Recently in Alimony Category


Reduced Earning Capacity Difficult to Prove in Alimony Cases

In the case titled Fields v. Fields, E2012-02406-COA-R3-CV, Slip Copy, 2013 WL 6858383 (Tenn. Ct. App. Dec. 27, 2013), Knoxville divorce attorneys learn whether it is appropriate for a downward departure in regards to alimony in futuro when a party alleges inability to maintain an earning capacity due to an injury.

Facts

Husband and Wife were granted a divorce in which the trial court ordered alimony in futuro (hereinafter "alimony") of $1,100.00 per month to Wife. Because husband was temporarily out of work due to a knee surgery, the court suggested the parties negotiate or return for a hearing once Husband returned to work to set a new alimony amount commiserate with his income.

After the divorce was final and the Final Order was entered, Husband returned to work for a period of one year and five months until he had to undergo another knee surgery. After the surgery, Husband never returned to work. Husband filed a motion asking for a reduction of the alimony. Wife countered with a motion to increase the alimony payments.

A bench trial was held in which Husband admitted he made a "conscious decision not to return to his previous line of work." He advised that in addition to the knee injury he also broke his wrist while working. He claimed $1,600.00 in monthly expenses and that his only income was disability payments. He also averred he was making the alimony payments to Wife via credit card advances. Wife averred she had been working since the divorce was final, and made $9.00 to $10.00 per hour working full-time hours. She stated she had to refinance the marital home that was awarded to her in the divorce and obtained an "interest only" loan in order the keep the house. She claimed $4,795.00 per month in expenses, excluding health insurance.

The trial court denied Husband's motion to reduce the alimony averring, "the decisions made by [Husband] relative to his employment are unreasonable and have not been made in good faith."
It further ruled Husband had not proven an inability to work. In its decision, the trial court granted Husband a six month deferral period at the end of which he was to pay alimony in futuro of $2,000.00 per month to Wife.

Husband filed a motion to alter or amend the judgment. He pointed out a VA "exam note" that stated Husband "could not possibly work a construction site" due to his knee surgeries. He also presented an affidavit certifying his disability rating of 100% from March 2011 to May 2012, with an automatic reduction to 40% after May 2012. Husband stated that this information and his recent surgeries constituted a material change of circumstances, because he could no longer work in his former profession and that this justified a reduction in his alimony obligation.

Based on Husband's information the trial court granted the motion to reconsider, and found Husband had established a level of impairment to his knee and hand which warranted a reduction of the alimony obligation during his period of unemployment. However, it further found Husband did not provide sufficient evidence to warrant a downward modification. It affirmed its judgment and ordered Husband to pay Wife $2,000.00 per month in alimony effective June of 2012. Husband appealed.

Analysis and Conclusion

On appeal the appellate court had to determine if Husband's disability rating and recent surgeries constituted a substantial and material change in circumstances to warrant a downward deviation on his alimony obligation, and whether the trial court abused its discretion when it increased Husband's alimony obligation when Wife's circumstances had not changed since the divorce was final.

According to Tenn. Code Ann. § 36-5-101(a)(1) (Supp. 2000), a court may not modify or terminate a spousal support judgment unless it is found that a substantial and material change in circumstances has occurred subsequent to the entry of the original support decree. A change in circumstance is deemed to be material when: (1) "occurred since the entry of the divorce decree ordering payment of alimony," Watters v. Watters, 22 S.W.3d 817, 821, 821 (Tenn. Ct. App. 1999), and (2) was not "anticipated or [within] the contemplation of the parties at the time they entered into the property settlement agreement," Id. A change in circumstances is considered to be substantial when it significantly affects either the obligor's ability to pay or the obligee's need for support. Bowman v. Bowman, 836 S.W.2d 563, 568 (Tenn. Ct. App. 1991).

After reviewing the trial court's record, which indicated Husband had more than enough income over and above his expenses (to the tune of $80,000 per year) to cover the alimony obligation imposed by the court, the appellate court found the trial court was accurate in its summation of the legal facts of the case. At the end of the marriage, Husband made over $100,000.00 per year and drew another $1,200.00 per month in military disability benefits. It further found Husband was not actively seeking employment, but was still employable and capable of earning a comparable income that he enjoyed during the marriage.

As far as Husband's argument against the increase the trial court awarded Wife in alimony payments, the appellate court found no evidence that preponderated against the trial court's decision. It was pointed out by the trial court at the time of the original award of $1,100.00 per month, that the court understood and knew that this amount was low due to Husband's unemployment and advised the parties when he became employed again to negotiate a new amount or return for the court to have a hearing on the matter. Husband did return to work until he required another knee surgery after which he never returned to work again. The trial court noted Husband did not give any factual reason for his lack of employment, and pointed out the note in Husband's VA file was from a physician's assistant, not his doctor. In fact, it was reasoned that Husband's decision not to return back to work actually constituted a material change in circumstance that would justify an upward modification as opposed to a downward modification to match his prior earning capacity. Therefore, the trial court's opinion was affirmed and costs for the appeal were taxed to Husband. The case was remanded back to the trial court for the enforcement of the judgment.



Long-Term Alimony Award Upheld Despite Lack of Documentation at Trial

October 15, 2013 by The McKellar Law Firm, PLLC


In the case titled Parrish v. Parrish, No. W2013-00316-COA-R3-CV (Tenn. Ct. App. June 21, 2013), Knoxville divorce attorneys learn when 1) disadvantaged spouses are entitled to in futuro alimony and 2) awards are not solely determined by proper documentation or benefits obtained from the distribution of marital assets.

Facts
The parties of the case were married in December 1982. Husband filed for divorce in June 2010. Wife did not answer the complaint and Husband moved for a default judgment and was granted a divorce by the Chancery Court in September 2010. Wife filed a motion to set aside the divorce in October 2010 and filed a counterclaim for in futuro alimony. The court granted Wife's motion and set the original judgment aside. At that time the parties agreed on an equal division of most marital property and debt. However, a settlement could not be reached on the distribution of Husband's retirement account and alimony. The parties' pursuit of the case stalled until the court ruled that the case would be dismissed if an agreement was not reached in a timely manner. Wife filed a motion for non-dismissal and requested that alimony be granted. The Chancery Court granted the divorce and awarded Wife in futuro alimony in the amount of $850.00 per month based on the length of the marriage, physical and mental health of Wife, disparity of earning potential and education levels, and no means of feasible rehabilitation by Wife to sustain a standard of living above poverty. Husband appealed the trial court's decision on the grounds that the ruling was based on the lack of documentation substantiating Wife's inability for rehabilitation and did not consider the sizable monetary relief that was awarded to her by the distribution of marital assets.
Analysis and Conclusion
Husband averred the trial court was in error when it awarded Wife alimony in futuro. He argued that the court ruled without the proper documentation that supported the need for the specified amount and length of alimony. He also stated the lower court granted the in futuro alimony without regard to the sizable monetary relief that Wife obtained through the distribution of martial assets. The trial court based its decision on the following facts: that the parties had been married for 29 years; that the husband was gainfully employed as a skilled laborer; Wife had been a stay at home parent for the majority of the marriage; Wife, when employed outside the home, had earned a meager income; Wife suffered from physical and emotional ailments that prevented her from being employed; and by her own, undisputed testimony that she relied on the assistance of family members for housing, government food assistance and by "begging" for the basic needs of survival. Husband did not dispute any of Wife's circumstances. While important, it was not necessary for the evidence to be officially documented in order for in futuro alimony to be awarded. The undisputed testimony Wife outlined the need for the requested alimony. Husband had the ability to provide and the divorce action should not decrease Wife's standard of living. The trail court's decision was appropriate based on the individual needs and circumstances of the disadvantaged spouse under the required guidelines. The Court of Appeals held the opinion that the lower court did not err in its discretion by awarding the type or amount of alimony to Wife. Therefore, the Court of Appeals affirmed the trial court's decision.

Rehabilitative Alimony May Be Modified Post-Divorce if Economic Rehabilitation Not Feasible

September 4, 2013 by The McKellar Law Firm, PLLC

In the case titled Owens v. Owens, No. 2012-01186-COA-R3-CV 2013 Slip Copy, WL 3964793 (Tenn. Ct. App. July 30, 2013) Knoxville divorce attorneys learn when it is appropriate for a rehabilitative alimony award to be modified to alimony in futuro.

Facts: Husband and Wife were married 25 years and divorced in 2004. As part of the divorce, Wife was awarded rehabilitative alimony. An appeal of the trial court's decision resulted in a change to the original division of marital property and increased the amount and duration of the alimony through November 2012.

In 2009, Wife filed a petition requesting the court to increase her alimony or change the award to alimony in futuro. To support her argument, Wife asserted she was unable to support herself selling real estate or teaching yoga classes. She averred she had to increase her credit card debt and borrow money from family in order to pay her living expenses while Husband had fewer expenses and a more disposable income.

A trial was held on Wife's petition in 2011. At the time, Wife was 62 years old. Wife provided proof to the court of her attempts to support herself through selling real estate and teaching yoga. She provided evidence of real estate classes and renovation bills to turn her pool house into a yoga studio. When this did not work, Wife rented the pool house for $700 a month. However, her mother became ill and was unable to pay for in home care, so Wife let the tenant go to allow her mother to move in so she could care for her. As further proof of her financial dilemma, Wife introduced a statement of monthly income and expenses an increase from the statement included with her original petition of more than $3,000 per month. These expenses did not include a mortgage or car payment as both were already paid in full.

In 2012 the trial court issued its Memorandum and Order denying Wife the relief she sought citing that she did not meet the preponderance of evidence standard. It further stated that Wife did not exhaust all reasonable efforts to support herself. However, the trial court did find Wife to have a need for continued alimony and kept her current award in effect. Wife appealed this decision.

Analysis & Conclusion: In the case a bar, Wife sought to extend her rehabilitative alimony or convert it to alimony in futuro. Tenn. Code Ann. § 36-5-121(c)(2) states that the court has discretion to control the duration, increase, decrease, termination, modification, or extension of rehabilitative alimony. It further states that the burden of proving reasonable efforts lies on the receiving party in order to show the court a need for an extension or increase of same.

The Tennessee Supreme Court has added that once an award of alimony has been made, it can be modified if it is shown to the court that the receiving party's prospects for rehabilitation have materially changed. If it is deemed by the court that the party cannot feasibly rehabilitate, the trial court can convert the alimony award to alimony in futuro. The standard for rehabilitation, as provided by Tennessee statute, requires the disadvantaged party, through reasonable efforts, to reach an earning capacity that permits the party to enjoy a reasonably comparable standard of living to that which was enjoyed when married. The Tennessee Supreme Court has also explained that a material change in circumstances occurs when an unanticipated change happens after the initial award has been granted by the court.
In this case, the trial court found that Wife had a continuing need for alimony and limited job skills. The appellate court agreed with these findings. At trial, it was learned that Husband earned a significant income and had the likelihood of continuing to earn same. Wife had not worked outside the home since 1980.

In considering these factors, the appellate court found Wife to have made reasonable efforts to rehabilitate by selling real estate, but, due to the market, she was unable to do so. It also considered her age and skill set and found that she did not have the capacity to earn a living comparable to that which she enjoyed when married. Therefore, it was determined that the modification from rehabilitative alimony to alimony in futuro was appropriate and within the court's discretion.

However, when looking at Wife's assets, the appellate court saw that Wife was awarded a partial interest in a real estate company that had the potential to produce rental income. It was also found that when Wife's mother moved in with her, Wife could then rent her mother's home for additional income.

For these reasons the appellate court modified the alimony award to alimony in futuro, and modified the amount from $3,000 per month to $2,000 per month.


Recent Case Highlights Differences Between Alimony In Futuro vs. Alimony In Solido in Tennessee

In the case titled Holt v. Holt, No. W2012-00265-COA-R3-CV, 2013 WL 1577831 (Tenn. Ct. App. Apr. 15, 2013) Tennessee divorce attorneys learn the parameters for alimony in futuro and alimony in solido in Tennessee divorce matters.

Facts: Husband and Wife founded a large church in Memphis. The church grew throughout the marriage and at the time of the divorce was housed in a multi-million dollar facility. Both parties were well-educated. Husband filed for divorce in 2009; however, the case was dismissed for failure to establish grounds. In 2010, Husband re-filed. Wife requested temporary spousal support which the divorce referee awarded in the amount of $3,300 per month. The referee also ordered Husband to continue paying the marital bills. The trial court agreed and entered an order.

After litigation for over a year, Husband and Wife agreed that grounds for divorce existed pursuant to Tenn. Code Ann. § 36-4-129(b) upon stipulated grounds. After several bifurcated hearings, the trial court entered its final decree of divorce. The court decreed the following: Wife was awarded $274.82 per month of Husband's pension; Wife was awarded alimony in solido in the amount of $29,700 due to Husband's failure to make mortgage payments on the marital residence; Wife was awarded alimony in futuro in the amount of $2,500 per month; Husband was ordered to pay half of Wife's attorney's fees; and the court rejected Wife's request for Husband to pay for her COBRA insurance benefits. Both parties filed appeals.

Analysis and Conclusion: On appeal Husband argued that the trial court erred in awarding Wife alimony in solido in the amount of $29,700 and alimony in futuro in the amount of $2,500 per month. Conversely, Wife asked the court to review whether the trial court erred in not requiring Husband to pay for her COBRA benefits and only ordering Husband to pay half of her attorney's fees. She also argued that the trial court erred in not considering income generated through the church based on the theory that the church was an "alter ego" of Husband when determining the amount of alimony and the distribution of the marital estate.

In addressing Wife's "alter ego" argument, the trial court averred that Wife did not cite any applicable laws or make any legally based argument to support her position in her brief. The court cited Forbess v. Forbess, 370 S.W.3d 347 (Tenn. Ct. App. 2011) which determined that if a party does not cite to an authority or detail an argument in its brief then the issue is considered waived. Because there was no legal authority or argument contained in Wife's brief to the Court to support her position, the issue was waived.

Next, alimony in solido is a form of long-term support that can be paid in a lump sum so long as there is a definite term. Tenn. Code Ann. § 36-5-121(h)(1). This type of alimony is considered a final judgment and is only modifiable by agreement of the parties. Wife was awarded alimony in solido in the amount of $29,700 which equaled nine (9) months of mortgage payments that Husband did not pay resulting in the marital home's foreclosure. The trial court provided that Husband could pay this amount in installments of $500 per month with no interest until the balance was paid.

In determining if the alimony in solido awarded to Wife for the missed mortgage payments was a proper judgment, the Court of Appeals averred they could not find any support for the trial court's finding. During trial, Wife neither asked the court to award her monies for the missed mortgage payments, nor was there any indication in the trial court's record that the award was an attempt to adjust distribution of the marital estate. The appellate court determined there was no basis to award wife the $29,700 as alimony in solido. Therefore, the judgment was reversed and remanded. The other portion of alimony in solido awarded to Wife for her attorney's fees was determined to be within the trial court's discretion and, therefore, was affirmed.

According to Tenn. Code Ann. § 36-5-121(f)(1), alimony in futuro is appropriate in matters where a disadvantaged spouse with "reasonable effort" is unable to earn an income that would permit a standard of living commiserate with that of the standard of living during the marriage. Courts look at several factors in determining if a spouse is "disadvantaged" such as: education, financial resources and obligations, duration of marriage, minor children of the marriage, standard of living during the marriage, fault of the parties, physical condition of the parties, assets of the parties, etc.

Here, the parties were ages 64 and 57 respectively at the time of the divorce. Both had some minor ailments, but were in good physical condition. The couple was married for 24 years with Wife working alongside Husband to grow the church they started in 1989. While both parties were similarly educated, Husband had an income of $9,000 per month; however, Wife was fired from her position in the church in January 2010 and had not gained other employment. During the marriage the couple enjoyed an income as high as $13,000 per month which the court deemed Wife would not be able to replicate. The appellate court found that the trial court correctly determined Wife had a need for support and affirmed its ruling on the award of alimony in futuro in the amount of $2,500 per month.

In regards to the COBRA insurance, Tenn. Code Ann. § 36-5-121(k) allows a court to order a party to pay health insurance premiums, "in whole or in part," for as long as the court deems necessary and the award is deemed a formed of alimony. Based on this statute the appellate court found that the trial court did not abuse its discretion in its refusal to order Husband to pay Wife's COBRA premiums and affirmed the ruling.



Taking "Loans" While Self-Employed Will Be Viewed as Income (and Will Not Lower Your Alimony in Tennessee)

In the case titled Harkleroad v. Harkleroad, No. E2012-01804-COA-R3-CV, 2013 Tenn. App., WL 1933024 (Tenn. Ct. App. May 10, 2013) Knoxville divorce attorneys learn that not all income changes qualifies as a "material change in circumstance" in order to modify alimony.

Facts: Husband and Wife filed for divorce after forty (40) years of marriage. At the time of the divorce, the children of the marriage were over the age of eighteen (18) years. Wife alleged adultery while Husband alleged Wife was "verbally and mentally cruel to him." Wife requested spousal support. The court found her earning potential to be $14,000-$16,000 per year; Husband was assessed an earning potential of $60,000 per year. The court divided the martial estate and ordered Husband to pay wife alimony in futuro in the amount of $1,300 per month and to provide Wife's medical insurance. The court stated Wife needed the spousal support to make the mortgage payment on the marital home which she kept as part of the divorce.

In 2012 Husband petitioned to modify the alimony and medical insurance obligation arguing a "material change in circumstances." Husband alleged he had not received a paycheck from his insurance company (of which he was the sole stockholder) since 2009 and was solely living off his Social Security income. He averred that Wife never got a job as the lower court ordered, she refinanced the home prolonging the payments, and she now received Social Security income.

Income statements were submitted by both parties. The Husband's showed a loss of $1,574 per month; Wife's showed a net income of $149.19 per month. Husband testified that he received $1,660 per month in Social Security benefits and retirement income. He claimed he had not received income from his insurance business since 2009, however; he conceded that the business covered its expenses and provided him with personal loans over the years with the most recent loan being three (3) years after his divorce from Wife in the amount of $106,000. He averred that this loan was used to pay Wife's medical insurance premiums and alimony payments. Husband agreed that his business' appraisal value was $268,000, but he argued that he owed the company $260,000. Husband also admitted to obtaining personal loans from friends and family in the amount of $34,000.

Husband stated that the purpose of the alimony in futuro was to assist Wife in paying the mortgage on the marital home which was awarded to her in the divorce and that the mortgage should have been paid off in 2010, but Wife refinanced the home which extended the payment for another 30 year mortgage term. Wife rebutted that she was not working at the time she refinanced the home, and the alimony payments were not enough to cover the mortgage and her living expenses. She averred that the refinance of the home lowered her mortgage payment to $490 which allowed her to remain in the home.

Wife stated that she had been employed as a substitute teacher but had injured her back rendering her unable to work. In response to her costly medical insurance premiums, Wife explained that she had to have several operations on her back. Wife testified to the court that she was eligible and intended to apply for Medicare which would reduce the cost of her medical insurance premium to $98 per month.

In regards to Husband's income, the lower court found that the loans he received from his business were income as was his Social Security benefits. Therefore, it reasoned, Husband had the ability to pay the alimony in futuro in the amount of $1,300 per month and further ordered him to pay an additional $400 per month to pay his arrearage of same. It was also ordered that Husband pay Wife's Medicare premium in the amount of $98. Husband filed an appeal.

Analysis: On appeal Husband asserted that his entire estate was dissipated by the alimony in futuro and medical insurance premiums awarded to Wife in the divorce. He further asserted he had not received any income from his business since 2009. Wife argued that Husband did receive income from his business through loans instead of a traditional salary; therefore, the lower court's opinion should be affirmed.

The appellate court found that Husband reported an income of $20,000 from his company at the time of the divorce. That income would amount to approximately $1,666 per month. The court found that while Husband no longer received said income his Social Security benefits were almost exactly the same amount, therefore; his income had not drastically changed. It further averred Husband chose to take loans against his company instead of a salary, so, while he did not have a salary, he did have income from the business. In regards to Wife, the appellate court found her ability to work had drastically declined since the divorce was finalized and her Social Security benefits were "not commensurate with her imputed income at the time of the divorce."

Conclusion: The appellate court found the lower court did not abuse its discretion in finding that Husband did not prove a "material change in circumstance" in order to dictate a modification of the alimony in futuro obligation. The lower court's opinion was affirmed.


The Importance of Preserving the Record for Appeal (and the Importance of Having a Divorce Attorney)

April 28, 2013 by The McKellar Law Firm, PLLC

In Higgins v. Higgins, No. E2012-01376-COA-R3-CV (Tenn. Ct. App. April 16, 2013), Tennessee divorce attorneys learn the importance of preserving the record for appeal; if there is no record, the Court of Appeals must presume that the trial court's findings and conclusions are correct. Also, Tennessee family lawyers also learn that a party's decision to represent himself or herself pro se are not an excuse for failing to preserve the record.

The facts of the case are as follows: In 2010, Wife and Husband separated after twenty years of marriage; Wife subsequently filed for divorce. Husband was provided with an additional thirty (30) days before trial to acquire a new attorney after his former attorney withdrew from the case; however, he declined to do so, instead choosing to represent himself pro se. The parties then attended trial to address remaining issues of property division. At trial, it was clear to the trial court that the parties had similar health, financial resources, earning capacity, and ages. Also, the trial court noted that the marriage was long-term, and that the parties did not have any separate property. Accordingly, the trial court fairly equally divided the parties' property ($34,000 to Husband and $38,000 to Wife) and expressed its opinions in a memorandum opinion.

Testimony revealed that Wife's $50,000 gift and a prior sale of a residence that was in the name of both Husband and Wife was the source of funds by which the parties acquired their marital residence. The court granted this residence to Wife "subject to the first mortgage as well as two-thirds of the home equity line of credit (HELOC)," and determined that it was a marital asset. Husband was responsible for the remaining one-third of the HELOC. After trial, Wife filed a motion requesting that the court amend the memorandum opinion to elaborate on other matters; the court made amendments and entered a divorce decree and final judgment at a second hearing, which Husband declined to attend. Husband then filed a motion to amend, alleging that the court's initial memorandum opinion differed from the final decree. The trial court only made a few amendments to the final judgment. As such, Husband filed this appeal, claiming that the court improperly classified the marital residence as separate property and that the division of the marital property was inequitable because the trial court failed to account for his "substantial" debt. He also alleged that the trial court wrongfully awarded alimony to Wife.

On appeal, the Court of Appeals addressed the following issues: (1) "Did the trial court err in its classification of the parties' property and did the court err in failing to equitably divide the marital estate?" and (2) "Did the trial court err in amending the final order to include an award of alimony?"

Regarding the classification and division of property, the Court of Appeals found that the trial court properly classified the home as a marital asset and that the trial court averred that Husband did not provide evidence of his alleged debts; since Husband presented no record, the Court had no basis on which to challenge the trial court's position. Finally, the Court found that neither the trial court's memorandum opinion nor amendment reflect any alimony award; the amount was purely an attempt to allocate the mortgage debt between Husband and Wife.

The most important aspect of this case is that the Court of Appeals noted that Husband entirely failed to provide a record of trial, and that his self-representation was not an excuse for his failure to do so. The Court warned that appellants are responsible for "prepar[ing] a record which conveys a fair, accurate, and complete account of what transpired in the trial court with respect to the issues which form the basis of the appeal." If they fail to do so, then the appellate court is required to "assume that the record, had it been preserved, would have contained sufficient evidence to support the trial court's findings."


Recent Case Shows How Negative Behaviors Can Impact Your Divorce


In this case titled Thomas v. Thomas, No. M2011-00906-COA-R3-CV (Tenn. Ct. App. March 6, 2013), the Court of Appeals found that the trial court did not err in their findings on the income used to set Wife's alimony and child support. Tennessee divorce attorneys learn that a spouse who is inconsistent about stating their income, fails to account for a dissipation of a child' college fund, and takes revengeful actions such as shutting off power and water to the marital home runs the risk of the divorce court deciding many aspects of the case in the other spouse's favor.

The facts of the case are as follows: Husband and Wife were married in April 1994 and had two children during the marriage. Wife filed for legal separation from Husband in June 2009; the couple attempted an unsuccessful reconciliation in October 2009; Wife moved to reinstate her legal separation petition in March 2010. Husband and Wife had several hearings regarding occupation of the marital home, payment of household bills, child support/alimony obligations, and visitation with the children. An order was entered by the court stating specific findings about Husband's truthfulness, the amounts he had paid or failed to pay (specifically regarding the mortgage), and ordered that Wife could remain in the marital home pending further court orders.

The final order for divorce entered by the trial court named Wife as primary residential parent and adopted Wife's Proposed Parenting Plan. "In part, the court based its custody decision on the limiting factors of neglect or substantial nonperformance of parenting responsibilities (Tenn. Code Ann. § 36-6-406(d)(5)). The court found Husband and Wife to be underemployed with Husband's income at $60,000 per year and Wife's at $24,000 per year. Husband was ordered to pay $862 per month in child support, $350 per month in alimony with this amount to increase to $550 per month to begin on April 1, 2012. Wife was also awarded alimony in solido by way of Husband's retirement account. Husband appealed the trial court's findings.

Analysis & Findings: Under Tenn. Comp. R. & Regs. 1240-02-04-.04(3)(a)(2)(i), it is appropriate to impute income for the purpose of setting child support payments when "(1) a parent has been determined to be willfully and/or voluntarily underemployed or unemployed..." The determination of whether a party is willfully and voluntarily underemployed is a question of fact, and the trial court has considerable discretion in its determination. Taking into consideration the obliging parents educational level and/or previous work experience, determining whether he/she is willfully and voluntarily underemployed, the trial court must make a finding on their potential earnings. However, it is not presumed that the parent is willfully and voluntarily underemployed or unemployed, the burden lies on the party accusing such. Brewer v. Brewer, No. M2005-02844-COA-R3-CV, 2007 WL 3005346 at *8 (Tenn. Ct. App. 2007).

Wife entered income tax returns of Husband's with an income as low as $74,500 in 2005 to $131,097 in 2003. Husband did not submit any tax returns but testified that his income for 2010 was approximately $2,000 per month. To contest Husband's testimony, Wife produced a credit card application in which Husband reported he made $85,000 per year. After reviewing the record, the appellate court affirmed the trial court's finding of Husband's imputed income of $60,000 for purpose of setting child support and the amount awarded and alimony obligation.

Husband contended using his past behavior to determine the residential schedule and adopting Wife's proposed parenting plan was error by the trial court. The Wife's proposed parenting plan allowed him 85 days per year with his children. The factors in Tenn. Code Ann. § 36-6-404(b) must be considered when figuring the child's residential schedule and determining the primary residential parent. Tenn. Code Ann. 36-6-406(a) gives the court power to limit the child's time with the nonresidential parent "based upon a prior order or other reliable evidence that certain circumstances ... exist to justify imposing a limitation on parenting time." Jernigan v. Jernigan, No. M2011-01044-COA-R3-CV, 2012 WL 1357558, at *4 (Tenn. Ct. App. Apr. 16, 2012).

The trial court cited Husband's "abusive use of conflict" as a reason for limiting his parenting time. Examples of this behavior includes his posting intimate photos of Wife on the internet, his shutting off the electricity and power to the marital residence, and his liquidation of the children's college funds while the litigation was ongoing. The trial court also took into consideration a beer commercial he sent to his daughter and his continued self-absorbed acts. The appellate court reviewed the trial court's record and found no reason for the trial court not to adopt Wife's parenting plan. The decision was affirmed.

Husband argued that awarding Wife his retirement account was not an equitable distribution of marital property. The trial court awarded the account to Wife as alimony in solido. "A reviewing court will find an abuse of discretion only if the trial court 'applied incorrect legal standards, reached an illogical conclusion, based its decision on a clearly erroneous assessment of the evidence, or employ[ed] reasoning that causes an injustice to the complaining party.'" Konvalinka v. Chattanooga-Hamilton Cnty. Hosp. Auth., 249 S.W.3d 346, 358 (Tenn. 2008).

In its determination of alimony in solido, the trial court considered Husband's inability to account for the children's college funds as its basis. The trial court also stated the alimony in solido was used as an alternative to awarding Wife accrued alimony and medical expenses owed by Husband. In reviewing the evidence, the appellate court found that the trial court did not abuse its discretion in awarding Wife alimony in solido by way of the retirement account and affirmed the decision.


Alimony in Futuro Not Appropriate Where Spouse Has Some Education and Work Skills

March 27, 2013 by The McKellar Law Firm, PLLC


In this case titled Hatfield v. Hatfield, No. M2012-00358-COA-R3-CV (Tenn. Ct. App. Feb. 7, 2013), Tennessee divorce attorneys learn that the trial court erred in awarding alimony in futuro due to Wife's education level and ability to work, and that the award of almost all the value of the marital property to Wife was not equitable.

The facts of the case are as follows: Wife filed a complaint for divorce in March 2011 alleging adultery by Husband after twenty-four (24) years of marriage, for most of which Wife was a stay-at-home mother. The couple had three children born of the marriage. At the time of filing the initial complaint, the oldest child had reached the age of majority.
In April 2011, the trial court ordered Husband to pay temporary child support in the amount of $1,422.00 per month and temporary spousal support in the amount of $1,422.00 per month. He was also ordered to continue paying the parties' main household bills such as utilities and a home equity line of credit. The trial court allowed him to use his 401k account, but only "for the purpose of paying child support and temporary alimony." The following month the trial court allowed Husband to withdraw $5,000.00 for his attorney fees and expenses and $5,000.00 for Wife's attorney's fees and expenses from the 401k account.

In November of 2011, the divorce hearing was held over a two day period. After the hearing, the court entered a memorandum opinion regarding the permanent parenting plan and the division of marital property. In this opinion, the court proposed that Wife remain the primary residential parent and found her income to be zero. Husband subsequently filed a motion objecting to the court's proposed final order. In the court's ruling on this motion, it stated that it was not the court's intent to award alimony in solido to Wife. Instead, received a larger portion of the marital property in lieu of said alimony in solido. Wife had a need of $2,300.00 per month; however, Husband only had the ability to pay $1,500.00 per month. The court reasoned that there were no assets that could justify an award of alimony in solido.

The final decree for divorce was entered in January of 2012. Wife was granted the divorce on grounds of adultery and awarded alimony in futuro in the amount of $1,500.00 per month. Wife was also awarded the equity in the marital home totaling $242,227.00 and the remaining 401k balance of $40,872.12. The court again stated that it was awarding wife a larger portion of the marital property because Husband could not afford to pay Wife's need. Husband appealed the decision arguing that the trial court erred in its division of the marital property and in awarding Wife alimony in futuro instead of transitional alimony or no alimony at all.

Analysis: In considering Husband's appeal, the appellate court stated that an equitable division is not necessarily an equal division. According to Husband's calculations, the trial court awarded Wife 99% of the marital property; Wife's calculations showed 96.5%. Wife asserted that Husband dissipated marital assets by withdrawing money from the 401k account which bumped his share of the marital property to 21%. The appellate court rejected this argument due to the ruling of the trial court that allowed him to make withdrawals to pay his and Wife's attorney fees.

In regards to the marital property, the appellate court agreed with the trial court's strategy in treating wife as a disadvantaged spouse. However, it disagreed with the "extreme disproportion in the percentages awarded to the two spouses." The appellate court modified the property division awarding Husband the 401k balance and allowing Wife to retain the equity in the marital home.

In considering Husband's argument regarding alimony, the appellate court stated that the trial court erred in its calculations of Husband's ability to pay $1,500.00 per month in alimony. It reasoned that Husband's statement of income showed monthly expenses of $4,892.00 and his monthly income as $4,982.46. Subtracting the child support obligation of $1,357.00 and the alimony at the trial court's ruling of $1,500.00 left Husband with only $2,125.00 toward his monthly expenses. The appellate court averred that the evidence preponderated against the trial court's finding that Husband had the ability to pay the $1,500.00 in alimony in futuro. It modified Husband's obligation to $1,200.00. It also found that the trial court erred in awarding the alimony as in futuro. It stated that Wife had completed some college and had a real estate license which she could eventually use to support herself in the workforce. Therefore, the appellate court modified the alimony in futuro to transitional alimony for a period of five (5) years.



Rehabilitative Alimony Is Modifiable By Definition in Tennessee

March 11, 2013 by The McKellar Law Firm, PLLC

In the case of Finchum v. Finchum, No. M2012-00975-COA-R3-CV, WL 17155CV (Tenn. Ct. App. Feb. 13, 2013), Tennessee divorce attorneys learn that rehabilitative alimony is modifiable when a substantial and material changes of circumstances can be shown.

Facts: In May of 2009 Husband and Wife divorced after a ten year marriage, during which they had two (2) children. The Marital Dissolution Agreement ("MDA") awarded Wife rehabilitative alimony of $1,000 per month for thirty (30) months to terminate in June 2012 or upon Wife's death. In September 2009 an Amended MDA was entered and approved by the court. In the pleading, Husband agreed to extend his alimony payments by six months.

In September 2010 Husband filed a Petition to Modify seeking to terminate his alimony and modify his child support payments based on Wife's remarriage and her increased income. Wife filed an Answer and Counter-Petition alleging Husband was in contempt for unilaterally terminating his alimony payments in April 2010. Wife then filed a Motion for Partial Summary Judgment asking the court to deny Husband's request to terminate his alimony obligation. Wife asked the court to award her the outstanding alimony payments, her attorney's fees, and to find Husband in Contempt. The trial court granted Wife's Motion for Partial Summary Judgment and found that the alimony was contractual in nature and, therefore, un-modifiable. In the Final Order issued in April 2012, the trial court found Husband in contempt for unilaterally stopping the alimony payments prior to filing his Petition and awarded Wife $5,200 in attorney's fees. Husband appealed the trial court's decision.

Analysis and Conclusion: The Appellate Court referred to Tenn. Code Ann. § 36-5-121(e)(1) which provides that rehabilitative alimony is modifiable at any time by the court. It surmised that the trial court must have determined the alimony awarded to Wife to be in solido alimony, which is not modifiable, instead of rehabilitative alimony. Because both the MDA and Amended MDA in the case at bar referred to the alimony as rehabilitative, the Appellate Court concluded that the alimony was modifiable. It remanded the case back to the trial court to determine if Husband could prove a substantial and material change in Wife's circumstances to warrant a termination or modification of the rehabilitative alimony as of the date of the Petition (September 1, 2010).


Careful! Exaggerating Expenses for Alimony Purposes Can Backfire

January 25, 2013 by The McKellar Law Firm, PLLC

In the case of Willocks v. Willocks, No. E-2012-00378-COA-R3-CV (Tenn. Ct. App. January 10, 2013), Tennessee divorce attorneys are shown some potential ramifications of dissipating the marital estate and filing false expense affidavits, as well as an example of when property can be classified as separate (and therefore not subject to equitable distribution) even when acquired during the marriage.

Facts: The parties married in 1994, and Husband brought substantial separate inherited assets to the marriage. Wife worked for about 6 years, earning about $30,000 per year. Husband filed for divorce in 2008 after a separation that began in 2007. Husband began paying Wife $2,000 of temporary spousal support in July 2009. The trial court awarded Wife retroactive alimony of $12,000 upon her motion showing $700 of monthly income and $4,400 in monthly expenses. At trial, Wife amended these numbers, claiming $2,600 in expenses and $934.00 in income per month. After the trial, the court entered a Memorandum Opinion, finding that Wife's affidavits were untruthful and she had "secretly and fraudulently" spirited away $100,000 of marital assets. The court awarded Wife marital assets of $383,848 (including the $100,000)and Husband was given $257,206 of marital property and separate property worth $685,100, including an AIG annuity. The court also awarded Wife $900 per month of alimony in futuro, to continue until one party's death or Wife's remarriage or cohabitation.
Issues: Wife argues that the alimony award was improperly low and Husband argues the amount was too high. Secondly, Wife argues that the annuity should have been deemed marital property.

Analysis: Regarding the award of alimony, the trial court must look to the factors found at T.C.A. §36-5-121(I)(1-12). The two most important factors are the disadvantaged spouse's need and the payor's ability to pay. The parties' income in 2006 was over $500,000, which came from Husband's inherited interest in his family's business and estate. When the trial occurred, those assets were not producing income, as the estate had been closed and the business hadn't paid a dividend in three years. The trial court made an important finding that these assets could not maintain the previous standard of living. The court also found Wife's affidavit of expenses was not accurate and noted that she admitted that they were false. As to fault, the court found that Wife's "extreme jealousy" contributed to the end of the marriage. In light of these findings and Wife's dissipation of marital assets, the Appellate Court found that the $900 per month alimony award was appropriate and proper.

Secondly, Wife argues the annuity should be classified as marital property. The Court looked to T.C.A. §36-4-121 which defines separate property as "property acquired in exchange for property acquired before the marriage or income from and appreciation of property owned by a spouse before marriage except when characterized as marital property." Husband bought the annuity during the marriage with separate funds. Husband testified that the purchase came from separate funds acquired prior to the marriage and Wife did not contribute to the purchase. Further, Wife's argument that the property was transmuted from separate to marital fails because no evidence in the record shows that she substantially contributed to preservation or appreciation of the annuity. Accordingly, the Appellate Court upheld the classification of the annuity as Husband's separate property.


Alimony In Futuro Appropriate in Tennessee Divorce When Employment Rehabilitation Not Possible

January 18, 2013 by The McKellar Law Firm, PLLC

In the case of The Tennessee Court of Appeals matter styled Dodd v. Dodd, No. E-2012-00378-COA-R3-RV (January 9, 2012), Tennessee divorce attorneys are given an example of when alimony in futuro is appropriate.

Facts: The parties married in 2002 and Husband filed for divorce in 2011. During the marriage, Husband opened and operated several businesses. After a trial, the court awarded Wife $3,156.00 per month in alimony in futuro. Husband appealed, arguing that there was no finding as to whether Wife could be rehabilitated, no evidence as to the parties' standard of living, no evidence that Husband had an ability to pay, and that the court misapplied the alimony factors found in T.C.A. §36-5-121(i).

Analysis: Trial courts have "broad discretion" to determine alimony in divorce cases, but the two most important factors are the payor's ability to pay and the payee's need. In the case of alimony in futuro, this type is only appropriate when rehabilitation of the payee spouse is not feasible. In this case, Wife was 56 years old at the time of divorce and was earning $400 net per month after taxes and insurance as a teaching assistant and had a high school education.

Accordingly, the trial court found that she was the economically disadvantaged spouse and that "nothing was shown that there's any training we could give to her over the next six years before she's at least eligible for social security that's going to make a hill of beans difference....I'm finding she's not trainable." Further, the trial court also found that there was no credible proof that Husband's expenses negated his ability to pay as he failed to file an Affidavit of Income and Expenses. The Appellate Court, on review, stated there was substantial evidence in the record to support Wife's inability to be rehabilitated or meet the standard of living enjoyed while married. Wife's only other work experience consisted of retail and restaurants, and her Affidavit showed a need of $3,375.00 per month. The proof regarding Husband's income included net income of one business of $105,328.76 over a two-month period, and that Husband owned and operated a convenience store and a restaurant. Husband failed to produce any tax returns or reliable profit and loss statements. Therefore, the trial court committed no error in it's alimony determination and the Appellate Court affirmed the decision.


When Transitional Alimony, Attorney Fees, and Moving Expenses are Proper After A Short Marriage

November 21, 2012 by The McKellar Law Firm, PLLC

In Gorbet v. Gorbet, No. W2011-01879-COA-R3-CV (Tenn. Ct. App. Oct. 11, 2012), Tennessee divorce attorneys learn that the Tennessee Court of Appeals finds transitional alimony, attorney fees and moving expenses proper after a short marriage where one spouse relocated and sacrificed former employment. The Court of Appeals also sheds light on how to determine whether property is marital or separate.

The facts are as follows: Husband owned a construction company building custom homes. He had a daughter from a prior marriage who visited every other weekend. Wife, a quality management analyst in Little Rock, AR, lived with her daughter from a prior marriage. Wife and her daughter moved to Jackson, TN and Wife stopped working following the marriage. Only Husband attended the closing of the parties' new Jackson, TN home several weeks prior to the marriage, and only Husband's name was on the deed. After the marriage, Husband moved out of the parties' new home in February 2011--before Wife could sell her home in Arkansas. Husband filed for divorce, and both parties contested ownership of the home and alimony. After a hearing, the trial court "grant[ed] Wife's petition for exclusive use of the... home." Wife also was to receive temporary alimony in the amount of $2,055 per month.

At trial, Husband stated that Wife's only contribution to Husband's company, which "purchased lots on a speculative basis", was interacting with potential clients at a home show and signing twenty checks. The parties used the business account (personal account) rather than a joint bank account to pay for monthly living expenses during their short marriage. Husband asserted that the parties' new home constituted separate property as the mortgage and title were in his name and he bought it prior to marriage; however, in order to have $2,000 of stonework completed, Wife gave away her car to the workmen, and the parties intended the home to be the "marital home." The parties disputed whether some of the business properties were separate or marital. Husband estimated that he had a $625,000 net worth, including $60,000 to $70,000 per year in income, a $162,000 annuity from his first divorce settlement, and two vehicles. Husband also confessed to engaging in an extramarital affair .

Wife testified she quit her job to assist Husband with his construction business "by running errands, signing checks, and helping Husband with a week-long home show." Wife spent her entire $20,000 savings account during the short marriage to contribute to marital expenses and "pay her own bills" (including the mortgage on her unsold home in Arkansas). She alleged that Husband never permitted her to access either of the bank accounts in his name. Wife claimed that the parties' home constituted marital property, that she did not need to have her name on the title, and that Husband said she was not required to be present at the closing. She referred to obtaining $2,000 of brick and stone services by trading her car. Wife also alleged that another lot constituted marital property since the parties (through the business bank account) made a $16,000 down payment with a loan obtained during the marriage since they anticipated establishing another residence there. Wife sought temporary spousal support. She had received a salary of more than $32,000 per year after working at the Arkansas hospital for ten years. Since the hospital was on a "hiring freeze", Wife was unable to reacquire her former job following the parties' separation; the hospital informed her that she would not reacquire seniority, even in the event that jobs became available. Wife was interested in obtaining a certification or master's degree to improve her likelihood of employment in the speech pathology and audiology field, in which she had already earned a bachelor's degree. In order to find a job in Arkansas, Wife felt that it was necessary to relocate from Tennessee to Arkansas. Wife only earned $500 per month in child support paid by her former husband; she alleged that Husband was responsible for "cutting off her phone" and thus impeded her job search. Wife also alleged that Husband was largely responsible for her high attorney fees because he was dishonest during discovery regarding his infidelity, neglected to maintain the marital residence, and did not pay temporary spousal support as ordered.

The trial court considered the Jackson, TN marital residence, the other lot, and Husband's whole-life insurance policy as marital assets and equitably divided them between the parties. It also provided Wife with two-year transitional alimony of $1700/month the first year and $750/month the following year, $8,000 in attorney fees as alimony in solido, and $2,500 in relocation costs.

The Tennessee Court of Appeals decided the following issues: (1) the award of transitional alimony to Wife; (2) the classification of the marital home, the other lot, and Husband's whole life-insurance policy as marital property; (3) [the award of attorney fees to Wife as alimony in solido; (4) the award to Wife of $2500 in moving expenses.

First, the court indicated that "when the court finds that rehabilitation is not necessary, but the economically disadvantaged spouse needs assistance to adjust to the economic consequences of a divorce", transitional alimony is proper (Tenn. Code Ann. § 36-5-121(g)) and upheld the award of transitional alimony to Wife, referring to her sacrifice in leaving Arkansas and her former employment there.

Second, the court upheld the classification of the aforementioned property as marital assets. It described that "marital property" is "all real and personal property, both tangible and intangible, acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing..." and that it "must be divided equitably... without regard to fault on the part of either party" (Tenn. Code Ann. § 36-4-121). The court further stated that under the transmutation or commingling doctrine, "separate property can become part of the marital estate due to the parties' treatment of the separate property." Eldridge v. Eldridge, 137 S.W.3d 1, 13 (Tenn. Ct. App. 2002). The marital residence that both parties agreed to purchase, the lot on which both parties expended marital funds, and the whole-life insurance policy that Husband changed from a pre-existing term life insurance policy using marital funds all constituted marital assets.

Third, the court affirmed the alimony in solido attorney fees to Wife due to Husband's inappropriate discovery behaviors (lying about an affair under oath), Wife's minimal income, and the importance of Wife being restored to her former standard of living. Fourth, the court upheld the award of $2,500 in moving costs to Wife since the parties had received estimates for this amount and because Husband testified during trial that he should reimburse Wife for such costs.


Older Parties Divorcing After a Long Marriage: Division of Marital Estate and Determinations of Periodic Alimony

October 12, 2012 by The McKellar Law Firm, PLLC

In Rodgers v. Rodgers, No. E-2011-02190-COA-R3-CV (Tenn. Ct. App. July 9, 2012), the Tennessee Court of Appeals sheds light for Tennessee divorce attorneys on the manner in which it divides the marital estate and awards periodic alimony for a marriage of long duration in which the parties are at or nearing retirement.

The facts are as follows: Both parties were aged in their mid-to-late 60s. After more than forty years of marriage, Wife accused Husband of irreconcilable differences and inappropriate marital conduct and divorced Husband. Husband, in turn, accused Wife of inappropriate marital conduct. Wife, a registered nurse, had worked part-time throughout her career while taking care of their sons (now adults), and presently her $3350.55/month expenses exceeded her $2407.69/month income--she had received no financial assistance from Husband during the separation although prior to his retirement he was making $100,000/year using his two degrees. Husband qualified for Social Security Disability beginning in 2005. As a means of supplementing his income, Husband owned a side car sales business in which Wife was not greatly involved (and which Husband failed to report on joint income tax returns). Selling cars and a line of credit were the means by which Husband accumulated $89,011 in funds in the parties' joint account at one point in 2006; however, Husband alleged that he no longer sold cars often.

In the final divorce decree, the trial court granted Wife a divorce and periodic alimony and also divided the marital estate. The court determined that a family heirloom ring that Wife wore was to be passed to the parties' adult sons upon their engagement or marriage. It also determined that Husband's sister's flat screen TV, freezer, and refrigerator that she had shipped to TN in anticipation of a move were "gifts" that were abandoned to the marital estate. The court evaluated the expert testimony pertaining to the valuation of the lake house and marital residence, ultimately deciding that the lake house was worth $243,000 and the marital residence was worth $248,750. Six of the parties' automobiles were to be sold to satisfy the HELOC (Husband would pay any remaining disparity since he used the HELOC as an income source).

As for alimony, the court (citing T.C.A. § 36-5-121 and common law) emphasized "need" and "ability to pay" as its primary considerations. The court found that Husband's sale of automobiles generated a substantial profit and noted that Husband would make more than twice the amount in Social Security benefits as Wife when she became of age to qualify. While the parties are at an age nearing retirement (thus, "their traditional earning capacity is not relevant"), Husband's car business is likely be ongoing post-retirement. The parties were in similar physical and mental conditions and Husband was at fault for the divorce. Based on all of the information, the court awarded Wife $1,000/month in periodic alimony, required Husband to pay the premium on both his and his Wife's life insurance policy, and enabled Wife to change beneficiaries. $5500 of Wife's attorney fees were also to be covered by Husband.

The appellate court decided the following issues on Husband's behalf: "(1) Whether the trial court erred in its classification of the marital estate; (2) whether the division of the marital estate was in error; (3) whether the trial court erred in awarding Wife periodic alimony; and (4) whether the trial court erred in awarding Wife's attorney's fees."
First, the appellate court discussed the difference between "separate" and "marital" property-- according to T.C.A. § 36-4-121(b)(2)(D), "separate property" includes "property acquired by a spouse at any time by gift, bequest, devise or descent" and can become marital property "under theories of commingling or transmutation" that reveals an "intention that it become marital property." As for marital property, there is a "presumption" that "property acquired during the marriage" qualifies. The court affirmed the trial court's decision that the heirloom ring and abandoned property of Husband's sister constituted marital property. Second, the court affirmed that the 53% (Wife) and 47% (Husband) division of marital property was equitable since relative fault should not be taken into account in dividing marital property (T.C.A. § 36-4-121(a)(1)) and "equitable" does not necessarily mean "equal." The court referenced T.C.A. § 36-4-121(c) factors. The appellate court, explaining its affirmation of the trial court, noted the older age of the parties, the high standard of living to which the parties had become accustomed, and the length of the marriage.

Third, the court decided the issue of periodic alimony; maintaining the "broad discretion" of the trial court and the "factually-driven" nature of alimony determinations, the court explained that the objective of alimony in futuro (based on factors such as earning capacity, past education, length of marriage, age and health of each party, standard of living the parties enjoyed, contributions of each party to the separate and marital property, and relative fault- see T.C.A. § 36-5-121(i)) is to "provide support on a long-term basis until the death or remarriage of the recipient." T.C.A. § 36-5-121(f)(1). Finding that Husband was at fault, the parties enjoyed a high standard of living, Husband earned more income, and the marriage lasted over four decades, the appellate court affirmed the trial court's award of alimony to Wife. Fourth, the court considered the issue of attorney's fees. The appellate court said that it was reasonable under the statute to require the spouse with adequate income to pay the legal expenses of the other spouse who does not have enough income and thus affirmed Wife's award of attorney's fees.

Finally, the appellate court addressed Wife's two disputed issues: "(1) whether the trial court erred in declining to award her the vehicles she requested and (2) whether the trial court erred in requiring Wife to pay part of what Wife describes as Husband's debt out of her share of marital property." First, the court said that the trial court was justified in requiring Wife to use her portion of marital property (in this case, the vehicles) to assist with paying some of Husband's debts since the HELOC benefit (and resulting "debt incurred during the marriage") "benefitted the marriage." Second, the court asserted that Wife is not entitled to attorney fees pertaining to any appellate issue on which she did not prevail.



When To Impute Income for Child Support; Preference for Rehabilitative Alimony in Tennessee Highlighted

August 12, 2012 by The McKellar Law Firm, PLLC

In the case of Velez v. Velez, No. M2011-0949-COA-R3-CV (Tenn. Ct. App. July 31, 2012), Tennessee divorce attorneys learn the manner in which appellate courts evaluate the adequacy of a parenting plan set by the trial court; that imputed income for an unemployed parent with a high school education and little work experience should be based upon minimum wage; and that Tennessee courts have a preference for rehabilitative alimony.

Facts: A divorce was filed after 12 ½ years of marriage. The parties had two minor children, with Mother requesting to be the primary residential parent (PRP). While Mother had been employed at minimum wage, she primarily stayed at home raising the children, and had a high school diploma. Father had been active duty US Navy, but suffered post-traumatic stress and was discharged. Father became employed as a civilian with relatively high pay.

At the hearing, Father confessed to adultery and testified he earned $70,000 per year base salary with the opportunity for bonuses. Mother alleged she had been the children's primary caregiver as well as offering testimony from relatives regarding Father's parenting ability and the parties' interactions with one another. Mother testified she had enrolled in college for occupational therapy, which would be expensive and would take 6-7 years to complete. The trial court granted Mother a divorce based on Father's inappropriate marital conduct. While Father had earned several bonuses, the court determined these were speculative and calculated his income at $7,433 per month; however, the trial court noted Mother was entitled to "immediate" information regarding Father's future bonuses. The trial court imputed a $1,642.00 per month ($8.00 per hour) income to Mother, in spite of her being unemployed. The trial court then provided Mother with lump sum alimony ($25,000), but denied her the greater amount of rehabilitative alimony she requested for school, and named her PRP.
The appeal addressed three issues: (1) whether the parenting plan was in the best interests of the children under Tenn. Code Ann. 36-6-106; (2) whether the court properly calculated child support and correctly imputed income to Mother; and (3) whether the alimony was appropriate in accordance with Tenn. Code Ann. 36-5-121.

First, the appellate court decided that the parenting plan was in the best interests of the children, holding that "trial courts have broad discretion to fashion parenting plans that best suit the unique circumstances of each case" and that the appellate courts are not to "tweak" such plans unless they appear to be entirely unreasonable because trial courts are in the position to determine credibility.

Second, the appellate court found that trial courts are granted "broad discretion" to assess child support in accordance with the Child Support Guidelines and that Father's bonuses were "too speculative for inclusion as income." However, the appellate court reversed the trial court's decision regarding Mother's imputed income, stating that it should be based upon the federal minimum wage ($7.25 per hour) and that after Mother is employed, the Child Support Guidelines warrant a child support award for resulting work-related daycare expenses.

Third, the court ruled on Mother's request for rehabilitative alimony. While trial courts have discretion in deciding the appropriate type of alimony, the appellate court noted a "strong preference for short-term spousal support", particularly rehabilitative alimony. The appellate court stated that one spouse's ability to pay and the other spouse's need are the most essential considerations in determining alimony awards and listed the factors provided in Tenn. Code Ann. §36-5-121, including: relative education and training of each party; length of the marriage; separate assets of each party; marital property allocations; relative earning capacity of each party; standard of living to which the parties are accustomed; age, mental condition, and physical condition of each party; relative fault of the parties; and tangible and intangible contributions of each party to the marriage. Here, Father's income was (minimum) $70,000 per year; however, since Mother had contributed to the marriage by staying home with the children, she had little work experience (earning minimum wage) and a high school education that would provide her with income of only $15,080 per year. Since Mother was "significantly" economically disadvantaged in comparison to Father, the appellate court held that the trial court did not appropriately apply the statutory factors and that Mother was entitled to rehabilitative alimony "either in addition to or instead of" the lump sum alimony originally granted. Accordingly, this issue was remanded to the trial court to determine the appropriate amount of rehabilitative alimony for Wife.


Understanding Equitable Division of Marital Property and Debt; When Alimony in Futuro is Appropriate

August 10, 2012 by The McKellar Law Firm, PLLC

In Pollan v. Pollan, No. M2011-01896-COA-R3-CV, (Tenn. Ct. App. July 3, 2012) Tennessee divorce attorneys learn the manner in which courts equitably divide marital debt and learn factors that the courts consider when awarding future alimony.

The facts of the case are as follows: Wife was a 56 year-old homemaker with a high school education but assisted her Husband with beginning his successful company. Wife suffered from degenerative disk disease, but Husband was in good health. Due to Husband's inappropriate marital conduct, a divorce was granted to Wife after a twenty-five year marriage. The parties subsequently agreed in a Stock Settlement Agreement that Wife would receive full-time employment at Husband's company for eight years, with a $50,000 annual salary and full benefits. Further, Wife would not be responsible for any taxes or debt of Husband's company and in return, Husband could keep all of the stock in the company; however, upon the sale of the Company, Wife was entitled to a set percentage of proceeds between a certain range (which decreased the further the sale occurred from the date of divorce). At trial, the court divided debts and assets; Husband obtained 49% of the marital assets and Wife obtained 51% of the marital assets. Until Wife turned 65 years old, she was to receive alimony in futuro of $5,000 per month; after age 65, and until Wife's remarriage or death, Wife received $2,000 per month. The trial court did not state that Husband would be responsible for Wife's health insurance benefits in the event that she lost them through the company.
The appellate court decided three issues: (1) whether allocation of marital debts to wife were proper; (2) whether wife's alimony award was properly calculated; and (3) whether Husband should be required to pay Wife's medical insurance upon the conclusion of Husband's eight-year agreement with his employer.

First, the appellate court provided that equitable distribution of property applies to both marital debts and assets. It stated that "equitable division" does not necessarily mean "equal division" per Tenn. Code Ann. § 36-4-121. The appellate court further noted that Tennessee courts should apply the following factors when equitably dividing marital debt: "(1) the debt's purpose; (2) which party acquired the debt; (3) which party benefited from acquiring the debt; and (4) which party is best able to repay the debt." Accordingly, the appellate court determined that Wife had benefited in the past and would benefit in the future from the company and credit cards and was in a position to pay the debt. Second, the appellate court held that alimony in futuro was proper (in spite of a legislative preference for short-term alimony) due to Wife's need for long-term support, the impossibility of economic rehabilitation (largely due to her age and lack of work experience and education), and Wife's accustomed high standard of living. However, the court held that Wife provided insufficient proof that Husband dispersed assets and therefore was not entitled to additional lump sum alimony. While "dissipation of assets is a factor to be considered in the division of the marital property", it "requires a showing of intentional, purposeful, and wasteful conduct"--a burden of persuasion which Wife failed to meet. Third, the appellate court found that Husband owed Wife no additional health insurance benefits due to her alimony in futuro, her eight-year employment agreement (with included health insurance), and the fact that she would soon be eligible for Social Security and Medicare benefits.