Wait! Before you file your custody case, remember to consider if the Hague Convention on the Civil Aspects of International Child Abduction applies.

The Hague Convention on the Civil Aspects of International Child Abduction (the “Hague Convention”) governs custody jurisdiction between countries. It is an international treaty that has been ratified with the United States by nearly 80 countries. Most recently, Pakistan and Jamaica have ratified the Hague Convention with the United States.

All family law practitioners should consider whether or not the Hague Convention applies to an international family law case. It is an essential step in any case involving international children. If the left-behind parent submits to the local jurisdiction, Hague Convention claims may be impacted.

Let’s examine the following example. You have a family that lived together in Ecuador. The father moved to the United States. The mother and child continue to live in Ecuador. The mother agreed for the parties’ child to visit the father in the United States for three months during the summer. Three months have passed, but the father has not returned the child to Ecuador. Three more months have passed and the father files for custody in state court.

 In the above example, if the mother files an answer to the father’s custody case in state court, she has submitted to the state court’s jurisdiction. Before filing an answer, she should consider her alternative legal options, including the Hague Convention. In this frequently occurring scenario, it is essential that both parties are advised on the possibility of a Hague Convention case and the consequences for bringing the claim or not bringing the claim.

So how do you know when you should consider the Hague Convention? You should ask the following questions:

1.    Are there two countries involved?

2.    Have the two countries ratified the Hague Convention with the other?

3.    Where is the child’s habitual residence?

Practice Note: In 2020, the Supreme Court of the United States established the habitual residence test that applies in the Unites States.

4.    Did one parent remove the child from the habitual residence, retain the child in the United States, or state that he or she will not return the child after the agreed limited time in the United States?

5.    When did the retention or removal occur?

Practice Note: There is an important one-year deadline to consider from the date of the retention or removal.

6.    Does the left-behind parent have rights of custody under the laws of the habitual residence?

Practice Note: This is a legal question that should be determined in consultation with a legal professional in the country of the habitual residence.

7.    Was the left-behind parent exercising his or her rights of custody at the time of the removal or retention?

If you answered yes to the most or all of the above questions, then you should consult with an experienced attorney regarding the Hague Convention.

Hague Convention cases are unique and increasingly more frequent. The cases are unlike family law cases in many respects. A Hague Convention return case can be filed in federal court or state court. The treaty contemplates that the case from start to finish will be completed in six weeks. Time is therefore of the essence. Which country has custody jurisdiction can have a long-lasting impact on families and their cases.

There may also be alternative legal routes to consider if, for example, you have a custody order from another country. In addition to a Hague Convention return case, you may want to consider a Hague Convention access case or registration and enforcement of a custody order. Stay tuned for the next blog on registration and enforcement under the Uniform Child Custody Jurisdiction and Enforcement Act.

This information is not a substitute for legal advice applicable to your case.  Consult an attorney with respect to your circumstances. If you have questions, please reach out to Leah M. Ramirez, Esquire at lramirez@markhamlegal.com.

QDRO Corner: Survivor Benefit and Beneficiary Elections

Defined benefit plans allow for a participant to elect to provide a survivor benefit. A survivor benefit is a monthly payment to a survivor which begins upon the death of the plan participant. In Maryland this is a separate benefit from the participant’s retirement benefit and must be requested and treated as a separate asset in court or when negotiating a settlement.

A participant must make an election at retirement (or sooner) if the participant is going to provide a survivor benefit for a spouse. However, this election is not reliable for a former spouse expecting to receive a survivor benefit in the future. This is true for a few reasons:

First, some plans, like the CSRS and FERS will automatically terminate survivor benefit elections made prior to a divorce, even if the participant is already retired and in pay status. (Typically, once a participant is in pay status no changes can be made to a survivor benefit election).

Second, if the participant is not yet in pay status, then the election form can be voided by the participant, and a new election made either for someone else, or for no one else. (Typically, a participant can change their survivor benefit elections at will prior to retiring, or going into pay status).

Third, some plans require that a survivor benefit be provided for a current spouse, unless waived. If the participant remarries without a COAP in place, then the plan rules may require a survivor benefit for a new spouse.

It is important that even if the former spouse is only awarded a survivor benefit from the participant’s defined benefit plan that the former spouse get the benefit secured by a COAP or QDRO. The QDRO should explicitly state the benefit for the former spouse, and be submitted timely with the divorce to limit the opportunity for problems. If you want to know if your QDRO language is clear, please reach out and we can review your Order.

If you have any QDRO questions, please reach out to Veronica Dulin at vdulin@markhamlegal.com.

QDRO Corner: Fees Related to QDRO Preparation and Implementation

In the general process of having a QDRO prepared and implemented, there are more fees than just the fee to have the Order drafted by the attorney. These fees can add up to a substantial amount of money, and therefore it is important to address them at least generally in an agreement.

In total, the fees can include:

1.    Drafting Attorney’s Fee

2.    If the drafting attorney represents only one party, then the other party will likely incur fees to have an attorney review the QDRO on his/her behalf

3.    Court fees to obtain the certified copies

4.    Postage to mail or otherwise deliver the certified copies to the Plan

5.    Review fee charged by the Plan

What is the review fee charged by the Plan? Plans of course have their own attorneys or other trained staff review submitted QDROs to ensure that if implemented, the Plan remains within compliance with ERISA or other laws regulating their plan, and within the rules of their plan. The Plan is allowed to pass these fees on to plan participants if the fee is published so that the participant has notice of such fee in advance. Note, the amount of the fee is not required to be published, only the fact that there is a fee and that it may be passed on to the participant.

Fees typically range from approximately $300 - $2,400 per order and are determined by the Plan. The fee is not paid out-of-pocket by the participant, but rather the fee is taken from the participant’s account during the transfer or review process.

Many plans will allow for this review fee to be transferred entirely to the alternate payee, or to be shared between the parties. If this fee is not addressed in the QDRO, plans typically will default to charging it to the participant, or rejecting the order for vagueness. It is best to contact the plan while still negotiating the agreement so that this fee can be addressed as a part of the larger agreement.

QDRO Corner: Titling Court Orders to Divide Retirement Interests

ERISA (Employee Retirement Income Security Act) provides the protections for retirement interests for employees of private companies. The terms and regulations in ERISA are commonly used language in this area of law. Most notably the terms “domestic relations order” and “qualified domestic relations order” come from ERISA; however, these terms only apply to plans governed by ERISA.

Federal, state, and local government plans are specifically exempt from ERISA. This exemption means that plans provided by federal, state, and local governments can be non-divisible and non-transferrable, even by court order. If you are representing a spouse of a government employee, be sure to review the plan documents to understand whether the plan can be divided, and if so, what type of order the plan will accept.

Since government plans are not subject to ERISA, they do not use the term “qualified domestic relations order” and certain plans will reject the order on those grounds alone. Popular terms used for government plans in the Washington D.C. Metro area include Court Order Acceptable for Processing (federal government for Federal Employees’ Retirement System and Civil Service Retirement System), Qualifying Court Order federal government for the Thrift Savings Plan); and Eligible Domestic Relations Order (Maryland State Pension System).

The plan document or summary plan document should include the preferred term for any plan as well as any information regarding limitations on divisibility or transferability of interest. Be sure to request these documents early in your representation of a client to best negotiate on their behalf, or to ask the Court for proper relief.

If you have any QDRO questions, please reach out to Veronica Dulin at vdulin@markhamlegal.com.

QDRO Corner: Beware of Model Orders

Many plans provide model or sample orders for QDRO attorneys to use in the preparation of the Order for their clients. These are extremely useful tools to determine a plan’s preferred terms and mandatory provisions. However, these can also be misleading, or omit terms or provisions that may be beneficial to your client.

For example, most pension plans governed by ERISA provide for both a shared and a separate interest payment option. However, if the plan prefers one division method to another, then it may provide only the preferred model to you or try to dissuade you from using the other division method.

Non-mandatory QDRO terms may include how to reconcile if the plan pays one party’s share to the other by accident. Omitting this term may lead to litigation over who had the burden to recognize and fix the mistake, the plan or either party. An easy way to avoid the potential litigation is to state the protocol here, such as reimbursing the plan, or the other party.

Another non-mandatory term that is quite useful is for the court to retain jurisdiction in the event an amended QDRO is needed. Amended QDROs are sometimes necessary due to no fault of the parties, such as a merger with another plan resulting in changed rules, and it is best to know that the Court will always have jurisdiction to enter the new order if needed.

Think carefully about your client’s particular needs with respect to their QDRO and if you have a model order, treat it as a great first step in drafting the order.

QDRO Corner: Defined Contribution Plan Loans

Loans from defined contribution plans are easy to overlook when reviewing a statement for the current balance. However, if there is an outstanding loan, whether the outstanding loan balance is included or excluded from the account balance can dramatically alter the amount a spouse receives when dividing the account.

If the outstanding loan balance is “included” or “taken into account” then the loan balance will reduce the account balance before account is divided. For example, say the parties to a settlement decide that the defined contribution account shall be divided equally, the account has a total value of $20,000, and there’s an outstanding loan balance of $5,000 that shall be taken into account. The math to divide the account is as follows:

$20,000 (total account value)
- $5,000 (outstanding loan balance)
$15,000 (account balance to be divided between the parties)

$15,000 (account balance to be divided between the parties)
÷ 2 (for equal division between the parties)
$7,500 (total funds to be transferred to spouse)

If, however, the outstanding loan balance is to be “disregarded” or “excluded,” the spouse receives a different amount. Using the same numbers as above, if disregarding the loan balance, the math is as follows:

$20,000 (total account value)
÷ 2 (for equal division between the parties)
$10,000 (total funds to be transferred to spouse)

If you are unsure whether a plan participant has taken out loan, let the person preparing the QDRO know so she can investigate and make sure the division will be as the parties intended.

QDRO Corner: Cash Balance Plans

A cash balance plan is a hybrid plan between a defined benefit and a defined contribution plan, offered by some private employers.

A statement for a cash balance plan will look very similar to a statement for a 401(k) account, in that the statement will show a specific dollar amount in what appears to be an account for the participant as of a date certain. However, this is not a separate account for the participant with that specific amount of funds in it. Instead, this is the actuarial value of the plan based on the participant’s life.

Most cash balance plans can only be divided in the same manner as a defined benefit plan, wherein the alternate payee receives a share of the monthly payment to the participant, or receives their own share in which the monthly payment amount is actuarily determined based on the alternate payee’s life.

Some cash balance plans may be divided like a defined contribution plan, wherein the alternate payee receives a lump sum. This is the small minority of cash balance plans.

Before finalizing a separation agreement that includes the division of a cash balance plan, it is best to have the QDRO prepared and communicate with the plan to ensure that the division upon which the parties are agreeing will be accommodated by the plan.

QDRO Corner: The Importance of Addressing Earnings, Gains, and Losses

Earnings, gains, and losses is the phrase used to describe the investment experience of the funds within a defined contribution account (401k, 403b, 457, TSP, etc.). In dividing a defined contribution account, the parties have the option of including earnings, gains, and losses on the amount to be transferred, or not. One must select a valuation date from which to apply the earnings gains and losses.

Division of the earnings, gains, and losses protects against surprises in the market.

Let’s say Spouse A is to receive 50% of Spouse B’s old 401k as of December 31, 2019, with earnings, gains, and losses applied thereon (Spouse B and the employer are no longer contributing to the 401k). At the time, $100,000 was in the account. Due to market fluctuations, at the time the account was to be divided, only $80,000 was in the account. Therefore, each party received $40,000 upon division.

Assume the same facts as above, but this time with no earnings, gains, and losses applied. Spouse A will receive $50,000 and Spouse B will retain $30,000.

Continue to assume the same facts, but this time due to market fluctuations only $40,000 remained in the account at the time it was to be divided. Without earnings, gains, and losses Spouse A would receive all $40,000 (even though Spouse A should have received $50,000), Spouse B would be left with $0, and the plan would consider its obligation satisfied.

Earnings, gains, and losses in an account can be quite substantial in certain circumstances. If you are uncertain how to discuss this issue with your client give us a call.

QDRO Corner: A FERS Annuity Doesn't Have to Revert to the Employee

When parties divorce and the FERS annuity is divided pursuant to a COAP and then the former spouse dies, the default is for the former spouse’s share to revert back to the employee.

I’m often asked whether the former spouse’s share of the FERS monthly annuity can be transferred to someone else in this scenario, rather than having the share revert back to the employee.

OPM (the administrator of the FERS plan) will only transfer the former spouse’s share to a specifically named third party as a part of the COAP if that third party is the child of both parties. If the former spouse’s share is to be paid to any other third party, the COAP must designate either a central location such as a specific bank account, or the former spouse’s estate. If, however, the estate is elected, then keep in mind that the funds will be taxed for going through probate (according to each state’s laws) and then the estate must remain open until the death of the employee, which will cause delay and maybe an administrative headache. Additionally, note that if the former spouse was to receive a survivor annuity, the survivor annuity does not transfer to anyone. Only the former spouse’s share of the monthly annuity during the life of the employee can continue to be paid beyond the death of the former spouse.

Similarly, I’ve also been asked the opposite question recently: the parties designate that the former spouse’s share goes to the parties’ child upon the death of the former spouse if predeceasing the employee. The former spouse dies, and the parties’ adult child is now receiving the former spouse’s share, whereas the employee could really use those funds. As the former spouse is now unable to sign a new COAP, the only way for the employee to recoup those funds is to ask the adult child for them, and hope their child voluntarily pays it over, post-tax.

Changes to Maryland Child Support Rules

Shared Physical Custody – SB 579

Last month, the Maryland legislature passed a law that changes the way child support is calculated in certain shared custody situations. Under the child support guidelines, child support is calculated depending on the number of overnights the child spends with the non-custodial parent. Currently, when a child spends more than 128 nights, or 35 percent of the year, with the non-custodial parent, a shared physical custody calculation is used. If the child spends fewer than 128 overnights with the non-custodial parent, then a sole physical custody calculation is used.

But what about situations where the child spends 127 overnights with the non-custodial parent? This is called the “cliff” model because of the drastic difference in child support calculation between 127 and 128 overnights. The new legislation lowers the “cliff” so that the shared physical custody guidelines are more readily applied and is now accompanied by a “slope” to ease into the shared physical custody guideline calculation.

First, the legislation alters the definition of shared physical custody, so it now applies when a non-custodial parent has the child for at least 92 overnights, or 25 percent of the year. Second, when the child spends between 92 and 109 overnights with the non-custodial parent, or 25 to 30 percent of the year, a shared physical custody adjustment calculation will be used to determine child support. This adjustment acts like a slope to ease child support calculations into shared physical custody. The sole physical custody calculation will be used in cases where the child stays with the non-custodial parent under 25 percent of the time and the shared physical custody calculation will be used where the child stays with the non-custodial parent more than 30 percent of the time.

So, what does this mean for your upcoming child support case? Well, as the child spends more time with the non-custodial parent, between 92 and 109 overnights per year, a new, gradual calculation applies until the overnight amount reaches 110 overnights. At that point, the shared physical custody calculation is applied. For more information on how child support is calculated in Maryland, please check out our previous blog.

This legislation goes into effect on October 1, 2020. For existing child support orders, the passage of this bill does not mean that your child support obligation will change.

Child Support – SB 847 

Last month, the Maryland legislature also passed a law that changes child support obligations in certain circumstances, unrelated to timesharing. Effective on October 1, 2021, the child support guidelines will provide judges with more discretion to ensure that after child support is paid, the payor parent still has sufficient income to provide for him or herself and will require judges to make specific findings in cases where there are allegations of voluntary impoverishment.

First, this law gives the court authority to determine whether applying child support guidelines would be unjust or inappropriate by taking into consideration whether the support obligation would leave the payor below 110 percent of the 2019 federal poverty level. In cases where this is true, the court can decline to apply the child support guidelines.  If the court declines to apply the child support guidelines, the court must make specific findings that defend the support determination, including how it deviates from the guidelines and why it serves the best interest of the child.

Second, the law indicates circumstances where the court has the authority to decline to establish a child support order. These circumstances are where the payor parent is unemployed, is incarcerated, is permanently disabled, has no financial resources to pay child support, is institutionalized in a psychiatric care facility, or is unable to obtain or maintain employment.  

Further, the law establishes that a material change of circumstances exists to modify a current child support order if any of the circumstances outlined above (unemployment, permanent disability, etc.) apply to the payor parent. A “material change of circumstances” is the standard that must be met in order for any modification of child support to be considered in Maryland.

Lastly, where there are allegations that the payor parent is voluntarily impoverished to avoid paying child support, the law requires the court determine the validity of these allegations based on the totality of the circumstances. If the Court determines that there is voluntary impoverishment, then the Court must decide if potential income should be imputed to the payor parent and if so, how much. The Court makes this decision by considering several factors, such as the parent’s age, education, special skills, employment history, etc.… However, if the parent is unable to work due to a physical or mental disability, or is caring for both parties’ young child (under two years of age), then the court may not make a potential income determination for the purposes of child support.

The passage of this bill will not directly affect a child support order that is in effect prior to October 1, 2021. And, the adoption of new legislation does not constitute a basis for a modification of child support.