In Uncategorized on 11/27/2017 at 17:55

If the divorce decree doesn’t state the payment(s) cease(s) with death of payee spouse, and local law doesn’t either, it isn’t alimony.

I’ve blogged Section 71(b)(1)(D) to death (sorry, guys). But some family law types are going to get hammered in a professional liability suit. And I’m a member of the New York State Bar Association Committee on Association-Sponsored Insurance Programs. Although nothing I say should be deemed or construed in any way to state an official position, I don’t like it when lawyers get sued, and premiums go up. Been there, done that, and won. But why go through the agita?

OK, here’s jolly old England with Gary A. Wolens, 2017 T. C. Memo. 236, filed 11/27/17. Y’all remember Gary from his discovery joust with IRS over his loved-once’s tax returns. If not, check out my blogpost “Nolens, Wolens,” 4/4/16.

Gary married loved-once in Our Fair State, but promptly took off for Blighty and there he shed loved-once, the English Court issuing an Order for Financial Provision. That’s not a divorce decree, says Judge Pugh, but she and we will pretend that it is. Gary claims NY domicile, and NY law should govern whether his lump-sum payment to loved-once is or isn’t alimony. And NY is the marital domicile.

Nope, says Judge Pugh, domicile isn’t the issue.

“Although the parties dispute domicile, neither party is challenging the validity of the divorce.  We, therefore, conclude that the law of the marital domicile is not the law that we must interpret.  Section 71 requires us to interpret the divorce order. The divorce order was issued under English law, as petitioner acknowledged.  We, therefore, will apply English law to determine the rights and obligations created by the English court’s order.” 2017 T. C. Memo. 236, at pp. 6-7. (Citations omitted).

Yeah, says Gary, but England isn’t a “State,” and the cases say apply State law.

So what, asks Judge Pugh. “We also reject petitioner’s contention that the ‘State law’ referred to in our analysis of section 71(b)(1)(D) means the law of one of the fifty States.  We previously applied the law of a foreign country in determining the taxability of rights created by a divorce decree granted under the laws of that country.“ 2017 T. C. Memo. 236, at p. 8 (Citations omitted, but Tax Court has applied Latvian law and German law in the family law context.)

Gary loses.

Now, deep in the heart of Texas, Courtland L. Logue, Jr., 2017 T. C. Memo. 234, filed 11/27/17, saves me from the angst of reporting how a lawyer blew Section 71(b)(1)(D), by having his trusty nonlawyer business manager, whom I’ll call Chip, draft the marital settlement agreement. Courtland had had a prenup, but drafter not stated. Maybe Courtland didn’t like paying lawyers’ fees, and perhaps Chip was cheap. So the marital settlement agreement, minus you-know-what, gets incorporated in the divorce decree from the Two Hundred and Sixty First Judicial District (Travis County).

Judge Nega has this one, and Texas law governs both prenup, marital settlement agreement and divorce decree.

There’s some argy-bargy about whether the Texas Family Code or general contractual provisions of law govern, but Judge Nega  has a Texas case that says that contract governs, and even if the Two Hundred and Sixty First Judge incorporates the marital settlement agreement into the decree, and has jurisdiction to enforce, that doesn’t make the payments court-ordered support payments that the Court can modify. Texas lawyers, see footnote 8 at p. 11. Here be dragons.

What’s more, it doesn’t matter when the payment is made, even at the moment the Judge signs the decree. “The complete termination upon the death of the payee spouse of all payments made as alimony is an indispensable part of Congress’ scheme for deducting a payment as alimony for tax purposes.  See H.R. Rept. No. 98-432 (Part II) at 1496 (1984), 1984 U.S.C.C.A.N. 697, 1138.  The fact that payments were in fact made simultaneously with the execution of the agreement is irrelevant.” 2017 T. C. Memo. 234, at p. 8, footnote 12. (Citations omitted).

For whatever reason, neither Chip nor Courtland’s lawyer raised good faith reliance to abate the five-and-ten chop.

Be warned, family lawyer.


  1. I’ve always wondered what Congress was thinking when they inserted the “death” provision for deductible alimony. It does seem to give the payor a weird incentive to, you know, prematurely end his or her alimony obligation.


  2. The aim was to prevent turning nondeductible child support into deductible alimony. If the spouse’s death terminates the deductible payment, there’s no doubt it’s for the maintenance of the spouse, thus alimony, and not child support in disguise.


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