Recent Blog Posts in September 2006

Family Court, Richmond County, New York.

In the Matter of a CUSTODY/Visitation Proceedings

CURTIS L.S., Petitioner

Janice P.W., Respondent.

Aug. 2, 2006.

CATHERINE M. DiDOMENICO, J.

Petitioner Father, Curtis S., filed a Petition seeking permission to relocate from Brooklyn, New York to Chapel Hill, North Carolina with his six year old son, Curtis Allen S. ("Allen") (d.o.b.8/22/99).

On May 17, 2004, the Administration for Children's Services ("ACS") filed a Neglect Petition against the Respondent Mother, Ms. W., alleging, among other things, that she physically assaulted Allen's sibling, Antoinette, in the presence of Allen. Antoinette and Allen were remanded to the care of ACS. On April 26, 2004, Petitioner Father filed a Petition for Custody. On July 8, 2004, after a trial, a finding of neglect was entered against the Respondent Mother and Petitioner Father was granted custody of Allen. Visitation to the Respondent Mother was granted upon mutual agreement by the parties to be supervised by the maternal aunt, Ms. Joyce J.

An Order of Disposition was entered as to Antoinette on August 3, 2004. Antoinette was placed with ACS for a period of up to twelve months. Respondent was to observe the following conditions: cooperate with ACS and Agency services, referrals and supervision; complete alcohol rehabilitation; visit Antoinette regularly; maintain adequate housing; maintain an adequate source of income; plan for the return of the child; complete an anger management program; and comply with a one year Final Order of Protection on behalf of Antoinette. A Petition to Terminate the Parental Rights of Respondent Mother as to Antoinette on the grounds of permanent neglect is currently pending before this Court.

On July 28, 2005, Respondent Mother filed a Petition for Modification of an Order of Custody requesting that Petitioner Father be prevented from relocating with Allen to North Carolina. On August 1, 2005, the Hon. Ralph Porzio ordered that Allen not be relocated without prior court approval. On March 22, 2006, Respondent Mother filed a Petition for Modification of an Order of Visitation alleging that Ms. Joyce J. could no longer supervise visits. Respondent Mother requested that she be granted unsupervised visits, unrestricted daily contact, and visits every Monday and Friday from 3:30 pm until 5:30 pm at the Brooklyn Public Library.

Petitioner Father's relocation petition and Respondent Mother's visitation petition were the subject of a fact finding hearing held on July 10, 11, 19 and 20, 2006. At the fact finding hearing, Petitioner Father testified and also called Dr. Margit W., a licensed Family Court Services psychologist, as an expert witness. Dr. W.'s report was entered into evidence without objection (Petitioner's # 1). Respondent Mother testified on her own behalf. The Law Guardian called no witnesses.

After hearing the testimony of all three witnesses, and assessing their credibility, this Court credits the testimony of Petitioner Father and Dr.W. The Court does not credit at all the testimony of Respondent Mother.

Testimony at Fact Finding

Petitioner Father

Petitioner Father was awarded custody of Allen in July 2004. He testified that he is currently employed as a personal trainer earning approximately $20,000.00 to $30,000.00. Petitioner Father testified that he would like to relocate with Allen to Chapel Hill, North Carolina where he has an opportunity to be a Personal Trainer Director earning between $40,000.00 to $50,000.00. Petitioner Father's mother and aunt, whom he and Allen had lived with in New York and whom they intend to live with in Chapel Hill, have already relocated to Chapel Hill and are residing in a three bedroom apartment in a gated community. Petitioner Father and Allen would each have their own room in paternal grandmother's home. Petitioner Father researched the school system on the internet and communicated with the principal of the school Allen would be attending. He testified that he was impressed with the school's computer program and that the school is a five-minute walk from the home and a three minute walk from the job Petitioner Father hopes to secure. While Petitioner Father acknowledges that Allen is currently doing well in school and has no special needs, Petitioner Father believes he would be able to spend more time with Allen and would be able to offer Allen a better quality of life with the support of his extended family. Petitioner Father's mother and aunt are retired and would provide child care for Allen while Petitioner Father works.

Petitioner Father testified that since his mother and aunt relocated to North Carolina he is currently staying with friends while Allen lives with his maternal aunt, Ms. Joyce J. Petitioner Father sees Allen every day, taking him to and from school and karate.

Petitioner Father testified that the maternal aunt, Ms. Joyce J., supervised visits until October, 2005. From July 2004 to December 2004, Respondent Mother visited with Allen at Ms. J.'s home twice a week for approximately two hours. From January 2005 to August 2005, Respondent Mother visited only once. Respondent Mother sporadically calls to speak with Allen, and has never provided child support.

Dr. W.

Dr. W. testified that she interviewed both Petitioner Father and Respondent Mother and had a play interview with Allen. Dr. W. recommended that Petitioner Father be allowed to relocate with monthly visits with the Respondent Mother. Dr. W. did not recommend unsupervised visits with the Respondent Mother because of Respondent Mother's violent episodes with Antoinette. On this subject, Dr. W. noted that Respondent Mother seemed to feel that the physical force she used on Antoinette was in some way "justified." Tr. 7/1//06, p. 18, l. 21.

Dr. W.'s report concludes: "Mr. W. is a bright, articulate woman who may or may not have a substance abuse problem. What does seem clear, however, is that she has an impulse-control problem, particularly around managing her angry and needy feelings. While she has intellectual perspective on a number of issues, she seems to lack the necessary emotional perspective. Emotionally, she seemed to feel it reasonable that she strike her child back. Additionally, she has the stressors of multiple physical problems. She does appear to care about her children, at least at some level, but doesn't seem capable of handling the many vicissitudes of life, children and her feelings on a full-time basis. Sadly, she does not seem to think that psychotherapy is a useful option for her." Petitioner's # 1, page 7.

Respondent Mother

Respondent Mother testified that, in May of 2004, her children, Antoinette and Allen, were removed from her care after what she referred to as a "domestic dispute" with Antoinette. Antoinette was twelve years old at the time and the altercation left bruises on Antoinette's body. Respondent Mother was arrested and the children were removed. At that time Allen went to live with Petitioner Father. Visits between Respondent Mother and Allen were to be supervised by her aunt, Ms. J.

From May 2004 to September 2004, she visited with Allen twice a week at her aunt's home. Respondent Mother further had hip surgery on September 28, 2004 and was hospitalized for three and a half weeks. During that time, her uncle brought Allen to visit. She did not visit with Allen from October 2004 to January 2005. Her uncle brought Allen to visit in January 2005. She completed her physical recuperation in April 2005 and had a visit with Allen at that time. From January to April 2005, Respondent Mother testified that she attempted to call Petitioner Father everyday but only spoke with Allen sporadically. A visit occurred in June 2005, and then at the end of August 2005. Respondent Mother learned that Allen was relocating to North Carolina from Allen at the end of July 2005.

During cross-examination by the Law Guardian, Respondent Mother testified that she did not visit with Allen because of actions of Petitioner Father, the agency, and because she was not given adequate assistance after her hip surgery. Respondent Mother admits she did not file any petitions to enforce her right to see Allen until July 28, 2005, when she learned of Petitioner Father's intention to relocate Allen. Respondent Mother claimed that she did not realize she could enforce her rights in Court, however, this statement is belied by her frequent court appearances in connection with the Neglect and Termination of Parental Rights cases for Antoinette and the instant pro se Petitions actually filed by Respondent Mother.

Respondent Mother testified that she was granted unsupervised visits, however, they were suspended in October 2005 when she was arrested after another physical altercation between her and Antoinette during which she struck Antoinette with a metal stove grate. This incident, during which Antoinette sustained physical injuries, occurred after Respondent Mother completed mandated parenting and anger management courses and while Respondent Mother was enjoying one of only four unsupervised visits that had been permitted.

The Applicable Law

Where a custodial parent seeks permission to relocate a child, the request "must be considered on its own merits with due consideration of all the relevant facts and circumstances and with predominant emphasis being placed on what outcome is most likely to serve the best interests of the child." Tropea v. Tropea, 87 N.Y.2d 727 at 739 (1996). The issue is whether the parent requesting the relocation has established by a preponderance of the evidence that relocation would be in the child's best interest. Id. Factors to be considered in determining the appropriateness of relocation include, but are not limited to, "each parent's reasons for seeking or opposing the move, the quality of the relationships between the child and the custodial and noncustodial parents, the impact of the move on the quantity and quality of the child's future contact with the noncustodial parent, the degree to which the custodial parent's and child's life may be enhanced economically, emotionally and educationally by the move, and the feasibility of preserving the relationship between the noncustodial parent and the child through suitable visitation arrangements." Id. Where there are educational, emotional and economic benefits for the child, relocation should be granted. Aziz v. Aziz, 779 N.Y.2d 539 (2nd Dept.2004). Applying the established principles to this case, this Court does find that Petitioner Father has established, by a preponderance of the evidence, that relocation would be in Allen's best interests.

Findings of Fact & Conclusion of Law

This Court credits the testimony of Petitioner Father and Dr. W. Petitioner Father submits that the move to North Carolina will improve the quality of life for both himself and the child. Petitioner Father offers that he has greater opportunity for employment and extended family in North Carolina. Petitioner Father would be able to spend more time with the child and has a large support system there which is no longer present in New York. This Court credits Petitioner Father and finds that he has a good faith basis for relocating, namely to offer his son a better life surrounded by his aunt, grandmother and other relatives.

Petitioner Father clearly recognizes the importance of maintaining a relationship between Allen and Respondent Mother and his sister. See Miller v. Pipia, 297 A.D.2d 362 (2nd Dept.2002); Boyer v. Boyer, 281 A.D.2d 953 (4th Dept.2001). Petitioner Father offers a realistic and feasible alternative visitation schedule, specifically, he will bring Allen one weekend a month for visits with the Respondent Mother and separately, with Antoinette. This Court credits Petitioner Father's testimony in that he will continue to foster a relationship between Allen, his sister and Respondent Mother.

This Court further finds that Respondent Mother's visitation has been so inconsistent and sporadic that it is not clear that relocation would substantially interfere with her rights as a practical matter. See Ira S. v. Lauren S., 21 AD3d 288 (1st Dept.2005) (Family Court did not err in refusing to conduct hearing on issue of relocation where non-custodial parent had not made use of existing visitation rights). Respondent Mother refuses to assume any responsibility for allowing months to pass without seeing Allen or to even telephone to inquire how he was doing. Indeed, it was not until Respondent Mother discovered (through Allen) that Petitioner Father wanted to relocate that she took concrete steps to assert her rights. Further, this Court notes that Respondent Mother assumed no responsibility for the fact that custody of Allen was granted to Petitioner Father as the final disposition of a neglect case filed against her in which Allen was one of the subject children, nor that unsupervised visits were suspended when, during one of only four unsupervised visits, she physically assaulted the child Antoinette. This Court does not credit at all Respondent Mother's testimony that her acts of physical violence against Antoinette occurred as part of a "domestic dispute" in which she was compelled to "defend" herself against this then 12 year old child.

Finally, although the Respondent Mother is said to have completed court mandated anger management programs, to this day, she evidences little ability to control her frustration or her temper. During the fact-finding hearing, she became increasingly angry and hostile in response to questioning by counsel other than her own attorney to the degree that this Court offered to take a recess so that she might compose herself.

Accordingly, Petitioner Father's Petition to relocate to North Carolina is granted. Respondent Mother's Petitions to prevent the relocation, for unsupervised visits, and for violation of her visitation rights, are denied.

Disposition

As this Court does not believe sufficient information exists upon which an informed decision can be made with respect to what visitation is appropriate between Respondent Mother and Allen, this matter is adjourned for disposition. Respondent Mother is to undergo a psychiatric evaluation through ACS. The evaluation shall include a full psychiatric assessment of Respondent Mother and specifically identify what, if any, risk factors would exist should unsupervised visits with Allen be permitted.

Respondent Father is allowed to relocate with Allen to Chapel Hill, North Carolina and to register him in school in Chapel Hill forthwith. Pending disposition, Respondent Father shall produce Allen one weekend a month for a supervised visit with Respondent Mother for approximately four hours. Until such time as a mutually agreeable third party is available to supervise the visits, Petitioner Father shall supervise the visits in such public or other place as these parties may agree.

WHAT IS DISCOVERY?
By Ruth Miller

"Discovery" is what makes real-life practice of law different from television dramas. Nothing in the law happens suddenly, and very little happens by surprise. Your lawyer has the right to ask your spouse about everything related to the case. That means just about everything in the area of finances and issues related to custody of your children. Included in discovery are subpoenas, interrogatories, requests for production of documents, and depositions.

There are ways to keep costs down during discovery. Sometimes one of the spouses will monopolize the financial information of the parties and the other spouse will know little or nothing about their assets and liabilities. However, it is far more common that each spouse has substantial knowledge. Since a major portion of the lawyer's job is to collect and marshall information, your lawyer's time is best (and most economically) spent when you provide your lawyer with every bit of relevant information you can.

Informal discovery involves counsel exchanging information voluntarily or upon request. This method is far less expensive than formal discovery. Your lawyer will simply prepare a list of documents that are important, and ask the other lawyer for them. Be prepared to have your spouse's lawyer ask you for a multitude of documents also. Be sure to cooperate in this request. It will save you money.

Formal discovery involves interrogatories and requests for production of documents. Interrogatories are an inexpensive method of gaining information and narrowing issues. Either of you may send the other formal written questions which must be answered under oath within 30 days of their service. If interrogatories are served upon you and you don't respond, your spouse can obtain a court order to force you to respond. This is expensive and a foolish waste of money, so make sure you and your lawyer answer the questions completely.

Another method in the formal process of discovery involves requests for production of documents. Either of you can ask the other to produce any and all documents having anything to do with the dissolution (or divorce) and its related matters. That is, anything to do with support, community (or marital) property, separate property, the children, or any other matter that can be decided by the Court. This is not a great deal different from the informal method, but like interrogatories, if there is no response, it can lead to court orders, sanctions, possible jail time and a big waste of money.

The most common type of discovery is called a "deposition" whereby your lawyer talks to your spouse. A deposition is a duplication of a court proceeding without a judge. Your lawyer may ask questions of your spouse (and your spouse's lawyer can ask you questions) in a setting in which the questions and answers are recorded by a certified shorthand reporter and later bound into a permanent volume.

Depositions have several functions. First, they narrow the issues so that your lawyer can find out exactly your spouse's position on various matters. For example, if you and your spouse agree that your grandmother's furniture is your separate property, that issue can be eliminated. If not, and you are trying to preserve that furniture as your separate property, your lawyer must ask your spouse the basis of his/her opinion: If there are any receipts to prove the furniture is community (or marital), when he/she first saw the furniture, if the two of you ever had any conversations concerning the status of the furniture, and many other questions. By eliminating issues in this way you are "narrowing the issues" which saves money!

Second, depositions tend to "freeze" testimony from deposition to trial. That is - if a party testifies one way at a deposition, and another way at a trial, it is unlikely that the judge will believe anything the person says. So each spouse is "stuck" with his/her deposition testimony.

Third, a deposition is very useful in helping the lawyer determine how effective your spouse is likely to be in court. And, finally, if the assets, liabilities and income are very complex, a deposition is essential to educate the lawyers.

You have the right to be present at your spouse's deposition and should plan to do so, unless your lawyer advises you that it would be counterproductive. If your spouse won't answer the question, your lawyer will ask the court reporter to "certify" the question, and then ask the judge to order him/her to answer. If the judge makes that order and if he/she still refuses to answer, there are many remedies. A fine or jail sentence is possible, but what is most effective is to "strike the pleadings" of the other spouse. Then he/she has no rights before the court.

If your spouse is lying, it is clearly to your advantage if you can prove it. In fact, if you can prove that only part of his/her testimony is not truthful, you are probably going to be the prevailing party on contested issues/ Many people lie and cheat in the world, but they are generally unsuccessful in getting the court system to help them. Judges are quite experienced in judging a person's credibility and know when witnesses are lying. The foundation of our legal system assumes that people tell the truth when they come to court, so judges react very negatively to witnesses who lie.

The deposition process is an ordeal, but the following instructions, commonly provided by attorneys to their clients, can lessen the stress:

1. Tell the truth. You must, you are under oath. However, do not depreciate yourself. For example, if you genuinely believe you are unable to work long hours of overtime, then the answer "Yes" to the question, "You really are able to work overtime, aren't you?" would not be the truth.

2. Don't guess. If you don't know the answer or if you can't remember. Say so! Nobody is going to think you are stupid if you can't remember something. Most of us can remember only life milestones, not day-to-day trivia. The deposition "freezes" your testimony, so a wrong guess can be disastrous.

3. Answer only the question: don't run on at the mouth. A deposition is very expensive! Extra words create extra expense. If you can answer a question with ten words, do not use one hundred. However, you are not limited to a "yes" or "no" answer.

4. Don't volunteer information. You are not obligated to do so, and if you do, it could be damaging to your case. Just wait for the question, answer the question, and then wait for another question.

5. Don't try to convince the other side of the merits of your case. You won't be able to do it, and you will find yourself caught in a web. Besides, it really doesn't matter whether the other side likes you or not. You can never help yourself at a deposition, only hurt yourself. So just answer the questions.

6. Can my mother/friend/therapist be present? The law in this area is not clear. However, most lawyers will allow other persons to be present if the request is reasonable and if there is enough space in the room. This is especially true with your own deposition as opposed to your spouse's deposition.

Supreme Court, Appellate Division, Third Department, New York.

Gwen CHERNOFF, Respondent,

v.

Michael S. CHERNOFF, Appellant.

July 13, 2006

Before: MERCURE, J.P., CARPINELLO, MUGGLIN, ROSE and KANE, JJ.

MUGGLIN, J.

Appeal from a judgment of the Supreme Court (Peckham, J.), entered November 30, 2005 in Delaware County, ordering, inter alia, equitable distribution of the parties' marital property, upon a decision of the court.

In this action for divorce, issues of counsel fees, fault and custody of the child were settled by stipulation. As to the remaining issues, Supreme Court denied spousal maintenance to plaintiff, awarded child support to plaintiff and decided issues of equitable distribution. Defendant appeals, claiming that Supreme Court miscalculated his child support obligation and that, with respect to equitable distribution, Supreme Court erred both by classifying and distributing some of his separate property as marital property and by refusing to properly credit him for his separate property contributions to the acquisition of marital assets.

First, as to the issue of child support, we agree that Supreme Court miscalculated it, but not because, as defendant asserts, his income was miscalculated. Supreme Court determined defendant's income for child support purposes to be $86,304, but in consideration of the standard of living of the child during the marriage and because defendant's income will "be considerably reduced by the equitable distribution award," it limited child support to 17% of the first $80,000 of defendant's income. By doing so, Supreme Court ignored the statutory three-step process of (1) determining combined parental income, (2) multiplying the first $80,000 by 17% and allocating the result between the parents according to their respective shares of the total income, and (3) determining the amount of child support payable on the combined parental income above $80,000 by applying the statutory factors (see Matter of Cassano v. Cassano, 85 N.Y.2d 649, 653 [1995]; see also Domestic Relations Law § 240[1-b] ).

Here, the parties were both self-employed as real estate salespeople and, without regard to whether any portion of their self-employment deductions should be added back to income (see Domestic Relations Law § 240[1-b][b][5] [vi][B] ), their tax return otherwise reveals that they had combined parental income for child support purposes of at least $118,508. The statute requires the trial court to determine the amount of support on the combined income above $80,000 (see Domestic Relations Law § 240[1-b][c][3] ) by application of the subparagraph (f) factors "and/or the child support percentage." As the record is incomplete as to these factors and Supreme Court erroneously limited the child support calculation to the first $80,000 of defendant's income, intelligent appellate review of this issue is not possible and we must remit for recalculation of child support. Remittal is further required because we find it necessary to reverse some of Supreme Court's equitable distribution determinations which it found would reduce defendant's future income.

Insofar as defendant's separate property claims are concerned, the following facts are not disputed: defendant entered this 19-year marriage owning, among other things, his residence on Long Island, three rental properties (Lazy Cow, Long Beach and a parking lot) and stocks inherited from his mother; the stocks and the Lazy Cow property are still titled in defendant's name (Supreme Court awarded them to defendant as his separate property); defendant sold the parking lot approximately six to eight years prior to the divorce action and received $150,000, which he invested in four mortgages in his own name (Wegman-$18,000; Cheryl-$30,000; McCarthy-$95,000, and Chaplick-$80,000); the Long Beach building was sold shortly after the divorce action was commenced and defendant received $200,000 which netted him a $160,000 increase over his 1979 $40,000 investment in this property; and, finally, defendant has deposited income received from these assets in four bank accounts, in his name alone, from which accounts he has frequently withdrawn funds that were then commingled with plaintiff's funds in a bank account from which the parties paid their expenses. Supreme Court held that because the income from these assets had been commingled and because plaintiff had contributed services as a wife and homemaker and defendant produced no paper trail for the $73,000 sum by which the mortgages exceeded the $150,000 sale price of the parking lot, these increases in value ($73,000 and $160,000) represented marital property and awarded plaintiff 50% of the four mortgages and 50% of the four bank accounts (total to plaintiff-$119,025.34). We find this award to be erroneous for three reasons.

First, property acquired before marriage remains separate (see Domestic Relations Law § 236[B][1][d][1] ) and property acquired in exchange for said property, even if the exchange occurs during marriage, is separate property (see Domestic Relations Law § 236[B][1][d][3] ). To be sure, commingling the corpus with marital funds transmutes the separate property into marital property for purposes of equitable distribution (see Judson v. Judson, 255 A.D.2d 656, 657 [1998] ), but commingling only a portion of the income produced by the corpus does not transmute the corpus which has never been commingled.

Second, the lack of a paper trail concerning the source of the funds invested in the four mortgages is not, alone, fatal to defendant's claim (see Zanger v. Zanger, 1 AD3d 865, 867 [2003] ). Moreover, unlike the plaintiff in Cassara v. Cassara (1 AD3d 817, 819 [2003] ), defendant, here, documented his claim that the proceeds from the sale of the parking lot were invested in the mortgages in his own name alone. Moreover, it is telling that the evidence shows no source other than defendant's separate property for these investments and plaintiff acknowledged this property to be defendant's separate property.

Third, "[w]hen a nontitled spouse's claim to appreciation in the other spouse's separate property is predicated solely on the nontitled spouse's indirect contributions, some nexus between the titled spouse's active efforts and the appreciation in the separate asset is required" (Hartog v. Hartog, 85 N.Y.2d 36, 46 [1995] ). Here, there is not a scintilla of evidence that the increase in value of defendant's property was due to any effort on his part or to anything other than passive market forces. Plaintiff, as the nontitled spouse, bore the burden of proof on this issue (see Golub v. Ganz, 22 AD3d 919, 922-923 [2005] ).

Lastly, there are two main items of marital property, the marital residence and an apartment house that the parties owned through their corporation (Wachern Corporation). The marital residence was acquired by the parties, as tenants in common, prior to the marriage. Each contributed separate funds to the purchase and defendant contributed additional separate funds to pay off the purchase money mortgage (a total of $46,000). In addition, defendant contributed $25,000 of separate funds to the purchase of the apartment house. Supreme Court found that defendant made a gift of these funds to plaintiff and denied him a separate property credit. We disagree and find that the record supports defendant receiving a credit in those amounts in the equitable distribution of these assets (see Judson v. Judson, supra at 657).

ORDERED that the judgment is modified, on the law, without costs, by reversing so much thereof as (1) awarded child support, (2) denied separate property credits to defendant of $46,000 against the marital residence and $25,000 against the apartment house, and (3) awarded plaintiff a $119,025.34 share in defendant's mortgages and the related bank accounts; matter remitted to the Supreme Court for recomputation of child support and equitable distribution not inconsistent with this Court's decision; and, as so modified, affirmed.

MERCURE, J.P., CARPINELLO, ROSE and KANE, JJ., concur.

Pagliaro v. Pagliaro, 31 A.D.3d 728, --- N.Y.S.2d --- (Second Dept. 2006)(2006 WL 2065028)(2006 N.Y. Slip Op. 05929)(July 25, 2006):

Supreme Court, Appellate Division, Second Department, New York.

Susan PAGLIARO, appellant,

v.

Robert H. PAGLIARO, respondent.

July 25, 2006.

ANITA R. FLORIO, J.P., GABRIEL M. KRAUSMAN, WILLIAM F. MASTRO, and MARK C. DILLON, JJ.

In a matrimonial action in which the parties were divorced by judgment dated April 30, 2003, the plaintiff appeals, by permission, as limited by her brief, from so much of a Qualified Domestic Relations Order of the Supreme Court, Orange County (Owen, J.), dated February 22, 2005, as failed to distribute to the plaintiff a portion of the defendant's Variable Supplements Fund benefits and cost of living adjustments.

ORDERED that the Qualified Domestic Relations Order is modified, on the law, by deleting the second sentence of the fourth decretal paragraph thereof, and substituting therefor the following: "The term 'retirement allowance' means the total amount payable to the participant by the New York City Police Pension Fund, including any Variable Supplements Fund benefits and cost of living adjustments; and it is further"; as so modified, the Qualified Domestic Relations Order is affirmed insofar as appealed from, with costs to the appellant.

The parties were divorced in April 2003. The judgment of divorce incorporated the terms and conditions of an amended separation agreement dated January 15, 2003 (hereinafter the Agreement). The Agreement provided, inter alia, that the plaintiff would share in the pension benefits of the defendant, a New York City Police Officer. The judgment of divorce directed, among other things, the settlement of a Qualified Domestic Relations Order (hereinafter QDRO).

On February 22, 2005, the Supreme Court signed a QDRO which had been drafted by the defendant's attorney. The QDRO, as signed, excluded any Variable Supplement Fund (hereinafter VSF) benefits from the definition of "retirement allowance" and was silent as to cost of living adjustments (hereinafter COLAs). The plaintiff argues that the Supreme Court erred in excluding from the QDRO the defendant's VSF benefits and COLAs payable in relation to his pension. The defendant concedes that the plaintiff is entitled to an equitable share of pension-related COLAs. We agree with the plaintiff that she is also entitled to an equitable share of VSF benefits.

Pensions represent a form of deferred compensation paid after retirement in lieu of the receipt of greater compensation during the period of employment (see Majauskas v. Majauskas, 61 N.Y.2d 481, 491-492). Pension rights earned during a marriage, prior to a separation agreement or matrimonial action, are marital property subject to equitable distribution (id. at 490-491). While certain assets created after the divorce do not constitute marital property, enhanced retirement income is marital property subject to equitable distribution, since a non-employee spouse is entitled to share in the pension of the employee spouse as it is ultimately determined (see Olivo v. Olivo, 82 N.Y.2d 202, 209-210). As VSF benefits and COLAs are merely supplements and enhancements to already existing pension benefits, the non-employee spouse is entitled to an equitable share (see DeLuca v. DeLuca, 97 N.Y.2d 139; Johnson v. Johnson, 297 A.D.2d 279; Flores v. Flores, 22 AD3d 372; Ross v. Ross, 16 AD3d 713, 714).

We reject the defendant's argument that the plaintiff is not entitled to a share of the defendant's VSF because the Agreement did not specifically provide for such payments. The defendant incorrectly relies upon cases which have held that parties must explicitly provide for an allocation of pre-retirement death benefits in a settlement/separation agreement in order for the non-employee spouse to receive an equitable share of those benefits (see Kazel v. Kazel, 3 NY3d 331, 334-335). Death benefits, unlike pension enhancements, are separate interests, independent of retirement benefits (id. at 334). Thus, in order for a non-employee spouse to be entitled to a share of the other spouse's death benefits, the parties must make specific provision for such entitlement in their marital agreement (id.). It was not necessary for the Agreement to specifically provide for the plaintiff to receive an equitable share of the VSF benefits and COLAs, because they were merely supplements to the existing pension asset (see Olivo v. Olivo, supra at 210). Accordingly, the QDRO signed by the Supreme Court should have conformed with the Olivo principles to ensure that the plaintiff realized her right to share in the pension benefits as they are ultimately determined (see Silver v. Silver, 278 A.D.2d 478, 479).

It is a rare case where one spouse will recieve nothing out of the property acquired during the marriage in New York. There are a number of factors which govern how Judges should decide in New York about the divsion of marital property. The first question every Judge asks me is have the parties lived together for most of the marriage and are their any children. If you have lived with your spouse for most of your marriage and their has been some sort of economic partnership, generally Judges want to resolve the case by splitting the assets in half. Judge because you think your husband or wife is good for nothing, does not mean that a Judge will think the same way. If your husband or wife is trulely worthless, i.e. he abuses your, uses drugs, refuses to work, etc... Judges will generally give that person less than half.

What can Court order a party to do?
Purchase, maintain or assign a policy of insurance for health and hospital care and related services for either spouse or children;
Purchase, maintain or assign a policy of insurance on the life of either spouse and designate either spouse or children of the marriage as irrevocable beneficiary;
Are there any restrictions or limitations on the court's ability to order Special Relief"?
The policy of insurance for health and hospital care and related services for either spouse or children cannot be for longer than party is obligated to pay maintenance, child support or a distributive award;
The life insurance may be during a period of time fixed by the Court but the beneficiaries' interest must terminate upon the termination of the spouse's obligation to pay maintenance, child support, a distributive award, or when the beneficiary remarries or predeceases the insured.

By Joel Brandeis P.C.

Following are brief summaries of these seven mistakes. Each of these areas can be quite complex, so we strongly recommend that you consult a professional prior to making a financial decision that may affect the rest of your life.

This list is not exhaustive, and depending on the complexity of your case, there may be many more areas that require thorough analysis.

Mistake #1: Not Knowing the Liquidity of Assets

Liquidity refers to the ability to access the cash value of an asset. For example, a bank savings account is highly liquid, because you can simply withdraw funds from an ATM when you need them. An antique automobile, however, is nearly illiquid because it is very difficult to quickly sell this asset to access the actual cash value.

Often in a divorce settlement, one party will receive mostly illiquid assets, including the home, while the other party receives liquid assets such as retirement plans, brokerage accounts etc.

What is the potential problem with this type of settlement?

On the surface, this scenario may appear to be equitable assuming that the home and other assets are of approximately the same value. However, the challenge lies in cash flow. How will the party that keeps the home pay the bills if his or her major asset is illiquid?

One can borrow against the equity of the home, but that's costly (closing costs, interest etc.) and it takes time to close the loan. In worst-case scenarios, the home must be sold, a smaller home is purchased and the remaining equity is utilized for living expenses.

If your proposed financial settlement has very little liquidity, be sure that you will have enough cash flow throughout the years to handle your living expenses. If not, you may have to consider selling the home, other assets or significantly decrease your expenses in order to meet your budgetary needs.

Mistake #2: Failure to Consider the Impact of Taxes

The effect of your settlement on various taxes can be very costly if not addressed thoroughly. Capital gains, income tax, and alimony are just a few of the areas that may be impacted.

Capital gains taxes need to be analyzed when property is being divided. Capital gains refer to the fair market value of an asset minus its cost. For example, if you paid $5 for a share of stock and it is now worth $25, you have a capital gain of $20. This applies to other assets such as real estate (including your home), mutual fund accounts and just about any investment that has appreciated in value.

Be very careful that the property you are receiving in a settlement does not have large capital gains as compared with your ex-spouse's property. Don't be fooled if your spouse offers you property of equal value but conveniently forgets to inform you of the tax liability.

As an example, you may be offered an investment account worth $150,000, but the cost basis is only $50,000. That means there is a gain of $100,000 that you must pay at minimum long-term capital gains tax (15% in 2004). There could possibly be short-term gains as well, which are taxed at your own marginal tax rate (as high as 35% in 2004).

In the case of your personal residence, the federal government eased the tax burden in 1997 by allowing a $250,000 capital gain exclusion per spouse if you've lived in your home for at least 2 of the past 5 years. If the home is to be sold and there is a considerable gain in value (over $250,000), you should consider selling before the divorce to take advantage of the full $500,000 exemption.

If you had sold a home prior to 1997 and rolled over the capital gain to the existing home, the old rules will apply to determine the cost basis of the current home. This will increase your gain and possibly further the need to sell while still married.

Income taxes are effected primarily by alimony payments and filing status. Alimony received is taxable as ordinary income, so a $50,000 payment received is actually worth $35,000 after taxes, assuming a 30% marginal state and federal tax bracket.

On the other hand, the payer of alimony receives a tax deduction, so the same $50,000 payment actually costs the taxpayer $35,000 assuming the same tax bracket.

Filing status is an important decision after the divorce. If you were still married on 12/31 of the tax year, you have the option of filing a joint return. If you can peacefully deal with your spouse after the divorce, you should consider this option as it could save considerable tax for both parties.

If you were divorced after 12/31 and you qualify, filing as head of household versus single can also save considerable tax dollars. Your best course of action is to consult with a tax professional regarding these options.

Mistake #3: Not Understanding the Rules of Retirement Accounts

Retirement accounts are a tax related issue, but their complexity merits a separate category. If a large portion of your settlement consists of retirement assets, you need to be aware of the many tax ramifications and potential penalties involved.

Normally, distributions from a retirement plan prior to age 591/2 are considered "early distributions" and are subject to a 10% penalty tax as well as ordinary income tax. An exception to this rule, however, is a transfer to an ex-spouse as part of a divorce settlement. A Qualified Domestic Relations Order (QDRO) is used to affect this transfer. Income taxes still apply, so any assets you receive from a "qualified plan", such as a 401(k), will be subject to a mandatory 20% tax withholding. For example, if you are awarded a $100,000 distribution from an ex-spouses 401(k) you will actually receive only $80,000.

To avoid this mandatory withholding, the transfer must be made directly to another retirement account, such as your own IRA. Once the assets are in your retirement account, you are now subject to the early distribution rules. If you need some of the assets to live on, or pay bills, make sure you take them out prior to transferring them to an IRA to avoid the 10% penalty.

To simplify, let's look at an actual example of how this transfer works:

Barbara and Stanley are both age 55 and going through a divorce. Stanley has $560,000 in his 401(k) that will be divided by a QDRO, transferring $280,000 to Barbara.

She could transfer the money directly to her IRA and pay no taxes until she starts withdrawing funds after age 591/2, at which time she would pay ordinary income tax on the amount withdrawn. But Barbara needs $80,000 for a down payment on a new house. So she holds back $100,000 before transferring the remaining amount to her IRA. 20% is withheld for taxes, leaving her with $80,000 to spend without incurring a 10% penalty.

After she transfers the remaining $180,000 to her IRA, Barbara is held to the early withdrawal rule. If she says, "Oh, I forgot, I need another $10,000 to buy a car," it is too late. She will have to pay the 10% penalty and the taxes on that money.
It is important to note that IRA's are not qualified plans, so a QDRO is not needed to divide the assets. Also, there is no 20% mandatory tax withholding on a transfer. To avoid paying taxes, you must deposit any distribution from an IRA directly to your own IRA. If a check is sent to you, you must deposit the money into your own IRA within 60 days to avoid a taxable distribution.

Mistake #4: Overlooking Debt and Credit Rating Issues

Nothing is worse than starting out a new life with bad credit. Several steps can be taken during the divorce process to minimize the chances of this occurring.

First, obtain a copy of your credit report. This will identify all joint accounts, accounts you may not have been aware of, and any potential credit problems.

Next, be sure to pay off and close all joint accounts prior to the divorce settlement and open new accounts in your own name. Unfortunately, creditors don't care how a separation agreement divides responsibility for joint debt (joint credit cards, auto loans etc.). Each person is liable for the full amount of debt until the balance is paid, hence the importance of dealing with this issue prior to your divorce.

Regarding income tax debt, even if the divorce is final, you may not be exempt from future tax liability. For three years after the divorce, the IRS can perform a random audit of a divorced couple's joint tax return. If it has good cause, the IRS can question a joint return for seven years.

To avoid any potential problems down the road, your divorce agreement should have provisions that spell out what happens if any additional penalties, interest or taxes are found as well as where the funds come from to pay for any expenses associated with an audit.

Mistake #5: Not Maintaining Control Over Insurance Policies

Most divorce decrees call for one of the parties to obtain a life insurance policy to insure the value of alimony payments, child support or some other financial need. If you are the person for whom the insurance is obtained, it is critical that you are either the owner or irrevocable beneficiary of the policy.

If you are not, the ex-spouse who took out the policy could easily stop making payments and you would never know about it until the policy is needed and it no longer exists. This could be financially devastating. As the owner or irrevocable beneficiary, you would be notified of any outstanding issues with the policy, such as non-payment of the premium, and could therefore take action and prevent the policy from lapsing or being cancelled.

Mistake #6: Failure to Budget

One of the most common mistakes made post-divorce is the failure to budget based on one's new lifestyle. We see this happen most often when one spouse keeps the home for the sake of the children or perhaps due to an emotional attachment. Because of the high value of the home, there are few other assets awarded in the settlement. The expense of maintaining the home and the lack of liquid assets often results in a rapid depletion of cash, leaving no choice but to sell the home.

This scenario can be avoided if you take a good hard look at your expenses versus liquid assets and income. A Certified Divorce Financial Analyst can help you project several years into the future and determine if you'll have enough resources to support your current lifestyle as well as your retirement years.

This analysis should be completed prior to a settlement. If it is determined that you will be unable to maintain your lifestyle with the proposed offer, you have established a good case to request more assets, alimony or child support.

Mistake #7: Failure to Identify Hidden Assets

Hopefully, you're not in a situation where you distrust your spouse and fear there are hidden assets that should be included in the settlement. Unfortunately, once a divorce is initiated, many individuals will do whatever they can to preserve what they feel is their own money. Some individuals maintain secret accounts or other financial activities throughout an entire marriage. If these assets are not exposed, one spouse is certain to obtain an unfair settlement.

There are multiple resources and methods used by financial professionals and attorneys to uncover potential hidden assets. Being aware of these may help you avoid being victimized by a dishonest spouse. Forensic accountants are generally the most commonly utilized professionals to assist in this area.

Tax returns are one of the best places to start. Most people are uneasy about misleading the IRS for fear of penalties, fines and even prison. Go back at least 5 years to look for any inconsistencies in income, the presence of trusts, partnerships or real estate holdings.

If your spouse is a business owner, corporate or partnership returns may show a change in salary, charging personal expenses to the company, or excessive retained earnings. Another common trick is to put a "friend" on the payroll, who agrees to give back the money paid to him after the divorce. A forensic tax professional is of tremendous help in this area.

Checking account statements and cancelled checks for the past few years can also be quite revealing. A cancelled check for a purchase you never knew about, such as an investment property, can make a substantial difference in total assets to be divided.

Savings accounts may reveal unusual deposits or withdrawals in amount or pattern that could point to a hidden asset such as a dividend producing investment. In addition, cash may be hidden almost anywhere.

Brokerage statements are valuable in tracking the purchase and sale of securities. If securities are sold and the proceeds are not accounted for, you can be sure that the assets are out there somewhere.

Expense accounts can be abused when corporations give employees a great deal of leeway in their expense account reporting. Cross checking between expense account disbursements and savings/checking account deposits may indicate a pattern of abuse if the deposits exceed legitimate business expenditures.

Children's bank accounts may be opened as a custodial account for the intent of hiding assets as well. In some of these cases, interest is not reported as income on tax returns, and no return is filed for the children.

This is not an exhaustive list of places to look for hidden assets. If you suspect this is occurring, you owe it to yourself to seek help from a financial professional.

In Summary

There are thousands of articles, books, manuals and other publications written about the financial issues of divorce. It is a complex area, and certainly deserves the attention it gets.

But reading this article or any other resource will probably not make you an expert. If you think you may not be receiving fair treatment, or you are simply uncomfortable dealing with these issues, it might make sense for you to consult with a financial professional who is trained specifically in divorce related issues.

A Certified Divorce Financial AnalystTM (CDFA) has endured extensive training in the financial issues of divorce. He or she will analyze the long-term financial impact of a proposed settlement and help you determine if it is feasible. Remember that a proposed settlement might look fair initially, but without proper analysis and forward looking projections, it can lead you to a future of financial hardship.

The bottom line is don't settle until you know how it will affect your financial future!

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Article submitted February 2005 by William Donaldson and Adam Westphalen

In this year's DeSilva case, the husband's behavior was far less egregious than the barbell attack at issue in Havell -- and yet was used to justify an even greater deviation from the usual division of marital property. With this broadened definition of "egregious" behavior, Judge Silbermann has opened the door, in property division proceedings, to consideration of marital misconduct, more generally, in the allocation of marital property.

The DeSilvas' Marriage and Divorce: Misconduct, Some Assets, More Debt

In the DeSilva case, Mrs. DeSilva alleged that Mr. DeSilva had engaged in a long history of abuse toward her, which, she said, had increased over time in frequency and intensity, and involved his heavy drinking. Among other allegations, she said he spat in her face; while she was pregnant with their second child, threw a packed duffel bag at her stomach; and engaged in verbal tirades, during which he called her unspeakable names, often in front of their children and other people as well. Mrs. DeSilva testified that she feared for her safety and the safety of her children, and suffered extreme mental anguish because of her husband's conduct; indeed, he had been arrested at least five times as a result of physical altercations with other people, such as a coworker and a cabdriver.

At the time Mrs. DeSilva sought a divorce, the couple held less than $45,000 in assets, including a car, her pension, and the cash-surrender value of their life insurance policies, but had about $65,000 in debt. Mr. and Mrs. DeSilva had disparate earnings and earnings potential. She had a degree in fashion design and had recently held a job earning $100,000 per year. He had a degree in marketing, but earned less than half of what she did -- $45,000 per year.

Mrs. DeSilva clearly alleged and proved sufficient abuse to gain a divorce on grounds of extreme cruelty, even under New York's relatively strict laws. The tougher question in a case like this is how to apportion the couple's assets and debts and, more importantly, whether one party's misconduct ought to be part of the calculus.

Equitable Distribution: Who Gets Marital Property and Marital Debts?

When couples divorce, courts are often saddled with the task of dividing their property. In most states, this process is guided by the principle of "equitable distribution," under which the property a couple has accumulated during marriage (and even the property they brought to the marriage, in some states) will be fairly apportioned between them. Courts are rarely given unfettered discretion in this process, but, instead, are guided by legislatively mandated factors to consider.

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New York's equitable distribution law, Domestic Relations Law § 236(b)(5)(d), provides thirteen factors that courts must consider before dividing marital property. Most of the factors relate directly to economic information such as past earnings, the amount of property the parties brought to the marriage, their expected future income and property acquisition, the tax consequences of property distribution, and whether either party wasted assets during the marriage or transferred them to avoid distribution. In addition, courts are directed to consider non-economic factors such as the duration of the marriage, the age and health of the parties, and the need for a custodial parent to keep the marital residence.

With respect to these many factors, the trial judge in the DeSilva case found only a few to be relevant: Judge Silbermann held that the plaintiff should continue to occupy the marital residence because she had custody of the couple's two small children; that she greatly out-earned him; and that his future financial circumstances were uncertain because of alcohol abuse and anger issues that made it difficult for him to retain jobs.

On these findings alone, a court might well have given Mr. DeSilva a slightly greater, or at least an equal share, of the couple's assets, and perhaps a smaller proportion of the debts -- given his predicted lower future income stream. But here's where the thirteenth factor comes into play: New York's equitable distribution law also directs courts to consider "any other factor which the court shall expressly find to be just and proper."

Here, Judge Silbermann noted, "a pattern of conduct involving both physical and verbal abuse which rises to the level of egregious fault." And, based primarily on that finding, the judge awarded one hundred percent of the marital assets to Mrs. DeSilva and ninety-two percent of the debts to Mr. DeSilva.

Different States' Views on the Role of Marital Misconduct in Property Division

The decision to strip Mr. DeSilva of any marital assets and saddle him with most of the marital debts may seem an obvious penalty - or an outrageous one, I suppose, depending on your point of view -- for abusing his wife. In most states, however, a court would simply not be permitted to consider his behavior during the marriage, no matter how egregious, when apportioning marital property.

But New York is not "most states" when it comes to family law. Most states - every other one, in fact - permit couples to obtain a "no-fault" divorce, where either party can unilaterally seek to have the marriage legally dissolved, even if the desire is not mutual, and even if they cannot agree on post-marital issues like custody, alimony, and the division of property. In New York, however, a spouse must allege and prove marital fault in order to obtain a divorce, or the couple, together, must agree to separate and file a written agreement resolving these issues without court intervention.

Unsurprisingly, most states that - unlike New York -- prohibit or discourage the consideration of fault in determining whether to grant a divorce similarly restrict consideration of fault for related issues like marital property division. Two influential compilations separated by more than thirty years - the Uniform Marriage and Divorce Act (1970) and the American Law Institute's Principles of the Law of Family Dissolution (2002) - take the view that consideration of fault has no place in property division proceedings. And nearly two-thirds of the states follow this view, disallowing consideration of fault entirely for property division purposes. (The rules regarding the consideration of fault in setting alimony awards can be different, as I discussed in a prior column.)

The remainder of states do permit consideration of fault in marital property division, though often only in limited circumstances.

Among them is New York -- which permits courts to consider marital misconduct as part of the "any other factor" analysis, but only if it is egregious.

Why the Judge's Ruling Was Right: Penalizing Domestic Violence

To reach the property division result in the DeSilva case, the judge had to hold that Mr. DeSilva's behavior constituted egregious fault, in that it "shocked the conscience." In prior cases, attempted murder of a wife, and a man's rape of his stepdaughter, both qualified under the standard. And in Havell v Islam - which the judge herself had decided, as noted above, in 2001 - the standard was held to encompass domestic violence as well.

In Havell, the husband quite literally beat his wife within an inch of her life, and, as a result, she was awarded ninety-five percent of a $13 million marital estate. In the opinion, Judge Silbermann looked to the law in other states, as well as to social science evidence about the physical and psychological ramifications of domestic violence for its victims. She concluded that the "egregious fault" standard could be interpreted to include domestic violence.

The conduct in Havell was indeed egregious - almost incomprehensibly so. After beating his wife with a barbell and watching her teeth and parts of her jaw fly across the room, Mr. Islam told their frantic children not to worry about helping her because she was already dead. She survived the attack, but suffered permanent neurological damage. The trial court's ruling in that case was upheld by the appellate division, which concluded that marital misconduct could, indeed, be taken into account when dividing property as long as it was "so egregious or uncivilized as to bespeak of a blatant disregard of the marital relationship."

Does the husband's behavior in DeSilva meet that standard? The shock value of Mrs. DeSilva's story is admittedly less than in Havell. Yet, if a sustained pattern of physical and verbal abuse of a spouse does not meet the requisite standard, perhaps we should think about why: Is domestic violence such a common aspect of some marriages that we deem it within the bounds of the normal and civilized? Let us hope not.

Surely abusing a spouse is one way to exhibit "a blatant disregard of the marital relationship." Thus, if New York were to permit spouses in marriages like the DeSilva's to walk away on equal footing (as many states do), financially, it would be subtly acknowledging the normalcy of the abuser's behavior.

While Justice Silbermann has at least implicitly broadened the category of "egregious" conduct that can justify the consideration of fault in property division, in doing so, she has sent the right message: Domestic violence is not a normal part of marriage and its perpetrators must pay.
By JOANNA GROSSMAN

 

Tax Years 2006 and Later

Earneded Income Credit Amounts Increase
Earned income amount.
The maximum amount of income you can earn and still get the credit is higher for 2006 than it is for 2005. You may be able to take the credit for 2006 if:

You have more than one qualifying child and you earn less than $36,348 ($38,348 if married filing jointly),
You have one qualifying child and you earn less than $32,001 ($34,001 if married filing jointly), or
You do not have a qualifying child and you earn less than $12,120 ($14,120 if married filing jointly).
The maximum amount of adjusted gross income (AGI) you can have and still get the credit has also increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.

Investment income amount.
The maximum amount of investment income you can have in 2006 and still get the credit increases to $2,800.

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Exemption Amount Increased
The amount you can deduct for each exemption has increased from $3,200 in 2005 to $3,300 in 2006.

You lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount at which the phaseout begins depends on your filing status. For 2006, the phaseout begins at:

$112,875 for married persons filing separately,
$150,500 for single individuals,
$188,150 for heads of household, and
$225,750 for married persons filing jointly or qualifying widow(er)s.
If your adjusted gross income is above the amount for your filing status, use the Deduction for Exemptions Worksheet in the Form 1040 instructions to figure the amount you can deduct for exemptions.

Social Security and Medicare Taxes
For 2006, the employer and employee will continue to pay:

6.2% each for social security tax (old-age, survivors, and disability insurance), and
1.45% each for Medicare tax (hospital insurance).
Wage limits. For social security tax, the maximum amount of 2006 wages subject to the tax has increased from $90,000 to $94,200. For Medicare tax, all covered 2006 wages are subject to the tax.

Standard Deduction Amount Increased
The standard deduction for taxpayers who do not itemize deductions on Schedule A of Form 1040 is, in most cases, higher for 2006 than it was for 2005. The amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer.

The basic standard deduction amounts for 2006 are:

Head of household -- $7,550
Married taxpayers filing jointly and qualifying widow(er)s -- $10,300
Married taxpayers filing separately -- $5,150
Single -- $5,150
The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $850 or the sum of $300 and the individual's earned income.

Standard Mileage Rates
For tax years beginning in 2006, the allowable deductions for the standard mileage rate are as follows:

Business miles. The standard mileage rate for the cost of operating your car increases to 44.5 cents a mile for all business miles driven.
Charitable services. The standard mileage rate allowed for use of your car when you use your car to provide charitable services to a charitable organization is 14 cents a mile.
Charitable services -- Hurricane Katrina relief services. If you used your vehicle in giving services to a charitable organization to provide relief related to Hurricane Katrina, the standard mileage rate allowed for use of your car is 32 cents a mile.
Medical reasons. The standard mileage rate allowed for use of your car for medical reasons is 18 cents a mile.
Moving. The standard mileage rate for determining moving expenses is 18 cents a mile.

2006 Federal Income Tax Rate Schedules
The 2006 tax rate schedules are provided so that you can compute your estimated tax for 2006.

Uniform Definition of a Qualifying Child
Beginning in 2005, one definition of a qualifying child will apply for each of the following tax benefits.

Dependency exemption.
Head of household filing status.
Earned income credit (EIC).
Child tax credit.
Credit for child and dependent care expenses.
Tests To Meet
In general, all four of the following tests must be met to claim someone as a qualifying child.

Relationship test.
The child must be your child (including an adopted child, stepchild, or eligible foster child), brother, sister, stepbrother, stepsister, or a descendent of one of these relatives.

An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final.

An eligible foster child is any child who is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction.

Residency test.
A child must live with you for more than half of the year. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, or detention in a juvenile facility count as time lived at home. A child who was born or died during the year is considered to have lived with you for the entire year if your home was the child's home for the entire time he or she was alive during the year. Also, exceptions apply, in certain cases, for children of divorced or separated parents and parents of kidnapped children.

Age test.
A child must be under a certain age (depending on the tax benefit) to be your qualifying child.

Dependency exemption, head of household filing status, and EIC.
For purposes of these tax benefits, a child must be under the age of 19 at the end of the year, or under age 24 at the end of 2005 if a student, or any age if permanently and totally disabled.

A student is any child who, during any 5 months of the year:

Was enrolled as a full-time student at a school, or
Took a full-time, on-farm training course given by a school or a state, county, or local government agency.
A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or night school.

Child tax credit.
For purposes of the child tax credit, a child must be under the age of 17.

Credit for child and dependent care expenses.
For purposes of the credit for child and dependent care expenses, a child must be under the age of 13 or any age if permanently and totally disabled.

Support test.
A child cannot have provided over half of his or her own support during the year.

Exception.
For purposes of the EIC only, the Support test does not apply.

Qualifying Child of More Than One Person
Sometimes a child meets the tests to be a qualifying child of more than one person. However, only one person can treat that child as a qualifying child. If you and someone else (other than your spouse if filing jointly) have the same qualifying child, you and the other person(s) can decide who will claim the child. If you cannot agree on who will claim the child and more than one person files a return using the same child, the IRS may disallow one or more of the claims using the tie-breaker rule explained in Table 1, next.

Table 1. When More Than One Person Files a Return Claiming the Same Qualifying Child (Tie-Breaker Rule).
IF . . . THEN the child will be treated as the qualifying child of the. . .
only one of the persons is the child's parent, parent.
both persons are the child's parent, parent with whom the child lived for the longer period of time. If the child lived with each parent for the same amount of time, then the child will be treated as the qualifying child of the parent with the highest adjusted gross income (AGI).
none of the persons are the child's parent, person with the highest adjusted gross income.

Dependency Exemption
To claim the dependency exemption for a qualifying child, all four tests listed earlier under Tests To Meet must be met. The child generally must also be a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico. An exception applies for certain adopted children. If married, he or she cannot file a joint return unless the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns.

A person who used to qualify as your dependent but who is not your "qualifying child" may still qualify as your dependent as a "qualifying relative." To claim the dependency exemption for a qualifying relative, the child cannot be the qualifying child of any other person and all five dependency tests discussed under Dependency Tests in Publication 501 must be met.

Note: If you are a dependent of another person, you cannot claim any dependents on your return.

Head of Household Filing Status
In general, you can use head of household filing status only if, as of the end of the year, you were unmarried or " considered unmarried" and you paid over half the cost of keeping up a home:

That was the main home for all the entire year of your parent whom you can claim as a dependent (your parent did not have to live with you), or
In which you lived for more than half of the year with either of the following:
Your qualifying child (defined earlier, but without regard to the exception for children of divorced or separated parents). But, if your qualifying child is married at the end of the year, see Married child below.
Any other person whom you can claim as a dependent.
But you cannot use head of household filing status for a person who is your dependent only because:

He or she lived with you for the entire year, or
You are entitled to claim him or her as a dependent under a multiple support agreement.
Married child.
If your qualifying child is married at the end of the year, both of the following must apply for the child to be your qualifying child for purposes of head of household filing status.

The child cannot file a joint return unless the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns.
The child must be a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico. An exception applies for certain adopted children.
Earned Income Credit (EIC)
You may be able to claim the earned income credit (EIC) in 2005 if you have:

2 or more qualifying children and your earned income is less than $35,263 ($37,263 if married filing jointly for 2005),
1 qualifying child and your earned income is less than $31,030 ($33,030 if married filing jointly for 2005), or
No qualifying children and your earned income is less than $11,750 ($13,750 if married filing jointly for 2005). For purposes of the EIC, a qualifying child must meet the Relationship test, Residency test (without regard to the exception for children of divorced or separated parents), and Age test, earlier. A qualifying child does not have to meet the Support test for purposes of the EIC. But, if your qualifying child is married at the end of the year, see Married child next.
Married child.
A child who is married at the end of the year is a qualifying child for purposes of the EIC only if you can claim him or her as your dependent (see Dependency Exemption, earlier) or this child's other parent claims him or her as a dependent under the rules for children of divorced or separated parents in Publication 501, Exemptions, Standard Deduction, and Filing Information.

Child Tax Credit
You may be able to take the child tax credit if you have a qualifying child that meets all four of the tests listed earlier under Tests To Meet. For additional rules that you must meet, see Publication 972, Child Tax Credit.

Credit for Child and Dependent Care Expenses
Generally, a qualifying person for purposes of the credit for child and dependent care expenses is:

Your qualifying child (defined earlier, but without regard to the exception for parents of kidnapped children), or
Your dependent or spouse who is physically or mentally incapable of caring for himself or herself and who lived with you for more than half of the year.
For purposes of the credit for child and dependent care expenses, a qualifying child and dependent are determined without regard to the exception for children of divorced or separated parents and the child is treated as a qualifying person only for the custodial parent.

For additional rules that you must meet, see Publication 503, Child and Dependent Care Expenses. However, you no longer need to meet the Keeping Up a Home test discussed in Publication 503.