apart for a continuous period of 2 or more years preceding the application; it is unlikely cohabitation will resume; and the court is satisfied in this case that it would not be harsh and oppressive to the defendant or contrary to the public's interest to a divorce on this ground. It is r e q u e s t e d of t h e c o u r t : 1. That a decree be entered granting a divorce from the bonds of matrimony, awarding attorney's fees and costs, dividing and distributing the property and allocating the liabilities of the parties, providing for spouse support, and the custody, visitation, support and education of the child(ren) of the parties, if any, all as alleged and as may be appropriate and in accordance with the evidence and the law. 2. That other relief be granted as the court deems proper in this case, including temporary relief as requested in connection with this complaint. T h e Plaintiff does hereby solemnly a n d sincerely declare, under penalty o f perjury that the statements m a d e herein are true and correct t o the best of plaintiff's knowledge, i n f o r m a t i o n a n d belief. PLAINTIFF'S S I G N A T U R E

DISTRIBUTION D O R I C FILE. O DEF . O P R O S FORM NO 07310»

4*4

COMPLAINT FOR DIVORCE

F i g . 1. C o m p l a i n t f o r D i v o r c e

Filing the Divorce Complaint

15

return after his military service ends. Either spouse has met the physical presence requirements to file here. Now suppose that you want to file for divorce but some time in the past six months you left the state on vacation, or that in the past three months you left the circuit, perhaps to visit a neighbor island. Or what if you attend school or have a temporary job on the mainland or in a foreign country? Would you still be able to meet the residency requirements? Yes, because your "domicile" means your permanent home. If Hawaii is your permanent home, temporary absences during the months before filing will not invalidate your Hawaii domicile and your right to file. Likewise, short interruptions in your physical presence here will probably not invalidate your divorce complaint if you have generally been physically present in the state for the six months before filing and in the circuit for three months before filing. Even if you have lived away from Hawaii for years, the court still may have jurisdiction to grant you a divorce or to make orders that you must obey. The court has to decide whether you are a Hawaii domiciliary. To do so, it will consider several factors that indicate the extent of your connections with Hawaii, such as where you filed state tax returns and voted, where you had a driver's license and bank accounts, whether you had relatives here or owned real property in the state, and whether you had memberships in local social clubs. If the court is satisfied that there are sufficient connections, you are considered a domiciliary and can file here. You can change your domicile by being physically present in a specific place and intending to remain there permanently. Thus, if you have just moved here from Peoria, Illinois, you can change your domicile from Peoria to Hawaii if you intend Hawaii to be your permanent home. In such case, you can file for divorce six months from the day you arrive here. It is possible, too, that in the meantime your spouse will have filed a complaint in your former state of residence and served you with it. In that case, you would have to go back to your former state to resolve the divorce case. Example 5: Joan fled from New York to Hawaii with her two young children. She cannot file a complaint here for six months. However, two months after she arrived, her husband Mike filed a divorce complaint in New York and asked that state's court to order the children returned.

16

Filing the Divorce

Complaint

The Hawaii court has no jurisdiction over the dispute (except in very limited circumstances if the children would be placed in danger upon their return to New York) and so Joan's two children are required to return to the east coast, where she will have to respond to her husband's complaint. If you live here but your spouse has not been domiciled in Hawaii, you may have serious problems, especially if your child is with your spouse or if your property is located out-of-state. In such cases, the Hawaii court can grant you a divorce, but it may not have "personal jurisdiction" over your spouse to make orders that your spouse will have to obey. Issues relating to alimony or division of property may have to be resolved later in the state where your spouse is domiciled. The disposition of each case depends on its particular circumstances; jurisdictional issues can become very complex if your spouse never lived here or has moved away to another state. In most cases, however, domicile or physical presence for the required minimum period will not pose a problem for those who want to file here for divorce. In fact, the "physical presence" requirement enables those in the military to file for divorce even though they are not domiciled here. (See Chapter 9, "Special Problems of the Military.")

Serving the Complaint After you file your complaint for divorce, it must be "served" on your spouse in order for the court to begin to address the matters raised in your complaint. The purpose of service is to give notice to your spouse and to put him or her under the jurisdiction of the court. The complaint is served with a summons which requires your spouse to file an answer with the court within 20 days of the date of service. If your relationship is still friendly, your spouse may simply sign a receipt, called an "Acknowledgment of Service," presented by you or your attorney. If your relationship is unfriendly, you will probably have to have the sheriff serve the complaint. The sheriff will be instructed where to find your spouse and will serve the complaint by handing him or her the complaint and summons. If your spouse refuses to accept it, the sheriff can simply drop it near his or her person. If your spouse is particularly contentious, service by the sheriff sometimes

17

Filing the Divorce Complaint

succeeds in getting his or her attention because it indicates that you're serious about the divorce. Of course it can worsen your relationship, if that's possible, because service by a sheriff can be really annoying or embarrassing. If your spouse is out-of-state or within the state but outside the circuit in which you file, you can either serve by certified mail—the return receipt signed by your spouse completes service—or by an authorized process server where your spouse resides. If you can't find your spouse after diligent efforts, you may be able to serve by placing a notice in the local newspaper, at your expense. At the time your complaint is served, or shortly thereafter, you may also serve a Motion and Order to Show Cause for Temporary Relief (OSC). An OSC may request temporary alimony; child custody, visitation, and support; use of one of your cars; exclusive occupancy of your house; payment of debts; advances on attorney's fees; and various restraining orders. Some of these issues are discussed in greater detail in later chapters. Typical temporary restraining orders include ones to restrain both spouses from annoying or threatening one another, disturbing their child's custodial or visitation arrangements (including removal from the county), and wasting or disposing of their assets except as necessary to operate their businesses. Any transfers of assets you make after you separate from your spouse or file your complaint may be set aside by the court or considered in the final property division. Unless there is violence between the two of you, it is difficult to have one of you removed from the marital residence because of the severe financial strain that often results. Your Spouse Answers the

Complaint

Once served, your spouse must file an answer to the complaint within 20 days of the date of service. The answer includes your spouse's response to your statements about whether alimony should be awarded, how property should be divided and debts allocated, who should have custody of your child, who should pay child support, and whether your marriage is irretrievably broken. Even if your spouse denies the latter, you will still be able to obtain a divorce. If your spouse fails to file an answer, you can request the court to approve a decree of divorce as soon as a hearing can be scheduled. In such a case, your spouse need not be present for the court to grant you a divorce and the other relief you requested in your complaint.

4 Financial Statements and Negotiations AT or near the time of filing your divorce complaint, you need to get ready to negotiate what is commonly called a property settlement agreement,* although it also includes matters relating to alimony and child custody, support, and visitation. Of course, you may want to state your position and not budge, but this would be most unusual and unrealistic. Since numerous issues have to be resolved in most divorces, there usually is give and take in most negotiations. When you first file, you may not even know your rights as to child custody, visitation, and support, or alimony and property division, or even the value of the property you own. Only when all the facts are clear to both spouses should you begin to negotiate. To determine what property you own and whether alimony and child support are justified, the court requires you to file "Income and Expense" and "Asset and Debt" statements. The court forms are shown here as figures 2 and 3, both completed in sample form. Your attorney may ask you to complete them before you first meet in order that he or she can review them and pinpoint the most important areas for discussion. These forms are very important. So let us review them section by section to help you complete them properly.

•Sometimes a divorce decree will contain all the provisions of your agreement relating to alimony, child support, and property division; alternatively, you may first sign a separate settlement agreement called an "Agreement Incident to and in Contemplation of Divorce." The latter is then referred to and incorporated in a one-page divorce decree. In either case, the court approves the decree, which is the legal document that is proof of your divorce.

Financial Statements and Negotiations

19

Asset and Debt Statement 1. Cash on Hand. This does not include amounts held in savings or checking accounts. It does include cash you are holding or that you have socked away somewhere. If you hand over $500 to your friend and say, "Don't tell anyone about this because I don't want my spouse to know, but give it to me when I need it," you still must list it—but under item 10 (property held in trust for you). Remember, you are required to sign this statement under penalty of perjury; an intentional lie might affect how the court acts upon your case, and could even cause you to be convicted of a crime. If you are aware of how much cash your spouse has on hand, list it too. The same is true of all the assets and debts discussed below. List your spouse's if you know them. 2. and 3. Credit Union and Bank and Savings Accounts (including Trustee Accounts). You should know the information requested about your own accounts. If held jointly by yourself and your spouse, put " J " in the title column. Even if you don't know much about your spouse's or your joint accounts, at least list the name of the institution holding each account because this will bring the account to your attorney's attention. To ascertain the balance in your own or a joint account, just call the financial institution and ask for the current balance. Also list trust accounts. In other words, if you are trustee for an account in your child's name and can remove the funds at will, list it here. If, however, the funds are held irrevocably by you, such as, for example, for the benefit of your child in a Hawaii Uniform Transfers to Minors Act (UTMA) account, then list it under 10. 4. Securities. These include shares of stock, bonds, money market funds, and so forth. Again, you may not know the date of acquisition, number of shares, cost, market value, and debt owed against the securities, but if at least you know of their existence, list them by name of company. It is important to note the existence of securities, even if you do not have much information on them. 5. Vehicles. Before you fill in the current market value for your car, which may be just a guess on your part, consult a "blue book," available at most car dealers or bookstores, or check the ads in the local newspapers to estimate its current market value. Do not simply guess at a value because a wild guess could hurt you later. Your estimation is

20

Financial Statements and Negotiations

admissible evidence of the vehicle's value. Put a question mark under fair market value if you are unsure of the car's current worth. If you own a boat or an airplane you may have to order an appraisal, which costs approximately $100 to $200. 6. Real Property. You should indicate whether the property is your marital residence, commercial or investment property, or unimproved. Don't guess at the current gross value unless you have a recent appraisal or you are selling the property and have recently received offers. Do not use the values on your property tax assessment notices since they are generally lower than fair market value. Total debt owed can be obtained from your lending institution. It will be helpful if you bring your attorney copies of deeds, agreements of sale, mortgages, promissory notes, and other related documents. 7. Life Insurance. If you have life insurance, it may have a cash value that can be divided by the court. Therefore, this is an important asset and should be described as accurately as possible. 8. Retirement and Related Benefits. Next to your marital residence, this is probably the most valuable asset to be divided, although you may not realize that this is so until you have read this book. You may not even know the type of plan either of you has, its present vested value, or when benefits will be payable. In any case, just fill in what you know. Ask your office manager or employee benefits department for information about your plan. They should be able to provide you with a statement of your current interest and a description of how your plan works. 9. All Other Major Assets. Do not indicate approximate values of these assets unless you have some reasonable basis for doing so. But list as many of them as you know. Don't list every piece of furniture or household effect, but group them under appropriate headings. You may have to provide detailed lists later in order to negotiate division. Be sure to include any sole proprietorships, partnerships, or corporations in which you have interests and any accounts receivable. 10. Property Held in Trust. This is where you list your child's UTMA accounts or other trust accounts you or your spouse hold for others. Also list trusts held for your benefit. Do not include inheritances you might receive, but only actual trusts already created for you or your spouse's present or future benefit. 11. All Outstanding Debts. This includes your mortgage, agreement of sale, and leasehold payments, credit card payments, promissory

07-31 -14.2 (R-l/76)

(Name of Attorney and Address)

Jin the Jfamily (£nurt nf tljp 3Firat (Eirruit »lolr n{ Damait FC-D

Nn

1 lift

ASSET AND DEBT STATEMENT OF GEORGE WASHINGTON !.

C A S H (on hand or held by others for me)

2.

C R E D I T UNION ACCOUNTS: Name

Title [ H . W . J )

S t a t e of Hawaii Employees C r e d i t Union

3.

50.00

Credi! Balance

H

Title(H.W.J)

Checking

H

Bank of Hawaii

Checking

J

F i r s t Hawaiian Bank

Savings

W

SECURITIES:

-

(Include Trustee Accounts)

Type of Account

Bank of Hawaii

4.

Debt Balance

$2,500

BANK A N D SAVINGS A C C O U N T S : Company A Branch

S

Current Balance

$2,000 500 2,500

(Stocks, Bonds, Mutual Funds, Certificates of Deposit, etc.)

Company

Title ( H . W . J )

C a s t l e & Cooke

Dale of Acquisition

J

1/78

Cost

750

Market Value

Debt Owed Against

2,000

5. VEHICLES: (Autos, Trucks, Motorcycles, Trailers, Campers, Boats, etc.) Year

Make

Title (H.W.J)

Current Market Value

Debt O t t t d Against

1978

Chrysler

J

->

1,000

1982

Toyota

J

•>

4,000

1986

Sailboat

J

7>

(20')

Fig. 2. Asset and Debt Statement

_

F i g . 2.

(continued) 07-31-15 3 (R-1.76) Pigt 1

FC-D

No

17

Mum.- George Washington 6.

REAL PROPERTY: Till« (H.W.J)

1887 Constitut i o n Ave. Lease Hilo »Inimnnvwil Pee

J

Date of Aeçuiulion

Current O r o u Valut

Co»t

1976

$150,000

199?

8.000

$107,000

7. LIFE INSURANCE: Company

Penon liuurtd

Prudential

8.

Face Amount

H

Beneficiary

Title (H.W.J)

W

H

100,000

Debt Owed Againit

Caih Value

3,500

RETIREMENT) PENSION: PROFIT SHARING ACCOUNTS: Employer or Company

Type of Pton

Yean in Plan

Tout Preten« Vetted Value

Benefits Payable When

Age 55

Castle & Cooke

Retirement

20

$125,000

Castle & Cooke

Profitsharing

15

80,000

Sane

9. ALL OTHER MAJOR ASSETS: (Furniture, Household Effects, Art, Stamps, Coins, Tools, Equipment, Jewelry, Accounts Receivable, Investment Assets, Business Assets, Cemetery Plots or Niches, Tax Refunds Due, etc.) General Deaeription

Title (H.W.J)

Household furniture (leather goods) Mail order business

J

Joint Tax Return refund

J

J

Eatimated G r o n Value

$10,000 ?

Debt Owed A|ainM

~

800

07-31-15.3 ( R - l . 76) Page 3

FC-D

Nn

1776

Name . 10.

P R O P E R T Y H E L D IN T R U S T F O R OR BY T H I R D P E R S O N / S : Accounts Noted in paragraph 3)

Value

Description

Bank

11.

ALL OUTSTANDING DEBTS: Debtor (H,W,J or Other)

Debt O w e d Against

$8,000

Children

account

Creditor

(Aside f r o m Bank & Savings

(Include those listed above) Security

M o . , Yr. Debt Incurred

Total Balance Owed

Minimum Monthly Payment

American Savings

J

House

1/76

107,000

750.00

Credit Union

J

Car

4/82

4,000

175.00

Husband's mother

H

_

1/85

5,000

VISA

H

_

Ongoing

2,000

-

100 min.

I hereby declare, under penalty of perjury, that I have examined the foregoing statement and to the best of my knowledge and belief it is true, correct and complete.

(Signature)

Date:

24

Financial Statements and Negotiations

notes, and personal loans from friends, parents, and business associates as long as you can provide proof—even oral testimony—of their existence.

Income and Expense Statement* If neither you nor your spouse is seeking alimony or child support, this statement may not be very important. But sometimes—for example, after you have completed the form—it becomes very clear that you need alimony. The statement is often very difficult to complete because most people do not keep a daily record of their expenses. 1. Regular Income. If you receive a regular paycheck, this is fairly easy to complete. But what if your paycheck varies? It's best then to average what you have received over a few months. Do not predict future income. This statement is supposed to reflect your current monthly income as of the time you sign it. If you are paid every week or every two weeks rather than monthly or bi-monthly, be careful how you calculate the item "Net take home earnings on a monthly basis." Example 1: Your net pay (after withholding) every two weeks is $750. Your net monthly take home is not $1,500 because you will receive 26 paychecks a year, not 24, for the 12 months you work. The extra $1,500 (2 paychecks x $750) should be divided by 12, and $125 should be added to your net monthly earnings. Thus your total average net monthly income should be $1,625. Example 2: Note that your other income should also be averaged on a monthly basis. If you receive four $60 dividend checks a year, or $240, insert $20 ($240 divided by 12) for the monthly "other income."

If either spouse's withholding is too high, and net income is thus too low, this fact may be pointed out when negotiations commence. You should have your attorney review the amounts withheld from your own and your spouse's current paychecks to assure their accuracy. *The court is also using a slightly different form of Income and Expense Statement which, in my opinion, is more difficult to read and to complete. The categories are about the same; there is one additional question which requires you to explain how you invest your monthly savings (in the unlikely event that your income exceeds your expenses) or, in the more typical situation, cover your monthly deficit.

07*31-14.2 (R-l/16)

(Name of Attorney and Address) Jin t i p J i a m i l g (Enurt o f fttitrof FC-D

No

9irat

Cirratt

Buwii 1776

INCOME AND EXPENSE STATEMENT OF GEORGE WASHINGTON M Y R E G U L A R INCOME: A.

Gross wages and commissions each pay period Weekly: ; Every 2 weeks: X . Twice a month: ; Monthly: Payroll deductions each pay period: Fed. Tax $ 1 7 5 . 0 0 . State Tax S 8 0 . 0 0 ; FICAt 7 0 . 0 0

.

Union dues Haalt-.h

insurance

premium

$

1,000*00

S

400.00

325.00

10.00

*

Retirement

B.

S

S

y

20.00

45.00

Net take home earnings each pay period Net take home earnings on a monthly basis

$ bUU.UU $ 1 / 300 .00

Other income (e.g. net business income, net rentals, dividends, etc.) averaged out on a monthly basis

S

200.00

M Y R E G U L A R M O N T H L Y EXPENSES: General expenses. * 1. Rent or Mortgage or agreement of sele, including monthly prorata Utilities (Water, Electricity. Gas, Telephone) Car operation, maintenance, repair, and insurance Installment contracts and required monthly payment on: autols) $ 1 7 5 . 0 0 ; household items $ personal loans S 2 5 . 0 0 7. Payments to other dependents TOTAL B.

(mother)

$ $

750 .00 12b .00

$ $ $

100 .00 25 .00

s s s

200 .00

1.300.00

Other expenses: 1. 2. 3. 4. 5. 6. 7. 8. 9.

-

l ö ö • ÖÖ

For myself only

Food Clothing Medical and dental Laundry and cleaning Recreation School Payments to others for child care Income taxes on alimony Others (Itemize) (a) Chapter XIII bankruptcy (bl Flute lessons (c) Miscellaneous TOTAL

S $_ S S S $

240.00 50.00 25.00 10 . 00 75.00 -

S

- payments

I have the following medical and dental plan coverage.

.

.

.

t S S »_

Children 150.00 50.00 25.00

10.00 50.00 125.00 150.00

— 100.00 25.00 25.00 560.00

•25.0Q 585.00

HMSA/HDS

I hereby declare, under penalty of perjury, that I have examined the foregoing statement and to the best of my knowledge and belief it is true, oorrect and complete.

•Mrs. Washington's salary contributes to payment of expenses. Fig. 3. Income and Expense Statement

26

Financial Statements and Negotiations

2. Regular Monthly Expenses. a. Rent or mortgage. If you live rent-free with your parents or friends, leave the space blank. If you do list rent, you may be asked to prove you are paying it. Remember that your spouse may question every amount you list. Include condominium maintenance fees, property taxes, and leasehold fees. b. Utilities. List your telephone, electric, water, cable television, and gas expenses. c. Car operation. Estimate your annual costs for repairs, maintenance, insurance, and registration fees and divide the total by 12. Add the result to your estimated monthly gasoline expenses. d. Non-car insurance. Divide by 12 your annual premium costs. e. Installment contracts. These include your monthly credit card payments for past-due amounts. Do not include any current charges that you also list under other headings. f. Payments to other dependents. If you support a parent or relative other than your child, insert your average monthly expense. g. Food. Include expenses for eating out and at home. Don't forget weekday lunches at work. You may have to review your checkbook and to start keeping a daily record to estimate this expense. h. Clothing. If you have a child, don't underestimate his or her needs. You may be able to wear the same clothes for months or years; your growing child cannot. i. Medical and dental. If your contributions to premium costs are listed as a deduction from your paycheck at the top of the form, do not include them in your expenses, too. Also indicate your average monthly unreimbursed costs, including costs for prescription medicine. j. Laundry and cleaning. If you use your home washer and dryer, include only dry cleaning costs. k. Recreation. Be reasonable. Include your normal recreation costs for movies, amusement park admissions, golfing fees, club dues, sporting events admissions, and so forth. If you normally take an annual trip to a neighbor island or the mainland, divide the costs by 12 and include them. However, keep in mind that this expense may be the first one to be cut if belt tightening becomes necessary. 1. School. This includes costs for tuition, other fees, after-school activities, meals, transportation, uniforms, books, and supplies. m. Income taxes on alimony. If you complete the statement at a time when you are receiving alimony, estimate the taxes you will have

Financial Statements and Negotiations

27

to pay or are paying to the government—both federal and state—on the alimony included in your income. (Note that the alimony you receive will be added to all your other income.) You will be paying a higher rate of tax on the alimony received than that imposed on the rest of your income since under our progressive tax system, the marginal rates increase as your income rises. Keep in mind that if you are paying alimony, your tax withholding may be too high because you will be able to deduct the alimony payments from your gross income on your tax returns, thus reducing your tax liability. n. Other expenses. Did you forget anything? Church donations, charitable contributions, holiday and birthday gifts, newspaper and magazine subscriptions, haircuts, tobacco, makeup, etc.? o. Miscellaneous. About $50-$ 100 a month is probably reasonable. Review your checkbook for the past few months and your most recent tax returns. Start keeping a record of all your income and expenses. You should expect your spouse's attorney to review carefully and question you about many items in your statements. The attorney may request, and is entitled to receive, copies of every document related to your assets and debts and income and expenses. You should check your statement against your most recent tax return to be sure you have included all of your assets, debts, income, and expenses. Be sure to tell the truth, to the best of your knowledge and belief; in this way you can protect yourself from perjury charges or from being caught by your spouse during negotiations or at trial in a very embarrassing and harmful inconsistency. You should be aware, however, that you can revise your statements as circumstances change or new information comes to your attention. Of course, if the above information is in the sole control of your spouse, your attorney will have to obtain the information from him or her. Prior to negotiations, you may have to obtain appraisals of your real property, antiques, and business interests. Your spouse's attorney may also undertake "discovery" including your oral "deposition" where you will be asked to answer questions under oath to obtain additional information about your personal and business affairs. You may also be asked questions regarding your position, if you have formed one, on child custody and support, alimony, property division, and related matters. These depositions take place in your spouse's attorney's office, usually in the early part of the divorce process.

28

Financial Statements and Negotiations

The Negotiation Process Now you are ready to negotiate. Your attorney might first make a written offer to your spouse's attorney. Or the attorneys might meet faceto-face to discuss an agreement. Alternatively, all four of you might meet together. There are numerous variations on how offers are made and agreements negotiated. The methods used should be tailored to the personalities and issues involved. Negotiations can take days, weeks, or months. Attorneys will negotiate with each other since your spouse's attorney is prohibited from talking directly with you, as is your attorney prohibited from talking directly with your spouse. You and your spouse may negotiate directly if you wish, but this generally is not a very effective approach and can lead to a lot of problems if you are not well informed as to your rights, or if one spouse is easily manipulated by the other. If the agreement is negotiated solely by the attorneys, you and your spouse still must give final approval. If you can't agree, you will have to go to trial. One way to speed up negotiations or to move forward to trial is to file a "Motion to Set for Trial" and a "Position Statement" with the court. This document, to which you must attach current Asset and Debt and Income and Expense statements, will describe what you want in terms of alimony; child custody, visitation, and support; division of property, and allocation of debts. Your spouse will then have to respond, usually within two weeks. Then your attorneys will appear together before the court to see if the matter can be settled out of court, or whether it should go to trial. Often, the court encourages fair settlements by conducting pretrial conferences with the attorneys and by encouraging discussion and resolution of your differences. In any event, there are two deadlines to track. First, you must properly serve your spouse with the complaint for divorce and summons within six months after the complaint has been filed with the court (if you fail to do so, the court will dismiss your case). Second, you have to complete your case within one year after the complaint is filed—by either reaching an agreement or going to trial. Mediation Mediation is the use of a neutral third party who tries to help the two of you—without your attorneys being present—reach an agreement. Most mediators are not attorneys. They do not force you to reach an

Financial Statements and Negotiations

29

agreement; they have no power to do so. To be most effective, mediation requires cooperation between you and your spouse. Mediation services are offered on Oahu by the Neighborhood Justice Center at no cost to you, and by many professionals trained in mediation who usually charge an hourly fee. Mediation usually can be set up quickly and then, if progress is being made, can last as long as necessary to reach an agreement. However, there are limitations to mediation, and its usefulness is the subject of heated debate, particularly between attorneys and mediators. It is strongly supported by the court and, when used in appropriate cases, can be very helpful. But if you decide to try this service, you should be aware of its limitations. For one thing, family law cases have become much more complex in the last decade, and the law is constantly changing as new cases are reported. Most mediators are neither trained nor licensed to practice law. They have no experience in negotiating divorces; they may not keep up with recent developments in divorce law; and they lack the expertise of attorneys who specialize in family law in negotiating agreements. This problem can be resolved if you use a family law attorney for your mediator. Then too, if one spouse has habitually dominated or manipulated the other, mediation may be fruitless or may even worsen the situation. To have a chance for success, both spouses must feel free to be frank and to participate openly in give and take. If not, one may feel pushed to reach to an agreement he or she may later repudiate. Mediation in family law situations can be successful when no inequality of this sort exists between the spouses and the mediation focuses on certain limited and factual issues—for example, the child's visitation schedule, or the division of furniture and household effects. In fact, in many custody and visitation disputes, the court in Honolulu is now requiring the parents first to try mediation before the court will hold a hearing. However, mediation is not appropriate to deal with complex legal issues such as how pensions are divided, the tax consequences of paying or receiving alimony, or a complex division of property. Mediation is more likely to succeed if, before you begin it, you consult with your attorney to learn exactly what your rights are, how to formulate your position, and what to expect in a typical agreement. You will then be better prepared to address your particular problem. All in all, mediation is definitely worth trying in many situations,

30

Financial Statements and

Negotiations

particularly if you have first conferred with your attorney. Mediation may help to narrow the issues in dispute and to assist both of you in reaching agreement on certain matters. It should also be clearly understood by all parties that any agreement is subject to review by your or your spouse's attorney and can be repudiated at any time prior to its approval by the court. Now you are ready to read the following chapters on child custody and visitation, child support, alimony, and property division. They will inform you about your rights and what you might expect to be awarded by the court on a temporary and permanent basis.

5 Child Custody and Visitation PERHAPS the most emotionally trying aspect of divorce cases involves disputes over child custody. It is also a very confusing area because of misunderstandings over the difference between joint legal custody and sole legal custody, and legal custody compared with physical custody and visitation. These terms are explained in detail below. Most parents seeking divorce fall into one of two categories: those who agree on custody arrangements and request their attorneys to draft the appropriate legal documents; and those who disagree about custody and simply tell their respective attorneys, "I want custody of my child." The latter statement really means two things in legal terms: "I want to be the decision maker regarding my child's upbringing" (legal custody) and "I want to be primary caretaker" of my child (physical custody). When discussing custody with your attorney, you need to focus on these two distinct types of custody. Keep in mind that under Hawaii law, "child" refers to a person under 18 years of age. You may have a duty of support for your adult child (see Chapter 6), but your legal control over your child terminates when your child reaches 18, the age of majority.

Legal Custody Sole Legal

Custody

Legal custody relates solely to parental decision making. If you are the parent with sole legal custody of your child, you will decide where your child lives, what school the child attends, the child's religious observances, lifestyle, medical and dental care, when the child may drive a car, major recreational and extracurricular activities, and every other major and most minor decisions that need to be made in your

32

Child Custody and Visitation

child's life. Your spouse* will have no legal right to share in this decision making, although he or she may offer advice—which may be ignored by you, the custodial parent. Generally, if you are the parent who has sole legal custody, you will also have primary physical custody of your child. Your spouse, the "non-custodial parent," will usually have rights of visitation with the child. Joint Legal

Custody

When the parents have joint legal custody, both have an equal say in making decisions about their child. In other words, each would have a veto over the other's decisions relating to the child. In theory, at least, if the two parents fail to agree, then no change can be made affecting the child's present situation, unless one makes the change in spite of the other's objections or convinces the Family Court to order the change. When parents disagree on "minor" decisions concerning the child—the court has not yet defined "minor"—it is likely that often the decision will be implemented over one parent's objections. It is also likely that the latter will not run to court when this occurs. In other words, there will have to be some give and take over day-to-day decisions. However, on major issues like medical and dental care, religion, education, and relocation, if one parent implements a decision over the other parent's objections, the former might be found by the court to be violating the joint custody arrangement. The law is not yet clear in this area. The court might then sever joint custody and give one parent sole legal custody. In terms of physical custody, however, the visitation arrangements may not be much different from those already set under sole legal custody agreements. Until the last decade, most custody arrangements gave mothers sole legal and primary physical custody, while fathers had rights of reasonable visitation. Hawaii courts applied the "tender years doctrine" which favored mothers, who, the court said, "by nature were better suited" to care for their young child. The court awarded mothers custody of the children regardless of the fathers' fitness to care for them. Fathers usually visited with their child for limited periods of t i m e alternate weekends, holidays, and during summers—while mothers *The term "spouse" will be used hereafter to refer also to your ex-spouse, if your divorce has been granted.

Child Custody and Visitation

33

bore the major burden of parenting. Though the tender years doctrine no longer applies in Hawaii, this arrangement—in which mothers have sole legal and primary physical custody—still remains a common arrangement here. Since the 1970s, however, more than 30 states have adopted some form of joint legal custody as an allowable or preferred alternative to sole legal custody. Hawaii's law, enacted in 1980, permits but does not require the court to award joint legal custody. The major reasons for the rise in popularity of joint custody appear to be the recent emphasis on equal rights and opportunities for both sexes and the increased role played by fathers in parenting. A very noticeable indication of this change is the greatly increased number of fathers who assist at the birth of their children in the delivery room. Recent national studies indicate that 90% of all child custody arrangements are arrived at through negotiation. Most commonly, mothers still have sole legal and primary physical custody subject to the father's rights of reasonable visitation. Even when the parents agree on joint legal custody, mothers generally remain the primary physical custodians. However, these studies appear to indicate that in the 10% of cases where custody is disputed, fathers have an excellent chance of being awarded both legal and primary physical custody of their child. Joint vs. Sole Legal Custody: Which Is Best for You? Joint legal custody can succeed when the parents communicate well with one another. Unfortunately, most people seeking divorce don't communicate well with their spouses; usually that's why they decided to end their marriages in the first place. Is it worth fighting to obtain sole rather than joint legal custody? Although which parent has physical custody is often quite important, in many cases it is not worth battling over joint versus sole legal custody. If the child is a teenager, major issues like the child's education, religion, health care, and primary residence will already have been resolved. If you and your spouse communicate well with each other— at least as to decisions involving your children—the form of legal custody will probably make little difference. Also, if you are not financially well off, issues revolving around school or lifestyle will most likely be resolved by what is affordable, regardless of which of you has legal custody.

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At this time, the effectiveness of joint legal custody remains unproven. Some judges believe there should be "one captain for the ship." It should work well for parents who communicate well and are willing to confer about their child's needs and problems. It may even encourage both parents to share responsibility for the child's upbringing. Unfortunately, many parents—often fathers—become weekend or everyother-weekend visitors and lose the sense of daily involvement in their lives. If either spouse remarries, this lack of involvement often increases. Too often, in my opinion, the Hawaii courts award joint custody even when parents do not communicate well or when one of them does not spend a significant amount of time with their child. Maybe it is the court's wishful thinking that if it orders joint legal custody, then communication or contact will improve under such conditions. What then are the advantages and disadvantages of seeking joint legal custody if you do not communicate well with your spouse? If you are likely to be the primary physical caretaker of your child, should you agree to joint legal custody rather than fight for sole legal custody? On the other hand, if you're not going to be the primary caretaker, should you fight for joint legal custody? Even if you don't currently communicate well with your spouse, there are several possible benefits to having joint rather than sole legal custody. For one thing, an award of joint legal custody may encourage both of you to communicate better and share more responsibility for your child's upbringing. If both of you can communicate and agree on major decisions affecting your child, even though one of you may be a "weekend parent," your child will probably benefit. Many studies indicate that a child is more likely to come through a divorce with fewer emotional scars when the parents communicate amicably and both are involved in the child's life. Furthermore, joint legal custody preserves your parental rights to be involved in your child's upbringing. It also may give you a veto over unilateral decisions made by your spouse. If one spouse wants to make a major change in the child's life and the other does not agree, the former, unless he or she unilaterally implements the change, will have to ask the Family Court to order the other spouse to comply. These court battles can have serious financial and emotional consequences for you, your spouse, and your child. Often it will be too troublesome to go to

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court, so the current situation—unsatisfactory to one of you—will not change if the objecting spouse is willing to abide by the decision without challenging it in court. However, as previously noted, even with joint legal custody's requirement of joint decision making, most decisions may work themselves out simply by the force of events or by the parents "giving and taking" on different issues. For example, if neither of you can afford private school, your child will attend the public school nearest the parent with whom he or she resides during the week. O n that issue there is really not much left to decide. And finally, having joint legal custody may be important if your spouse decides to move from the island with your child to another island or to the mainland. If a parent who has sole legal custody decides to relocate, and the other parent objects, the latter will have to ask the Family Court to prevent the move. Conversely, under joint legal custody, the parent who wants to relocate should initiate the court proceeding if the other parent opposes the move. In my opinion, if a parent subject to the terms of joint legal custody relocates from the island with the child without the spouse's permission, he or she may be in violation of the divorce decree and subject to contempt of court penalties. These penalties include modification of the terms of legal custody, fines, or jail. To avoid this problem, if you are the primary physical custodian (see below), you should try to have your divorce decree provide that you may relocate without your spouse's permission, even when joint legal custody has been ordered. Will the Hawaii courts distinguish between joint and sole legal custody in situations where one of you seeks to relocate with your child and the other asks the court to prevent the child from being removed? Will having joint legal custody prevent you from relocating with your child? In one older case, the Hawaii Supreme Court denied a mother's request to remove her children when she failed to state any specific reasons why the move would be beneficial for them. One mainland court recently ruled that the type of legal custody was not important, but that the court would generally favor the child's primary physical custodian who wished to relocate. In other words, the nonphysical custodial parent who opposed the relocation would have the burden of proving to the court that it was not in the best interests of the child to move. O f course, the parent who wishes to move can always do so without the child; the parent remaining here can then assume primary

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caretaker responsibility. If the child moves, the parent who remains here would still have rights of reasonable visitation. However, because of transportation costs and the child's school schedule, visitation would probably occur only during the summers and extended holiday periods. The next decade will reveal whether joint legal custody is the panacea pictured by its proponents. In summary, if the two of you communicate well regarding your child, the type of legal custody chosen is probably not very important; if you don't communicate well, then requiring joint legal custody—and thus shared decision making—creates a fiction that the two of you can cooperate when, in fact, you can't. If disputes develop, the Family Court may not have the resources to handle a flood of complex disputes over your child's education, religion, lifestyle, health care, and related issues. Mediation may help to resolve some disputes. On the other hand, in your negotiations with your spouse, joint legal custody may be a useful compromise position that protects each of you by giving you the right of input into and a veto over your spouse's major decisions regarding your child. It also may encourage better communication between you in the future.

Physical Custody Physical custody refers to the time during which your child lives with you or visits and is cared for by you. Each of you has physical custody of your child at such times even though you may not have legal custody. Visitation with each parent is also the right of the child. Visitation rights, therefore, cannot be bargained away by either of you for other benefits. Visitation is both a privilege and a responsibility, and failure to comply consistently with visitation arrangements can have profound detrimental effects on your child now and in the future. Physical custody arrangements may be stated in very broad terms. For example, one of you may have primary physical custody subject simply to the other's rights of "reasonable visitation." This arrangement can succeed where both of you remain flexible and have a clear understanding of the visitation schedule. This arrangement is used sometimes where one parent does not plan to exercise his or her visitation rights on a set schedule. On the other hand, where disputes are likely to arise, a specific

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schedule can help avoid conflict and the potential for abuse by you or your spouse. A typical physical custodial arrangement might provide that the child lives with one of you and visits with the other parent every other weekend from Fridays at 5:00 P.M. to Sundays at 5:00 P.M., one weekday afternoon from after school to 7:00 P.M., on holidays, and during half the summer vacation (this is called "Type A" visitation by the court). An unusual type of arrangement is to have the child live alternately with the parents—perhaps one year with one parent and the following year with the other, or two weeks with one and two weeks with the other. Another unusual but creative (and very expensive) approach is to have your child live in your marital residence while you and your spouse alternate living there on some periodic basis. These types of "shared" physical custody are permitted in Hawaii, but are rarely used. The reason is that the court is very concerned about providing a stable environment for the child, and from this point of view, these arrangements may prove unworkable. If the parents communicate well and can afford such arrangements, and if the child can adapt easily to them, then they may work out well. Otherwise, it is unlikely that such plans would be successful. In negotiations with your spouse, the following issues should be considered in working out a specific visitation schedule: 1. Weekly visitation. There are numerous variations of weekly visitation arrangements that can be tailored to each individual situation. However, few parents want to divide physical custody during the week (for example, one parent having the child Wednesdays to Saturdays and the other parent having the child Sundays to Wednesdays). Transportation to school is one major problem if you live far apart; more important, a split-week arrangement may undermine your child's sense of stability by not having one "home." As the child becomes a teenager, he or she will probably want to establish one home base as his or her circle of friends develops. Commonly one parent may visit every other weekend and one evening during the alternate week. This gives the child's primary caretaker some weekend time with the child. For any regularly scheduled visitation arrangements between you, it is prudent to designate the exact times for the beginning and end of visitation periods. Otherwise, if conflicts arise, your spouse can really annoy and inconvenience you—for example, by being late in returning

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your child or by failing to pick the child up for the weekend, thereby ruining your plans. Your agreement can also provide that your spouse must give you ample notice, say 72 hours, if visitation is going to be cancelled, or else pay your babysitter's fees (if any) if you fail to receive such notice. 2. Summer visitation. Generally, during the child's summer vacation period, the noncustodial spouse will have four to six consecutive weeks with the child. During such visitation periods, the custodial parent may be able to see the child a few days a week or every other weekend unless the spouse takes your child on an extended trip to the neighbor islands or the mainland. If specific dates are not set forth in the agreement for summer visitation, a deadline should be set by which time each year the two of you must agree on such dates. 3. Holidays and birthdays. Unless distance is a prohibiting factor, the noncustodial spouse usually will have visitation rights on holidays and other important dates, generally on an alternating annual basis. These normally include the child's birthday, each spouse's birthday, Mother's and Father's days, Christmas Eve, Christmas Day, New Year's Eve, New Year's Day, Thanksgiving Day, Easter Sunday, and Independence Day. Often, other school and religious holidays, as well as special days (like Halloween), are included. 4. Transportation. It is important to designate which of you will pick up or deliver the child at the beginning and end of a visitation period and the place it will occur. A fair arrangement is to split equally such duties and costs of travel. If arguments erupt at your door when the child is picked up or delivered, you may propose that a neutral place such as a restaurant, park, or your parents' home be used instead.

Resolving Disputes over Physical or Legal Custody If you and your spouse disagree over the type of legal custody or the physical custody (visitation) arrangements for your child and cannot negotiate a settlement, the Family Court will usually order that its Adult Services Branch on Oahu, or Family and Probation Services on the neighbor islands, conduct a social study. Under some circumstances, you may be required to participate in mediation first before the court will make this order. Once you have decided to contest custody or visitation, the social study will begin.

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The Social Study You and your spouse will not bear any of the costs for the social study unless you agree to retain a psychologist, social worker, or psychiatrist to conduct the study in place of the court's social worker. It includes an investigation of your family's situation by a court-appointed social worker and the social worker's recommendation regarding both legal and physical custody based upon what is "in the best interests of the child." If you agree to use a private psychiatrist, psychologist, or social worker to do the study, you and your spouse would bear the costs. In most cases, both parents accept the social study recommendation. But if either of you chooses to contest the recommendation, the court will make the final decision. Although the court makes an independent evaluation, it is more likely than not to follow the recommendation of the social study, even if the "losing" parent contests it. This happens primarily because the court views the social worker as an objective observer of the family situation and as someone who has spent extensive time with the family compared to the short time the court will hear the parties. You and your spouse, however, may submit to the social worker psychological and psychiatric evaluations of your child prepared by experts you have retained. Usually these experts see only one parent and the child, so they cannot make a custody recommendation. The social worker may consider these evaluations before making a recommendation. If you then go to trial to contest the social study recommendation, you have the right to have your experts testify. But as one Family Court judge told me, "You're going to have to convince me that the social worker's wrong or else I'm going to follow her recommendation." In all cases, the Family Court has the power to reject either a negotiated custody agreement or the social worker's recommendation. But it does not often do so. If you choose to contest, you should realize that it will be an uphill battle to convince the court that the social study is wrong. How long does a social study take? Depending on the social worker's caseload, it may take up to 45 days, during which time all other matters pending in the divorce may remain unresolved, although temporary orders will cover many such issues. What risks do you take if a social study is undertaken? If your spouse offers you a custodial arrangement you can live with, you may

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want to reach agreement and thus shorten the divorce process by several months rather than to take the risk that the social worker, several months later, will recommend a different arrangement that is more detrimental to you. For example, John and Kathy agreed on physical custody: they would split visitation during the week because their two young teenagers needed and wanted frequent contact with both parents. But Kathy wanted sole legal custody because she felt John was not exercising sufficient discipline over the children; she feared that if they as parents had to make decisions jointly, the children would play one parent against the other. Should John risk a social study in order to try to obtain joint legal custody? It depends. Your attorney can help you analyze the various factors that the social worker will consider in determining the best interests of the children. For example, what decisions does John feel he must make jointly with Kathy? Have most of the major decisions about their teenagers already been made? If so, having joint legal custody may make no real difference in changing such decisions. Is it likely Kathy will try to relocate with the children? Perhaps having joint legal custody will dissuade her from relocating since she will have to obtain the court's permission to do so if John objects. If she left without John's permission, she might be in contempt of court and face serious penalties. If she has sole legal custody, she can immediately relocate; John would have to go to court to try to prevent her from taking the children. These are just some of the factors John and Kathy should consider in making their decision. What does the standard "in the best interests of the child" mean? Hawaii law does not specifically define the expression other than to say that it depends on "the facts of each case." Every case is truly different, but experience demonstrates that the social worker will consider the following factors, among others, in making a recommendation to the court on legal and physical custody: 1. Continuity of child care. This is probably the most important factor in deciding custody issues. Often you and your spouse will have established a pattern of custody and visitation even before filing for divorce and requesting a social study. The same parent may have been the primary caretaker even before your separation. The younger the child, the less likely it is that the social worker will recommend that established patterns be changed. Maintaining the child's school and social ties is an important factor, particularly if the child still resides in the marital residence.

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During the divorce process, which on the average can last anywhere from three months to a year, whichever parent has temporary physical custody of the child will most often be awarded permanent legal and physical custody. T h i s assumes that the child has adjusted well to living with that parent. Thus, it is crucial that you discuss this matter with your attorney before a pattern of temporary custody has developed. T h e social worker will generally recommend that temporary custody arrangements become permanent. A related issue is whether you can force your spouse out of the marital residence, or whether it is wise for you to leave without your child and spouse and move out. Unless there is physical or severe emotional abuse, it is likely that both spouses can remain in the marital residence if they wish to do so and assuming there's room for separate sleeping arrangements. Financially, there is often no realistic alternative. If you intend to request legal or primary physical custody of your child, you and your child should remain in the marital residence if at all possible, for it is likely that the court will want the child to remain there if possible, in order to provide stability in the child's life. If you flee the marital residence with your child, your spouse may be able to convince the court to order the child returned. A few examples will illustrate why continuity of care is an important factor: Example 1: Jean and Ken had two children, a boy, age 10, and a girl, age 6. Ken was in the military and stationed on Oahu while Jean worked during the week on Maui. They were saving her earnings in order to open a business after Ken's retirement from military service. Jean would work two weeks, then fly home and stay one week before going back to work. Thus Ken was the primary custodian of the children. When arguments began to flare between the parents, Jean sought an attorney's advice a few days before Ken filed for divorce. Jean wanted the children. She related how Ken had physically abused her and their son during constant drinking binges. In addition, his work shift had changed to late night, and he was leaving the children alone in the house five nights a week while Jean was on Maui. Jean was concerned for her children's safety. Her attorney advised Jean that her current situation did not present a "pretty picture." She was home only one out of every three weeks; there was no evidence of child abuse except her word against Ken's. Her attorney recommended that she move back to Oahu and get a daytime job. Jean did so and then moved the two children to her new

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Child Custody and Visitation residence; the next day Ken retaliated and took the children back to his house on base. Jean's attorney then contacted Ken's attorney and worked out a split-week custody arrangement. Jean wanted physical custody during the week, but Ken would not agree, so they compromised by splitting the week down the middle. Ken would have physical custody Wednesday evenings to Sunday afternoons and Jean would have custody the other half of each week. Each parent assumed responsibility for transportation of the children once a week. They then agreed to temporary joint legal custody because Jean feared that Ken planned to relocate to the mainland with the children. With joint legal custody, Ken would have to go to court to obtain permission if Jean objected. They also agreed to request that the court order a social study. After an investigation, the social worker recommended that the above joint legal custody and split-week physical custody arrangement be continued on a permanent basis. Note that if Ken had filed for divorce and requested temporary custody before Jean had moved back to Oahu, it is very likely that the Family Court would have awarded him both temporary legal and physical custody. At most Jean would probably have had weekend visitation. The latter might well have turned into the permanent custody arrangement recommended by the social worker.

T h i s example, although it may appear far-fetched, is based on a t r u e story. T h e point is that before you file for divorce or even before you separate, you should consult your attorney and discuss your plans relating to child custody issues. Example 2: This example illustrates the importance of such initial decision making. James and Diane split up after years of fights, sometimes violent. Diane walked out one day after just such an argument and left her two young girls with James. She retained an attorney, filed for divorce, and sought temporary custody of the children. When James was served two weeks later by a sheriff with the Complaint for Divorce and Order to Show Cause relating to child custody, he immediately called Diane, who told him, "You better give me the girls immediately or else the sheriff is coming back to arrest you!" Ignorant of the law, James brought his two girls to Diane's house and then agreed in writing to a visitation schedule drafted by Diane's attorney in which he would have physical custody each weekend for 48 hours. When he finally retained an attorney, he decided he wanted to fight for legal and physical custody of his children so that they could live with him during the week, because he believed that weekdays were the most important time for child-rearing. But it was too late. A pattern of

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child custody had developed; although James could try to have the court change the temporary custody arrangement during the time the social study was in progress, it would have been very difficult to do so. While the social study found both Diane and James to be equally fit parents, it recommended that Diane have sole legal custody and remain the primary caretaker during the week. If James had retained primary physical custody of the children from the start of the divorce process, it is likely that the social study would have recommended that he continue to remain primary caretaker.

Again, where a child custody dispute is likely to develop, the best advice is to confer with your attorney as early as possible, preferably before you file for divorce or before there has been any disruption in your child's physical living arrangements. 2. The abilities of the parents. The social worker will examine the relationship of your child with each parent and review your and your spouse's economic and other abilities to support and care for your child. Who will care for and supervise the child after school or during the day if he or she is not in school all day? Will either of you be working in the evenings or on weekends, and if so, how will this affect your ability to care for and supervise your child? Have you set u p a regular routine for your child? Even if you are dependent on your spouse for financial support, do you maintain a budget and a well-managed household? How emotionally mature is each of you and how does this affect your relationship with your child? 3. Extended family support. The presence of grandparents, aunts and uncles, and other extended family members can often have a marked influence on the social study recommendation. In one case, George's parents, who lived a block away, took care of Lani, his 4-year-old daughter, between the time she got out of nursery school each afternoon until George came home from work. Lani's mother, Mary, filed for divorce. She had abandoned her husband and daughter and had not seen either of them for months. In addition, she had no extended family support. In spite of Mary's attempts to contest custody, the social study took into account the support of George's extended family and recommended that George be awarded physical custody from Sunday evenings to Saturday mornings. This was in fact the visitation arrangement previously agreed to by Mary and George before the social study began. 4. Child abuse. Clear evidence of spousal or child abuse, physical or

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emotional, by one of you will likely affect the recommendation. Physicians' or police reports, or eyewitness acounts from neutral third parties are essential; otherwise it is one parent's word against the other's, since the child will not be allowed to testify in such situations although the social worker will interview the child. At the least, if there are no written reports, you should take pictures immediately after the incident so that you can show the social worker that such abuse occurred. 5. The child's preferences. Asking the child to choose between parents is a no-win situation in many cases because of the anxiety it may cause the child. However, depending on the child's age, his or her preference, if any, may be taken into consideration by the social worker. Specifically, Hawaii law provides that if "a child is of sufficient age and capacity to reason so as to form an intelligent preference, his wishes as to custody shall be considered and given due weight by the Court." This is particularly true of a child of about 12 years of age or older, whose preferences are likely to be given greater weight by the Family Court than a younger child. If you go to trial on a child custody dispute, the child will not testify in court. Instead, the judge, in rare cases, may choose another option, such as meeting alone with your child in chambers to discuss his or her preferences. 6. Willingness to permit liberal visitation. The social worker will try to determine how willing you are to allow your spouse visitation with your child in the event you are awarded primary physical custody. Your rigidity or flexibility will affect the social worker's recommendation since the more flexible parent is likely to be favored in an award of custody. 7. Psychological or psychiatric evaluations. In many cases in which a social study is undertaken, your attorney may recommend that you have your child evaluated by a psychiatrist or psychologist who specializes in working with children. The basic purpose of these evaluations is not to determine your wishes, but to assess the child's needs and his or her emotional relationship with each parent; the evaluations usually involve several hours of interviews with the child and may include a battery of tests. These evaluations may cost $500 to $750 per child, but your health insurance coverage may reimburse you for a large part of the cost. If it supports your position, your expert's opinion may assist the social worker in focusing on certain areas of your and your spouse's emotional relationships with the child. However, even if unfavorable,

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the expert's report is likely to come to the attention of the social worker. Your attorney can help you assess the risks of using these experts in your particular case. 8. Race. The fact that your child is of different ethnic origin or mixture from your own, or that you plan, after your divorce, to marry a person of different ethnic origin from your child is not a legitimate factor to be taken into account by the social worker. In Hawaii, marriages between persons from different ethnic backgrounds are commonplace and it is not something to worry over. In 1984 the United States Supreme Court held that race alone cannot be relied upon as a reason to award or modify custody. 9. Cohabitation. The cohabitation of two unmarried adults living together in a sexual relationship during the social study period may affect the social worker's recommendation. Generally, it is more prudent not to live with another person in a sexual relationship during this period. Unless your child has established a strong bond with this third person, the new relationship is likely to create anxiety and friction and may make your child feel more comfortable with your spouse. There is no problem, of course, if you have to live with someone else merely to share housing expenses. If you're not actually living with this person, but want to spend nights together, it is prudent to be cautious in such arrangements and to avoid overnight visits when your child is present. For example, Neal told his attorney that his wife, Joanne, was sleeping with her boyfriend several nights weekly. Neal said that his two younger girls had complained to him about it. When Neal's attorney took the depositions of both Joanne and her boyfriend, he found that they did sleep together on weekends, but that was when Joanne's children were with Neal. In addition, on the few occasions when Joanne and her daughters stayed over at her boyfriend's house during the week, Joanne slept in the same room with her girls. The social study recommended that Joanne be awarded custody. A related question is whether sexual preference will affect the social study recommendation. For example, what if Joanne was sleeping with another woman? In some mainland cases, the courts have ignored such behavior unless detrimental to the child's best interest. For example, one court noted that a homosexual father did not express himself physically to his live-in lover in front of his child. This was an important factor in awarding the father custody. Hawaii is a fairly liberal and

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tolerant place and our courts might rule in a similar manner. However, other mainland courts have considered such relationships detrimental to the child's well-being and awarded custody to the heterosexual parent. 10. Splitting up the children. It is unusual for parents to want to split up the children between them. The court may not approve such arrangements even if they have been agreed upon by both parents. When child custody disputes arise and social studies are ordered, the social workers also do not usually favor such split custody arrangements. In summary, the social worker is trying to determine who has and will provide the better living arrangement for the child. Many factors, including the more important ones described above, will be considered in making the recommendation.

The Social Study Process In making a study, the social worker will generally meet first with each of you alone in his or her office and then meet with your child and you together in each of your respective residences or at the social worker's office. During such interviews, it is important to be honest and detailed about your strengths as well as your weaknesses. Obviously, you will want to paint a glowing picture of yourself and a bleak one of your spouse, but a balanced version may prove more credible to the social worker. Put yourself in the social worker's place and try to organize your thoughts before your meeting begins. You may want to develop a few "themes" around which to focus your thoughts on why your child is better off living with you. Your attorney should assist you in completing the social worker's questionnaire and in preparing for your interviews. When the social worker visits your home, it may be helpful to have your extended family with you and to openly express affection for your child who, you hope, will respond in view of the social worker. Maintain direct eye contact with both your child and the social worker. The social worker will also review any letters submitted on your behalf from relatives and friends and, if time permits, will talk separately with such people and with the child's teachers. Such letters may seem self-serving, but they probably can't hurt, particularly if the author has personal knowledge of your relationship with your child.

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Your attorney as well as your spouse's attorney will simultaneously receive copies of the completed social study. As noted earlier, almost all parties accept the social worker's recommendation rather than go to trial. The financial and emotional costs of trial are significant (see Chapter 10). However, you may wish to negotiate slight variations of the social worker's recommended visitation schedule or you may have to define certain details, for example, which holidays to split and dates for summer visitation.

Custody Awards to Third Parties Hawaii law permits the Family Court to award legal custody to persons other than the natural father and mother whenever it is in the best interests of the child. However, unless there are strong reasons to award custody to third parties, the natural parents are given preference. In addition, Hawaii law permits the court to award reasonable visitation rights to nonparents, including your child's grandparents, unless it is shown that such visitation would be detrimental to the child's best interests. There have been a number of mainland cases in which grandparents have requested legal custody or visitation rights. In such cases, the grandparents—or other relatives—should retain an attorney and consider "intervening" in the case. That is the only way they can actually appear before the Family Court and participate in the proceedings along with the child's parents.

Contesting Custody If you decide to contest custody, you will really be contesting the social worker's investigation and recommendation. The social worker will then become the chief witness against you. Depending on the complexity of the case, a contested child custody case can cost you thousands of dollars in attorneys' and experts' fees and cause great emotional trauma to you, your spouse, and your child. Unrelated property settlement issues may also then become part of the contested case, even if these matters were tentatively agreed upon earlier. Your attorney can assist you in assessing your chances of prevailing in a contested case, and the potential financial and emotional consequences. But the final, difficult decision will be yours alone to make—

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whether to go to trial for what you believe is best for your child or to agree to compromise with your spouse.

Child Custody and Visitation Summary 1. Importance of early conference with your attorney. Meet with your attorney as early as possible before any disruption occurs in your child's normal living arrangements. 2. Types of custody. Make sure you understand the difference between legal custody and physical custody, and also between sole legal and joint legal custody. Discuss each type of custody with your attorney to best determine which makes sense in your particular circumstances. 3. The need for specific terms in your custody agreement. If you and your spouse don't communicate well, consider having your custody and visitation agreement describe exactly the temporary or permanent custody arrangements.

6 Child Support

ONCE you and your spouse agree upon your child's physical custody arrangements or the Family Court decides such arrangements after a trial, the amount of child support to be paid becomes a matter of mathematical computation under the court's Child Support Guidelines. The latest version of these guidelines was issued November 1, 1989, and a copy can be found at the end of this chapter (be sure to ask your attorney if any further amendments have been made to the guidelines). It is very important that you understand that both of you are legally responsible for the financial support of your child because it is your child's right to receive support from both parents. The court may not approve an agreement in which the noncustodial spouse agrees to pay less than the amount required by the guidelines (although the noncustodial spouse may agree to pay more than required in the guidelines).

The Child Support Guidelines The guidelines, once applied in your case, provide the amount of child support that the noncustodial spouse must pay to the custodial spouse. If you are the custodial spouse you can also compute from the guidelines how much child support you would pay if custody changes so that your child lives with the noncustodial spouse. In effect, you are paying that amount to yourself as your contribution to child support for as long as you are primary caretaker. Child support will last throughout your child's minority—that is, until age 18—even if your child completes or drops out of high school before age 18, unless your child marries or dies before age 18. You also remain responsible for support of your adult child if he or she attends college or another post-high-school educational or vocational institu-

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tion on a fulltime basis (usually 12 credits per semester), or is "incompetent" (for example, mentally or physically handicapped) and requires your continued financial support. The guidelines apply to the calculation of temporary child support before the divorce is granted, post-divorce child support, modification of existing child support orders, and paternity cases. The following comments about the guidelines will help you better to understand them and will assist in your calculations of the amount of support required in your case (for all specific line references see the copy of the guidelines at the end of this chapter). 1. The guidelines in general. There are two separate calculations under the guidelines, primary support and standard of living adjustment ("SOLA"), which, when added together, result in the amount to be paid by the noncustodial spouse. The most important factor that determines the amount of support is the noncustodial spouse's gross monthly income. 2. Line 1 (a). If alimony is to be paid by one spouse to the other (see Chapter 7), then the amount of the monthly payment is subtracted from the payor's gross monthly income and added to the payee's. For example, if the alimony payor's gross monthly income is $3,000, the payee's gross monthly income is $500, and monthly alimony is $1,000, then the line 1 gross income for the payor is $2,000 ($3,000 - 1,000) and $1,500 ($500 + 1,000) for the payee. You need to know the amount of alimony to be paid before you can apply the guidelines. 3. Line 1 (b). Income is calculated before taxes. Your attorney should review the most recent pay stubs, tax returns, and financial statements to verify gross income. If your income fluctuates, then an average over the past year may be an appropriate amount to use. 4. Line 1 (c). Overtime pay received on a regular basis must be included (if you plan to reduce or eliminate the overtime, then you should use your base salary and be prepared to explain your plan to cut back). 5. Line 2. Except for very high incomes, you must use the tax table attached to the guidelines. This prevents over or under withholding of taxes when making computations from the guidelines. 6. Line 3. This amount is the extra monthly cost to cover your child under your health insurance plan. For example, if it costs you $100 for yourself alone and $150 for your child and you, then you insert $50 on line 3.

Child Support

51

7. Lines 4-6. If your line 4 income is $2,000 and your spouse's is $3,000, then the percentages in line 6 are 40 ($2,000 / $5,000) and 60 ($3,000 / $5,000) respectively. Each parent is required under Hawaii law to work to the extent of his or her ability. If you are now a lawyer, then you cannot, without substantial justification, give up your job for one that pays less. If you are staying at home to take care of your own child who is younger than school age, then no income will be attributed to you (you can insert -0in lines 1, 2,4, and 6F). If you are taking care of a child (not your own) from a new spouse or cohabitant and this limits your earnings, then up to 50 % of your new spouse's or cohabitant's income may be attributed to you on a case-by-case basis (although the court rarely does so). 8. Line 7. If the custodial spouse has only one child in the household, the amount of primary support needed is $200. But if the custodial spouse cohabits with another person who has an older child, then the child who is the subject of the calculation from the guidelines becomes the second oldest in the household with a primary need of $150 online 7. 9. Line 8. Be sure to verify the amount of child care because it can significantly affect how much support is to be paid. If the child care is provided by an independent agency or a nonrelative, then receipts, copies of checks, or verification directly from the provider should be obtained. A problem may arise if a relative (for example, grandmother) provides the child care and is paid in cash. In some cases, the court may not allow the inclusion of such amounts if the provider does not claim such monies as income on tax returns and does not pay state excise taxes on the payments received. 10. Lines 9-12. The guidelines assume that the noncustodial parent has visitation 100 overnights or less per year. If the noncustodial parent has "Type A" visitation (discussed in Chapter 5), then this visitation amounts to 100 or so days. If visitation exceeds 100 days (including 50/50 shared physical custody), then the guidelines provide a formula for calculating a reduced amount of support. This calculation should be prepared carefully by your attorney. 11. Line 13. SOLA income is determined by looking at the table. 12. Line 15. Under Hawaii law, the custodial parent may claim the tax dependency exemption for the child. The parties, by agreement only, may allow the noncustodial parent to claim the exemption in which case -0- is entered on line 15. In most cases, the custodial parent

52

Child Support

is financially better off in the long run in retaining the right to claim the exemption. 13. Line 16. If the noncustodial parent has an obligation to another child (for example, from a previous marriage or a paternity case), then the line 7 primary support amount or actual court-ordered amount, whichever is less, may be deducted on line 16. 14. Line 18. If three of the parties' children live with the custodial parent the percentage is 24 (12 + 6 + 6). 15. Line 20. The primary support and SOLA amounts are added together and rounded off to the nearest $10. There are exceptions to the guidelines. The parties may not simply agree that one party pay less than the amount required by the guidelines. The court may approve amounts different from those required by the guidelines under exceptional circumstances, which include: a. Extraordinary medical or other needs of the child or parent. For example, the child may require expensive prescriptions or home care. b. Other child support obligations of a parent under previous court orders. For example, a parent may have been ordered to pay $300 per month and the private school tuition for a child born of a previous marriage. This may justify a lower amount for the child of the current marriage. c. An unusually high income. If the noncustodial parent's income is unusually high (perhaps $6,000 per month or more), the amount stipulated in the guidelines may provide for more than the reasonable needs of the child. For example, if the cash expenditures for the child (as shown on the custodial parent's Income and Expense Statement) total $500 and a reasonable share of the housing and transportation expenses is an additional $400, the reasonable needs of the child total $900. If the amount from the guidelines comes to $1,200, then clearly it exceeds the child's reasonable needs (and is really a payment of unwarranted nontaxable alimony to the custodial parent), d. Private education expenses if they exceed the SOLA amount or if the child was enrolled in private school by agreement of the parties before separation. For example, if the SOLA amount is $350, but private school expenses total $500 per month, the court will likely order the noncustodial parent to pay one-half or some portion of this expense. If the child attended private school before the separation, then it is likely that the court will make an exception to the guidelines, if financial circumstances warrant, to keep the child in school after the divorce. Heavy debts alone will not justify an exception to the guidelines to lower support. Visitation transportation expenses (between islands or

Child Support

53

to the mainland) are not considered under the exceptions, but are dealt with separately by the court. Generally, the court will order the airfares split equally or allocated according to the percentages in line 6 for two or so trips per year unless one parent's income is extraordinarily higher than the other.

Payment through Child Support Enforcement Agency Wherever possible, the noncustodial parent's income will be assigned for the amount of child support payable to the custodial parent. This means that the noncustodial parent's employer, for example, must withhold the required amount and send it to the Child Support Enforcement Agency (CSEA). The CSEA, in turn, keeps a record of payments and sends the payments to the custodial parent. Only if the noncustodial parent is self-employed or lacks other assignable income is the income assignment not used.

Health Insurance Coverage for Children The court must order that one parent provide medical coverage for the child if it is available at reasonable cost. The court usually does not order a parent to obtain dental coverage, but if a parent has had such coverage before the separation, the court will order that parent to continue it for the child's benefit.

Tax Impact of Child Support 1. Deductibility for income tax purposes of child support payments. Payments for child support are not deductible by the payor-spouse. Neither are they includible in the taxable income of the spouse receiving them. 2. Child dependency exemptions. Unless there is a written agreement to the contrary, the custodial spouse will be allowed to claim the child dependency exemption on both the federal and state tax returns as long as both parents together provide for more than half of the child's support. If you make a written agreement to allow the noncustodial spouse to claim the exemption, it must be attached to the noncustodial parent's tax returns. In almost all cases, if you are the custodial parent then you should not agree to give up the exemption. If you have two children and each of you has physical custody of one

54

Child Support

of them, you may claim the exemption for that one child only, unless you alter this arrangement by agreement. Or if you have one child who lives half the year with each of you, the two of you could agree to alternate annually the entitlement to claim the exemption. 3. Child-care credit. If you are the primary physical custodian of your child for more than half of the year and your child is under age 15 or incapable of self-care, you may claim the child care tax credit. The credit is deducted from your net tax liability or added to your refund. To qualify for the credit, you have to be employed or in active search of a job. Even if your spouse claims the dependency exemption, you may still claim the child care credit. 4. Medical and dental expenses. Either of you may claim the expenses that you incur for your child regardless of which of you claims the dependency exemption.

Child Support Summary 1. Financial records. Make sure you have an accurate record of your spouse's, your child's, and your financial resources and needs when determining child support. 2. Tax consequences. If you are also paying or receiving alimony, keep in mind the interrelationships between and the tax consequences of alimony and child support payments (see Chapter 7). If you are the noncustodial parent, then try to negotiate the right to claim the child dependency exemption.

DANIEL ü. HEELV

STATE OF HAWAII F A M I L Y

KENNETH K.M. UNC

FIRST

C O U R T CIRCUIT

P. O . B O X 3 4 9 « H O N O L U L U . H A W A I I 96811-3498

November 1, 1989 TO:

DISTRICT FAMILY JUDCES ARNOLD T.ABE D A U V L Y jC. CHOV EVELYN B. LANCE UNDA KX. LUKE MARJORIE HICA MANUIA TOCO NARACAWA MICHAEL A. TOWN FRANCIS Q.F. WONC

PERSONNEL O F T H E JUDICIARY, CHILD SUPPORT ENFORCEMENT AGENCY, HEARINGS OFFICERS, A N D ATTORNEYS

FROM:

THE SENIOR FAMILY COURT JUDGES, STATE O F HAWAII

SUBJECT:

AMENDED CHILD SUPPORT GUIDELINES

The Child Support Guidelines, adopted by the Senior Judges of the Family Courts of the First, Second, T h i r d and Fifth Circuits of the State of Hawaii o n February 1, 1988, pursuant to HRS Section 576D-7, are hereby amended as contained in the attached "Guidelines in Determining C h i l d Support (November, 1989." The effective date of these amended Guidelines, w h i c h supersede the February 1, 1988 Guidelines, is noted o n its first page. These amendments update the poverty level self-support amount and tax withholdings to reflect the 1989 figures, and add a method of computation of appropriate child support in those cases where the non-custodial parent has overnight visitation in excess of 100 days but less than the time period w h i c h constitutes equal joint physical custody (182 1/2 days). As amended, the guidelines are now applicable to administrative process hearings and resulting orders issued pursuant to the provisions of HRS Chapter 576E. Your comments and suggestions for further revisions are invited. Prior to November 15, 1989, you m a y submit comments to: The Child Support Guidelines Committee Post Office Box K Wailuku, Maui, Hawaii 96793

Note:

For inclusion in the Hawaii Divorce Manual, Vol. II Section 13- Court Policies, as M e m o r a n d u m No. 90 This memo supersedes Memorandum No. 55 (2/1/88).

Fig. 4. Amended Child Support Guidelines

Fig. 4. (continued) -2-

It is anticipated that the Guidelines will continue to be reviewed on an ongoing basis. The Senior Family Court Judges express their deep appreciation to the following members of the Child Support Guidelines Committee: Naomi Campbell, Esq., Head of the Family Support Division, Corporation Counsel; Jeanne Carman, Director, Child Support Enforcement Agency; William Darrah, Esq., Attorney and Chairman of the Family Law Section of the Hawaii State Bar Association; Jack Durham, Esq., Deputy Attorney General with the CSEA's Administrative Process Branch; Patricia Eads, Esq., Attorney with the Legal Aid Society of Hawaii; Geraldine Hasegawa, Esq., Deputy Corporation Counsel, Family Support Division, County of Hawaii; Peter Herman, Esq., Attorney; The Hon. Evelyn Lance, District Family Court Judge, First Circuit; Ronald Lau, Esq., Hearings Officer, Department of the Attorney General; Deborah HcNulty, Esq., Deputy Attorney General, Child Support Enforcement, Maui Section; The Hon. Clifford Nakea, District Family Court Judge, Fifth Circuit; Gerald Suenishi, Special Court Trustee Supervisor, Family Court, First Circuit; Michael Wong, Esq., Attorney; and The Hon. Michael Town, District Family Court Judge, First Circuit.

FAMILY COURT, THIRD CIRCUIT

GEORGBNMASUOKA, ¡EsM SENIOR JUDGE .Y COURT, CI FAMILY FIFTH CIRCUIT

STATE OF HAWAII DEPARTMENT OF THE JUDICIARY FAMILY COURTS GUIDELINES IH DETERMINING CHILD SUPPORT (November, 1989) These guidelines are promulgated pursuant to HRS Section 576D-7, as amended by Act 305 (1987), which provides that "[t]he Family Court, in consultation with the [Child Support Enforcement] agency, shall establish guidelines to establish the amount of child support when an order for support is sought or being enforced under this chapter." HRS Chapter 576E has created an administrative process for child support enforcement. This administrative process has concurrent jurisdiction with the Family Court over child support matters. Therefore, all references in these Guidelines to the "court" include administrative hearings; references to "court orders" include administrative orders; references to "Judges" include administrative hearings officers; and references to "motions" include administrative requests for service. HRS Sections 571-52.5 and 576E-15, provide that "[w]hen the court/agency establishes or modifies the amount of child support required to be paid by a parent/responsible parent, the court/agency shall use guidelines established under section 576D-7, except when exceptional circumstances warrant departure." (emphasis added). Judges shall make recorded oral or written findings of fact where exceptional circumstances supported by evidence in the record warrant departure from the guidelines. These amended guidelines may be applied immediately and shall take effect statewide in all types of cases involving child support orders heard by tHe~Family Courts or by the Hearings Officer Section, Department of the Attorney General, from and after November 15, 1989. In cases in which stipulations were entered into or administrative orders prepared prior to November 15, 1989, these Guidelines need not be applied provided the case in which the stipulation was reached is heard or judicially reviewed (in uncontested divorces), or the administrative order is issued prior to February 1, 1990. These guidelines are child centered. They are based upon a formula developed by Delaware Family Court Judge Edward F. Melson, which the State of Delaware has successfully used since 1979. The underlying principles are as follows: 1.

Parents are entitled to keep sufficient income for their most basic needs and to facilitate continued employment.

Fig. 4. (continued) 2.

3.

Until the basic needs of children are met, parents may not retain any more income than required to provide the bare necessities for their own self-support. Where income is sufficient to cover the basic needs of the parents and all dependents, children shall share in any additional income so that they can benefit from the absent parent's higher standard of living." 1/

1/ Family Court of the State of Delaware. "The Delaware Child Support Formula: Study and Evaluation," Report to the 132nd General Assembly (1984). See also, Williams, •Guidelines for Child Support and Orders," 21 Fam. L. Q. 281-324 (1987), (describing the four types of child support guidelines: flat percentage, income shares, Melson and income equalization). See also palton vs. clanton, 15 FLR 1308 (Del. 1989), a comprehensive appellate review of Delaware's guidelines.

General Provisions PARENT, as used in these guidelines, denotes any person with a legal obligation of support to a dependent child. All information presented to the court shall be based on monthly amounts. Where a party receives income weekly, the pay should be multiplied by 52 and divided by 12 to arrive at a correct monthly amount. Where a party receives income every two weeks (as compared to semi-monthly) the income should be multiplied by 26 and divided by 12. Percentages shall be rounded to the nearest percent. Child support amounts shall be rounded to the nearest $10. PART I.

PRIMARY CHILD SUPPORT

Step A:

Income Determination

Line 1.

Determine each parent's monthly gross income.

a.

Subtract from the payor's income the amount of spousal support paid to the other parent of the child(ren) for whom child support is being determined. DO NOT SUBTRACT any deduction from income, even if mandatory (e.g., retirement).

b.

Include income from all sources, including but not limited to employment salary or wages, pensions, net rental income, dividends, interest and other net investment income, spousal support, etc., except AFDC, General Assistance and Food Stamps.

c.

Include any cost-of-living adjustment overtime pay that occurs on a regular The payor bears the burden of showing overtime is not likely to continue in future.

d.

Include employment fringe benefits to the extent that they provide the parent with something he/she would otherwise have to provide (including free housing, automobiles, lunches, etc.).

e.

Self-employed individuals should report gross income, less necessary business/operating expenses, i.e., the net profit before taxes.

and all basis. that the

Fig. 4. (continued) Line 2.

Determine each parent's net income less self-support:

a.

Based on each parent's gross income, find his/her net income less self-support on the Income Table attached to these Guidelines.

b.

For gross income greater than $5,449 per month, calculate net income less self-support as follows: (1)

c.

Calculate Federal taxes: (i)

Subtract $167 from gross income to yield an adjusted monthly income for Federal tax calculations.

(ii)

Adjusted monthly income over $3,833 but not more than $8,786 is taxed at $847 plus 33% of the excess over $3,833.

(iii)

Adjusted monthly income over $8,786 is taxed at $2,481 plus 28% of the excess over $8,786.

(2)

Calculate State Taxes as $24 plus 8% of all adjusted monthly income over $458.

(3)

Calculate Social Security as $300, or, for self-employed obligors, substitute the Self-Employment Tax.

(4)

subtract Federal Taxes, State Taxes, and Social Security or Self-Employment Tax from the gross monthly income to yield net income.

(5)

Subtract $454 net self-support to yield net income less self-support.

Explanation: Primary child support obligations will be determined on the basis of net income, allowing deductions for taxes (based on 1989 federal and state employer withholding for a single taxpayer with one exemption) and social security. In addition, the base net self-support need for each parent is established at $454, based on the 1989 Federal Poverty Level need of $573 gross income for minimum food, clothing, shelter, and other essential needs. The Income Table provides net income less self-support figures for gross incomes of up to $5,449 per month.

Line 3.

Subtract amounts paid by a parent for health insurance to cover the subject children. This amount should include only the extra cost of covering the children beyond whatever coverage the parent would otherwise have. Ordinary medical and dental expenses not covered by insurance shall be paid by custodial parent unless otherwise ordered by the court.

Line 4.

The amount of the net income remaining after these subtractions is the net income available for child support.

Lines 5/6.

Calculate each parent's relative ability to pay by dividing each parent's net income available for child support by the total of both parents' net income available for child support. The resulting percentage establishes the burden each parent shall carry with respect to their children's primary support.

General Provisions Regarding Income a.

Income capacity of a parent: Where a parent is not employed full time or is employed below full earning capacity, the reasons for this limitation must be considered. If such parent's income is limited in order to care for the children to whom the parties owe a joint legal responsibility, at least one of whom is younger than school age (kindergarten) , then no additional income will be attributed to such parent. If the parent's income is limited in order to care for other children, and the parent is remarried or cohabiting with another in the relationship of husband and wife, the parent's income will be deemed to be up to 50% of the combined gross income of the parent and •spouse". If the parent's income is limited for any other reason, then the parent's income will be determined according to his or her income capacity in the local job market, considering both the needs of the children and the reasonable work aspirations of the parent. If income capacity is attributed, it shall be

Fig. 4. (continued) not less than 30 hours of weekly earnings at minimum wage provided the custodial children are of school age (kindergarten or above). [HRS Section 576D-7(9)] Cleveland vs. Cleveland, 1 Haw. App. 187 (1980); Saromines vs. Saromines, 3 Haw. App. 20 (1982). b.

Assets for payment of support: Where a parent has inadequate income to meet his or her support obligation but owns assets, he/she may be required to convert all or some portion of said assets to cash for payment of support. Cleveland vs. Cleveland, 1 Haw. App. 187 (1980).

Step B:

Calculate Primary Child Support Need

Line 7.

The minimum needs of several children in a household are established below. The order of all children in the household is a ranking on the basis of age beginning with the eldest. Enter the total amount for all subject children on Line 7 of the Calculation Sheet. 1st child in the household $200/mo 2nd & 3rd children in the household . $150/mo Each additional child in the household $100/mo The primary child support need of each child in question will be calculated by first determining that child's rank in the custodial parent's household and then using the appropriate figure shown above. These "minimum need" or primary support amounts, determined on the basis of the Delaware Melson Formula, are further supported by studies of the U.S. Deparment of Agriculture, Thomas J. Espenshade, Lawrence Olson, and others.

Line 8.

Calculate the verified child care expenses actually paid and needed to allow a custodial parent to work, or participate in vocational education or training.

Step C:

Determine the Primary Support Obligation of the Non-Custodial Parent

Lines 9/10.

Multiply the total primary support need (Line 9) by the non-custodial parent's percentage of the obligation (Line 6). Enter this amount on Line 10.

Line 11.

If the primary support obligation of the non-custodial parent(Line 10) is less than $30 per child, a minimum obligation of $30 per child per month shall be required. If this provision applies, enter $30 on Line 11.

Line 12.

If the amount available for primary support (Line 4) is greater than $30 per child, but less than that parent's primary support obligation (Line 10), then he/she will only be required to pay primary child support equal to 70% of his/her income available for primary support (Line 4) and no standard of living adjustment will be added. If this provision applies, enter the greater of $30 per child or 70% of the non-custodial parent's income available for primary support on Line 12.

Explanations; a.

Although both parents have the obligation to provide child support, the custodial parent fulfills his/her obligation with direct support and this generally is not the subject of a court order. For simplicity, therefore, only the non-custodial parent's obligation is determined on the calculation sheet.

b.

Normal visitation: A parent will be treated as the non-custodial parent even though he/she has visitation or physical custody arrangements for up to 100 days a year. If a parent establishes visitation or has physical custody significantly beyond 100 days per year, see c and d below regardless of the title of the custodial arrangements.

c.

Joint physical custody: Where parties share physical custody on an equal basis, each will be considered to have the child for six months during the course of a year. In such cases, two guideline worksheets should be prepared, with one for each parent. To avoid unnecessary transfers of funds, the "pay out" of each parent for the year should be determined by multiplying the monthly support obligation times six months. If one parent's yearly obligation is greater than that owed by the other, the excess amount shall be divided by 12 and paid monthly over the course of the year, unless the parties agree otherwise.

Fig. 4. (continued) d.

Extensive visitation: For overnight visitation more than 100 days, but not exactly 50/50 joint custody (i.e. 182 1/2 days) use the following formula: 1. 2. 3. 4. 5.

Calculate normal (100 days) support. Calculate 50/50 joint physical custody (183 days) support. Subtract #2 from tl. Divide (3 by 83 to obtain a per diem support amount. Multiply the per diem support amount by the number of days over 100 days to calculate the support amount to be subtracted from "normal" support to adjust for the additional days.

If this issue arises in connection with a request for modification of child support, the moving parent bears the burden of showing by accurate calendar records the actual number of visitation days for the 12 months immediately preceding the motion. Either parent may file a motion to modify child support, based solely on the number of visitation days, only once in any 12 month period. e.

Split custody: If these two parties "split" the custody of their children, a separate guidelines worksheet must be prepared regarding the children in each individual household, as each household will have a first, etc., child for purposes of lines 7 and 18. To avoid unnecessary transfers of funds the amounts payable by each parent to the other may be offset, with a net amount to be paid by the parent having the greater child support obligation.

f.

The $30 minimum child support obligation recognizes that every parent is required to provide support for his/her children.

g.

The reduction in primary child support to 70% of income available for primary support creates an incentive for low-income parents to continue to work.

PART II.

STAHDAKD OF LIVING ADJUSTMENT (SOLA) CHILD SUPPORT

Step A:

Determine the Non-Custodial Parent's Income Available for SOLA Support

Line 13.

Determine the non-custodial parent's SOLA income from the income Table. For gross income greater than $5,449, determine the SOLA income by subtracting $573 from the non-custodial parent's gross income.

Line 14.

Subtract the amount of primary support calculated above and entered on Line 10.

Line 15.

If the custodial parent has retained the federal tax dependency exemption, then subtract one-twelfth (1/12) of the annual federal tax dependency exemption per child from the non-custodial parent's SOLA income. This amount is $167 (1/12 x 2000).

Line 16.

subtract the TOTAL PRIMARY CHILD SUPPORT NEED owed by the non-custodial parent to other children, whether by a previous court order or a nonadjudicated legal obligation (including children residing in the obligor's household). The maximum that may be subtracted is the lesser of the actual court-ordered amount or the total primary support need calculated according to the instructions to line 7.

Explanations: a.

Because of the tax rate structure established by the Tax Reform Act of 1986 and the variety of available tax deductions, fair SOLA percentages can be established only on the basis of gross income minus minimum self-support, including taxes. To effectuate the legislative intent, that the obligor retain sufficient income to allow for taxes and social security, the SOLA percentages have been lowered from the percentages applied in Delaware to net income. $573 is established as the minimum level of self-support, based on the 1989 Federal Poverty Level. The Income Table reflects SOLA income as gross income less the minimum gross self-support.

b.

Primary support owed to the subject children and to other children is subtracted in order to equalize the treatment of all children.

c.

Recognition is also given to the fact that the federal tax dependency exemption may be retained by the custodial parent.

Fig. 4. (continued)

Step B:

Calculate SOLA Support Obligation for Each Parent

Line 18.

The SOLA, support obligation for each parent is established as 12% for the first child, 6% each for the second and third child, 4% each for the fourth, fifth, and sixth child. Enter the total percentage for all subject children on Line 18.

Line 19.

Multiply the SOLA net income (Line 17) by the SOLA percentage (Line 18) to calculate the SOLA obligation.

PART III.

TOTAL MONTHLY SUPPORT OBLIGATION OF THE NON-CUSTODIAL PARENT

Enter the sum of Lines 10 and 19 or enter Line 11 or 12. A specific and differentiated child support amount shall be ordered for each child. An equal amount shall be allocated for each child even though the computation is based on birth order in the family. See Part I, Step c, explanations b, c, d, and e above for directions regarding extensive visitation, joint physical custody, and split custody. Exceptional Circumstances The court may order child support which deviates from the Guidelines only if exceptional circumstances warrant such deviation, pursuant to HRS Sections 576D-7 and 576E-15. In such cases, the court shall make oral findings of fact on the record at the hearing or shall prepare written findings of fact regarding the exceptional circumstances. Although it is impossible to predict all exceptional circumstances that warrant departure, the following examples provide some guidance: —Extraordinary medical needs, either of the child or of a parent. — O t h e r extraordinary needs of the child, e.g., special educational needs, special housing needs for a disabled child. — O t h e r child support obligations of a parent that render him/her unable to pay the Guideline's level of child support for the subject chiildren.

— A n unusually high monthly income that would result in a computation higher than the reasonable needs of the children. Doe VI v. Roe VI, 6 Haw. App. 629, (April (1987). —Private education expenses are considered as part of SOLA unless such expenses are so extraordinary that SOLA cannot adequately cover it or i£ the child has been in private school with the agreement of the parties prior to separation. —Ordinarily, the existence of heavy debts will not constitute extraordinary circumstances. See also Mack v. Mack, 7 Haw. App. , 749 P. 2d 478 (1988) (duty to adult educationally dependent child same as to a minor; remarriage to individual with child not an exceptional circumstance); Ching v. Ching, 7 Haw. App. , 751 P. 2d 93 (1988) (agreement to pay less is not an exceptional circumstance); Tomas v. Tomas, 7 Haw. App. (1988) (visitation transportation expense not exceptional).

1889 CHILO SUPPORT GUIDELINES GROSS Under $600) $600 - 649 $650 - 699 9700 - 749 $750 - 799 $800 - 849 $850 - 899 $900 - 949 $950 - 999 $1,000 - 1049 $1,050 - 1099 $1,100 - 1149 $1,150 - 1199 $1,200 - 1249 $1,250 - 1299 $1,300 - 1349 $1,350 - 1399 $1,400 - 1449 $1,450 - 1499 $1,500 - 1549 $1,550 - 1599 $1,600 - 1649 $1,650 - 1699 $1,700 - 1749 $1,750 - 1799 $1,800 - 1849 $1,850 - 1899 $1,900 - 1949 $1,950 - 1999 $2,000 - 2049 $2,050 - 2099 $2,100 - 2149 $2,150 - 2199 92,200 - 2249 92,250 - 2299 $2,300 - 2349 92,350 - 2399 92,400 - 2449 92,450 - 2499 $2,500 - 2549 92,550 - 2599 92,600 - 2649 92,650 - 2699 92,700 - 2749 92,750 - 2799 92,800 - 2849 92,850 - 2899 $2,900 - 2949 $2,950 - 2999

NET $0 918 «59 $99 9116 9190 9190 9231 9271 9305 9322 9363 9403 9437 9477 9518 $535 9569 9609 9649 9690 9724 9750 9786 9823 9851 9881 9912 9943 9964 «994 91,025 91,056 $1,077 $1,107 $1,138 $1,169 $1,190 $1,220 $1,251 91,282 91,303 91,333 91,364 91,395 91,416 91,446 91,477 91,508

SOLA «0 «0 «77 9127 9177 «227 «277 9327 9377 9427 «477 «S27 «577 «627 9677 9727 «777 9827 9877 9927 «977 91,027 $1,077 $1,127 $1,177 91,227 $1,277 $1,327 91,377 $1,427 $1,477 91,527 $1,577 $1,627 $1,677 $1,727 $1,777 $1,827 $1,877 $1,927 $1,977 $2,027 92,077 $2,127 $2,177 $2,227 92,277 92,327 $2,377

- TABLE OF NET INCOMES GROSS «3,000 «3,050 «3,100 «3,150 «3,200 «3,250 «3,300 «3,350 93,400 93,450 «3,500 93,550 93,600 93,650 93,700 93,750 $3,800 93,850 93,900 $3,950 94,000 «4,050 «4,100 $4,150 $4,200 $4,250 $4,300 $4,350 $4,400 $4,450 $4,500 «4,550 «4,600 «4,650 «4,700 «4,750 «4,800 $4,850 $4,900 $4,950 $5,000 «5,050 «5,100 «5,150 95,200 95,250 «5,300 95,350 95,400

-

99

49

NET

SOLA

$1,529 91,559 91,590 91,621 «1,642 «1,672 «1,703 «1,734 91,755 91,785 91,816 91,347 91,868 91,898 91,929 91,960 91,981 92,011 92,042 92,073 $2,093 $2,125 $2,158 $2,191 $2,211 $2,243 $2,277 $2,306 $2,336 $2,365 92,395 92,424 92,454 92,483 92,513 92,542 92,572 92,601 92,631 92,660 92,690 «2,719 «2,749 92,778 92,808 92,837 «2,867 «2,896 92,926

«2,427 «2,477 «2,527 «2,577 «2,627 «2,677 «2,727 «2,777 •2,827 82,877 «2,927 «2,977 «3,027 «3,077 «3,127 «3,177 «3,227 «3,277 «3,327 «3,377 «3,427 «3,477 «3,527 93,577 «3,627 «3,677 «3,727 93,777 93,827 93,877 93,927 93,977 94,027 «4,077 94,127 «4,177 «4,227 «4,277 «4,327 94,377 94,427 «4,477 «4,527 «4,577 94,627 «4,677 «4,727 «4,777 «4,827

( R e f e r t o i n s t r u c t i o n s f o r Gross Incomes over $5449 per monthj

IN THE FAMILY COURT OF THE FIRST CIRCUIT STATE OF HAWAII )

FC-

NO.

) )

CHILD SUPPORT GUIDELINES WORKSHEET

CHILD SUPPORT GUIDELINES WORKSHEET The parties whose signatures appear below state that the following child support information and the calculations are true and correct as of the date signed.

¿1

Number of children to be supported

Father Monthly gross income (LI)

$ 3po°

Mother

J, OQO « 9Cy

$

Net income (L2)

ùS'o

Calculated support of non-custodial parent (L20)

Date Signed

Date Signed

Father

Mother SSt

SS«

Attorney for Father

Attorney for Mother

Statement under penalty of perjury regarding exceptional circumstances is/is not included. (KEY:

L-Line; F-Father; M»Mother)

Fig. 5. Child Support Guidelines Worksheet

Fig. 5. (continued) CHILD SUPPORT GUIDELINES CALCULATIONS (Calculations should be rounded to the nearest dollar) PART I.

PRIMARY CHILD SUPPORT

Step A: 1.

Monthly GROSS Income

2.

Monthly NET Income ("NET" column from table)

3.

Leas additional costs of cliild/ren's health insurance

-

4. =

Available for primary support from each parent 4F =

5.

TOTAL AVAILABLE FOR PRIMARY SUPPORT - BOTH PARENTS (4F + 4M)

Father $ 2 QOO —t

Mother $

ooo

$ _ L £ 2 ±

s

M

- 5

$

/ j - 3 2 -

4M =

$

Percentage of support from 6F 6/ % 6M each Parent. (4F/L5; 4M/L5) (Percentages should be rounded to the nearest whole percent) Step B: 7.

Total basic child support ($200+150+150+100, etc.)

8.

Plus monthly child care expenses of working custodial Parent

9.

TOTAL PRIMARY CHILD SUPPORT NEED

2

oo

(From this point, calculate for only the non-custodial parent; if joint physical or split custody, use two worksheets) 10.

PRIMARY SUPPORT OBLIGATION of non-custodial parent [ (6F or 6M) x L9 ) ]

11.

If line 10 is less than $30/child, enter $30/child and go to PART III

12.

If line 4 is less than line 10, enter 70% of line 4 and go to PART III

33(*

—

PART II. STANDARD OF LIVING ADJUSTMENT (SOLA) CHILD SUPPORT (Prom this point, calculate for only the non-custodial parent; if joint physical or split custody, use two worksheets) 13.

SOLA income ("SOLA" from table)

$

Qf

14. 15.

Less PRIMARY SUPPORT OBLIGATION (L10) Less 1/12 of annual Federal tax dependency exemption per child if retained by custodial parent. ($167/child for 1989)

-

$ $

33b

16.

Less PRIMARY support for other

-

$

®

= SOLA net income

=

$

x SOLA % (12%+6%+6%+4%,etc) * SOLA OBLIGATION

x =

$

children 17. 18

19.

PART III. 20.

~7 / %

3/6

TOTAL MONTHLY CHILD SUPPORT OBLIGATION

(Line 10 + Line 19) or Line 11 or Line 12 (rounded off to the nearest $10)

STATEMENT REGARDING EXCEPTIONAL CIRCUMSTANCES

(

not applicable):

The Court should deviate from the total Monthly child support obligation as calculated under these guidelines (L20) because of the following exceptional circumstance(s):

I hereby declare, under penalty of perjury, that I have examined the statement regarding exceptional circumstances and to the best of my knowledge and belief it is true, correct and complete. DATED:

Honolulu, Hawaii,

.

(Signature)

7 Alimony SPOUSAL support or maintenance, commonly known as alimony, is one of the most misunderstood issues in divorce cases. Unfortunately, those who pay alimony and those who receive less than they think they deserve often feel a great deal of resentment toward their spouses. Generally, it remains true that most alimony recipients are women, although Hawaii law allows the Family Court to order either spouse to support the other, regardless of sex. In longer marriages, where women have been full-time homemakers for decades and have no realistic outside employment opportunities other than minimum-wage type jobs, their husbands may be ordered to pay alimony on a permanent basis. By contrast, in many of the more recent marriages, both spouses work full-time outside the home and do not require alimony when they separate. Between these two extremes lie a variety of situations in which alimony for a limited period may be appropriate. In this chapter, for the sake of convenience, the reader is usually assumed to be the spouse seeking alimony. If you are entitled to alimony, the most important factors in computing the amount you will receive are (1) each spouse's net income, (2) your financial needs, and (3) how long it will take to "rehabilitate" yourself in order for you to support yourself independently. The latter might also be called "transitional alimony," to be paid for a limited period. The court emphasizes rehabilitative alimony, thus often placing limits on how long alimony payments will have to be paid.

Temporary Alimony As with temporary child support, the Family Court has the power to order one spouse to pay temporary alimony to the other spouse until the divorce is final. The court's discretion to award temporary alimony

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73

is limited only by the standard of what is "fair and reasonable." Unlike temporary child support, there are no mathematical formulas or guidelines to use in computing the amount. Until your spouse signs an agreement—called a stipulation—to pay you alimony, or the court, after a hearing, orders your spouse to pay you alimony, he or she is not responsible for making such payments. However, Hawaii law requires each spouse to provide "necessities" to the other spouse. If your spouse has been paying the monthly bills and giving you a household allowance, such support should continue (but it may exclude "luxuries" and provide you with only a "bare bones" existence). You may get much more support by asking the court to order it than by relying on your spouse's "generosity." The most prudent approach is to have your attorney negotiate with your spouse's attorney as soon as your need for alimony arises. Your attorney can then prepare a stipulation setting forth your agreement. If you can't agree within a few days after your need for alimony arises, then your attorney should file an Order to Show Cause (OSC) to request that the court order your spouse to pay you alimony. After your spouse is served with the OSC, the court will hold a hearing and decide the temporary alimony issue. Often spouses entitled to alimony fail to act because they believe falsely that they will be reimbursed later for the ordinary living expenses they incur even though a stipulation or court order is not in effect. Or they rely on their spouses' good will to provide support. Don't wait. Have your attorney put your agreement in writing and file it with the court, or file an OSC if your spouse will not agree to pay you alimony. This will protect you and help assure your receipt of alimony. Rules of Thumb to Follow in Computing Temporary

Alimony

1. The court will not simply divide your incomes equally, but will take into account (a) unusual circumstances such as whether the payorspouse is paying for exceptional medical or dental expenses, or education expenses such as school tuition, (b) the failure of either of you to seek gainful employment consistent with your abilities and financial needs, (c) your age, (d) your physical and mental health, (e) your present lack of skills, and (f) if your spouse does not have sufficient income to pay alimony, whether substantial amounts of marital property, such as bank accounts, stock, and other fairly liquid assets, are available to draw upon for payment of your expenses.

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Alimony

2. While the court will not force either of you to sell your house or your stamp collection to provide alimony, it may require you to use up all of your $10,000 bank account before requiring your spouse to pay you alimony if his or her income is limited. If your spouse is paying some expenses, such as your rent or mortgage payments, your automobile insurance and gasoline expenses—which are a form of indirect alimony payments—then you have less need for direct alimony payments. 3. Again as with computation of temporary child support, the court is less concerned with the immediate payment of your joint or separate debts than with providing you with food, shelter, and the other basic necessities of life. 4. Alimony payments that meet certain conditions may be deducted, for income tax purposes, from your spouse's gross income if your spouse files a separate tax return for the year in which alimony is paid (see discussion below). In such cases, your spouse's tax liability may decrease significantly. Often overlooked is the fact that your spouse can then decrease the amounts withheld from his or her paycheck from gross monthly income. This may occur because your spouse's deductions will increase for that tax year and reduce the net tax burden. The result will be an increase in your spouse's net income, enabling your spouse to pay a higher amount of alimony. This is a good argument to use if your spouse contends that his or her cash flow will not allow payment of the amount of alimony you seek. At the time you calculate how much alimony your spouse can afford to pay, make sure that your spouse calculates his or her taxes due for the year, taking into account the projected alimony deductions. Example: Your spouse earns $2,000 net monthly income, but insists his or her expenses total $1,600, leaving only $400 to pay you alimony. Assume that alimony payments will start in February and are expected to continue through the year. Assume further that you will be divorced by December 31 and will file separate tax returns for this year. Your spouse will be able to deduct from gross income 11 months x $400 or $4,400. This will reduce your spouse's net taxes payable in an amount dependent on your spouse's federal and state income tax brackets. A calculation by your attorney may reveal that your spouse's net monthly income can be increased to $2,200 by decreasing the monthly withholding because of the expected tax savings. As a result, your spouse's ability to pay alimony has increased. Keep in mind that direct payments by

Alimony

75

your spouse of your gasoline, shelter, and other expenses may also be deemed alimony by the Internal Revenue Service. The amount of such payments will be included in your gross income and be deductible by your spouse. Don't overlook these tax consequences.

On the downside, all the alimony you receive, whether directly or by your spouse paying for your expenses, must be included in your income for income tax purposes if you file separate tax returns. But if your income is low, your taxes will not be excessive. However, you should estimate your taxes due and discuss with your attorney a plan for paying them. You can also try to negotiate to have your spouse provide you additional funds to pay the taxes on the alimony you receive. This is one area of divorce where both spouses can calculate and negotiate to their mutual benefit and not necessarily to the benefit of the IRS. How Long Does Temporary Alimony

Last?

As with temporary child support, temporary alimony will continue until your divorce is final unless both of you agree to modify the amount, or the court, after a hearing, orders modification upon request by one of you. Temporary alimony could therefore last a few months to a year. If temporary alimony is agreed upon or ordered by the court, it may set an important precedent in determining permanent alimony, if any is justified. However, unlike permanent child support paid throughout the child's minority or until completion of college, it is likely that alimony will be ordered for only a very limited period after the divorce is final. The determination of temporary alimony can be only educated guesswork. Reasonable attorneys can often negotiate an amount acceptable to both of you. If you go to court to obtain temporary alimony and your request is unreasonable, the court may require you to pay your spouse's attorney's fees and the court costs incurred in having the court resolve this issue.

Post-Divorce Alimony Whether or not you will be entitled to post-divorce alimony is difficult to predict because of the many factors that the Hawaii statutes require the court to consider in ordering alimony.

76

Alimony

First, Hawaii law requires the court's orders to be "just and equitable." This standard gives the trial judge broad discretion in deciding whether to order alimony and, if so, how much. The court's decision will probably not be reversed on appeal to a higher court unless the trial court has "abused" its discretion. Second, Hawaii law requires the court to consider the respective merits of each spouse, the relative abilities of each spouse, the condition in which each will be left by the divorce, the burdens imposed upon each for the benefit of the child, and all other circumstances of the case. Hawaii law goes on to list some 13 relevant factors that the court must consider in determining alimony. "Fault," or one spouse's personal conduct toward the other spouse, is not relevant to the determination of alimony. Often one spouse thinks that if the other spouse "walked out" on him or her or committed adultery, then this conduct is relevant to the determination of alimony; it is not. The court, in one case, stated that "alimony is not awarded as reward for virtue and punishment for wrongdoing." Alimony simply provides needed financial support. The factors which the court must consider include the following: 1. Financial resources of the spouses. How much income is each spouse expected to earn? What property will each spouse have after the divorce? How much income will such property provide annually, or is the capital in nonproductive form? Normally, these factors will be the principal considerations in determining the need for alimony. In one case, both parties earned monthly income, the husband's was two and a half times the wife's, and the wife's expenses exceeded her income. The court held that alimony to the wife was appropriate for a limited period. The court has also held that the amount of alimony awarded must allow for the payee-spouse's income tax liability on it. Otherwise, the recipient would fall short of the amount necessary to meet his or her financial needs. 2. Ability of the spouse seeking alimony to meet his or her needs independently. Will your financial resources alone enable you to support yourself without assistance from your spouse? This is where personal "fault" may be relevant if, as the court stated in one case, one spouse, although in good health, "malingers or otherwise fails to use his talent in income-producing endeavors." In another case, the court found that the wife malingered because she continued to rely on welfare while not using her talents or preparing herself to do so. Her husband paid half

Alimony

77

his income to support four children and an order for alimony would "probably cause an invasion of [his] capital." Alimony was inappropriate in such a case. In a recent case, the court set more specific guidelines where one spouse was found to be unemployable and without potential for rehabilitation and therefore entitled to alimony. Since a disability or handicap is never a license to malinger, the court noted that it would be very hesitant to find that the party seeking alimony has absolutely no ability to meet his or her needs independently. The court further noted that the spouse seeking alimony is not excused from satisfying his or her continuing duty to exert reasonable efforts to generate income and attain self-sufficiency. If the court later finds that the spouse seeking alimony has failed to satisfy his or her continuing duty to exert reasonable efforts to generate income, this will not necessarily prevent an award of alimony. Instead, the court could reduce the amount that would otherwise be awarded by the amount of support that could have been generated by the spouse seeking alimony but was not because of the violation of the duty. 4. Standard of living established during the marriage. What was your standard of living? Unfortunately, once you're separated, your individual incomes may not enable either of you to maintain your former standard of living. The court has stated that the amount of alimony "is to be determined upon a realistic appraisal of the situation of the parties at the time of the divorce." Numerous recent studies confirm that the standard of living of those receiving alimony declines significantly after the divorce. Most recipients of alimony are women, and their situation compares unfavorably with that of their ex-husbands, whose incomes and standard of living usually rise, or at least do not decline significantly. 5. Age of the parties. The older you are, the more likely you are to receive alimony. However, in some recent cases involving women in their forties or even fifties, some of whom were full-time homemakers throughout the marriage, alimony was awarded for only a few years (sometimes five or so years to enable the completion of a college degree and a one-year transitional period). The court has been encouraging homemakers to obtain an education and/or training in order to be prepared to achieve financial independence. 6. Physical and emotional condition of the parties. You may need expert testimony if you intend to seek alimony because you have a

78

Alimony

physical or mental handicap. Although almost everyone going through a divorce suffers great emotional stress, your physical and emotional problems must be more severe than the usual divorce-related ones to justify alimony. 7. Usual occupation of the parties during the marriage. The court will review your work history and determine what level of employment it can expect each of you to continue or to attain in the coming years. If you are ordered to pay alimony, you have a duty to maintain your ability to pay it in the future. If your spouse is likely to be awarded alimony, don't plan on taking early retirement or entering a risky business after your divorce unless you can afford to continue to pay alimony too. Filing for bankruptcy does not discharge your duty to pay alimony. 8. Vocational skills and employability of the parties seeking support and maintenance. What is your present situation regarding employability? If you are seeking alimony, it is crucial for you to discuss with your attorney early in the divorce proceedings your plans for future employment and how you will achieve them. It is often useful to undergo a vocational assessment (which costs approximately $500). This involves testing and interviews that may help you to focus on the appropriate career track—considering your aptitudes, desires, and the need for such skills in the job market. In one case, a young woman held a registered nurse's license but had gone back to college for a fine arts degree. The court awarded her temporary alimony because her current needs justified it. At the same time, however, the court noted that it was very skeptical about awarding post-divorce alimony since the woman could return to nursing and attend school in the evenings if she wanted to change careers. In another case, the wife was able to negotiate four years of declining alimony payments and payment for two years of tuition for a paralegal course. The more specific a plan you can present to the court regarding education or training, the more likely you will be to receive alimony and support for tuition. In another case in which the court awarded alimony to the wife to enable her to obtain a master's degree in psychology, it denied her later request to extend the payments of alimony so that she could obtain a Ph.D. degree. Upon appeal, the higher court found that if after obtaining a master's degree she had substantially rehabilitated herself financially, then her pursuit of a Ph.D. would be at her own expense. If she

Alimony

79

were found not substantially rehabilitated, alimony might continue for a short time. 9. Needs of the parties. Your financial statement is the key document here. You should probably start with what your needs would be if you maintained the same standard of living you had during the marriage. The problem is that, once you're divorced, your separate incomes may not be sufficient to maintain either of you at your "married" standard of living. Be prepared to cut down on the luxuries and maybe even on some of what you considered necessities. 10. Custodial and child support responsibilities. Do you have a very young child and need to stay at home during the child's early years? Can you afford babysitting, day care, or preschool if you have to work or attend school? Do you have to transport your child or be home early to supervise him or her? All these issues may affect your employability and expected income level. 11. Ability of the spouse from whom alimony is sought to meet both his or her own needs and those of the spouse. This is the "crunch" factor. Once you separate, there's only so much income to allocate between you. Particularly in Hawaii, where housing and other living costs are so high, two separate households are much more expensive to maintain than one. This is one of the sad realities of divorce. The lowerearning spouse generally bears more of the negative financial consequences of the divorce. 12. Other factors which will affect the post-divorce financial condition of the two parties. In one case, the undisputed fact that the wife was living with a male friend who was paying part of the cost of her housing was relevant in determining whether periodic alimony was appropriate. The court also held that the wife's "prospects for remarriage" were relevant, too, since there was evidence that she planned to marry this male friend shortly after the divorce. If you live with someone, whether friend or lover, be sure that your finances are kept separate and that it is clear what financial assistance, if any, this other person is providing you. This will be relevant in determining your net income available to pay alimony, or in determining your expenses, if you seek alimony. 13. Probable duration of the need of the spouse seeking alimony. Alimony paid to you until you obtain suitable education, training, and employment is often called rehabilitative alimony. In practice, the Family Court favors rehabilitative over permanent alimony, particu-

80

Alimony

larly in considering marriages where a spouse is capable of being educated and trained to obtain gainful employment. On the one hand, Hawaii law allows the court to order alimony for an indefinite period. On the other hand, it may order alimony for a limited period if, as the Hawaii statutes provide, convincing evidence is presented as to the time required for the spouse seeking support "to secure adequate training, education, skills, or other qualifications necessary to qualify for appropriate employment, whether intended to qualify the party for a new occupation, update or expand existing qualifications, or otherwise enhance the employability of the party." The specific duration of alimony should allow a reasonable time for completion of the training, education, or acquisition of skills and sufficient time for the party to secure appropriate employment. In a recent case, the court noted that when deciding whether one spouse must pay alimony, how much, and for how long, the court must consider all 13 factors described above. In general, however, the court held that the most relevant factual questions for consideration are as follows: 1. Taking into account the property awarded to the spouse seeking alimony, what amount, if any, does he or she need to maintain the standard of living established during the marriage? If there is no need for alimony, there is no obligation to pay. For example, if one spouse admits that $3,500 per month is sufficient to meet his or her needs, he or she is not entitled to more than that even if the other spouse is able to pay more. 2. Taking into account the income of the spouse seeking alimony, or what the income should be, and the income-producing capability of the property awarded to him or her, what is his or her ability to meet his or her need independently? If the spouse seeking alimony can satisfy his or her need independently, then the other spouse has no obligation to pay. For example, if the payee-spouse will be receiving a percentage of the payor-spouse's retirement benefits, these funds will be deducted from the amount of alimony requested (see Chapter 8). 3. Taking into account the income of the spouse from whom alimony is sought, or what the income should be, and the income-producing capability of the property awarded to him or her, what is his or her ability to meet his or her own needs while meeting the need for alimony of the spouse seeking it? For example, if you require $2,000 per month for alimony (which includes enough funds to pay the income

81

Alimony

taxes on it), are capable of earning $500 per month from your normal employment, receive $250 per month as your share of your spouse's retirement benefits, and earn $100 per month interest on the bank account funds awarded to you, then you need $1,150 ($2,000 less $850) from your spouse. Your spouse will probably pay that amount (although it is difficult to predict for how long) unless he or she cannot meet his or her own financial needs while meeting your needs for alimony. If the latter conflict arises, the court will have to make a Solomon-like decision. The result may be that both of you suffer a lower standard of living than the one you both enjoyed during your marriage. Almost all alimony orders are subject to later modification by the court (see Chapter 11). In rare instances, alimony is paid "in gross," meaning a flat amount paid either in one lump sum or in installments which cannot be modified by the court. If the two parties agree to nonmodifiable alimony in gross, the spouse paying the support is betting on his or her ability to continue to make the payments; the recipient spouse is betting that his or her needs will not increase during the period in which alimony is paid, since no requests for increases may be considered by the court. Unlike child support, however, there is no court-approved formula available to compute the amount of post-divorce alimony. The setting of an alimony amount involves a lot of guesswork. Generally, the court will not allow you to "reserve" the issue of alimony for a future hearing after the divorce is final, nor will it approve a nominal amount like $1 or $5 so that you can try to increase it later. If your agreement does not provide for any alimony or specifically "reserve" the issue for later determination, you will not be able to request it later. Nor will the court approve alimony payments based on a percentage of your earnings. Therefore, if you seek alimony, you should try to negotiate an automatic increase in alimony tied to the Consumer Price Index. Note, however, that many limited alimony awards automatically decline over the years as the recipient spouse becomes more financially independent. How Payments

Can Be Made

Alimony payments can be made through the chief clerk of the court or directly to your spouse (if you ar also receiving child support, the ali-

82

Alimony

mony payments can be combined and processed through the Child Support Enforcement Agency). You will receive direct payments much faster than if they are paid through the chief clerk of the court, which may take up to two weeks to process the payment. If your spouse usually pays you directly by check and then fails to make payments, your spouse may have a hard time proving any such payments were made if you go to court to enforce your agreement to receive alimony. By contrast, if your spouse is going to pay you in cash, then harrass you in person when making payment or delay payment, it is better to have the payments made through the court. Your peace of mind and the record of your spouse's payments that is kept by the court are far more important than a slight delay in payment. If your spouse fails to pay you support according to your agreement, an assignment of your spouse's income can be imposed by the court, after a hearing. In such cases, your spouse's employer will send the chief clerk of the court the amount deducted from each of your spouse's paychecks. The Effects of Death and Remarriage

on Alimony

Under the federal income tax law, the divorce decree must state that alimony terminates on the payee-spouse's death in order for it to be deductible from the payor-spouse's gross income and to be included in the payee-spouse's gross income. Also, under Hawaii law, alimony will automatically terminate when the payee-spouse remarries unless, in unusual circumstances, the court at the time of the divorce approves the continuation of alimony payments in the event of remarriage. This may be justified if, in effect, the alimony payments are really payments for tuition expenses for rehabilitation purposes or for the payeespouse's share of the marital property, but were "labeled" alimony for tax reasons (see Chapter 8). If, later, you cohabit—that is, have a sexual relationship and live in the same household with another person—the alimony you receive will not automatically terminate unless your agreement so provides. However, if the person with whom you cohabit pays part of your expenses, this may justify a reduction in the amount of alimony you receive. Absent an agreement to reduce your alimony, your spouse will have to go to court to seek a reduction. Lastly, you should try to ensure that the payor-spouse maintains a life insurance policy on his or her life and names you as the beneficiary for as long as you are to receive alimony. In case of the payor-spouse's untimely death, you will then be protected.

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83

Tax Impact of Alimony Recent tax "return" measures have intended to simplify the income tax consequences resulting from the payment or receipt of alimony. Since 1942, alimony has been deductible by the payor-spouse and included in the recipient's income. Hawaii has followed the federal rules. Under current law, the following rules apply: 1. Alimony payments must be made in cash or check, not in nonmonetary contributions. Payments to third parties for the benefit of a spouse are alimony. For example, if you make your spouse's rental or mortgage payments, these payments are deductible from your gross income and included in your spouse's. 2. Agreements concerning alimony payments must be stated in writing—for example, in a divorce decree, a court order for temporary alimony, or a letter agreement. 3. With a few exceptions, the two spouses must live in separate households. 4. Alimony must end at the payee-spouse's death. If your agreement mistakenly provides that some of the payments will continue beyond the payee-spouse's death, for example to his or her estate, then all the payments made in the past will not be considered alimony and cannot be deducted from the payor-spouse's income. If the payor-spouse dies before the payee, his estate is not liable for alimony payments unless the agreement so provides. 5. If a portion of the alimony is actually for child support, that portion of the payments will be considered child support and not alimony. For example, if the $500 monthly alimony payments are to be reduced by $100 a month when your child reaches age 18, $100 of each monthly payment will be considered child support and not deductible by the payor-spouse or included in the payee-spouse's income. 6. Large "upfront" alimony payments during the first two years after the divorce that decline by certain amounts may result in "recapture." This may mean that the payor-spouse may not be able to deduct payments from gross income and the payee-spouse may not have to include the payments in gross income. These rules are very complex and should be discussed with your attorney. 7. The payee-spouse must furnish his or her social security number to the payor-spouse, who must report it on his or her federal tax return. Since both spouses' social security numbers are generally listed

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Alimony

on the court's Matrimonial Action Information form or on the signature page of the decree, this information is available to you and your attorneys. 8. You and your spouse must file separate tax returns in order for the payor-spouse to deduct alimony payments and for the payee-spouse to include them in gross income. If you are divorced on or before December 31, you will have to file separate returns for that calendar year. If you are still married on December 31, you may file separate returns, of course, but it may benefit both spouses to file a joint return, in which case alimony is not deducted or included in gross income. Even if you don't itemize deductions, you can still deduct alimony on your separate returns and take the standard deduction too. If your attorney is not very familiar with these tax implications you would be well advised to consult with another attorney who has such expertise.

Alimony Summary 1. Is alimony justified? Review the factors that the court considers in awarding alimony to determine your eligibility. 2. Rehabilitation. If you meet the criteria for receiving alimony, what are your future plans for "rehabilitating" yourself? 3. Tax consequences. Make sure you consider the tax consequences of paying or receiving alimony. Seek the advice of an attorney who specializes in the tax laws relating to divorce. Try to make sure that the payor-spouse maintains life insurance for your benefit or that your agreement requires the payor-spouse's estate to make payments.

8 Division of Property THE American Bar Association Journal noted a divorce case in which child custody was not a problem since the children were already in their twenties. But the husband and wife disputed custody of toy trains worth $4,000: They worked it out so that he got the American Flyer, the water tower, coal loader, log car and caboose, among other things. She got the 1935 Comet locomotive, three passenger cars, a bridge, another tunnel—and visiting rights to his toys. Judge Josh Taylor was satisfied, but said he too wanted rights to visit the trains, if only at Christmastime.

In Hawaii, dogs, furniture, businesses, houses—everything from miso soup to macadamia nuts—have been the subject of division of property. Just to give you an idea of what property the court can divide, the following items of real and personal property may be subject to Hawaii's equitable division law: Separate property held in your own name. Appreciation in the value of your separate property during the marriage. Premarital property brought into the marriage. Gifts. Inheritances. The marital home, whether held in fee or leasehold, and unimproved real property. Cars, motorcycles, bicycles, and boats. Furniture. Stocks, bonds, securities, and options. Bank accounts, credit union accounts, money market accounts, and certificates of deposit. Contents of safe deposit boxes.

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Mortgages or agreements of sale owned by you. Accounts receivable, either personal or business. Trusts. Life insurance policies including their cash value. Annuities. Interests in law, medical, dental, accounting, and other professional practices. Business interests including sole proprietorships, partnerships, and corporations. Professional degrees and licenses. Art objects. Employment termination benefits including severance pay. Military or private pension, retirement, and profit sharing plans. Disability payments. Litigation awards. Jewelry. Clothing. Pets. In order to divide your property, depending on the circumstances of your case you may need to know its value (1) on the date of your marriage, if it is premarital property, (2) on the date you received it, if it is a postmarital gift or inheritance, (3) on the date of your final separation (when the marriage, in fact, ended), or (4) on the date of trial.

Hawaii's Equitable Division Law In dividing your property, the court will take into account numerous factors. There is no requirement that the court divide your property equally; it is difficult to predict what the court will do. Many people mistakenly assume that Hawaii, like many western mainland states including California, has a community property law mandating equal division of marital property. Hawaii is one of the forty or so states whose current law requires only a "just and equitable" division of property. Because of reasons discussed below, the court's application of this law often results in property divisions that are not 50/50. Most family law attorneys, however, will probably start negotiations with a 50/50 approach and then consider the various factors that might support a division other than equal. In a fairly typical situation, the

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spouses will have been married 15 to 20 years, have purchased all of their property with income earned during the marriage, and have held the property in joint title. A 50/50 division is very appropriate in this case. Even if one of you has not worked outside the home, but has been a full-time homemaker, a 50/50 split is still appropriate. The court will equate one spouse's homemaking, social, and child care contributions to the marriage with the other spouse's contributions as breadwinner. If the court did not do so, many homemakers would receive no share of the marital property at the time of divorce. The court has the power to divide and distribute all your joint or separately held real and personal property regardless of when acquired. The court can also allocate your debts, whether joint or separate, between the two of you. The statutory criteria that the court must consider, which are also considered in awarding alimony or child support, are the respective merits of the parties, the relative abilities of the parties, the condition in which each party will be left by the divorce, the burdens imposed upon either party for the benefit of the children of the parties, and all other circumstances of the case [emphasis added]. In interpreting this passage, Hawaii's courts have defined almost a score of factors, guidelines, and "uniform starting points" that must be considered in division of property.

Factors Considered by the Court in Property Division Factors

Considered

1. Respective merits of the spouses. This factor does not refer to your conduct toward each other, but to the merits of your respective claims to the property to be divided. Hard as it may be to accept, in the division of property it is irrelevant who abandoned your child, who "walked out" on whom, or who committed adultery. Either spouse's personal conduct toward the child is also irrelevant to division of property. If you go to trial, the court will not admit evidence of such conduct if it is offered to justify division of property; however, it may be relevant in a child custody dispute (see Chapter 5). Specifically, the court has held that "respective merits" means "a

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spouse's contribution to, or assistance in the accumulation or preservation of, the separate property of the other." 2. Your efforts in accumulation of your spouse's separate property. If you in some significant manner contributed to the accumulation of your spouse's separately held property, you may have a valid claim to a portion of it. For example, did you contribute monies to help purchase it? If a business, did you work without compensation in an administrative or sales position and help it grow? Or did you take any action to prevent its decline in value? Did you participate significantly in a social role in aiding your spouse's business efforts? As in one reported case, did you make your family's clothes and furniture, thus allowing your spouse's funds to be used in building up the business? Did you help supervise or help in the construction of your marital residence, or manage your spouse's real property used for income purposes? Did you negotiate for purchase of the properties and for the mortgage loans on them? All these factors are relevant to a claim to your spouse's separately held property. Almost twenty years ago, the Hawaii Court quoted several proverbs to show that peoples of many countries recognize that each spouse contributes to the property acquired during the marriage: "Husbands can earn but only wives can save" (English proverb), and "Nae man can thrive unless his wife will let him" (Scotch proverb). In many marriages where the wife has maintained the home and taken primary care of their child while the husband worked outside the home, the court has applied this principle and divided equally the spouse's separate property acquired during the marriage. If the court required that the wife had had to contribute monies to the marriage if she were to receive a share of the accumulated property held by her husband in his name, many wives would receive nothing. 3. Conservation of your spouse's property. If you pay all of your spouse's living expenses and your spouse then uses the funds he or she earns to build up separate property, you will have a valid claim to a portion of such property. For example, assume both of you worked and you agreed to pay all household expenses while your spouse agreed to pay all the car loan payments on the car purchased before the marriage. Title to the car was in your spouse's name only. You will have a valid claim to an interest in the car. This is so because, but for your payment of household expenses—which you both were obligated

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to share—your spouse never would have been able to pay for the car with separate funds. In evaluating such situations, the court will examine the extent to which your spouse's separate property was less burdened with joint living expenses because of your efforts during the marriage. 4. Dissipation of the other spouse's assets. On the other hand, if you did something to dissipate or reduce the value of your spouse's separate property, your claim to such property would be less valid. For example, in one case, the court took into account the fact that the wife's mother lived in the marital residence for six years. The mother's expenses exceeded her income, and the deficit was covered in part by her son-in-law; this was a factor in the latter's favor in the division of property. 5. The condition in which the spouses will be left by the divorce. The court has interpreted this statutory criterion to include such factors as the age of the spouses at the time of divorce, their current income and employment opportunities, prospects for remarriage, and mental and physical health. For example, if one spouse's employment prospects are much rosier than the other's, this might be a factor in awarding the latter a greater share of their property. Or if one spouse is in poor health, that spouse's financial needs may be greater. 6. The ability of the parties. In interpreting this factor, the court examines the ability of one spouse to convey property to the other spouse. For example, is property tied up in unmarketable land or in stock in a family-held corporation? If so, is a cash award to one spouse therefore more appropriate than a division of specific property? 7. All other circumstances of the case. The court has held that the handful of factors set forth in the Hawaii statute are not exclusive. Other factors include the value of the property to be divided, how the property was acquired, the status of the parties, the length of the marriage, and how much of the marriage was "happy." In one case, the court noted that the length of the marriage was not significant in itself unless it was considered in relation to whether the marriage was a "happy" one, and not a mercenary marriage or one of convenience. In one case, it held that six and one-half years of happy marriage was "sufficiently long" to be considered a positive factor in awarding property to the wife and that the year and one-half of unhappiness at the end did not outbalance and wipe out the good and happy years.

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In another case, the "source of the asset" was considered a "circumstance of the case" to be considered in division of property. Upon their marriage, the wife's father gave a residence to the husband and wife as tenants by the entirety, free and clear of financial encumbrances. Upon the divorce, 26 years later, the wife contended that she should be allowed some advantage in the division of the property because it came into the marriage from her father and not from the efforts of both spouses. Although the source of the asset was relevant, the court held that since the gift was to the husband and wife equally, the court could divide the property equally rather than give the wife a larger share of this marital asset. Uniform Starting Points and Other Guidelines

Followed

1. Where specific division of property is impracticable or unfair, the court can make a cash award. In some cases, both of you may have valid claims to a specific property, but it would be impracticable or unfair to divide it between you. Instead, one of you could receive a cash equivalent or another piece of property, while the other receives the specific property in dispute. For example, in one case the husband owned 1,605 shares of stock in a corporation with 3,200 outstanding shares. The court, in awarding him all of his shares of stock, noted that even if the wife had offered persuasive evidence of her contribution to the acquisition of such shares, the court would not divide them between the spouses. The husband had purchased 1,200 shares before his marriage and the remaining 405 shares from his own funds after the marriage. If the court had awarded the wife as few as 6 shares, the husband would have been left with 1,599 shares—less than one-half of the outstanding shares. This would have significantly lessened the value of his shares for he would no longer own a majority of the outstanding shares of stock. The court held that a cash award to the wife, instead of actual division of that property, was appropriate because the husband established a valid claim, and a specific division would have been unfair. In another case the court awarded the wife her share of the husband's retirement rights in the form of a lump sum cash payment; the husband was awarded his pension, but was ordered to pay her the lump sum cash payment out of his share of proceeds from the sale of their house.

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Such problems arise in numerous contexts relating to the marital residence, securities, business interests, pensions, and specific items of personal property. If you cannot agree on a property division, the court may award the property to one of you and a cash equivalent to the other, or it may order the asset sold and the net proceeds, after deducting the costs of sale, split equally between you. If the costs of sale are high or the timing of sale bad because of poor market conditions, both spouses may end up with less than they might have had if they had agreed on a fair division. 2. Separately owned property may be divided. The court has held that the fact that property is held in separate title is relevant, but not conclusive in deciding whether to divide it. As discussed above, the court will consider each of your contributions to the accumulation, preservation, or dissipation in value of such property. If you treated your marriage as an economic partnership and used your marital wages to buy various assets, the court is very likely to ignore title in dividing the assets. It will also consider whether each of you treated your earnings separately by maintaining separate income and expense accounts, and by accumulating separate estates. It is also relevant whether you lived together or separately. If you lived together, did you lead separate lives socially, sexually, or financially? If so, your separate property is less likely to be divided. Often, however, the court ignores title in applying the rules discussed in this chapter. Actually, title to property is one of the least important factors considered. 3. The court does not have to divide joint assets equally. Hawaii law requires a "fair and equitable" division, not necessarily an equal one. The court has held that it "is not required to divide the joint assets equally between the spouses." However, the court will start with a 50/50 approach ("uniform starting point," discussed below) and vary it only if justified by other considerations. This is just one reason why it is so difficult to predict how the court will divide your property. 4. Where there is premarital property, the court is likely to award each spouse the net value of his or her premarital property as of the date of marriage. It is very important that any substantial premarital property be valued as of the date of marriage in order to assist the court in deciding whether and how to divide it. However, if you began an economic partnership before your marriage, it may be appropriate to use an earlier date, such as of the time you began the partnership, to value these assets.

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For example, in one case the wife brought several parcels of real property into the marriage. In the divorce decree, the court awarded her the values of these properties as of the date of marriage. All of the specific properties had been sold during the marriage, but the court awarded her other real properties and assets acquired during the marriage which were equivalent in value to the value of the premarital property. In another case, the husband entered an eight-year marriage with $49,200 (84.5%) worth of premarital assets and the wife brought premarital assets valued at $9,000 (15.5%). The court, at the time of divorce, awarded the husband $80,000 (70%) worth of their combined assets while the wife was awarded $34,000 (30%) of their combined assets. In this case, some of the husband's separate property was awarded to the wife, but he still received most of the marital assets. Apparently the court thought it was fair to award the husband the bulk of the property since he brought the greater proportion of it into the marriage. Example 1: Sharon brought into the marriage her former marital residence purchased with her first husband. It was valued at $42,000 on the date of marriage and kept in her separate name. At time of divorce, she is likely to be awarded this property but her husband may have a valid claim to a portion of the appreciation of the value of the residence during the marriage. Example 2: Assume that Sharon, in Example 1, sold the house during the marriage and used the proceeds to buy her and Walter's marital residence. The new home is held jointly and the mortgage on it is in both their names. In dividing the marital residence, the court might first award Sharon the equivalent value of the proceeds from her former marital residence which she invested in the new house, and then divide the remaining proceeds equally between Sharon and Walter. Or the court could simply divide all proceeds equally. The latter would more likely occur if the marriage was a long one and the new house was purchased early in the marriage.

5. The court is likely to award each spouse the net value of gifts and inheritances, as of the date of acquisition, which each spouse received during the marriage. This general rule applies to property acquired by you or your spouse by gift or inheritance after your marriage.

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Example 1: During his marriage, Charlie received a $5,000 life insurance payment at the death of his daughter by a previous marriage and deposited it in his separate bank account. At the time of his divorce, he is likely to be awarded the $5,000. Example 2: Charlie uses the $5,000 to buy his wife, Jane, a diamond ring. In this case, Jane is likely to be awarded the diamond ring, a gift from Charlie. He is not likely to be awarded anything relating to the original $5,000 cash proceeds he received since he made a gift of it to Jane. Example 3: Charlie uses the proceeds to buy $5,000 worth of stock which he and Jane hold jointly. It has risen in value to $10,000. Such stock might be divided equally. Alternatively, Charlie might receive $5,000 before division of the remaining $5,000. The court's decision would depend on a number of factors including when the stock was purchased during the marriage, the duration of the marriage and Jane's contributions to management of the stock.

6. The court is likely to award each divorcing party one-half the net value ofjointly owned property. Where you and your spouse use marital earnings to buy your residence which you hold jointly, the court will most likely divide it equally. But what happens if you contribute the down payment for the house from your premarital property or property acquired by gift or inheritance during the marriage? In one case, such a conflict occurred where the husband, five months after the date of marriage, conveyed two of his solely owned real properties to himself and his wife to hold as tenants by the entirety. The wife filed for divorce two years later. The court noted the shortness of the marriage (two and one-half years) and found that, considering all the circumstances of the case, it was equitable to award the husband most of his separately held property which he had conveyed to himself and his wife during the marriage. In effect, the court undid the conveyances by the husband to his wife. Had it been a very long marriage, the court might have divided the property equally. In another case, the trial court awarded the husband 100% of the jointly owned marital residence. The Appeals Court reversed the trial court's decision. First, the Appeals Court held that the fact that the husband paid the mortgage from his earnings was not relevant to his claims to the house, since a spouse's wages and the products thereof

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are a marital asset divisible by the court. Second, the court held that the fact that the husband helped build the house was also irrelevant to his claim, since the products of a spouse's personal efforts are also divisible marital assets. Finally, the court rejected the husband's argument that he had a better claim to the house because his relatives and friends helped build it. The court found that the latter's contribution was a gift to both spouses unless the relatives and friends had expressly stated otherwise. Where one spouse conveys a premarital asset, or a postmarital asset received by gift or inheritance, to both spouses to hold jointly, it is likely that the court will examine the reasons for the conveyance in deciding whether to divide the asset equally. For example, if the conveyance occurred solely for estate planning purposes and was premised on a continuing happy marriage, or resulted from threats made by one spouse against the other, the conveyance might be ignored in a divorce proceeding. 7. Appreciation in premarital property held during the marriage, or property received by one spouse by gift or inheritance during the marriage, may be divided by the court. The court's uniform starting point will be to award 75% of the appreciation to the titleholder and 25% to the other spouse. But the court, considering all factors in the case, may award as much as 50% or as little as 0% of the appreciation to the nontitleholder. 8. Undue emphasis must not be given to a single factor. Failure to consider all the above relevant factors as required under Hawaii law is an abuse of discretion by the trial court and its decision may be reversed on appeal. In other words, the Family Court, at trial, must apply all the above criteria to the particular facts of your case and not rely unduly on only one or a few factors. 9. Out-of-state property can be divided. Hawaii courts generally can affect the title to your real property even if it is located in another state or country. You and your spouse can agree to convey such interests to one another or, if you fail to agree, the court can order you to sign documents that convey title to your spouse regardless of the location of the property. 10. Retirement benefits, pension, and profit sharing plan interests are divisible. Many people do not realize that this is so. Generally, the portion of such interests earned during your marriage is divided equally. As the nonparticipating spouse, your share may be paid to you at the

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time your spouse receives payments—which could be decades away— or you may be able to receive the cash equivalent of the present value of your interest. The circumstances under which this may happen are discussed later in this chapter under the heading "Pension, Retirement, and Profit Sharing Plans." Military retirement benefits are discussed separately in Chapter 9. 11. Business interests are subject to division. If one of you owns a business, the court will probably place a value on the business before deciding whether and how to divide it. You may have to retain an expert, such as an economist or an accountant, to estimate the value. If the two of you can't agree on the same expert, each of you can retain your own. The court will hear testimony from each spouse's expert before deciding value. The court has held that a business may be valued by a variety of complicated methods. Let your attorney and expert explain to you the best approach to use in your case. The court will also consider your and your spouse's involvement in the business in deciding what portion of its earnings and value should be awarded to each of you and whether only one of you should be allowed to own and manage it during and after the divorce. 12. The effect of premarital agreements. In the past, premarital agreements were unenforceable because they ran counter to the state's interest in preserving marriages and maintaining the financial security of divorced or separated persons. Now, however, in Hawaii the court will enforce a valid premarital agreement (see Chapter 12). 13. Effect of joint or separate income tax returns. If you and your spouse filed joint tax returns during the marriage, this may be evidence relevant to supporting an equal property division. By contrast, if you filed separate returns, that may support your position that all your separately held property should be awarded to you. The court may also consider how you allocated between you the taxes owed or refunds received. For example, in one case, the wife held as her separate property a tax shelter investment that was going to cause her to report and to pay taxes on a $20,000 "paper gain" in the next tax year. However, she was to receive no more monies from the investment. In past years, both spouses had benefited from substantial deductions on their joint tax returns because of her investment in the tax shelter. However, the evidence showed that the wife had retained most of the refunds result-

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ing from tax deductions on this investment. At the husband's urging, the court awarded the wife, over her objections, the investment—and future tax liability. In summary, there are many factors that the court must consider in dividing property. The uniform starting point for division of marital property is 50/50. Marital property includes property acquired during the marriage by the efforts of one or both spouses, but excludes gifts or inheritances to one spouse. The court will ignore title and divide the property equally if it was acquired through marital efforts. Conversely, the date of marriage value of premarital property and the date of acquisition value of gifts or inheritances to one spouse during the marriage will generally be awarded to the spouse who holds title, unless the "circumstances of the case," as discussed above, justify division. The uniform starting point for division of appreciation during the marriage in such separately held property is 75% to the titleholder and 25% to the nontitleholder. The court varies this formula frequently because of the different circumstances of each case.

Things to Keep in Mind in Property Division Marital

Residence

The asset that is most commonly a subject of property division in Hawaii is the marital residence, and it is often the most valuable asset. A number of issues arise in this connection: 1. Valuation. If you agree to sell the property or the court orders its sale, there is no need to value it. The market will determine its value. If one spouse wants to buy out the other's interest, however, an appraisal may be necessary. You and your spouse may agree upon a value, but unless you are very familiar with the local real estate market, your attorney will probably recommend that you hire an appraiser to estimate the property's fair market value. Your spouse will probably do the same. If the two appraisals differ substantially and you cannot reach a compromise on the value of the property, you can call the appraisers as witnesses at trial and the court will decide the property's value. Alternatively, you and your spouse can agree on one appraiser and agree to be bound by that appraiser's valuation. Or you can agree

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that either of you has the option to challenge such appraiser's valuation if you disagree with it. Appraisals of marital residences can cost $250 or more. In addition, if you go to trial, your appraiser may charge you $100 or more per hour for time spent in preparation and testifying at trial. 2. Costs of sale. If you sell the house through a realtor, you will incur commissions (generally 6 % of the sales price) and closing costs. If you agree to a buyout of your interest by your spouse, you should try to convince your spouse to calculate your share of the equity in the property without deducting commission costs. Your argument should include the point that no sale has occurred and therefore no commission is being paid. The spouse keeping the house will argue that it is fair to deduct commission costs since such costs would be incurred if the house was sold. If your spouse wants the commission deducted and you go to trial, the court usually does not deduct the commission for buyout valuation purposes. The difference can be substantial: Value of house Less commission (6%) Subtotal Less mortgage balance Subtotal

Sale by Realtor $150,000 9,000 $141,000 40,000 $101,000

Buyout by Spouse $150,000 $150,000 40,000 $110,000

Your one-half share of equity

$ 50,500

$ 55,000

If the commission were not deducted, you would receive $4,500—or one-half the commission—more than if it had been deducted. 3. Time of sale. If you disagree about the disposition of the house, the court will ordinarily order it sold. If you try to obstruct its sale by not signing appropriate documents or refusing to agree to reasonable offers, the court may order the chief clerk of the court to sign in your place. It may be different if you have a child. Often spouses agree to delay sale, or the court orders a delay, until the child reaches age 18 or completes college. This provides stability for the child and for the spouse living in the home; but the spouse who does not live in the home bears the cost of delay in getting his or her share of equity in the house. Therefore, the court rarely orders that one spouse have exclusive use

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and occupancy rather than having the home sold immediately, especially if the child is young. However, the court will be less reluctant to do so if the child has only a few years remaining in school and the sale will be postponed for only a short time. If the house is not sold, complications may also arise in trying to work out who will pay the mortgage and receive the resulting tax benefits, since interest and property taxes are deductible. The advantage of sale, of course, is that you will immediately have your share of equity in the house. This can be invested to yield interest or as a down payment on another residence. As already mentioned, determining factors should be the number of years remaining before your child finishes school and whether you and your spouse can afford to support your former marital residence and a new home for the other spouse. Because of high housing costs, it is often the case that the house simply must be sold in order that both spouses may survive economically. Another factor to consider is what happens if you both move out of the house pending sale and your spouse pays the mortgage for several months until a reasonable offer is accepted? Your spouse may demand reimbursement out of the proceeds of the sale for a portion of the mortgage payments made before the sale, less any rent received. 4. Release of mortgage. A problem that may arise which you need to think about is this: Your spouse buys out your interest in the house, agrees to pay the mortgage, and promises to reimburse you in the event that he or she fails to make the monthly mortgage payments and you have to make them. You have happily received $50,000 for your share of the equity in the house and plan to invest it in a new property. But now you suddenly find that since your name is still on the mortgage for your former marital residence, your bank will not let you borrow against your new residence until the other mortgage is paid off, which may be years in the future. How can you avoid this situation? Do not agree to a buyout unless your spouse agrees to refinance the mortgage or obtain a release of mortgage so that you are no longer responsible for it. In approving a buyout by one spouse of the other spouse's interest in the house, the court usually orders the former to refinance the mortgage or obtain a release. If your spouse fails to agree to these possibilities, you might want to insist that the house be sold within a specified time period. 5. Equal division? If you and your spouse bought the home with

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marital earnings, held it in joint title, and both of you were obligated on the mortgage, it is most likely that the net proceeds of sale will be split equally. However, as the above general rules and factors affecting division come into play, a division other than 50/50 may be appropriate. In both examples, the assets have a uniform starting point of 50/50 for purposes of division. Example 1: Assume that your spouse used $10,000 of premarital funds or an inheritance or gift received during the marriage for the down payment. You purchased the house during the first year of your marriage and the marriage lasted two years. In such a case, your spouse is likely to be reimbursed $10,000 before the remaining proceeds are divided equally. Example 2: Assume the same facts as in Example 1, except that the marriage lasted 20 years. The court may consider one-half of your spouse's $10,000 contribution to the down payment made 20 years ago as a gift to you and divide the net proceeds equally without any reimbursement to your spouse. In my opinion, the longer the marriage and the earlier the other spouse's contributions were made during the marriage the more likely an equal division will be considered fair. Example 3: Assume you buy the house in the eighteenth year of your marriage, your spouse uses $10,000 from an inheritance for the down payment, and you are divorced only two years later. Here it is likely that the court will reimburse your spouse $10,000 before dividing the remaining proceeds equally. However, you can argue that your spouse gave you one-half of the down payment as a gift. The court will consider all the factors discussed above and has the power to choose among a variety of options. Example 4: Assume that your spouse held the house in separate title at the date of your marriage, but you both lived in it for 20 years until your divorce. Assume further that it was valued at $60,000 at the date of marriage and $150,000 at the date of divorce. Using the uniform starting points, the court might award your spouse $60,000 for your spouse's interest on the date of marriage and then divide the $90,000 appreciation 75/25 ($67,500 to your spouse and $22,500 to you). Or the court could vary from the uniform starting points. The court will consider all the factors discussed above, particularly who was liable on the mortgage, who paid it, who paid property taxes and maintenance, whether either spouse helped build additions or improvements, who maintained it, and

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all other circumstances of the case. This example illustrates the difficulty of predicting what the court will do in such situations because the court has the power to choose among a wide variety of options.

Pension, Retirement,

and Profit Sharing

Plans

Many people are shocked when, at the time of divorce, they find out that their retirement, pension, and profit sharing plan interests are divisible by the court. The Hawaii Family Court, unlike courts in some other states, is presently dividing retirement and related types of benefits as part of marital property division. These assets, after the marital residence, may be the most valuable property of the two spouses and thus merit special attention in this discussion. At least four methods of dividing retirement benefits have been approved by the court: 1. Pay as received. This is probably the most frequently used method. When your spouse receives retirement benefits, you will receive a fraction equal to one-half of the monthly benefit times the number of years in which your spouse participated in the retirement system during your marriage, divided by the number of years of your spouse's participation in the plan. Each spouse is solely liable for the income taxes due with respect to the gross cash benefits distributed to him or her. Example: You and your spouse have been married 20 years. Your spouse began employment with his company in the first year of your marriage and participated in its pension plan for 20 years until your divorce and for 10 years thereafter. Your spouse then retires and receives $600 in gross cash retirement benefits per month. You would receive the following: 1 20 (yrs. married in plan) „ . ^ - x— : : f — ' x $600 = $200 per month 30 (total yrs. in plan) 2

There are many uncertainties with this approach. How long will your spouse continue to participate in the plan—that is, work for the same company—after the divorce? Will your spouse live long enough to receive the retirement benefits? Will you? How long will your spouse live after benefits start? Will they terminate upon your spouse's death? Will you know when your spouse starts to receive benefits, especially

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when payments are decades away and when you are not communicating well? Or what if one of you moves to another state? This seemingly simple plan may become a time bomb that will go off decades hence. On the other hand, the argument in favor of this arrangement, from the participating spouse's point of view, is that he or she may never have a vested interest in the plan or may die before receipt. Why agree to the obvious alternative, to "buy out" the nonparticipating spouse with cash or other property now, in exchange for an asset the participating spouse may never receive? The Retirement Equity Act of 1984 allows for earlier payments to the nonparticipating spouse under certain circumstances even before the participating spouse retires, and for payments to be made directly by the retirement plan administrator to the nonparticipating spouse. Your attorney should review this matter carefully. 2. Direct payment of present value. If in addition to the pension there is substantial marital property to be divided by the court, it may be appropriate to award the participating employee spouse all of his or her retirement benefits and to award the nonparticipating spouse an equivalent amount of other marital property. It is not always easy to determine the present value of a benefit plan. For pension plans based on the employer and/or employee's contributions ("defined contribution plans") the value is the fair market value of the employee's individual account on the date of division. Other plans ("defined benefit plans") calculate benefits based on the employee's years of service and salary. Example: Irene has worked as an executive for 20 years during the marriage. The present value of her pension is $70,000 and her husband Alvin's share is one-half, or $35,000. The court can award the entire pension to Irene and award $35,000 to Alvin in other marital property, if available.

In this case, the obvious advantage to the nonparticipating spouse is that cash in hand may be worth a lot more than the possibility of later receipt of a share of retirement benefits. There is an advantage, too, to the participating spouse, who may want to sever all ties with the other spouse upon divorce. This arrangement makes it possible to avoid making payments to an ex-spouse years later and protects against being pursued for failure to make payment.

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In such cases, your attorney may need to retain, at your expense, an expert to estimate the present value of the defined benefit plan. This expert, usually an actuary, will take into account the life expectancy of the employee spouse, the anticipated benefits to be received, the expected retirement date, the risk that the pension will never vest because of termination, disability, or death, and other related factors. Basically, the actuary is trying to make an educated guess by calculating an amount which when invested today would yield an amount equal to what your spouse would receive after retirement. The present value of your fractional share can then be calculated. 3. Cash buyout. If there is not substantial marital property in addition to the pension, the court might allow the participating spouse to buy out the nonparticipating spouse, if the former can borrow the funds to pay the latter the present value of his or her retirement interest. 4. Payment even on refusal to retire. If the participating spouse has reached retirement age, but has not retired, the court cannot order retirement. But it has the power to order the participating spouse to start paying the other spouse an amount equal to his or her share of the value of the participating spouse's retirement benefits. In making one such decision, however, the court noted that the "pay as received" method was the preferred approach, but that this situation was an exception. As a general rule, private pension and retirement benefits which result from your employer's contributions to your plan are fully taxable to you. Benefits you receive based on your own contributions are not taxable. Military pensions are fully taxable on receipt (see Chapter 9). In examining a pension or profit sharing plan to determine which method to propose, one of the first things to determine is whether and when any amounts—including your own or your employer's contributions, if any—can be withdrawn prior to retirement. For example, some profit sharing plans allow withdrawal of a portion of funds prior to retirement. Or your spouse may have a vested interest in a pension plan which can be withdrawn upon termination from his or her job. If you know your spouse is going to change jobs in the near future, the "pay as received" formula may be triggered before voluntary retirement, assuming your spouse is entitled to some benefits upon leaving his or her present job.

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Suppose, for example, that you agree with your spouse that you will receive a fraction of your spouse's benefits when he or she receives them. Your spouse quits one year after the divorce and receives $10,000 as his or her share of vested retirement benefits. You will immediately receive your fractional share of this amount. Note, however, that many employees who terminate their employment prior to normal retirement age often are not entitled to any benefits or may have to wait decades to receive them. Social Security

Benefits

Social security benefits are available to the nonparticipating divorced spouse after 10 years of marriage. Aside from such benefits, social security is not subject to division by the court. You should, however, contact your local social security office to obtain a pamphlet on the benefits available to you in the future. In regard to all the benefits discussed, you should make sure that you have considered the various options available and that your agreement specifically describes your rights to them. Are Academic

and Professional

Degrees

Property?

Suppose that you support your spouse while he or she attends college or professional school. Your spouse receives a medical degree, opens a practice, and begins to earn the income you've looked forward to for many years. Then divorce proceedings begin. Unfortunately, the law is unsettled as to the rights of the non-degreed spouse in such circumstances. Under Hawaii law, anything of present or prospective value is subject to division by the court. Arguably, this includes degrees. Many courts have recently considered the issue of whether and how to compensate the supporting spouse in such circumstances, and some have simply denied recovery. Although Hawaii's Appeals Courts have not yet decided this issue, they are likely, but are not required, to look to those states that have granted recovery. Some examples: A few courts have adopted the view that the professional degree or the enhanced earning potential it represents is property to be valued and divided upon divorce. The courts that have done so have awarded the supporting spouse significant lump sum payments generally payable in installments. Many courts have made awards to reimburse the supporting spouse

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for the expenses incurred in putting the other spouse through school. This is a form of restitution. Other courts have awarded the supporting spouse amounts equal to one-half of what the spouse who attended school would have earned if he or she had not been attending school, but had been employed. Another approach is to award the supporting spouse an amount necessary to enable him or her also to attend professional school and attain increased earning capacity. Hawaii courts, under current law, have a variety of options. The court, in awarding rehabilitative alimony, could consider the supporting spouse's past efforts and award alimony to enable him or her to attend school or obtain appropriate career training. Or the court could consider the degree in property division, particularly if the accumulation of substantial assets has resulted from the use of this degree over the years. Our court has been creative and imaginative in its decisions, and any of the arrangements described is possible.

Debts The court also has the power to allocate your joint or separate debts. Usually, it will award to one spouse the net equity value of a particular marital asset. This means that the spouse receiving the asset also assumes the debt on it. If debts are not related to any specific asset, in deciding how to allocate the debt the court must consider the same five factors applied to division of property (outlined earlier in this chapter under the section titled "Things to Keep in Mind in Property Division"). Each spouse's net income is the most important factor. Or the debts may be paid out of the proceeds from the sale of marital assets. As a general rule, one spouse will not be saddled with all the debts if both spouses are in identical economic circumstances. However, debts each of you incurs after your physical separation or the filing of the divorce complaint will generally be your own responsibility and not your spouse's, unless such debts were clearly incurred to pay for necessities.

Tax Impact of Property Division Under the 1984 Tax Reform Act, no gain or loss will be recognized upon the transfer of property incident to a divorce. The spouse

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awarded the property has a "carryover basis" which means the same cost for tax purposes as the transferor had. Previously, if one spouse transferred appreciated property like a house or stocks to the other spouse, the former would owe capital gains taxes on the difference between the current fair market value of the property and its cost. For example, pursuant to their divorce decree, Mike gives his wife, Evelyn, the marital residence held in his name. It was purchased for $60,000 and is now valued at $150,000. Evelyn's carryover basis will be $60,000. Mike does not incur a capital gains tax on the $90,000 difference between its cost and current value. Evelyn will pay capital gains taxes upon her later sale of the house. If $20,000 in improvements on the house had been made during the marriage, Evelyn's carryover basis would be $80,000 rather than $60,000. In general, there is no gift tax liability for transfers of property between spouses during marriage or after divorce if the transfer is in implementation of a property settlement agreement. You need to be very careful to take into account, during your negotiations or at trial, the potential tax consequences of what appears on its face to be an equal property division. For example, assume you agree to take your house, which cost $80,000 and is now worth $200,000. Assume your spouse takes the stock which cost $160,000 and is now worth $200,000. Equal division? Not necessarily. If you immediately sold the house, you would pay a tax based on a capital gain of $120,000 unless you purchased a new residence that cost more than $200,000, which would enable you to defer payment of the tax. By comparison, if your spouse sold the stock, your spouse would pay a tax based on a capital gain of only $40,000. Finally, it may be possible to label cash payments made pursuant to a division of property as alimony. In such event, the payments would be tax deductible on the payor-spouse's income tax returns, and included as income on the payee-spouse's returns. If the latter is in a lower tax bracket than the payor-spouse, using this technique may enable the payor-spouse to pay higher cash amounts to the payeespouse since the payments are deductible. However, there are dangers in doing so because it may keep the alimony issue alive for future modification where there might otherwise be no alimony payments. Such arrangements may also face "recapture" problems described in Chapter 7. This type of arrangement must be carefully structured by your attorney if you attempt to use it.

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In negotiations, you should take into account such potential tax consequences because they will determine the "real" value of the property awarded to you. If you don't reach agreement, but go to trial, you should bring these tax consequences to the court's attention, even though the court does not always take them into account in the division of property.

Joint or Separate Tax Returns? In addition, you should consider whether you want to file a joint tax return if you are eligible to do so. If you are still married on December 31, you can file a joint return for that calendar year. In fact, you may want to delay your final hearing to enable you to remain married long enough to do so. Generally, filing joint returns is beneficial compared with separate returns, on which the tax rates are usually higher. You should discuss this matter with your attorney, who can help you make the best financial decision.

The Effect of Bankruptcy What if your spouse files bankruptcy proceedings after the divorce? In general terms, the debts your spouse owes you based on property division may be reduced or even extinguished, but alimony and child support obligations will not be directly affected by the filing for bankruptcy. However, you can expect your spouse to file an OSC to request the Family Court to reduce the alimony and child support payments because of changed financial circumstances. If you suspect that your spouse might file bankruptcy proceedings in the near future, you should consider not agreeing to any property division that involves long-term installment payments to you.

Division of Property Summary 1. History ofyour assets and debts. You need to prepare a detailed history of each of your significant assets and debts including financial and management information. 2. Documentation. You will save a lot of time and attorney's fees if you can provide your attorney with copies of all relevant documents related to each asset and debt. For example, in a file you prepare on

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the marital residence, you should include copies of the deed, lease, or agreement of sale; information regarding improvements, property taxes, and insurance; and cancelled checks which provide evidence of the source of payment for each expense. 3. Retirement interests. If either spouse has interests in retirement or profit sharing plans, you need to consider whether a buyout is appropriate. 4. Tax consequences. Be sure to take into account the tax consequences of property transfers between you and your spouse. Examine the cost of each asset to be transferred as well as its current value. 5. Bankruptcy. If there is a possibility that your spouse may file bankruptcy proceedings, try to avoid agreeing to long-term installment payments relating to your share of the marital property. 6. Joint or separate tax returns. Consider whether it is worthwhile to file joint tax returns if you are eligible to do so.

9 Special Problems of the Military Where Should You File Your Divorce Complaint? 1 2 % of Hawaii's resident population consists of members of the military and their dependents. Only about 2 % of these people are permanent residents (domiciled) in Hawaii. The rest come from the mainland and intend to return to their permanent residences upon completion of their military service. Let's take the case of Kathy and Tom who were married in New York, where Tom enlisted. On his military records, he lists New York as their home state. They pay New York state taxes and vote absentee in New York elections. Their permanent residence or domicile remains in New York although he had been stationed at Pearl Harbor for the past seven months. As discussed in Chapter 2, you must meet specific residency or physical presence requirements in order for the Hawaii Family Court to have jurisdiction to grant you a divorce. Those persons in the military who are not permanent Hawaii residents, must satisfy two requirements: (1) either spouse must be physically present for a continuous period of at least six months before filing the complaint, and (2) the spouse who seeks the divorce must be physically present in the circuit (Honolulu, Maui, Hawaii, or Kauai County) for a continuous period of at least three months before filing the complaint. Since Kathy and Tom have been physically present in Honolulu for more than six months, either can file for divorce in that circuit. Even if one of them has to leave the island or state after filing, the Hawaii courts can grant the divorce, divide their property, and issue related orders. Can either Kathy or Tom file elsewhere? The answer will depend on the law of their state of permanent residence. If New York's law APPROXIMATELY

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requires that one spouse be domiciled there, then either Tom or Kathy could file in New York State. However, if New York law also requires that either spouse must have maintained a permanent physical residence in New York, such as a house or an apartment, neither Kathy nor Tom could qualify. If your domicile is not in Hawaii, you should have your attorney check on the law of your domiciliary state to determine if you can also file there. If so, what factors should you consider in deciding in which state to file? First, convenience is very important. In most states, you will have to appear in person at least at one hearing. You may have to take leave from your job to meet this requirement. Second, you may incur additional expenses using an out-of-state attorney, including long distance telephone calls. Finally, and most important, is whether the law in your domiciliary state will be more favorable to you in your particular case than Hawaii law. For example, does your domiciliary state divide pensions including military retirement benefits? If you supported your spouse while he or she attained a professional degree, does your domiciliary state require your spouse to reimburse you for a portion of such expenses? Now suppose that Tom supported Kathy when she went to law school. Hawaii law has not yet specifically addressed the issue of whether Kathy has to reimburse Tom for the expenses he incurred for her. Tom should consider filing in New York if New York's law would require Kathy to reimburse him. In order to determine whether filing in your domiciliary state would be preferable to filing in Hawaii, your attorney here will probably contact a family law specialist in your home state to discuss the pros and cons of filing in each state. If you can afford to have such a comparison made, you should seriously consider doing so.

Service of Process Problems The Soldiers' and Sailors' Civil Relief Act may provide protection to a member of the military who, due to military service, cannot be present to adequately participate in a divorce or post-divorce proceeding filed by the member's spouse. In such cases, the member may request a "stay" of proceedings, or the court, on its own, may stay the action until the member can appear and participate in the proceedings, or appoint an attorney to represent the defendant.

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Assume that Tom is in Washington, D.C., on military orders for three months and cannot return to Hawaii during that period. If Kathy files for divorce during this period and serves Tom in Washington, D.C., by certified mail or by using a process server, it is likely that the court will stay the action until Tom's return, or the court can appoint an attorney for Tom.

Military Retirement Benefits A few states apparently still do not consider military retirement pay benefits earned during the marriage as marital property and will not divide them in the divorce proceedings. Since the pension may be your most valuable marital asset, it may be worthwhile to determine how your home state courts would deal with it compared with the attitude of Hawaii's Family Court, which will divide it under most circumstances. Courts in Hawaii will divide the member's military pension earned during the marriage under the provisions of the Uniform Services Former Spouses' Protection Act (USFSPA). In order for the court to do so, according to the USFSPA: The Court must have jurisdiction over the member by reason of: (A) the member's residence, other than because of military assignment in the territorial jurisdiction of the Court; (B) the member's domicile in the territorial jurisdiction of the Court; or (C) the member's consent to the jurisdiction of the Court. These requirements have created confusion as to when the Hawaii courts have jurisdiction to divide the military pension. In one case, the couple came to Hawaii in 1979 on military orders. The husband, who had earned military retirement benefits during the marriage, filed for divorce in Hawaii. He indicated his home of record as Texas. The court held that since the husband was here on military orders, he was not domiciled here, and since he did not consent to the Hawaii court's jurisdiction, the issue of division of military retirement benefits as a marital asset should be reserved "for a court of competent jursidiction to divide." In other words, the wife would have to file a post-divorce action in the husband's domiciliary state in order to have the pension divided. If Texas law did not provide for such division, the wife would not receive any part of the pension.

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Shortly after this decision was made, another Family Court judge held that when the military member filed the divorce complaint he in effect had consented to the court's jurisdiction to divide all the marital property including the pension. This second decision appears to make more sense and is the current policy of the Family Court, although the Appeals Court has not yet addressed the issue. In my opinion, the current policy is likely to be upheld on appeal. What if the nonparticipating spouse files the divorce complaint and the military member is the defendant? Can the Hawaii courts then divide the defendant military member's pension? It is clear that if the military member is domiciled in Hawaii, the Hawaii court can divide the pension. In one case, though the military member contended that he was domiciled in Pennsylvania, the court found that his domicile was Hawaii because he had minimal contacts over the past 30 years with Pennsylvania and had bank accounts, a driver's license, real property, club memberships, and other strong connections to Hawaii. However, if the defendant military member is not domiciled here and he is served and answers the complaint, has he then consented to the Hawaii court's jurisdiction to divide the pension? The answer is not clear. He (or she) may respond to the complaint by stating that he or she does not consent to the court dividing his or her pension. If the court in such cases decides that it lacks the power to divide the pension, can it then consider this factor in the division of property by awarding the nonparticipating spouse a greater share of the marital property, excluding the pension? Again, the answer is not clear, although the existence of the pension is certainly one of the circumstances of the case to be considered. It is hoped that more guidance will be forthcoming on this issue from the Hawaii and mainland courts.

Payment of Military Retirement Benefits Assuming that the Hawaii court finds that it has the power to divide the pension, the court may divide it by any of the methods discussed in Chapter 8, including payment to the nonparticipating spouse as and when received by the military member, or cash buyout. The USFSPA provides that a former spouse is eligible to receive direct payments from the retirement pay of the military member if they were married for 10 years or more while the member performed

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10 years of creditable service. Under this method, the former spouse receives payment directly from the military finance center, not from the military member. If the former spouse has not met the 10-year requirement, then the court may require the military member to make payments directly to the former spouse. The problem, of course, is that the member spouse may make payments late, or even fail to pay. This will force the former spouse to take legal action to enforce the decree. The former spouse's share is a percentage of "disposable" retired pay, which consists of gross retirement pay less withholding for applicable federal and state income taxes and other specific items set forth in the USFSPA. If the member is eligible for and elects disability rather than retirement pay, the former, under a recent decision by the U.S. Supreme Court, is not divisible by the Family Court. The nonparticipating spouse should make sure that the military member's withholding amounts are consistent with his or her tax liability. If the withholding is too high, the nonparticipating spouse will not receive the full share of the pension to which he or she is entitled. If the retired spouse requests that additional taxes be withheld, government regulations require that the retiree provide proof of the existence of tax obligations justifying the additional withholding. Military retirement benefits are included in each spouse recipient's gross income for federal and state income tax purposes. The divorce decree should be very carefully written in order to meet the requirements of the USFSPA and to assure that the nonparticipating spouse receives his or her proper share of the member's retirement benefits.

Survivor Benefit Plans The military member may elect to provide an annuity to the former spouse or the court may order the member to provide it. If this decision is set forth in the divorce decree, it cannot be changed unless approved by the court. It is not clear when the court will order the member to provide the annuity, although the older the nonmember spouse the more likely the court will order it. Once the plan is ordered, it may end upon the nonmember's remarriage. You should have your attorney review with you the current law and regulations. Under Survivor Benefit Plans, the military member receives less in

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retirement pay in order to provide the beneficiary with an annuity upon the member's death. The member is unlikely to elect this plan for the benefit of the former spouse unless the latter offers some kind of trade-off in the divorce agreement.

Other Military Benefits If the couple was married 20 years during which time the member served 20 years active duty, the former spouse can continue to receive low-cost military health care benefits. However, these benefits terminate upon the former spouse's remarriage or if he or she is eligible for coverage under an employer-sponsored plan. In addition, the unremarried former spouse who meets the above 20-year requirement may also continue to use military commissary privileges. Those former spouses who were married for 20 years to someone with 20 years of service, 15 years of which are active duty, are eligible for medical care and insurance for two years. The United States Supreme Court has held that an insured service member has the absolute right to change the beneficiary designation on a life insurance policy issued under the Serviceman's Group Life Insurance Act regardless of the requirements of the insured's divorce decree. In all divorces involving military members, your attorney should review all the benefits earned by the member or to which the member is entitled and determine which benefits the Hawaii court may divide. It is also wise to review your potential benefits with legal staff on base, if available.

Military Summary 1. Choice of state in which to file for divorce. Are you eligible to file for divorce in more than one state? If so, which state's law would be more advantageous in your particular case? 2. Potential benefits. Be sure to assess all the military benefits to which you may be entitled, particularly your rights to your spouse's military retirement pay benefits.

10 Going to Court: Uncontested Cases, Trials, and Appeals Now that you have read several chapters regarding the issues that will be negotiated between you and your spouse, you need to understand what going to court means and the difference between uncontested cases and trials.

Who Goes to Court and When? Going to court is not the same as going to trial. If you reach an agreement with your spouse on all matters raised in your complaint, then the plaintiff—the party that filed the complaint—signs a statement (called an "affidavit") which is then given to the court along with both parties' financial statements, the proposed divorce decree, and an Appearance and Waiver form, which allows the court to proceed without the presence of either party. In other words, neither party has to go to court if the matter is uncontested. Generally the court, after reviewing all the documents in chambers, approves your and your spouse's agreement. If it does not, the court can require changes that both of you must approve or require that your spouse appear with you before the court on another day. This is the rare exception, however, since almost all uncontested cases result in approval of the agreement and granting of the divorce.

Going to Trial If you cannot reach agreement on all matters, you must go to trial. The court requires that you negotiate in good faith or try to settle your dif-

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ferences; this is much less expensive and emotionally traumatic than going to trial. In addition, a negotiated agreement can be tailored much better to each spouse's needs compared to a decision imposed on each spouse by the court after trial. Suppose agreement is reached on 90 % of the issues in dispute, but negotiations fall apart over a handful of remaining items. If you and your spouse agree and the court approves, you can go to trial on only the disputed items. However, there is the chance that one of you may decide to unravel the agreements already reached and contest at trial all issues. This decision may be made simply in anger, to try to force the other spouse to settle by threatening a very expensive trial, or because all the items in dispute are interrelated and the agreement must cover all of them. In deciding whether to settle or to go to trial, you need to examine the proposed out-of-court settlement as a whole and to review it carefully with your attorney. It is important to be flexible and willing to make reasonable compromises. You need to discuss the risks of going to trial and to evaluate the worst likely outcome on each item. You are not likely to "win" most points at trial unless your spouse is very unreasonable. You need to consider the financial and emotional costs of trial—on you, on your spouse, and on your child. In terms of costs, each day of trial will run close to a thousand dollars in attorney's fees. In addition, for each day of trial you can count on fees for one day's preparation time, costs of depositions that would not otherwise be taken of you, your spouse, and various experts, and fees for experts to testify. Your spouse is not required to pay your attorney's fees and costs incurred, but may be ordered to pay a portion of them. The court will consider (1) the respective merits of each spouse, (2) your relative abilities, (3) the economic condition of each of you at the time of the hearing, (4) the burden placed upon each of you to support your child, and (5) all other circumstances of the case. (Does this sound familiar?) Thus the court, as it has in deciding whether to award alimony and how to divide property, has very broad discretion in deciding who should pay attorney's fees and costs. More often than not, where both spouses are employed or receive substantial amounts of property after the court announces its decision, the court requires each spouse to bear his or her own fees and costs. What the court will do is not predictable; the most prudent approach in making your decision whether to settle or go to trial is to assume you will have to pay your own fees and costs.

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Remember that each side usually thinks it is in the right and that the other side should pay its attorney's fees and costs.

The Courtroom Experience At this point, you may be wondering, "What is it like to go to court?" This is a perfectly reasonable question since most people have never been in court. During the divorce process, you may go to court for hearings on your Orders to Show Cause for Temporary Relief that usually last 10 to 30 minutes, not including the time you may spend waiting for the hearing to start, or for trials that may last several days with two threehour sessions each day. Family Court is perhaps the most intimate of all the courts. Except for the judge and one clerk, there are usually no observers. Only you, your spouse, and your attorneys will be present if you have a contested hearing. The judge sits only a few feet away from you in a slightly elevated position. The chairs are comfortable. But you will probably be very nervous right before trial and may lose nights of sleep. It is possible that you will be cross-examined at length about every issue in dispute. Anything you previously said under oath at your deposition can be used to "impeach" (contradict) your trial testimony. It is not quite like the Perry Mason show, but often one witness gets caught in knots of contradiction or becomes very emotionally upset. It is not a pleasant experience and may destroy any chance you might have had to maintain a decent relationship with your spouse after the divorce. The effects on your child should also be considered before you decide to go to trial. Sometimes you will have no choice but to go to court for a short hearing on your Order to Show Cause (OSC) or to go to trial because of the unreasonableness of your spouse's position. Your spouse may force a trial no matter how reasonable you are. Being prepared for the emotional stress will help; be sure to discuss with your attorney what may happen at trial so you know what to expect. Your attorney will probably spend a lot of time with you to help you prepare your testimony. In several instances, generally at OSC hearings, my clients' spouses have appeared without an attorney. In almost all such cases, in my opinion, they would have benefitted from having their own attorneys

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present. The bewilderment often exhibited by unrepresented spouses in court is a predictable result of the situation. Family law and procedure are very complex, as this book attests. At trial, the plaintiff testifies first by responding to questions from his or her attorney. Documents, called exhibits, are often identified by the plaintiff and then introduced into evidence. Then the defendant's attorney will usually cross-examine the plaintiff. The plaintiff can then call experts to testify—for example, a child psychologist or an appraiser. Then the same process is repeated for the defendant. At the end of the trial, the judge may announce the court's decision immediately or take the matter under advisement. In such cases, the judge may issue a written decision or have you and your spouse return to court to hear the decision read to you.

Appeals after Trial Uncontested cases are obviously not appealed because you both agreed on the provisions of your divorce decree. After the court files its decision and decree in contested cases, you have 30 days in which to file a notice of appeal. Appealing the Family Court's decision means asking a higher court to review what happened at trial. Did the trial court follow the law properly? Did the trial court apply the law properly to the facts in your case? Very few cases are appealed, probably for one or both of two reasons: (1) An appeal entails a great deal of expense. It costs hundreds of dollars to provide a transcript of the trial proceedings (although the court does plan to videotape trials, which will cut costs dramatically because the tapes can be used on appeal) and thousands of dollars in attorneys' fees to have the briefs drafted and for the attorneys to appear at oral argument before the appeals court. No new testimony is allowed on appeals; the appeals court bases its review entirely on the record of the trial court. (2) In most appeals, the trial court's decision is upheld. Unless the trial court clearly abused its discretion, the appeals court will defer to the trial court in weighing the credibility of witnesses and all the complex evidence before it. However, if the trial court committed an error of law, the appeals court may independently review and reverse the trial court's decision. In my judgment, you should consider the trial as your only opportunity to prevail in your dispute with your spouse. But if, after trial, you

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strongly feel the need to appeal, you should discuss with your attorney the risks, costs, and likelihood for success.

Going to Court Summary 1. Negotiated agreement versus trial. You should discuss with your attorney all the pros and cons of reaching a negotiated settlement compared with going to trial. 2. What happens in court. Before going to court for any hearings, you should ask your attorney to describe clearly what will happen in court and what is expected of you there. 3. Appeals. If you are not satisfied with the trial court's decision, you should discuss with your attorney the prospects on appeal.

11 Modification and Enforcement of Court Orders the court files your divorce decree, problems may arise requiring its modification or enforcement. Sometimes these problems do not arise until years after the divorce. For example, you may become unemployed and find you are temporarily unable to pay child support. Or your child may wish to live with the noncustodial spouse on a permanent basis. Or your spouse may fail to make child support payments. AFTER

Modification of Decrees You and your spouse can always agree between yourselves to modify any terms of your decree except for provisions relating to property division, which are generally nonmodifiable. It is best to do this in writing and to file it with the court in a form best prepared by your attorney. If filed with and approved by the court, the modification is as enforceable as the original decree. However, your spouse may refuse to agree to modify the decree. In such a case, you will have to file an Order to Show Cause to be heard by the Family Court. Child Custody and

Visitation

The court will require you to show specific significant changes in circumstances that justify modification of child custody and visitation. These changes in circumstances must relate to why such modification is in the best interests of the child. The court is very reluctant to modify custody because of the ordinarily detrimental effect on the child's stable home situation. The burden is on you to persuade the court. A new social study may have to be done before the court will render a decision. You may first have to participate in mediation. In one case, John, age 11, had suicidal tendencies because of his mother's strictness and domineering personality. Only after John's

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father presented a psychological evaluation of the boy to the court did it agree to hear the father's modification request. The court then ordered its own psychiatrist to interview the child. When she confirmed the psychologist's evaluation and a social study recommended modification, the court ordered custody changed to the father. Other circumstances that may justify modification are when one parent relocates to the mainland, or if the child wishes to live with the noncustodial parent. If the child is 12 years of age or older, the court is likely to give serious weight to the child's wishes, but they constitute only one factor to be considered by the court. Or the remarriage of one of the spouses may result in a request for modification, although this factor alone is usually not enough to justify modification. To resolve the dispute, the court will probably order a social study conducted in a manner described in Chapter 5. Alimony and Child

Support

Modification may be justified if either spouse's income or expenses rise or fall significantly or your child's financial needs change. For example, one of you may become unemployed and be temporarily unable to make the payments required by the decree. Unless you agree to modify the decree, you will be liable for the "arrearage," the amount you have failed to pay. If you get into such a situation, don't hesitate to take action. In one case, the wife obtained a $45,000 judgment and a wage assignment of $400 per month (to continue for more than 10 years) because of her husband's failure to make support payments for two years, even though his financial situation had worsened. The judge himself, who ordered the wage assignment, advised the husband to file a motion to modify the decree in order to avoid more arrearage actions in the future. As to alimony, modification may be in order if the recipient has not been "rehabilitated" by the time alimony is scheduled to end, or if he or she is in poor health and requires continued support, or some similar situation. Both remarriage and cohabitation can affect alimony and child support. If your new spouse or cohabitant supports you or otherwise lessens your or your child's financial needs, a modification may be appropriate. As discussed in Chapters 5 and 6, alimony and child support include cash payments made to third parties for the benefit of your

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spouse or child, such as tuition, car expenses, medical and dental insurance coverage, and so forth. Payment for all these items may also be modified, as well as the usual form of direct monthly cash payment. Property Division Except in rare cases where the court reserves jurisdiction over division of a portion of your property, the property division in your decree is final and not subject to modification. Former spouses, however, may contract privately to modify their property division and, if certain requirements are met, may be able to enforce such contracts. Enforcement Enforcement is not difficult if your spouse is in this state and can be served with the Order to Show Cause. Your first approach should be a letter from your attorney to your spouse or perhaps a personal note or telephone call by you to discuss the problem. If this fails, don't put off filing an OSC because a prolonged delay could be raised as a defense by your spouse against your OSC action. The OSC can be served quickly by the sheriff, and you can usually get a court hearing within a week of service. Typical enforcement hearings deal with failure to pay alimony or child support, violations of child visitation schedules, and failures to pay debts or to implement provisions of the decree relating to property division, like selling the house or transfering possession or title to personal property to your spouse. The court has several remedies to choose from if it finds the offender in contempt for violating the decree. The offending spouse's wages can be assigned to make sure that payments are made in the future, or he or she can even be jailed until the court order is complied with, although this is the ultimate punishment. Under a new federal law, tax refunds can be intercepted to pay off any judgments for child support arrearages. If found in violation of the decree, the offender is also likely to be ordered to pay a reasonable amount toward your attorney's fees. Interstate Problems Enforcement of decrees when your spouse has moved to another state is a time-consuming, expensive, and frustrating problem.

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Alimony and Child

Support

There is an agreement among the states called the Uniform Reciprocal Enforcement of Support Act (URESA) that allows you to file your enforcement request here with your county attorney at little cost to you. This attorney, who is employed by your county, will then send the request to an attorney employed by the county on the mainland where your spouse resides. In effect, you testify under oath here and your testimony is sent to the mainland court which hears the enforcement motion. You do not have to appear personally in the mainland court. Although child support arrearages are enforced through URESA, some states will not enforce alimony arrearages. In any case, this procedure takes many months. In the meantime, your spouse may move again or your financial situation may worsen. An alternative that is quicker, but more expensive, is to hire an attorney in the state where your spouse resides. Your mainland attorney will then file your OSC. However, you may be required to appear at the mainland court hearing, with no assurance that your air-fare will be reimbursed. Your only other alternative will be to do nothing because it may cost more money to enforce your decree than the amount in arrears. Another alternative, where you are enforcing a Hawaii decree, is to file your OSC here and serve your spouse on the mainland by certified mail or personally. But if your spouse fails to respond, you will still have to retain a mainland attorney to enforce any order the court here issues. Child

Custody

Another act, the Uniform Child Custody Jurisdiction Act (UCCJA), exists to prevent or minimize what is called "forum shopping" by parents fighting over custody of their child. Forum shopping refers to the situation where parents flee with their children to another state and try to have that state (or "forum") decide the custody issue. All states, including Hawaii, have adopted some form of the UCCJA. When parents live in different states and one of them tries to change custody, the court has to apply the UCCJA to determine whether it can properly hear the case or whether the court in the other parent's state should hear it. The UCCJA is applied both at the time you file your complaint and at later modification or enforcement hearings.

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For example, a woman whose ex-husband had custody fled from Hawaii to California with their two children. Two months later she filed an OSC in California to modify custody. But the California court ordered the children returned here because Hawaii was the children's home state, Hawaii was the state where the original decree was rendered, and no emergency existed to justify keeping the children in California. The federal Parental Kidnapping Prevention Act (PKPA) works together with the UCCJA to minimize this type of child-snatching gamesmanship. If your child is simply snatched by your spouse without any attempt to modify custody, your spouse may be convicted of a felony, punishable by five years in prison. Under the PKPA, the Federal Bureau of Investigation can get involved. In addition, there are a number of publicly supported agencies that assist in trying to find missing children. But searching for your child is a difficult, time-consuming, frustrating, and expensive process; so, if this happens to you, be prepared for a very tense period in your life. In such cases, you should see your attorney immediately to get advice and begin proceedings to try to have your child returned.

Modification and Enforcement Summary 1. Modification in payments. Have there been any significant changes in circumstances relating to you, your spouse's, or your child's financial status that would justify modification in alimony or child support payments? 2. Modification in custody and visitation. Have there been any significant changes in your, your spouse's, or your child's life that would justify modification of custody or visitation? 3. Enforcement problems. Has your spouse violated any provisions of your agreement? If so, is it worth taking legal action to enforce the agreement? 4. Choice of forum. What state is the most appropriate one in which to seek modification or enforcement of your decree? What remedies are available to you?

12 Pre- and Postmarital Agreements and Palimony Premarital Agreements IN 1987, the Hawaii legislature enacted the Uniform Premarital Agreement Act (UPAA). The UPAA allows couples planning marriage to make agreements regarding property division, payment of debts, and alimony. If these agreements meet certain requirements, then the Family Court will enforce the agreements at the time of divorce even if the court would have ruled otherwise in the absence of such agreement. Under the UPAA, both parties must sign a zoritten agreement—it cannot be oral. The parties must agree voluntarily and not be coerced or under threat to sign the agreement. In addition, the agreement cannot be so one-sided at the time it is signed that it is what the court calls "unconscionable," and each side must first disclose his or her assets and debts to the other side (or agree not to have any disclosure). If properly drafted, each party to the agreement can severely limit the other party's claims to property and alimony at the time of divorce. Child custody and support are always subject to the court's approval regardless of the terms of the premarital agreement.

Postmarital Agreements A valid postmarital agreement, entered into after your marriage, will probably not be treated in the same way as a premarital agreement— that is, it will be only one factor to be considered by the court in property division at the time of divorce. Example: Jean, after 13 years of marriage, learns she is about to inherit $400,000 from her dying father. She has her attorney prepare a post-

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marital agreement that fully discloses to Ken, her husband, the value of the potential inheritance. He agrees to waive any interest in the inheritance, if Jean receives it, and to forego any claims in the event they divorce or she dies during the marriage. If Jean actually receives the inheritance during the marriage, holds it in her own name, and Ken does not contribute to its preservation or appreciation, it is more likely that Jean would be awarded the full inheritance and appreciation in a subsequent divorce proceeding than if there were no agreement. If Jean received the inheritance, then in effect gave Ken one-half by putting title to the marital residence purchased with the inheritance in both their names, and Ken helped increase its value, it is highly unlikely that the above agreement would be enforced. If Jean should die during the marriage, Ken could not assert his right to the "forced share" (equal to one-third of Jean's estate) or allowances against the property (see Chapter 13).

Whether the court will enforce a postmarital agreement depends on many factors: (1) Did the parties actually implement the agreement? (2) Was it fair at the time it was signed? (3) Was each party advised by an attorney? (4) Was it voluntarily entered? An obvious drawback to these agreements is that they may undermine the romantic relationship or trust that exists between you and your fiance or spouse. Art Buchwald, the nationally known humorist, wrote a column on prenuptial contracts picturing the groom and bride holding a prenuptial ceremony during which their lawyers argued about the provisions of their premarital contract. How romantic!

Palimony Hawaii does not have common law marriages. Thirteen other states, however, recognize them in situations where a couple holds themselves out as husband and wife. In effect, they are treated under the law as if they were married. But even without common law marriage in Hawaii, you still might be liable for or qualified to receive palimony. The term palimony became widely known when the California Supreme Court in 1976 decided the Marvin case, giving unmarried persons rights that are similar to the rights that the law gives to married couples. Marvin involved Lee Marvin, the well-known actor, and his female friend who lived together for six years in a marriage-like arrangement.

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Although this book is about divorce, it is appropriate to say a few words about the rights of unmarried couples. Many of you who get divorced will not jump into remarriage immediately. Some of you may never remarry having, as you say, been burned once. However, you may decide simply to live with someone. But just because you avoid the bonds of matrimony does not mean you will necessarily avoid all problems. Questions about support and property division could still arise if you split up. Therefore, you should be aware that there is an emerging body of law that grants unmarried couples certain rights, and there are some steps you can take to protect yourself. Courts throughout the country have relied upon a number of theories to allow recovery (provide for relief) where unmarried persons have lived together. In the only major case in Hawaii, the First Circuit Court in Honolulu, in 1982, held that it may award property to a woman abandoned by a man with whom she lived for 24 years. This matter was not heard in Family Court since the parties were never married. The woman had helped the man in his business, had cared for their four "illegitimate children," and performed all the duties (the Court noted) expected of a wife and social hostess. They also had represented themselves to the outside world as husband and wife. T h e court, relying on a number of theories of recovery, ruled in favor of the woman. It held that under its general equity powers, it could distribute property between unmarried persons at the termination of a long-term unmarried relationship—a "domestic partnership" —that included continuous cohabitation, pooling of resources for joint projects, and mutual assumption of rights, duties, and obligations. In addition, citing Marvin, the court found that the couple had an express oral contract, which the man violated. Finally, the court held that the woman was entitled to a distribution of property. The Circuit Court considered the same factors that the Family Court applies in deciding division of property at the time of divorce, as discussed in Chapter 8. The court awarded her one-half the value of their residence, one-half interest in two other parcels of real property, all the furniture in the residence, her personal articles and property, and a portion of their joint art collection. What if your unmarried relationship has lasted much less than 24 years and/or you did not make a pretense of being husband and wife? Perhaps you had no children. Because this is essentially an uncharted

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legal area in Hawaii, it is difficult to predict what the courts will do. Many different decisions would be possible in such instances, because of the wide variety of actual situations. Moreover, Hawaii's appeals courts may adopt any of the several recovery theories discussed above. Finally, if you decide to live permanently with someone without being married, it may be prudent to have a written agreement rather than relying on oral agreements or unstated expectations that you and your friend may share. Such agreements may be enforceable. Your attorney can assist you if you need advice.

Pre- and Postmarital Agreements and Palimony Summary 1. Should you consider a pre- or postmarital agreement? Do your circumstances justify consideration of it? Will it adversely affect your relationship with your fiance or spouse? 2. Cohabitation agreements. If you live with another person in unwedded bliss, should you consider a written cohabitation agreement?

13 Estate Planning (Wills and Trusts) ESTATE planning may be crucial at the time of divorce to assure that your property passes to those people or institutions you designate and to minimize your tax burden and probate costs. This is not a book about estate planning—there are many good ones available—but this chapter is meant to raise questions for you to consider and discuss with an attorney who specializes in this field.

Before Your Divorce What if the unthinkable happens and you die after you file your complaint for divorce, but before the court grants you a divorce? Many couples have reciprocal wills that were executed years ago, in happier times. These wills provide that if you die all your property passes to your spouse. This result may not be pleasing to you now, particularly if you prefer that other family members or a future marriage partner would receive your property. Many couples have never had wills. If you die, your property will pass according to Hawaii's laws of intestate succession. If you have no child or living parent, your spouse will receive your entire estate. If you have a child or a living parent, your spouse will receive one-half of your estate, and the others, as specified in the laws of intestate succession, will share the remainder. If you are contemplating divorce, can you do anything to ensure that in the event you die prior to your divorce your spouse will not receive any part of your property? Should you? First, you can do something before your divorce is final by having a will drafted that gives your property to those you designate. Under Hawaii law, however, even though you have such a will, as long as you remain married your spouse is still entitled to what is called an "elec-

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tive" or "forced share" inheritance equal to one-third of your net probate estate, as well as a homestead allowance of $5,000, a reasonable family allowance, and a right to take up to $5,000 of exempt property, which includes automobiles, furniture, appliances, personal effects, and so forth. Example: You and your spouse have no children and no wills, and you have filed a divorce complaint. You then execute a will leaving your $100,000 net estate to the Hawaiian Humane Society. Next day you drown at Hanauma Bay. Your spouse, who has been "disinherited" by your will, can elect to take a one-third share, or $33,333, and can also receive the homestead and family allowances and the exempt property. Note that if you had no will, by intestate succession your spouse would receive all of your estate or one-half if you had a child or at least one living parent. If you had reciprocal wills, your spouse would inherit your entire state.

Second, you can prevent the above problems by having a premarital or postmarital agreement in which your spouse waives the right to the elective share, the allowances, and the exempt property. See Chapter 12 which describes the requirements for an enforceable agreement of this kind. Often such agreements are executed before or during the marriage when you are about to inherit valuable property or you have a child from your former marriage to whom you want to leave your estate. These arrangements provide that upon your death your spouse will not assert a right to the elective share, the homestead and family allowances, and exempt property. In general, the agreement must be in writing, signed by the spouse waiving the elective share, and agreed upon after fair disclosure. In order to prevent later charges of fraud, duress, or coercion, it is prudent for each of you to have your own attorney advise you and review the agreement before you sign it. A third alternative is to reach a complete property settlement in anticipation of your divorce. However, this probably will occur after weeks or months of negotiations and a month or two before your divorce is granted. The agreement may then protect you if you die between the time your spouse signs it and the effective date of the divorce. In any event, if you do not reach such an agreement, the divorce itself will cut off your spouse's right to the elective share and the allowances.

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Planning

A fourth alternative, if you have substantial property in your own name, is to hold it in a living trust, which may protect you from your spouse's claims in the event of your death before the divorce. Should you do anything to address these possible problems? Most people expect to survive for many years after their divorce is granted. Unless your doctor has warned you of impending death, you may not want to incur attorney's fees now to prepare a will or amend your old one, which may have to be changed again after your divorce. Since it is most likely that you will live until the divorce is granted, you may decide to do nothing. However, you should weigh the costs of the strategies discussed above against the risks of your dying before the divorce and the value of the property at stake.

After Your Divorce If you have not changed your will, your divorce automatically revokes any disposition or appointment under your will of property to your former spouse. You are single again, and the law treats you, for inheritance purposes, as if you have no connection to your ex-spouse. Further, remarriage to your former spouse, if that unlikely event occurs, does not revive previously revoked provisions. So now is the time, immediately after your divorce is final, particularly if you have been awarded valuable property, to consider having a will, trust, or other estate planning device. This can assure that your estate goes to those whom you designate, with possible savings in taxes and probate costs. Talk this over with your family law attorney who can refer you to an attorney who specializes in estate planning matters.

Estate Planning Summary 1. Revising your will. If your health is failing or there is a substantial risk of your dying before your divorce is final, and if you want to minimize what your spouse might receive upon your death, you should consider revising your will or having a will or living trust prepared even before the divorce is final. 2. Estate planning, post-divorce. After the divorce, it is an appropriate time to review or prepare your estate plan, particularly if you received significant amounts of property under your property settlement agreement.

Index

Alimony, 72-84; and death, 82; definition of, 72; enforcement of, 122; modification of, 120-121; payment, methods of, 8182; permanent (after divorce) alimony, 76-81; recapture of, on tax returns, 83; rehabilitative alimony, 72, 78; and remarriage, 82; summary of, 84; tax impact of, 83-84; temporary (before divorce) alimony, 73-75; transitional alimony, 72 Appeals, 117-118 Attorneys: fees of, 115-116; need for representation by, 4-5, 7-8 Bankruptcy, 106 Bifurcated divorce, 10 Child custody, 31-48; contesting of, 47-48; enforcement of, 122-123; grandparental custody, 47; joint legal custody, 32-33; joint vs. sole legal custody, 33-36; legal custody, 31-36; modification of, 119— 120; physical custody, 36-38; social study as a factor in determining, 38-47; sole legal custody, 31-32; summary of, 48; third-party custody, 47; and visitation, 36-38 Child support, 49-67; for adult children, 49-50; and child-care credit, 54; definition of, 49-50; and dental expenses, 54; enforcement of, 122; guidelines for computing (fig. 4), 49-53, 55-67; and medical expenses, 50, 52, 54; modification of, 120-121; payment, methods of, 53; permanent (after divorce) support, 50; SOLA (standard of living adjustment), 50-52; summary of, 54; tax

impact of, 53-54; temporary (before divorce) support, 50 College expenses for children, 49-50 Complaint for divorce: answer to, 17; filing of, 12-16; sample form for (fig. 1), 14; service of process, 16-17 Contested divorce, 114-115; definition of, 10. See also Uncontested divorce Courtroom procedure and practices, 114, 116-117 Debts, 104 Domicile (permanent home), 12-13,15-16 Enforcement of decrees and orders, 121123; alimony, 122; child custody, 122123; child support, 122; interstate problems with, 121-123 Estate planning (wills and trusts), 128-130; after divorce, 130; before divorce, 128130 Filing for divorce: whether to file, 6-7; who can file, 12-13, 15-16 Financial statements, 19-27; asset and debt statement, 19-24; income and expense statement, 24-27; sample forms for (figs. 2, 3), 21-23, 25 Maintenance. See Alimony Marital residence, 96-100 Mediation, 28-30 Military personnel, special considerations of, 108-113; benefits other than retirement, 113; disability pay, 112; in filing for divorce, 13, 16, 108-109; retirement

132 benefits, 110-112; service of process problems, 109-110; Soldiers' and Sailors' Civil Relief Act, 109-110; summary of, 113; survivor benefit plans, 112-113 Modification of decrees and orders, 119— 121; alimony, 120-121; child custody, 119-121; child support, 120-121; property division, 121; visitation, 119-120 Negotiation process, 28 No-fault divorce, 9 Order to Show Cause (OSC), 17 Palimony, 125-127 Pensions, 90,95-98 Postmarital agreements, 124-125 Premarital (prenuptual) agreements, 95, 124 Property division, 85-107; and academic and professional degrees, 103-104; accumulation of property, 88; and bankruptcy, 106; and businesses, 95; community property, 86; conservation of property, 88-89; equitable division, 86-87; 50/50 rule, 86, 87,91,93-94; and gifts, 92-94; and inheritances, 92,94; jointly owned property, 91, 93-94; and marital residence, 96-100; out of state, 94; and pensions, 94-95, 100-103; and premari-

Index tal agreements, 95; and premarital property, 91-92,94; and profit sharing plans, 94-95, 100-103; respective merits of the parties, 87-88; and retirement benefits, 95-96, 100-103; and separate property, 91; and social security, 103; summary of, 106-107; tax impact of, 104-106; tax returns, 95-96, 106; types of property, 85-86; uniform starting points, 90-96 Separation, 10-11 Service of process. See Complaint for divorce, service of process Social Security, 103 Spousal support. See Alimony Tax aspects of divorce: alimony, 83-84; child-care credit, 54; child dependency exemption, 51-53; child support, 53-54; property, 104-106; tax returns, 95-96, 106 Uncontested divorce, definition of, 10. See also Contested divorce Uniform starting points, 90-96 Visitation. See Child custody, and visitation Wills and trusts. See Estate planning

Production Notes This book was designed by Roger Eggers. Composition and paging were done on the Quadex Composing System and typesetting on the Compugraphic 8400 by the design and production staff of University of Hawaii Press. The text typeface is Plantin and the display typeface is Friz Quadrata Bold. Offset presswork and binding were done by Malloy Lithographing, Inc. Text paper is Glatfelter Offset, basis 50.