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Bar News - November 16, 2012

Family Law: Donít Be Afraid of Arithmetic: Cheap and Simple Financial Arguments


Too many divorce practitioners are afraid of a little arithmetic, when the use of a few calculations can benefit your client considerably. A few minutes with a calculator can result in powerful arguments that can be worth of tens of thousands of dollars to your clients Ė and you donít always need an economic expert or an accountant to make them. Hereís a simple example:

You represent Patricia, who was married to Richard for 30 years. Their children are grown and gone. Patricia earns $30,000 per year and Richard earns $120,000 per year. There are no fault grounds. At present, Patricia has $20,000 in her 401K plan, and Richard has $110,000 in his. Both parties have stable employment.

Most attorneys would simply add the two 401K plans together, divide by two, and determine that each party should have a retirement account of $65,000. But Patricia has a better argument.

RSA 458:16 - a II (i) states that the Court can vary from a 50/50 division of assets based upon "the expectation of pension or retirement rights acquired prior to or during the marriage." And subsection (c) of the same statute allows the Court to consider "the opportunity of each party for future acquisition of capital assets and income."

In this example, suppose each party gets $65,000 from the two retirement accounts. In ten years, at retirement, Patricia will have added an additional $6,000, for a total of $71,000. Richard, on the other hand, will have added an additional $50,000, and will retire with $115,000 at age 65 in his retirement account. He will have an extra $44,000.

Suppose, however, that you took the $44,000 difference and divided it by two. See what happens then.

You can argue that Patricia should get $65,000 plus $22,000 from the retirement accounts, for a total of $87,000. That would leave Richard with $43,000 from the accounts.

But after ten years, given the contributions stated, Patricia would have $93,000, as would Richard. You should therefore argue that Patricia should get $87,000 from the retirement accounts, and that Richard should get $43,000, so that the amounts will be equalized at retirement.

It is easy to argue that, after a long-term marriage, both parties should be entitled to equally comfortable retirements.

Furthermore, you can argue that this does not even take into account the fact that Richard will get more in Social Security than would Patricia, because of his higher earnings. Richardís lawyer will undoubtedly argue against this, but the arguments are easily refuted.

First of all, these calculations ignore investment gains and losses. But so what? The calculations are simple and firm. They are probably also in Richardís favor, since Richard is more likely to be able to increase his contributions (since he will have more disposable income) and any percentage raises will benefit him more than Patricia. Do not let the lack of a perfect argument deter you from making a good one.

Richard may claim that you need an economist or at least an accountant for this. Malarkey. All you need is basic arithmetic, a sheet of paper, a pencil, and a calculator. Judges like simple explanations and calculations, and this is both.

Another argument Richardís attorney might make: He could become disabled, his company could lay him off, or Patricia might remarry a rich doctor, and so the whole thing is too speculative.

My response: Again, baloney. The calculations are based on what has existed for many years and we are simply assuming the continuation of the status quo. Every divorce decree is speculative. Circumstances can always change. But the court has to make its ruling on the situation as it exists.

I would only make these arguments in the case of a long-term marriage, a relatively short period of time until retirement, and if there was a substantial disparity in the partiesí incomes.

In addition, the cost of making the argument is negligible. You donít need an expert. It shouldnít take more than an hour to run the calculations and prepare a nifty little exhibit for the court, which can be supplemented in requests for findings and rulings. It is easy to make the argument that the parties were married for 30 years and always expected that they would have equally comfortable retirements.

And there is no downside. The worst case scenario is that the judge does not buy it. But even if he or she does not, the judge might toss you a few cookies in some other area of the decision.

This is but one of many examples of when a few minutes with paper, pen, and calculator, in conjunction with reviewing the statute, can benefit your client greatly. I have had success with this type of argument on several occasions. I have also used similar arguments to show why child support should be increased in cases where a child has especially high medical or other expenses (it is a much greater percentage of disposable income for the lower wage earner), why guardian fees should not be split 50/50, why the custodial parent, who needs to occupy the house for the kids, should not be attributed with 50 percent of the equity, and dozens of other examples.

Best of all, none of these arguments rests upon your ability to prove that Richard actually committed adultery with Fife LaBoom, and that was the cause of the breakdown of the marriage. A little thought and the judicious use of a calculator can get you to the same place with a lot less hassle and expense.

Theodore H. Parent is a solo practitioner in Keene.

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