There are several basic legal claims that arise in a family law case. For purpose of this discussion, these claims are classified as follows:

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1 SCOTT LAW OFFICES, PLLC YOU AND YOUR FAMILY LAW CASE The practice of family law covers a wide variety of topics, from premarital agreements, to adoption, to divorce and custody matters. The dissolution of a marriage is an unusually traumatic event. This easy to read outline discusses many areas of family law that might be of concern to you. I hope it will remove some uncertainties that you may have. You will probably have specific questions even after you have studied this information. Please ask us those questions and keep asking until you understand the answers. Scott Law Offices, PLLC is here to help. There are several basic legal claims that arise in a family law case. For purpose of this discussion, these claims are classified as follows: (1) Premarital Agreements (2) Divorce from Bed and Board (3) Separation Agreements (4) Absolute Divorce (5) Mediation and Arbitration (6) Alimony and Post-Separation Support (7) Beneficiary Designation (8) C.O.B.R.A. (9) Property Division (Equitable Distribution of Marital Assets) (10) Change of Name (11) Reconciliation (12) New Wills (13) Child Custody (14) Child Support (15) Adoption (16) Marital Misconduct (17) Dating Relationships (18) Alienation of Affection and Criminal Conversation (19) Domestic Violence Except for getting the actual absolute divorce, the parties can resolve many of these issues either by agreement (separation agreement) or through litigation. To obtain an absolute divorce, a simple Court hearing is necessary. If other litigation is involved, a party can file a lawsuit for each cause of action listed above. However, one or more of these claims are usually combined in one lawsuit with separate claims for relief for each cause of action. In a family with a husband, a wife and at least one minor child, one lawsuit might address (1) child custody and child support (2) post separation support and permanent alimony for the financially dependant spouse (3) temporary possession of the marital home place, and (4) the establishment of the parties ownership rights in various items of personal property. The Court grants an absolute divorce after one year of legal 1

2 separation in a separate lawsuit. The equitable distribution (division) of marital property can be finalized either before or after the Court grants an absolute divorce if you have preserved your rights before the divorce. PREMARITAL AGREEMENTS An engaged couple may enter into an agreement before their marriage that sets out what will happen to their property in the event of their death or divorce. This type of agreement is known as a pre-nuptial ("pre-nupt") or premarital agreement. A premarital agreement is made between prospective spouses in contemplation of marriage and becomes effective only upon their marriage. Prenuptial Agreement Laws in NC Prenuptial agreements are governed by the Uniform Premarital Agreement Act, Chapter 52B of the North Carolina General Statutes. To be valid, a premarital agreement must be in writing and signed by both parties (the engaged couple). At the time the engaged couple marry, their prenuptial agreement becomes effective, that is to say, their agreement becomes a legal, binding contract between the newlyweds. After marriage, the premarital agreement can be amended or revoked. An amendment to the premarital agreement or its revocation must also be in writing and signed by the married couple. Each prenuptial agreement should be uniquely tailored to the goals of the engaged couple. An engaged couple should anticipate several weeks of discussions to carefully consider and craft a premarital agreement that is a true reflection of their goals, fair, and fully understood by both. During these discussions, the counsel of a family law attorney, representing each party, is strongly recommended. Writing a Prenuptial Agreement: What Do They Cover? In general, premarital agreements determine financial matters between the spouses. Premarital agreements cover the rights and obligations of the spouses to manage and control certain property in all aspects of the sale, use, exchange, lease, consumption, assignment, transfer, mortgage, encumbering, and disposition of property. In particular, a prenuptial agreement outlines what will happen to certain property owned separately by one spouse or jointly by both spouses in the event of a spouse's death or the couples' divorce. In most cases, prenuptial agreements are executed to insure that the separate property owned by each spouse prior to their marriage remains their separate property under their control during the marriage. Separate property can include assets, debts, personal property, and all forms of income. A premarital agreement may also seek to create joint or marital property during the marriage and how that marital property will be disposed of in the event of one spouse's death or the couple's divorce. For example, the parties may agree that all property purchased from a joint banking account during the marriage shall be classified as marital property and divided equally upon divorce or shall pass to one spouse upon the other spouse's death. 2

3 The important issue of spousal support upon separation and divorce can be addressed in a prenuptial agreement. The parties to a premarital agreement can totally waive their rights to alimony or set the amount of alimony based upon the duration of the marriage or the need of the dependent spouse. It should be noted, however, that a waiver of alimony, will be dismissed by the court if one spouse is eligible for public assistance as a result of the break-down of the marriage. In that case the court will order the wealthier spouse to pay the amount of spousal support needed to lift the needy spouse out of his or her eligibility for public assistance. A premarital agreement can also decide issues of inheritance, the making of a will or trust, and the disposition of retirement accounts and life insurance death benefits upon the death of one spouse. Golden Rules of Writing a Prenuptial Agreement In order to avoid a challenge to a pre-marital agreement, it is important to: Make full disclosure of your financial situation -- all assets, debts and liabilities -- with your fiancé and to demand full disclosure from him (her). If either party fails to make full disclosure, it can be grounds to set aside your prenuptial agreement as unenforceable. Conduct your negotiations over your premarital agreement in such a manner as to preclude any accusation that your fiancé was coerced into signing the agreement, or that he (she) was under duress to sign, or that you exerted "undue influence" to persuade him (her) to sign. The surest way to avoid accusations of coercion, duress, or undue influence is to allow sufficient time -- no less than 30 days -- before your wedding day to discuss and finalize your prenuptial agreement with the advice and counsel of family law attorneys representing you and your fiance(e). Follow in executing your premarital agreement is to make sure that it is fair to you fiancé. Any contract, including your prenuptial agreement, can be set aside because it is "unconscionable." The word "unconscionable" is defined as "unreasonable or not guided by conscience." Deal fairly and openly with your fiancé in discussing and finalizing your prenuptial agreement. Anything less will jeopardize the enforceability of your premarital agreement and, in a larger sense, your eventual marriage GENERAL SUGESTIONS The facts surrounding your family law case are unique from any other. Your well-meaning friends may offer you advice about your case. Frequently, such advice is not accurate and you should be cautious in following it. Custody and alimony proceedings are very emotional and parties sometimes use them to seek revenge. Sometimes one parent will use the children in an attempt to 3

4 punish the other parent. Prepare your children properly without poisoning their minds about your spouse. Obtain professional advice as necessary. If you need assistance in locating a qualified psychologist either for yourself or the children let me know. Continue to cooperate with your spouse where the children s best interests are involved. Do not discuss with anyone the confidential matters involved in your case. Friends often pass information to the other party. It can defeat my efforts to help you. I strongly suggest that you follow my advice. I have specific reasons for all of the advice that I give to you and if I fail to explain those reasons adequately please ask me. BEGINNING A LAWSUIT The first step in a lawsuit is the preparation and filing of a summons and complaint. The summons is the Court document on which a deputy sheriff/or via certified mail through your attorney notes that a defendant has been given a copy of the complaint. The complaint is the Court document telling the defendant why the plaintiff is suing. After the summons and complaint are filed, the other spouse must receive proper notice. To avoid needless embarrassment to your spouse, we can allow him or her to accept service here at our office or we can serve the documents via certified mail. If your spouse will not agree to accept service of the summons and complaint, we will simply send the sheriff. Do not let your spouse worry you by saying that he or she will not sign an acceptance. If we are unable to locate your spouse, we can obtain sufficient service by publication in a local newspaper. TEMPORARY RELIEF If your spouse becomes abusive to you or your children, refuses to provide reasonable support or refuses to give us information concerning property, the court will hear our evidence on a priority emergency basis and determine if you should receive some temporary relief while the case is pending. The Court will require both you and your spouse to file a complete financial statement of you earnings and monthly expenses. It will restrain both of you from physically abusing each other. If at any time you feel you need temporary relief, be sure to let me know immediately. Your case will be contested unless you and your spouse agree on all aspects of custody, support, property division and payment of debts, attorneys fees and court costs. If your spouse disputes any of these matters, you do not have an uncontested case and a trial will be necessary on those items in dispute. Even after the complaint for relief is filed, the matter may still be settled by consent. The court will decide all unresolved issues. DIVORCE FROM BED AND BOARD Before a married couple legally separates, they may seek a judicial separation in order to get the other spouse out of the marital home. The married couple remains legally married to each other, albeit ordered by the court to live separate and apart from each other. In the state of North Carolina, a divorce from bed and board is only available if the moving spouse establishes fault on the part of the other spouse. A divorce from bed and board is granted based on one or more of the following grounds: 4

5 One spouse abandoning the family; One spouse maliciously turning the other spouse out-of-doors; One spouse treating the other spouse in a cruel and barbarous manner, endangering his or her life; One spouse offering indignities to the person of the other spouse to such an extent as to render his or her condition intolerable and his or her life burdensome; One spouse using drugs or alcohol in excess; and One spouse committing adultery. If the court finds that a spouse has committed one or more of these acts, the offending spouse may be ordered to leave the marital home. Divorce from bed and board is not commonly granted. It should also be noted that if you are granted a divorce from bed and board, you lose all the automatic inheritance rights that exist by virtue of your marriage. The law places the burden of proving a valid defense on the accused spouse. There are four defenses to divorce from bed and board: collusion, connivance, condonation and recrimination. SEPARATION AGREEMENTS In North Carolina, the separation of a married couple takes place when they move into separate residences with the intent of living separate and apart. It is advisable for a couple contemplating legal separation in North Carolina to consult with their attorneys prior to their actual separation for the purpose of drafting a Separation Agreement and Property Settlement. This is a written contract between the spouses and can cover all or some of the issues involved in their separation and eventual divorce. Because a Separation Agreement and Property Settlement is a legally binding contract once it is signed by both spouses and notarized, it is important to consult with an attorney to fully understand your rights under NC statutes and separation laws before entering into any such contract. All issues surrounding a couple's legal separation and divorce can be resolved through a Separation Agreement and Property Settlement with the exception of the couple's actual divorce, which can only be granted by a court. For example, the couple can determine how their marital property is to be divided, the amount and duration of spousal and child support, and the child custody schedule the parents will follow. The obvious advantage of a Separation Agreement and Property Settlement is that all these issues can be resolved without the need for costly litigation. There are pronounced advantages to settling the issues surrounding separation and divorce through a Separation Agreement and Property Settlement rather than litigating those issues. The most prominent advantage is cost. Litigation is expensive, time consuming, and its outcome uncertain. During separation and divorce, a family's finances are stretched thin to support two households when during the marriage there was only one household to support. Worse yet are the emotional costs exacted in litigation. Months of adversarial litigation can exacerbate the personal relationships between immediate and extended family members already under severe strain from the break-up of the couple's marriage. This is a particularly difficult period for the children involved regardless of their ages. 5

6 Another advantage to the settlement of issues through a Separation Agreement and Property Settlement is that the couple remains in control of the negotiations and ultimate outcome. It should be remembered that at the end of a trial, it is the judge who makes the final decision governing very telling and important aspects of the couple's lives and the lives of their children. In sharp contrast, the parties to a contract, such as a Separation Agreement and Property Settlement, negotiate and mutually agree to its terms and in the end their contract is tailor-made to fit their priorities and needs. In some cases a married couple can handle their settlement negotiations between themselves and need an attorney only at the beginning to fully understand their rights and at the tail-end to properly draft their Separation Agreement and Property Settlement. This is true where the couple is like-minded and their relationship remains open, amicable and even-handed. In most cases, however, married couples on the verge of legal separation will need their individual attorneys to handle their settlement negotiations. You should understand that an attorney is bound by the legal profession's code of ethics to represent and advocate for the best interests of a single party. You are advised to hire an attorney to handle your settlement negotiations if your relationship with your spouse is acrimonious, if you are ill-informed as to your marital assets and their value, if your priorities and objectives are radically different from those of your spouse, or if you feel that you at a disadvantage in negotiating with your spouse for whatever reason. Before meeting with an attorney to discuss an eventual separation from your spouse, you should give careful thought to what your priorities and objectives are. For example, do you want primary custody of your children and ownership of the marital home and its furnishings to provide some continuity for your children? Are you concerned about your future financial security upon your retirement and therefore looking for a substantial share of your spouse's retirement accounts? If your children are near college-age, do you want marital assets converted to a trust fund to cover their college education? If you and your spouse are unable to settle, then the issues pertinent to your case - child custody and support, spousal support in the form of post-separation support and alimony, divorce from bed and board (discussed sbove), property division and absolute divorce - will be settled through court action. Scott Law Offices has over 12 years experience in family law and have handled thousands of cases on all issues involved in family law, including legal separation in North Carolina. If you need help with you separation, contact Scott Law Offices today. We have extensive experience with North Carolina separation laws and can help navigate you through the legal system. 6

7 ABSOLUTE DIVORCE 7 Ways to Avoid the Pain & Expense of Divorce KNOW YOUR RIGHTS: Talk with a lawyer experienced in family law. Ask him about the facts of your situation. Tell him what worries you and what you need the most. PROTECT YOUR MONEY AND YOUR CREDIT: Take appropriate measures to prevent your spouse from taking the money from joint accounts or making unnecessary credit charges. Set aside enough money to tide you over until property and support matters can be settled. CONSIDER COUNSELING FOR YOURSELF AND YOUR CHILDREN: A good counselor can help you sort out the complex emotions surrounding divorce. It will help you make wiser decisions. You can learn how to keep your children from being unnecessarily upset. INVESTIGATE YOUR FINANCES: It is important to know what you have and what you owe. Make copies of all financial records and keep them in a safe place or give them to your lawyer. This can save you legal and accounting fees. AVOID ARGUMENTS WITH YOUR SPOUSE: If you cannot discuss matters calmly, wait until later or let your lawyer do the negotiating. No one ever wins a domestic argument and it could get violent. FIND AN EXPERIENCED LAWYER YOU CAN TRUST: Confidence and trust are especially important in divorce matters. Make certain your lawyer is experienced in family law. Find a board certified specialist by calling the N.C. State Bar in Raleigh for the names of specialists in your area. KEEP YOUR CHILDREN WITH YOU: If you have been your children's primary caregiver, the children should remain with you. The court will award you child support to assist in caring for them. In North Carolina, absolute divorces are usually obtained based on one year's separation. After you and your spouse have lived separately for one year, without resuming the marital relationship, either of you may obtain an absolute divorce. Attempts at reconciliation marked by isolated instances of sexual intercourse will not automatically end the period of continuous separation. However, instances of sexual intercourse and nights spent together may add to the totality of circumstances sufficient to cause a court to find that you have voluntarily renewed or reconciled the marital relationship. Should a court so find, the separation period will be reset. The entry of an absolute divorce terminates your rights to post separation support, alimony, and equitable distribution of marital property unless you have filed such a claim before the entry of an absolute divorce. If you go on with your absolute divorce without asserting claims for alimony or equitable distribution, or if we do not assert such claims in responding to your spouse's divorce suit, it is because of your instructions to us that you do not want us to assert such claims. If you have any questions about this, please ask us immediately, and in all events before the entry of your absolute divorce. Also, if you have been married for 10 years or longer it may improve your Social Security retirement benefits. You may want to delay your divorce until after your tenth anniversary. 7

8 Mediation: Mediation is a meeting between the parties in a domestic dispute and a third party mediator trained in dispute resolution. The goal is to reach a mutually acceptable agreement on as many issues as possible and to write a memorandum outlining the terms of the agreement. Mediation is consensual -- you are not told by the mediator what the decision should be. Mediation is successful in many cases. Its advantages are that it is not adversarial, it is less expensive than extended court proceedings, it is faster than multiple court hearings, and you have more input into the terms of any agreement reached rather than having a judge decide the issues for you. For mediation to be fully successful the parties must be open to settlement. They need to try to find middle ground which involves compromise by both parties. In preparation for mediation you should think carefully about what is most important to you and be prepared to explain why. We have attorneys trained as Certified Superior Court Mediators on call that have a high success rate of settling domestic cases. We can go to a mediation conference to advise you of the legal consequences of different issues discussed before you commit to a binding settlement agreement. This is possible in all cases except court ordered custody and visitation mediation in certain counties of the state. In these counties the parties meet together alone with a court appointed mediator paid by the state. Mediation is increasingly popular in family law matters. It is successful if both parties will seriously try to reach an agreement. However, one non-cooperative party can make mediation impossible. We encourage you to explore this alternative method of dispute resolution with us if you believe it can work in your case. We can help in the selection of a mediator with experience in cases similar to yours. Arbitration: The spouses may agree to submit some or all of their disputes to an arbitrator, a person chosen to decide the issues that the parties present. An arbitrator should have special training and qualifications. The arbitrator s decision can be made into a court judgment. Although traditionally the decision of an arbitrator is binding and final, some variations have emerged in recent years. We can discuss with you whether arbitration is advisable. It offers a good alternative to multiple court hearings and is generally faster than the court process. It is especially appropriate in complex cases. POST -SEPARATION SUPPORT & ALIMONY On October 1, 1995, the law of alimony changed dramatically. In all alimony actions filed on or after October 1, 1995, the spouse seeking alimony must only prove that he or she is a dependent spouse to be entitled to an award of alimony. The following information relates to alimony actions filed on or after October 1, Consult your legal adviser for information concerning alimony actions filed before October 1, 1995, or alimony orders entered before that date. 8

9 The court will award spousal support only to the dependent spouse. Generally, a spouse is dependent if he or she earns insufficient income to maintain the standard of living enjoyed during the marriage because of the loss of the other spouse's income. There are two types of spousal support. The first, called "post separation support", is temporary and is designed to provide for the dependent spouse's support until a final order of alimony is entered. An award of post separation support automatically ceases upon the entry of an award of permanent alimony. The second type of spousal support, called permanent alimony, is alimony awarded by the court to the dependent spouse paid either in a lump sum or periodically over a specified or indefinite period. Despite the use of the word "permanent," an award of permanent alimony does not necessarily last forever. The court has the discretion to order payment of permanent alimony for only a limited time period. The court may hold two separate hearings. The first, the post separation support hearing, may be heard with child support and child custody claims. At this hearing, a judge sitting without a jury will hear the evidence and decide if one spouse is a dependent spouse. In deciding, the court considers the income and expenses of both the dependent spouse and the supporting spouse. The court considers each spouse's affidavit describing their income and expenses, although each party may testify before the court. The court will compare the parties' incomes and expenses, and decide the financial needs of each party and their accustomed standard of living. If it determines that the resources of the spouse seeking support are not adequate to meet his or her reasonable needs and the other spouse has the ability to pay, the court will find the spouse to be the dependent spouse. It will then make an award of post separation support to the dependent spouse. In determining whether to award post separation support, and the amount of the post separation support, the court must also consider any acts of marital misconduct committed by the dependent spouse on or before the date of separation. If the court considers marital misconduct by the dependent spouse, the court must also consider acts of marital misconduct committed by the supporting spouse on or before the date of separation. Once the court awards post separation support, the award continues until the date specified in the order or the entry of a final order of permanent alimony. The post separation support can either be periodic payments, a lump sum payment, a transfer of personal property, possession of property, a security interest in real property or a combination of these. The procedure at the permanent alimony hearing is much the same. Once the court decides that one spouse is the dependent spouse and that the other spouse is the supporting spouse, the court may award permanent alimony to the dependent spouse. In deciding the amount of alimony to award, the duration of the award, and the manner of payment of the award, the court has wide discretion, but must consider all relevant factors, specifically including: the marital misconduct of either of the spouses (see below); the relative earnings and earning capacities of the spouses; the ages and the physical, mental, and emotional conditions of the spouses; the amount and sources of earned and unearned income of both spouses, including but not limited to, earnings, dividends, and benefits such as medical, retirement, insurance, social security, or others; the duration of the marriage; the contribution by one spouse to the education, training, or increased earning power of the other spouse; 9

10 the extent to which the earning power, expenses, or financial obligations of a spouse will be affected by reason of serving as the custodian of a minor child; the standard of living of the spouses established during the marriage; the relative education of the spouses and the time necessary to acquire sufficient education or training to enable the spouse seeking alimony to find employment to meet his or her reasonable economic needs; the relative assets and liabilities of the spouses and the relative debt service requirements of *the spouses, including legal obligations of support; the property brought to the marriage by either spouse; the contribution of a spouse as homemaker; the relative needs of the spouses; the federal, state, and local tax ramifications of the alimony award; any other factor relating to the economic circumstances of the parties that the court finds to be just and proper. Because of the wide discretion vested in the court, there is no way to predict with accuracy the amount of alimony a court will award or the duration of such an award. Although the court's discretion is broad, the court must strive to be fair to both parties. If it finds that the supporting spouse is deliberately depressing his or her income, it can base an award on capacity to earn rather than actual earnings. Although in awarding alimony, the court attempts to allow both parties to maintain the standard of living to which they grew accustomed during the marriage, the harsh economic reality is that in most cases both spouses will be required to accept a lesser standard of living because their income levels will not be sufficient to maintain two separate households according to the accustomed standard of living during the marriage. MARITAL MISCONDUCT One recurring theme in both post separation support and alimony is the idea of "marital misconduct." As defined by statute, "marital misconduct" means any of the following acts committed by either of the spouse during the marriage and before or on the date of separation: Illicit sexual behavior; Involuntary separation of the spouses in consequence of a criminal act committed prior to the proceeding in which alimony is sought; Abandonment of the other spouse; Malicious turning out-of-doors of the other spouse; Cruel or barbarous treatment endangering the life of the other spouse; Indignities rendering the condition of the other spouse intolerable and life burdensome; Reckless spending of the income of either party, or the destruction, waste, diversion, or concealment of assets; Excessive use of alcohol or drugs so as to render the condition of the other spouse intolerable and life burdensome; Willful failure to provide necessary subsistence according to one's means and condition so as to render the condition of the other spouse intolerable and life burdensome. These factors can be considered to either support the award of post separation support or alimony 10

11 if the marital misconduct was committed by the supporting spouse, or to deny or reduce the amount of post separation support or alimony that might otherwise have been awarded, if the marital misconduct was committed by the dependent spouse. The court treats "illicit sexual behavior" differently than the other factors listed above. "Illicit sexual behavior" means acts of sexual or deviate sexual intercourse, deviate sexual acts, cunnilingus, fellatio, anilingus, or anal intercourse, voluntarily engaged in by a spouse with someone other than the other spouse. If the dependent spouse has engaged in illicit sexual behavior on or before the date of separation, the court will deny post separation support or permanent alimony completely unless the supporting spouse also has engaged in illicit sexual behavior on or before the date of separation. If both parties have engaged in illicit sexual behavior on or before the date of separation, the court has the discretion to award or deny post separation support or alimony after considering all the circumstances. If only the supporting spouse has engaged in illicit sexual behavior on or before the date of separation, the court must order payment of alimony. The idea of illicit sexual behavior is one of the most important changes of the new alimony statutes that became effective October 1, Prior to October 1, 1995, adultery automatically barred a dependent spouse from receiving alimony, regardless of whether the supporting spouse had also committed adultery, and regardless of whether the adultery occurred before or after the date of separation. Under the new statutes, only acts of illicit sexual behavior committed on or before the date of separation are "marital misconduct." The commission of an act of illicit sexual behavior by the dependent spouse may bar an award of post separation support and alimony if the supporting spouse has not also committed an act of illicit sexual behavior. Either spouse has a right to a jury trial to decide whether the other spouse has committed "marital misconduct." Once the judge or jury has decided the questions of "marital misconduct," the judge will award or deny permanent alimony based upon the factors discussed above. Again the judge may reduce the amount awarded if the dependent spouse has engaged in marital misconduct. The court will deny alimony completely if the dependent spouse has engaged in an act of illicit sexual behavior on or before the date of separation and the supporting spouse has not. If after an incident of marital misconduct occurs, the spouses resume the marital relationship or have sexual relations, a court may rule that the marital misconduct has been forgiven. If the court finds that the marital misconduct has been forgiven, or "condoned", the act of marital misconduct may not be used to support or defend against a claim for alimony. The forgiveness is conditioned upon the offending spouse treating the other spouse kindly following the resumption of the marriage relationship and not later repeating the same or similar behavior. Normally, the judge will not set permanent alimony for trial until after all marital property has been equitably divided either by an agreement between the parties or by an order of equitable distribution entered by the court. In those instances where alimony is set before property is divided, the judge may review whether the dependent spouse is still dependent after the property is divided. The right of the dependent spouse to receive alimony, and the obligation of the supporting spouse to pay alimony, terminates upon the death of either spouse, the dependent spouse's remarriage, or if the dependent spouse continuously and habitually cohabits with a person of the same or opposite sex on a regular basis in a marriage-like relationship. Periodic alimony payments may also end by the terms of a court order specifying that the payments are to end on a certain date. Either party may make a motion to increase or decrease an alimony amount any time based 11

12 upon a change of circumstances. When the parties file separate tax returns, alimony payments will be considered taxable income to the dependent spouse and a deduction to the supporting spouse. All spousal support matters should be analyzed for tax consequences by your CPA or tax advisor before you sign a separation agreement or go to court. We are not qualified as tax advisors. To be tax deductible, support payments must be paid under the terms of a written separation agreement or court order. Due to the short time the new alimony laws have been in effect, there is no body of appellate cases interpreting the new laws. Therefore, although the previous discussion is a general overview of the new law, it is difficult to predict how the new alimony laws will be applied in any particular factual situation. BENEFICIARY DESIGNATIONS You need to be aware that once a judgment of absolute divorce is entered a person may change the beneficiary designation on any qualified retirement plan. Once you are finally divorced you should review and change the beneficiary designations on your retirement plans as appropriate. Even prior to divorce you can change the beneficiary designations on your IRA s and insurance policies as well as your will. Of course if you have made some agreement or you have been ordered to maintain your spouse or children as beneficiaries, you must honor that obligation. Be aware that if you are the beneficiary of a pension plan and a Qualified Domestic Relations Order enforcing your rights to this pension plan has not been entered at the time of the final divorce, you may be at risk for losing any claim to this plan. If the participant-spouse dies before the QDRO has been signed by a judge and accepted by the retirement plan administrator, you may lose all your rights to receive benefits under the retirement plan. The QDRO s need to be completed as early as the circumstances of the case will allow. Many times it is practically impossible to complete the QDRO s before a final divorce because there has been no agreement or the court has not ruled on your claim for equitable distribution. You should assist your attorney in every way possible in gathering the necessary information about all retirement plans so that this work can be completed expeditiously. Your Rights Under C.O.B.R.A. C.O.B.R.A. stands for the Consolidated Omnibus Budget Reconciliation Act of The Act was passed by Congress in 1986 and it requires certain employers to provide, at group rates, continued health insurance coverage for up to three years for divorced persons, widows, spouses of retiring workers and their children. These benefits must also be provided for workers and their dependents when the worker is terminated (for reasons other than gross misconduct) or who has a reduction in hours. Are All Employees Affected By C.O.B.R.A.? No. The Act affects employers who: Have 20 or more employees; and 12

13 Are not covered by governmental or church plans. How Long Will Coverage Under C.O.B.R.A. Last? If you and your spouse are divorcing, you can remain covered by your ex-spouse s employer for up to three (3) years. Widows, spouses of retiring workers and children who are no longer dependent can also be covered for up to three years. What Kind Of Coverage Can I Obtain? C.O.B.R.A. requires that employers offer identical coverage to C.O.B.R.A. recipients as is provided to any other beneficiary. If the plan core or basic coverage also offers options that may be added (such as dental coverage), you may elect to receive only the core coverage, or as many additional benefits as you wish. How Do I Get Coverage Under C.O.B.R.A.? If you and your spouse are divorcing, and your spouse is employed by a company that is affected by C.O.B.R.A., you are a qualified beneficiary. It is your spouse s responsibility to notify the plan administrator of your divorce within 60 days of the date of the final divorce decree. Once you have notified the plan administrator, the company has 14 days to send you information describing your rights under C.O.B.R.A. You will then have 60 days to decide if you want to be covered under C.O.B.R.A. Other qualified beneficiaries include dependent children, spouses of retiring employees and widows of previous employees. All qualified beneficiaries are subject to the same rules. The employer will no longer pay your premiums once you elect C.O.B.R.A. You or your exspouse will have to pay these premiums and this may also have an effect on how much coverage you want beyond the basic or core coverage. The employer will charge you the same group rate that an employee must pay. However, a maximum surcharge of two percent can be charged to you by the company for administrative costs. The employer also has to allow you to pay the premium in monthly installments if you would like. Is There Any Way That My Coverage Can Terminate Before The Three Years? Yes. In the following circumstances, your coverage would terminate: If the employer should decide not to offer a group health plan to any employee; If you or your ex-spouse fail to pay your premium; If your ex-spouse gets another job; or if you become eligible for Medicare or certain Social Security benefits. If I Remarry Will I Lose My C.O.B.R.A. Health Insurance? It depends. If you remarry but do not receive coverage under your new spouse s group health plan, you may retain your C.O.B.R.A. coverage. To lose your C.O.B.R.A. coverage you must remarry and become covered under another group plan. 13

14 Are There Any Special Conditions That Might Exclude Me From Coverage? Usually not. In most cases, you are not required to have a physical exam. If your deductible has been met for that year, it will carry over to your separate policy. Also, you will not lose coverage because of preexisting conditions. This means that any ongoing illness or condition you have that was covered prior to divorce will still be covered by your policy under C.O.B.R.A. PROPERTY DIVISION After your divorce, the court will divide the property owned by you and your spouse, if you have not voluntarily agreed to a property division earlier. In North Carolina this process is described as "Equitable Distribution of Marital Assets." There are three types of property that must be considered: Separate Property Separate property includes all property owned by either spouse before the marriage, property acquired during the marriage by one spouse through an inheritance or gift from a third party and property acquired after the date of separation with post separation earnings. A gift from one spouse to the other during the marriage is marital property unless the donor states at the time of the conveyance that it is intended to be separate property. Separate property also includes income from some separate property and property obtained in exchange for separate property. Marital Property Marital property includes property presently owned that was acquired during the marriage except property found to be "Separate Property." "Marital Property" also includes all vested pension and retirement benefits accrued between the date of marriage and the date of separation. Divisible Property Divisible property includes post separation increases and decreases in the value of marital property, property received after the date of separation that was acquired as a result of the marital efforts of either spouse before the date of separation, passive income generated by marital property and received after the date of separation, and post-separation increases in marital debt. In many ways Divisible Property is treated the same as the treatment of Marital Property : both are presumed to be divided equally. One difference is that Divisible Property is valued by the court at the time of the trial, not on the date of separation as is Marital Property. The category of Divisible Property applies only to actions filed on or after October 1, You should point out to your attorney any significant changes in the value of possible Divisible Property, which includes assets and debts that you anticipate could occur before the time of trial of your property division case. Divisible Property is subject to an interim distribution by the court that might be one way to deal with anticipated changes in the value of assets or changes in your debts incurred during the marriage. Equitable distribution can take place before or after a final divorce judgment, if you have 14

15 preserved your rights before the divorce judgment. The court will divide marital property and divisible property between the parties. While there is no precise formula for dividing the property, there is a strong tendency in North Carolina to divide the property or its equivalent value equally. There are thirteen (13) statutory factors the court must consider in deciding whether an equal division is appropriate in your case. These factors are: Income, property and debts of a party; Support obligations from prior marriages; Length of marriage and age and health of each party; Needs of custodial spouse to own or to possess the marital home place and household effects; Expectation of retirement benefits which are separate property; Efforts made by each spouse to acquire property; Contributions of one spouse to the education of the other; Contributions that increase the value of separate property; Liquid or non-liquid nature of property; Difficulty in valuing interest in a business; Tax consequences; Actions taken by either party to preserve or waste marital assets; Other factors. If you have any assets (bank accounts, cash, etc.) that your spouse might take, remove or otherwise conceal, you should advise us immediately so that protective actions can be taken. We may advise you to immediately withdraw at least one-half of any liquid funds to protect your interest. Also, a court has the power to enter an injunction to prevent the removal or disappearance of any assets, by both parties. Marital misconduct such as adultery is not considered in the settlement of property rights as in an action for alimony. If you and your spouse can agree on property division, and if your agreement is reasonable, it will be approved by the court. If you cannot agree, the court will divide the property. Basically, a division of marital property and divisible property is a nontaxable event. Generally, if property is transferred between spouses under an agreement or court order, it will neither be taxed as income nor allowed as a deduction. There may be tax consequences, however, when funds are transferred from retirement plans and Individual Retirement Accounts and when marital assets are sold to third parties. Timing on the sale of a marital residence can have significant tax consequences affecting your non-recognition of gain on the sale. Property that has increased in value significantly since it was acquired may carry heavy tax liabilities for the party who takes it by settlement or court order. All property distribution matters should be analyzed for tax consequences by your CPA or tax advisor before you sign a separation agreement or go to court. We are not qualified as tax advisors. CHANGE OF NAME 15

16 The female spouse may wish to resume her maiden name as part of the divorce decree. We can accomplish this easily for a $10 additional charge. If you want that service, let us know before we prepare the absolute divorce complaint. RECONCILIATION Even after we begin our court action, you may change your mind and decide to try to work things out. If you decide to drop this action, you will be responsible for only those services performed and additional services required to conclude the matter. Lawsuits that have been filed will be ended and hearings that have been scheduled will be dropped from the court calendar. NEW WILLS North Carolina s Probate Code invalidates certain portions of wills made before a divorce. Following the signing of a separation agreement or divorce, you probably will need a new will, power of attorney etc. If you wish to pursue this issue, please discuss it with me at an appropriate time. WAITING PERIOD After service of the summons and complaint, it may take ten to fourteen weeks to obtain a hearing on child support and temporary custody. Child custody and visitations must be mediated by a court appointed mediator before they can be scheduled for trial. This can take four to six weeks unless expedited or exempted by the court. Post separation support can usually be heard within six to ten weeks after the complaint is filed. In the divorce action, if no answer is filed, the matter is ready for hearing approximately 45 days after service of the summons and complaint on the spouse. Remember that you cannot file for absolute divorce until you have been separated for one year or more. In a property case, the equitable distribution action can be tried before or after the granting of a divorce and the permanent alimony hearing usually takes place after the equitable distribution issues is decided. It is not necessary for your spouse to be a resident of North Carolina or the United States in order to be divorced. CHILD CUSTODY Typically, the breakup of a marriage is more traumatic for the children of the marriage than for the parents. Thus, parents should exercise great care when a separation takes place. When a child's parents separate, decisions regarding the care and support of the child must be made. If the parents are not able to resolve the issues of custody or child support, a judge will. North Carolina law directs District Court judges to protect children until they reach majority (usually age 18) by determining what is best for the child when parents cannot agree or when either parent submits the issue to a court. Generally, the child and the parents will be better served by putting the child's welfare first and trying to decide what is best by agreement rather than by litigation. A child should never be used by a parent for revenge the child's needs and interests should come first. 16

17 In an effort to avoid litigation, counties either offer or mandate state supported mediation to facilitate decision making by the parents. However, when parents either cannot or will not agree between themselves, the legal system authorizes a District Court judge to decide who should have custody, how much visitation the non-custodial parent will have, and how much child support the non-custodial parent will pay. Litigation may be expensive, with both parties usually represented by an attorney. Litigation means the parents give up control over decision making that has an enormous impact on their child. No judge can ever know as much about the needs of a child as the parents do. And since litigation usually ends with both parties feeling bitter and unhappy about the results, use of the courts to resolve issues of custody and support should be a last resort when there is no other way. During a custody trial, the judge considers certain facts and issues to determine the best interests and welfare of the child, the guiding principle in deciding who is awarded legal custody. Here are some guidelines: What is the child's age? Who assumed primary responsibility in caring for the child during the marriage? Who would feed, bathe, clothe, and teach the child during the week? What is the work schedule of each parent who works outside the home? What is the physical, emotional, and parenting ability of each parent? With whom is the child bonded psychologically? Is either parent trying to prevent the child from continuing a relationship with the other parent? Is either parent trying to use the child just to hurt the other parent? Is either parent really unfit, unwilling, or unable to properly and appropriately raise the child? There is no legal presumption for either the mother or the father as the custodial parent. The only question is the welfare of the child. Custody, whether sole custody or joint custody, is "legal" if it is part of a valid written and properly executed agreement or if part of a court order. Orders may be entered by agreement, i.e., without a trial. Even if a lawsuit has been filed, the two parties may agree and ask the court to approve their agreement. The agreement almost always will be approved; the result is called a consent order, which can be enforced by the court. The form of your custody determination, strictly agreement or order, may make some difference. Each is enforced differently and treated differently if a change in custody or visitation needs to be made in the future. You should consult an attorney about what is best for you and your child. When one parent has legal custody of a child, the other parent usually is granted visitation privileges. Except in extraordinary circumstances, it is healthy and desirable for the child to have regular contact with the non-custodial parent. Two visitation options are: Reasonable Visitation. There is no set time for child visitation; rather it will be subject to agreement between the parents. Although it provides flexibility, it will not work unless the parents can agree on what visitation is "reasonable." Structured Visitation. There is a schedule for child visitation that may include visitation 17

18 every other weekend from Friday evening through Sunday evening, alternating holidays through the year, and several weeks during summer vacation. Until the parents execute a written separation agreement with provisions for custody or court grants custody to one parent, both parents have equal rights regarding their child. This does not, however, give one parent a right to take the child from the other parent. Usually, agreements and court ordered custody place the child primarily with one parent and give the other parent time with the child at least two weekends each month, alternating major holidays, and extended time in the summer. Even though agreements frequently use the term "joint custody," orders that are not entered by consent of both parties rarely give custody. When a judge must decide the issue of custody, it is already obvious the two parties cannot work together and resolve matters concerning their child. Joint custody essentially means little more than both parties are "fit" and can and will cooperate in making major decisions affecting their child. So it is rare that a judge will award joint custody to two parties who have been unable to resolve the most basic question: where the child will live. When separated parents agree upon joint custody or the court decides that the parents should be granted joint legal custody of a child, it does not mean that each parent has physical custody of the child for half of the child's time. It means that the parents should continue to cooperate and work together to make the major decisions for the child. Joint custody can, of course, be beneficial for the child if the parents are interested in and capable of working together for the child's best interests and welfare. On the other hand, it can be disastrous if one parent is bent on obstructing or undermining the other parent or the child. A separation agreement may allow credit, reducing the child support, if the child spends a relatively long period of visitation (three or four weeks) with the supporting parent. All North Carolina courts use guidelines that take into account extended time with the non-custodial parent. Some parents with custody refuse to allow visitation when support is not paid, or a parent will withhold child support when not able to see a child. Under North Carolina law, visitation and child support are not related; neither parent has the right to withhold support or visitation. Instead, the aggrieved parent must seek help from the court. Both parents have a duty to support his or her children. North Carolina has adopted child support guidelines that apply to all cases and are based upon the income of both parents, the type of custodial arrangement that exists, and factors such as day care and health insurance costs. Forms for determining the amount of support can be obtained from the Administrative Office of the Courts. Your child will benefit if matters of custody, visitation, and support can be determined amicably. When that is not possible, either parent or anyone seeking custody may petition the court to decide. Custody, visitation, and support issues are not concluded until the child reaches majority. An agreement or court order may be changed if the circumstances warrant. For custody and visitation, majority occurs when the child reaches his or her 18th birthday. For child support, it may continue until the child graduates from high school or reaches his or her 20th birthday, whichever 18

19 occurs first. If the support has been agreed to by the parents, it is not uncommon to make provisions for financial assistance for children who may go on to college. THIRD PARTY RIGHTS TO CUSTODY & VISITATION Third party rights to custody and visitation have changed dramatically in North Carolina in the last two decades. Third party petitions for custody and visitation are typically brought by grandparents, aunts and uncles, other family members or other potential caretakers. In North Carolina there is a parental preference toward natural and adoptive parents. Before 1994, the North Carolina statutes allowed custody or visitation to any person able to prove to the satisfaction of the court that the requested custody or visitation was in the best interest of the child, regardless of the party s biological relationship to the child. In the 1990 s, two cases changed North Carolina child custody and visitation law. Petersen v. Rogers established a parental preference, where a biological or adoptive parent has a constitutional right to the care, custody and control of his or her minor child. This does not extend to stepparents. Third parties are now required to show that a parent is unfit to care for the child. Then, in Price v. Howard, the court included other parental conduct as a factor for determining the best interest of the child. In order for a third party to be granted custody or visitation with a minor child, the non-parent must allege facts sufficient to prove that a parent is unfit, has neglected the welfare of the child, or has otherwise acted in a manner inconsistent with his or her protected status as a parent. Additionally, not all third parties have standing to petition for custody and visitation. A nonparent must also show a sufficient relationship with the child. A third party with no relationship with the child does not have standing for custody or visitation. If a parent has his or her parental rights terminated, he or she loses all constitutionally protected rights to petition for custody or visitation of the minor child. CHILD SUPPORT The North Carolina Child Support Guidelines create a rebuttable presumption of the reasonable monthly amount of child support. The Guidelines can be deviated from only when their application would be inequitable in some substantial way. You will need to provide the income verification including two months worth of pay stubs or an employer's statement. If you are selfemployed, then records for receipts and expenses. Both parties must also provide the most recent tax returns, both federal and state. You should be aware that a noncustodial spouse's child support obligation continues until the child reaches age eighteen except that if the child is otherwise emancipated, payment will terminate at that time. If the child is still in primary or secondary school when she reaches age eighteen, the court in its discretion, usually will order support payments to continue until she graduates, otherwise ceases to attend school on a regular basis or reaches age 20, whichever comes first. A party by agreement may obligate himself or herself to make such payments beyond these time limits. There is no legal obligation of a supporting spouse to pay for college education expenses. This obligation arises only if the supporting spouse voluntarily agrees to assume it. 19

20 Both child custody and child support are issues that either party can raise any time before the child turns eighteen. Either spouse can petition the court to change its prior order of custody or support based on a showing by the moving party that circumstances have substantially changed. Child support is not taxable as income to the receiving spouse and is not a deduction to the paying spouse. The Federal tax exemption for each child normally goes to the custodial parent who has the child the majority of the time. This deduction, however, can go to either parent if both parents agree or to the non-custodial parent by court order. ADOPTION Adoption law is one of the most gratifying areas in which to practice for a family law attorney. In most cases a family law attorney is involved in the break-up of a family. In adoption, the family law attorney helps in the creation or expansion of a family. Adoption in North Carolina In general, adoption is a method of establishing the legal relationship of a parent and child between persons who are not already related by blood. The principal object of adoption is to promote the welfare of the child. NC state statutes governing adoption should be understood as a process of selecting fit parents for children, not of finding children for adoptive parents. At the same time that adoption creates the legal relationship of parent and child between two persons who are not related, it permanently severs the relationship between the adoptee-child and his or her natural, biological parents and their families. From the date the adoption decree is signed, the adoptee-child has the same legal status as a legitimate child born to the adoptive-parent and may inherit through his or her adoptive parents through intestate succession. At the same time, the biological parents are relieved of all their legal rights and obligations toward the child. Neither the adoptee-child nor the biological parents may inherit by and through each other through intestate succession. An exception to the above paragraph is in the case of a stepparent adoption, when a stepparent adopts his or her stepchild, the adoption does not terminate the relationship of the child with his or her natural, biological parent who is, of course, the spouse of the adopting stepparent. NC Adoption Laws Legal adoption in North Carolina is governed by state statute and the statutory procedures set forth in Chapter 48 of the North Carolina General Statutes and must be strictly adhered to in order to accomplish a legal adoption. The statutory procedures for legal adoptions will differ depending on whether it is a private adoption or agency adoption. Different articles under Chapter 48 cover adoptions of minors, adult adoptions, stepparent adoptions, and the re-adoptions of a child by his or her natural parent after a stepparent adoption. The later type of adoption is becoming more and more frequent. Because strict compliance with statutory procedures is required, it is advisable to hire a family law attorney to handle your North Carolina child adoption. 20