Litigation

After their divorce, the debtor's former wife stayed in the marital residence with their dependent child. The property was awarded to the wife in the divorce decree subject to all encumbrances and a lien in favor of the debtor. The debtor asserted an exemption in the property as property that his dependent uses as a residence. The trustee objected, and a Minnesota bankruptcy court overruled the objection.

The Eight Circuit affirmed, noting that 'U.S.C. 522(d)(i) allows a debtor to exempt a 'debtor's aggregate interest, not to exceed $17,425 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence.' The court added that 11 U.S.C. 101 (37) defines lien as a 'charge against or interest in property to secure payment of a debt.' Finding the statute clear on its face, the circuit court concluded that a lien is an interest in real property and hence qualified for the homestead exemption as an interest in the dependent child's residence.

Duplication for Enhanced Earnings and Child Support Is Prohibited

Goodman v. Goodman, Indep No. 201099-00 (N.Y. Sup. Ct; Nassau Cty., Feb. 10)

The New York Supreme Court, Nassau County, has held that income from a distributive award of enhanced future earnings capacity must be subtracted from the income of the payor spouse and included in the income of the payee spouse in order to properly compute and determine each partner's respective child support obligations. In reaching its decision, the court ruled that the same logic that prohibits basing spousal maintenance on income that has been valued and distributed as marital property must be extended when considering awards of child support.

Child Support Obligation May Not Be Waived Via Parties' RSA

Patetta v. Patetta, A-1449-OITS (N.J. App Div., March 3)

The parental duty of child support beyond the age of 18 may not be waived or terminated by a property settlement agreement without proof of emancipation, the New Jersey Appellate Division has ruled.

The parties' property settlement agreement provided that child
support payments would be reduced by $50 per week per child when each child became emancipated. It also stated that the parties 'shall undertake their best efforts to pay for college expenses' after student loans, scholarships and financial aid have been exhausted. After the parties' oldest child turned 18, the father sought a reduction in his child support obligation.

The lower court denied the request and the Appellate Division affirmed, finding that no specific age equates to a child's emancipation and that the age of 18 is only prima facie and not conclusive proof. The court further held that while a child is living at home and dependent on his parents while attending college full-time, he is entitled to continued support.

Woman Sues Lawyer over Divorce Settlement

Bouville vs. McKenna, No. 03-WY-0224-AJ (MJW) (N.D. Colo., Feb. 5)

A woman is suing her former attorney and his firm for breach of fiduciary obligation and professional negligence stemming from his involvement with her divorce settlement. She alleges that the attorney had represented her and her husband in several business transactions. She claims that after she and her husband had entered into a divorce settlement agreement in France, under which she would receive $250,000, her house and her car, she was informed by the lawyer that he could no longer represent her, and that she should sign a deed to property in Colorado over to her husband. The property was worth more than $1 million. She further alleges that after she signed the deed and her husband returned to France, he rescinded the $250,000 settlement and offered $50,000, which she accepted.

The plaintiff alleges that the lawyer should have advised her to seek independent counsel before signing the deed. She claims that an independent counsel would have advised her that Colorado could have assumed jurisdiction over the divorce, and that she 'would have been entitled to equitable distribution of the marital estate,' including the property deeded to her husband.

Debtor's Lien Is Eligible for Homestead Exemption

In re Johnson, No. 02-6042 (8th Cir., Feb. 4)

A Chapter 13 debtor's lien in real property occupied by his former spouse and dependent child is eligible for homestead exemption under 11 U.S.C. 522(d)(i), the U.S. Court of Appeals for the Eighth Circuit has ruled.

After their divorce, the debtor's former wife stayed in the marital residence with their dependent child. The property was awarded to the wife in the divorce decree subject to all encumbrances and a lien in favor of the debtor. The debtor asserted an exemption in the property as property that his dependent uses as a residence. The trustee objected, and a Minnesota bankruptcy court overruled the objection.

The Eight Circuit affirmed, noting that 'U.S.C. 522(d)(i) allows a debtor to exempt a 'debtor's aggregate interest, not to exceed $17,425 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence.' The court added that 11 U.S.C. 101 (37) defines lien as a 'charge against or interest in property to secure payment of a debt.' Finding the statute clear on its face, the circuit court concluded that a lien is an interest in real property and hence qualified for the homestead exemption as an interest in the dependent child's residence.

Duplication for Enhanced Earnings and Child Support Is Prohibited

Goodman v. Goodman, Indep No. 201099-00 (N.Y. Sup. Ct; Nassau Cty., Feb. 10)

The New York Supreme Court, Nassau County, has held that income from a distributive award of enhanced future earnings capacity must be subtracted from the income of the payor spouse and included in the income of the payee spouse in order to properly compute and determine each partner's respective child support obligations. In reaching its decision, the court ruled that the same logic that prohibits basing spousal maintenance on income that has been valued and distributed as marital property must be extended when considering awards of child support.

Child Support Obligation May Not Be Waived Via Parties' RSA

Patetta v. Patetta, A-1449-OITS (N.J. App Div., March 3)

The parental duty of child support beyond the age of 18 may not be waived or terminated by a property settlement agreement without proof of emancipation, the New Jersey Appellate Division has ruled.

The parties' property settlement agreement provided that child
support payments would be reduced by $50 per week per child when each child became emancipated. It also stated that the parties 'shall undertake their best efforts to pay for college expenses' after student loans, scholarships and financial aid have been exhausted. After the parties' oldest child turned 18, the father sought a reduction in his child support obligation.

The lower court denied the request and the Appellate Division affirmed, finding that no specific age equates to a child's emancipation and that the age of 18 is only prima facie and not conclusive proof. The court further held that while a child is living at home and dependent on his parents while attending college full-time, he is entitled to continued support.

Woman Sues Lawyer over Divorce Settlement

Bouville vs. McKenna, No. 03-WY-0224-AJ (MJW) (N.D. Colo., Feb. 5)

A woman is suing her former attorney and his firm for breach of fiduciary obligation and professional negligence stemming from his involvement with her divorce settlement. She alleges that the attorney had represented her and her husband in several business transactions. She claims that after she and her husband had entered into a divorce settlement agreement in France, under which she would receive $250,000, her house and her car, she was informed by the lawyer that he could no longer represent her, and that she should sign a deed to property in Colorado over to her husband. The property was worth more than $1 million. She further alleges that after she signed the deed and her husband returned to France, he rescinded the $250,000 settlement and offered $50,000, which she accepted.

The plaintiff alleges that the lawyer should have advised her to seek independent counsel before signing the deed. She claims that an independent counsel would have advised her that Colorado could have assumed jurisdiction over the divorce, and that she 'would have been entitled to equitable distribution of the marital estate,' including the property deeded to her husband.