Divorce & COVID-19: Be Prepared When Demand Returns
The loss of income and drop in net worth will certainly affect the ability to pay child support and alimony. Two households are more expensive to run than one, so both parties will need to cut their expenses and set financial priorities.
May 15, 2020 at 12:16 PM
5 minute read
Divorce-related filings in metro Atlanta have dramatically slowed due to the COVID-19 virus. Couples considering divorce are struggling with the uncertainty that this pandemic has brought. Even with the shelter-in-place order lifted, many of these couples continue to live under the same roof while working remotely. While some couples have used this time to give their marriages one last shot, for others it has clarified the decision.
With courts remaining closed through June 12, there will be pent-up demand for divorces as well as modifications of child support and custody and contempt. I've received several calls from anxious clients on long walks or out for a solitary drive that plan to move forward when the courts reopen.
Georgia family law lawyers are not alone. According to a recent survey by the American Academy of Matrimonial Lawyers, potential clients have been calling attorneys during the crisis for a variety of reasons. These include:
- 58% of family lawyers have received calls from people that want to proceed with a divorce;
- 51% want to discuss existing visitation rights;
- 36% inquired about modifying child support.
To prepare for the uptick in a variety of family law matters, here are a few recommendations for attorneys and their clients.
Expect Cases to be More Complex
This will occur because the parties involved have lost a significant amount of their net worth and income, while debt has increased, compared to only two or three months ago. It's difficult to resolve cases where there is not enough money to go around. With approximately 1.85 million unemployment claims filed in Georgia since mid-March, the economy will take several months to recover.
Gather Key Financial Information and Keep Good Records
It will be critical to for couples to document their income, assets and liabilities. This includes any debt, such as unpaid mortgages, rent, credit cards and other loans, as well as the virus' impact on the parties' balance sheet.
Further, many businesses have been decimated due to lost revenues, making it difficult for business valuation experts to place a proper value on these businesses. In addition, home values are uncertain, since the real estate market has come to a screeching halt. And, while the stock market has recovered from a steep drop, it's still off its February peak.
A Recession May Affect Child Support
The loss of income and drop in net worth will certainly affect the ability to pay child support and alimony. Two households are more expensive to run than one, so both parties will need to cut their expenses and set financial priorities.
According to the AAML survey, one-third of family law attorneys have already received calls to discuss changing the terms of child support. Parents need to work as cooperatively as possible to resolve these issues. If the paying parent has been financially crippled and is unable to pay the prior amount of support, be realistic.
Custody Issues May Increase
We are likely to see parents litigate disagreements over visitation and child support that arose during the "shelter in place" rules. Courts could easily decide to take action against the one parent who decided to ignore these rules, potentially costing that parent time with their children in the future. In addition, issues about "make-up" time for missed parenting will arise. Parties should address this issue before heading to court.
How can attorneys and their clients work through these issues?
Be a Problem-Solver
If the both parties work cooperatively, there are vehicles to help get through the recovery period. The Coronavirus Relief Act, or CARES Act, has created unique opportunities for business owners.
For example, provisions dealing with net operating loss carrybacks allow some businesses to look back for five years and file amended returns. Any refund could create cash flow to help rebuild, fund salaries or both. Individuals also have access to retirement accounts with the options to make withdrawals without penalty and either repay the loan in three years or spread the taxes over three years. These accounts could help fund the expenses during the recovery.
Use Meditation and Other Options
Mediation, early or late case evaluations or a settlement meeting may help lower or possibly avoid legal fees. Couples that negotiate can foster more creative solutions than by battling in a courtroom. In my experience, many payors are concerned about their former spouse and their children and may be more generous than the court.
Even After a Divorce, Work Together
Whether together or apart, parents are going to need each other. For those with younger children, childcare may be an issue this summer. Older children have lost internships and may be home for an extended period of time. Parents need to determine how they can share child care and keep their homes and employment going until life returns to normal.
Family law attorneys can play a major role helping their clients navigate all of these issues in the coming months, while keeping in mind that health officials are warning about a second wave of infections this autumn from COVID-19. By communicating regularly and setting realistic expectations, we can help our clients maintain a proper perspective on how to achieve their goals while continuing to keeping their families safe and healthy during this crisis.
Elizabeth Lindsey is a shareholder with the law firm of Davis, Matthews & Quigley and practices exclusively in domestic relations and family law. She is the president-elect of the American Academy of Matrimonial Lawyers.
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