Intersection of Military Pension Division and NC Statute

Kris, a white man with brown hair and a beard, wears a white shirt, teal tie, and navy blazer.By Kris Hilscher

A common challenge attorneys face in a military divorce is how the Frozen Benefit Rule (FBR) will affect pension division.[1] To avoid a call to the malpractice carrier, attorneys must understand the FBR, and when it does – and does not – apply to their case.

The Frozen Benefit Rule: Is Your Client In or Out?

Any military pension case either is “in” or “out” for the FBR. What does a lawyer need to know to determine this?  There are two questions to answer:

  1. Was the divorce entered before December 23, 2016?
  2. Was the servicemember receiving retired pay on the date of divorce?

If the answer to both questions is “no,” then the rule applies. If the divorce was entered prior to that 2016 date, the rule does not apply. This is of course more and more unlikely as time marches on, making the second question more relevant for most lawyers. If Mr. Jones was receiving retired pay on the date of divorce, the rule does not apply pursuant to Chapter 29, Vol. 7B of the Department of Defense Financial Management Regulation (DoDFMR).

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Thank You, Pro Bono

Elysia, a woman with auburn hair and brown eyes, wears a white shirt and blue and white jacket.By Elysia Prendergast-Jones 

How are you giving thanks? I recently attended the lunch that honored the 2023 Branch Professional Award winner, Brian Beverly. His speech was so inspiring, particularly when he spoke about the importance of pro bono service. He mentioned how pro bono does more for the person doing than receiving. Nothing is truer. “What do I get from doing pro bono?” I asked myself. It is a feeling that I have something that others want and need, which I can freely give away. As attorneys, our most valuable commodity is our time and knowledge. Is that worth giving away for free?

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Uniform Parentage Act – Feedback Needed

ByJennifer, a white woman with short brown hair, wears a teal blouse and black blazer. Jennifer S. Tharrington 

Scope of project: The Uniform Parentage Act, if passed, would revolutionize parentage law in North Carolina and provide our state with a uniform legal framework for establishing a parent-child relationship regardless of how children are conceived.

The reason this matters: Currently, there is little or no law in North Carolina that allows children born of assisted reproduction to be legally attached to their parents despite infertility increasing and more available interventions to conceive. This is a legal blindspot that is harming a significant and increasing number of our state’s children and their parents.

Now is the time for feedback!

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The Trail of Tracing and Transmutation

Kristen, a white woman with long brown curly hair, wears a bright blue blouse and is smiling. By Kristen Sherwood

Have you ever had a client ask, “What happens to my inheritance if I decide to separate from my spouse?”

“Is this my separate property?”

“What if I used this for [insert marital purpose here]?”

Clients come in with the often-googled buzzwords “comingling” and “conversion” and think that since these funds were used for a marital purpose or placed in a joint account, then surely, they have been converted to marital funds[1]. However, the buzzword you should introduce your clients to is “tracing.”

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Family Law Intensive Seminar: November 2023

Barbara, a woman with short brown hair, wears a white button-down shirt and dark blue blazer.By Barbara Morgenstern

To the best of my recollection, the first Family Law Intensive Seminar was held approximately 25 years ago. It was the brainchild of a Rocky Mount family law attorney named J. Edgar Moore. I believe the first seminar was limited to 50 people and to family law specialists or lawyers who had practiced primarily family law for at least seven years.

It was only offered once. As the seminar became more popular over the years (and more lawyers became specialists), we expanded the seminar to two presentations and expanded the attendance to 85 lawyers and to lawyers who have practiced primarily family law for eight years or more. The idea for the seminar was to provide an advanced program with limited attendance to encourage a lot of dialogue between the speakers and attendees.  The Bar Association decided to offer the seminar every other year for advanced practitioners and to provide what was originally called the “Basics of Family Law” in alternate years for new lawyers and paralegals.

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Empower Pro Bono

Elysia, a woman with auburn hair and brown eyes, wears a white shirt and blue and white jacket.By Elysia Prendergast-Jones

Attorneys hold a unique power to transform the lives of many. It is often funny how lawyers are one of the top hated professions, yet most people will need an attorney at least once in their lives. We have an opportunity to show the softer and more caring side of attorneys through the power of pro bono. You can use your superpower to give back this month. Help me to empower those who simply cannot afford to ask a question that would be simple to us as attorneys. Many people are making the choice between food and bills, so attorney fees are out of their budget. This is something we can do to help empower those who need us the most.

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Joining Closely Held Business Entities As Parties in Equitable Distribution Actions

Chris, a white man with grey hair, wears a white shirt; red, navy, and white striped tie; and black suit. By Chris Graebe

Full disclosure at the outset: I’m not a family law practitioner. My practice involves a wide array of business litigation matters, including so-called “business divorce,” but never actual divorce. I will retire happily never having represented a spouse in an equitable distribution matter. However, I have represented business clients who have been joined as parties in equitable distribution actions, and I thought it might be worthwhile to write something about the intersection between the law of equitable distribution and the law that governs the business entities that may be marital property. This post will focus on the law of LLCs, because that is the corporate form most often chosen for closely-held entities. Most, but not all, of the principles discussed here are equally applicable to corporations. Furthermore, this post focuses on the joinder of LLCs in cases involving a non-owner spouse. When a spouse owns an interest in the LLC at issue, the spouse has certain rights under the LLC Act and may have additional rights (or limitations) under the operating agreement. Finally, this post discusses, but does not take a deep dive into, the specific facts of Campbell v. Campbell, 241 N.C. App. 227, 773 S.E.2d 93 (2015) and Geoghagan v. Geoghagan, 254 N.C. App. 247, 803 S.E.2d 172 (2017), the two cases most often cited in connection with the joinder of closely held companies in equitable distribution actions. The reader is encouraged to read those opinions closely if she is not already familiar with them.

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2023 is Not “2020, Too”

By Ketan Soni

Your new chair, Jill Jackson, comes on board next week!

Here’s where I started last July.

Introduction

After reading this post, ask yourself:

“What have I done to make things better?”

The answer, partially, is:

“Helping clients endure through one of the most difficult times in their lives.”

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Dillree v. Dillree – The Scope of Guardianship Powers in Divorce

David, a white man with dark brown hair, wears a pale purple shirt a dark grey tie. By David C. Herring

Understanding the role of a guardian (or even a durable power-of-attorney) over an incompetent ward is an invaluable tool for our family law clients. One could justify a whole CLE devoted to its usefulness in this context alone. Despite the value of a guardian’s role, the establishment of the guardianship relationship has its limits. This is the holding in a recent and seminal case from the North Carolina Court of Appeals, Dillree v. Dillree, 2022-NCCOA-835.

The Takeaway

A guardian over an incompetent spouse can separate the ward from her spouse if the guardian determines it to be in the ward’s best interest (i.e., her safety is at risk, dementia requires placement in a care facility, and the like). However, a guardian cannot create a legal separation. Namely, a guardian cannot form the determination on the ward’s behalf that such separation from her spouse is done with the intent required to cease the matrimonial cohabitation. Such power would allow the guardian to, in effect, create the necessary intent to begin the one-year separation period for purposes of a divorce and to establish the concomitant rights that come with forming such intent (equitable distribution rights, most specifically). Allowing otherwise, the court holds, is a bridge too far. There are, however, other tools at the guardian’s disposal to help protect assets and matrimonial rights for their principal, specifically, constructive trusts, charging orders, and the like.

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March 2023 Family Law Section Update

By Ketan Soni

A. We had a Council meeting on March 23, 2023. It was gloriously held over Zoom. The next (and final) meeting for this bar year is on May 18, 2023, in Cary.

Did you know that you can attend Council meetings remotely, thus eliminating travel? Well, now you know how easy it really can be to get involved.

B. Jill Jackson takes reign shortly as your next putative Chair. Listen to her interview with Shelby Benton, recipient of the John B. McMillan Distinguished Service Award, which can be found in the March 3, 2023, blog post.

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