Family Practice
April 2002 Newsletter for the TBA Family Law Section

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In this issue
From the Chair

Imputing Income to the Spiritually Minded

We Are All Uncivil in Our Own Way

Letter from Department of Human Services

Report on Activities of the TBA Family Law Section Code Committee

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From the Chair

You will not want to miss the excellent seminar on alimony in Tennessee on June 14 at 9:40 a.m., during the Tennessee Bar Association convention in Chattanooga. Amy Amundsen and her committee have written a tremendous resource handbook, Alimony Bench Book, which discusses the various types of alimony and charts the results of various Tennessee cases. These materials have been distributed to the judiciary and as an attendee, you too will have the benefit of this compendium of information. The TBA’s Family Law Section Code Commission, under the able leadership of Mary Frances Lyle, has proposed several legislative changes (SB 2559, HB 2523). Among them is a change clarifying one of the conditions upon which alimony in futuro terminates. The rehabilitative alimony statute specifically states: “… [rehabilitative] alimony terminates in the event of the death of the recipient.” The alimony in futuro code section needs similar language. Another proposed change would allow alimony to be paid through wage assignment. The Code Commission has also proposed a bill that would exempt the defaulting parent from mediation in a default divorce case. Steve Cobb, our Tennessee Bar Association lobbyist, has been working to obtain passage of these bills in the legislature. We will miss Kate Burkhart, our middle section representative to the Executive Council, who has moved to Alaska. She is replaced by Robyn L. Ryan of Nashville, Tennessee, who will be a welcome addition to the Executive Council. If any of you want to become more involved in our section and activities, please let me know. Marlene Eskind Moses graduated from Tulane University with a bachelor of arts and a masters of social work. She has been in private practice working mainly in the areas of family law, mediation and arbitration in family law, and probate law having graduated from the Nashville School of Law in 1980. She is a principal in the association of Eisenstein, Moses, & Mossman. Return to index

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Imputing Income to the Spiritually Minded
by Laura W. Morgan
On Feb. 22, 2000, the Milwaukee (Wisconsin) Journal Sentinel reported that John Andrew sent letters to the district attorney’s office stating that he had become a Hare Krishna monk, was thus impoverished, and therefore would no longer be paying his child support obligation to his four daughters. “I have no way of making an income as a monk and so I will no longer be paying child support,” he was quoted as saying. Assistant District Attorney Barbara Michaels said, “I’ve never had anyone say they’re unable to pay because of religion. This is the first one.” Nonetheless, she refused to dismiss the 16 charges of felony non-support filed against him, stating that he had voluntarily impoverished himself, and he was able to work and support his children. http://www.jsonline.com:80/news/wauk/feb00/krishna230222000a.asp

While this may be a first in Wisconsin, this is not the first case where a support obligor has claimed that he or she no longer need pay child support because he or she has joined the religious life. In the majority of the cases, the court has held that income can be imputed to a support obligor who voluntarily impoverishes him or herself, and such imputation of income does not offend First Amendment principles.

In an early case to discuss this issue, Pencovic v. Pencovic, 45 Cal. 2d 97, 287 P.2d 501 (1955), the husband and wife were married in 1937 and divorced in 1944. The husband was ordered to pay child support for the parties two children. From 1945 to 1951, he made no payments of child support. In his defense to the wife’s motions for contempt and modification, the husband claimed that after the divorce, he changed his name to Krishna Venta and founded a religious society called the WKFL Foundation (standing for wisdom, knowledge, faith, and love). The society members live in a commune and none works outside the commune. Funds are obtained from new members who transfer all their property to the society, and the society provides “gifts” to the members depending on their needs. The trial court concluded, and the appellate court agreed, that a parent cannot evade support obligations by claiming a religious exemption:

By refusing for religious reasons to seek or accept gainful employment defendant may not evade [his child support] obligation. Although the guarantee of religious freedom under the First Amendment of the Constitution of the United States is binding on the states under the due process clause of the Fourteenth Amendment, the states may nevertheless regulate conduct for the protection of society, and insofar as regulations directed towards a proper end and are not discriminatory, they may indirectly affect religious activities without infringing the constitutional guarantee … Certainly, there are few interests of greater importance to the state that the proper discharge by parents of their duties to their children, and the Constitution does not compel the subordination of the statutory duty of a parent to support his child to a rule of religious conduct prohibiting gainful employment.
287 P.2d at 504.

The statements by the court in Pencovic found resonance in McKeever v. McKeever, 36 Or. App. 19, 583 P.2d 30 (1978). In this case, the father resigned from his job in order to “take on a nonpaying promotional position with a Christian evangelical organization.” The father claimed that because he had no income, the court erred in ordering him to pay child support, and that such an order violated his First Amendment rights to free exercise of religion. The court, relying on State v. Sprague, 25 Or. App. 621, 550 P.2d 769 (1976), dismissed this argument out of hand. The court in Sprague had held, “It is of compelling interest to the state that parents of children, when they are able, should be required by law under penalty of criminal sanctions to support their children, and that their actions in such regard should be governed by laws, regardless of their religious beliefs.” 25 Or. App. at 628, 550 P.2d at 772.

The Michigan Court of Appeals took up the issue in Dunn v. Dunn, 105 Mich. App. 793, 307 N.W.2d 424 (1981). During the parties marriage, the husband became an ordained minister in the United Methodist Church. After the divorce, the husband became a member of the Order Ecumenical. As a member of this order, the husband took a vow of poverty and obedience. Members of the Order are given a place to live and a food allowance, and a stipend of the poverty level of the nation to which they are assigned. The Order also provides medical and dental insurance. The trial court found that the husband’s actions constituted a willful disregard for the interest of his children, and ordered the husband to pay child support. The husband appealed.

This time, the court held that the trial court erred. “Plaintiff’s interest in and association with the Order Ecumenical began long before his divorce from defendant and there is no hint in the record before us that plaintiff became involved in the Order merely to avoid his obligations of child support.” 307 N.W.2d at 426. The concurring opinion, per Kallman, J., went further, and said that his case was not a child support case, it was a First Amendment case. A court cannot order a man to get a job and pay child support that will force him to leave his religious order, which he joined during the marriage, and renounce his religious vows.

One might be tempted to conclude that the difference between these cases is that in Pencovic and McKeever, the court imputed income to the support obligor because the decision to become impoverished came after the divorce, whereas in Dunn, the court declined to impute income because decision to become impoverished came before the divorce during the marriage. One would, however, be mistaken, because subsequent cases failed to draw this distinction.

In In re Marriage of Meegan, 11 Cal. App. 4th 156, 13 Cal. Rptr. 2d 799 (1992), the parties were divorced in 1988 after 30 years of marriage. At the time of the dissolution, the husband’s net income was $56,400 per year. In 1991, the husband left his job, joined an order of the Catholic church, and entered the Holy Trinity Monastery. The husband then filed a motion to reduce his spousal support, claiming he was impoverished. The trial court reduced his spousal support to zero, and the appellate court affirmed. The court held that since the husband had changed jobs in good faith and without the motive to deny his ex-wife support, he was not guilty of “shirking” and therefore the court would not impute income to him. This case clearly conflicts with Pencovic.

Another case that is difficult, if not impossible, to reconcile with the Pencovic/Dunn rule is Goldberger v. Goldberger, 96 Md. App. 313, 624 A.2d 1328 (1993). In this initial child support case, the father was a lifelong Orthodox Jewish Talmudic scholar who had never held an income-producing job. “It is undisputed that appellant had earned no actual income, as he had never worked at any income-producing vocation. Appellant planned his life to be a permanent Torah/Talmudic scholar. He was a student before he was married and before any of his children were born … Throughout his life, appellant has been supported by others.” 624 A.2d at 1332-33. Nonetheless, even though this man had never held a job, the court imputed income to him. “A parent who chooses a life of poverty before having children and makes a deliberate choice not to alter that status after having children is voluntarily impoverished … The law requires that parent to alter his or her previously chosen lifestyle if necessary to enable the parent to meet his or her obligations.” 624 A.2d at 1335.

After Goldberger, one must draw the conclusion that the voluntary decision to pursue a life of religious poverty, whether before or after marriage, will result in the imputation of income, except in California. More recent decisions support this conclusion.

In Hunt v. Hunt, 162 Vt. 423, 648 A.2d 843 (1994), the husband belonged to the Northeast Kingdom Community Church. Members of the church lead an ascetic, communal existence, eschewing all personal possessions and working for the benefit of the community. The church forbids no-fault divorce and forbids members to support an estranged spouse or children who live outside the community. When the wife left the husband and took the children, the husband, consistent with his religious views, refused to support the wife or their children. The trial court concluded that although these beliefs were sincerely held by the husband, and were not recently acquired but had been practices by the husband throughout the marriage, the law nevertheless demanded that an otherwise able-bodied individual support his or children. “Matter of religious belief, as a matter of law, do not furnish an exemption from that ability to pay.” 648 A.2d at 847. The appellate court affirmed. While the support obligation would, indeed, place a burden on the husband’s religious practices, the state’s interest in seeing that children are adequately supported justified that burden.

In Bassette v. Bartolucci, 38 Mass. App. Ct. 732, 652 N.E.2d 623 (1995), the court also imputed income. In this case, the father claimed a modification of his support obligation because he took early retirement from the U.S. Postal Service to become a religious missionary in Jamaica. The court held that the father’s voluntary decision to leave a paying job warranted the imputation of income. “Because his was a voluntary career change, the father retains the ability to pay the ordered amount of child support, based on his potential rather than actual earning capacity.” 38 Mass. App. Ct. at 736, 652 N.E.2d at 626.

Likewise, in Elsberry v. Elsberry, 967 P.2d 1004 (Alaska 1998), after the father failed to provide tax returns to the court, the court imputed income to him. The father claimed that he could not comply with an order to produce his tax returns because his religious beliefs prevented him from paying federal taxes; hence, he had no tax returns to produce. The appellate court disagreed with the father’s contention that the trial court imputed income to him because of his religious beliefs. Rather, the trial court imputed income because he failed to produce any evidence of what his income was. Hence, the father’s religious beliefs were inconsequential to his ability to support his children.

In sum, the cases decided since the advent of child support guidelines, which in all states authorize the court to consider not just actual income but potential earning capacity, clearly support the proposition that one cannot avoid a child support obligation on the basis of religious belief.

Laura W. Morgan owns and operates Family Law Consulting, which provides research and writing services to family law attorneys nationwide. She is the current chair of the ABA’s Family Law Section Child Support Committee, and the author of the leading treatise on child support, Child Support Guidelines: Interpretation and Application. She can be reached at goddess@famlawconsult.com.

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We Are All Uncivil in Our Own Way
by Mark A. Chinn, Chinn & Associates PLLC, Jackson, Miss.
Over the years, I have heard many complaints from lawyers about “what we do to each other.” Most lawyers complain that young lawyers are the problem, because they don’t know how “we do things.” I have heard this before and there probably is need for more law school and young lawyer indoctrination. But, to tell you the truth, most of my trouble is with older lawyers, and not necessarily lawyers you would expect. It’s with you and me, depending on the circumstances.

Here’s who we are (by the way, I am one of these people below and I’ll buy lunch for the first person who writes me and tells me which one I am). Which one are you?

1. Bam Bam. This is the baby lawyer with his new big stick. The young lawyer aggressively trying to make his name for himself. He operates under the assumption that litigation is like a boxing match and your objective is to knock the other lawyer’s head off. He thinks it’s fun.

2. The Adolescent. The lawyer with about 10 years’ experience. This lawyer is just coming into his own and feeling his power. He wants people to know that he has arrived and is a force to be reckoned with. He knows what to do and he understands the force that he has at his disposal. The problem is that he is like a teenage boy, he has the strength and attributes of an adult, but not the experience.

3. The Advocate. The lawyer who believes the client is boss. This lawyer operates under the philosophy that people are paying him to be a sonofabitch. He believes the client is King and has the right to aggressive advocacy of his position, no matter what. This lawyer does not believe it is his place to try and counsel his client on the long term consequences of his action or on the “right thing to do.” This lawyer will assist a man in not paying child support.

4. Rambo. The lawyer who has personal problems. This lawyer has anger in his heart from personal history. He does not know how to control his anger, so he uses it in the attempt to control results. Unfortunately, these lawyers are usually very smart and cunning.

5. Albert Einstein (this is not me). These are good — usually very intelligent — lawyers who have little patience for what they regard as the inadequacies of the rest of us. They are going to teach the other lawyer a lesson. If the other lawyer doesn’t promptly return his excellencies’ telephone call, he will strike, to teach a lesson. If the other lawyer should dare to disagree with the Intellectual’s decree as to the law in the case, the intellectual lawyer will penalize him.

6. Oscar. This is the sloppy lawyer. He does not have the training, ability or interest in organization of his office. He has work — sometimes a lot of it — and he believes that he is in the practice of law to help people, but he is not particularly intense about it. He doesn’t charge a lot and he takes on little “causes.” Unfortunately, he doesn’t earn enough for his efforts to have the staff necessary to meet his volume of business. He finds himself in court all the time litigating. He usually believes the client is King, but not in the truly dangerous way of the Advocate. Because of his disorganization, he doesn’t return phone calls, he misses depositions and he files things without thinking. He really doesn’t intend to be uncivil but that’s how it feels when you are on the other end of it.

7. The White Knight. This lawyer takes his client’s causes personally and is on a mission to rescue his client. He is generally a good lawyer who thinks he is civil, but sometimes his rescue mission obscures his objectivity. He has a tendency to attack with righteousness.

8. The Southern Gentleman. This lawyer thinks that as long as he is a complete gentleman he can do just about what he wants. He is so darn nice that the judges love him. When you are on the other side from him, you find yourself “pulling punches” because you don’t want to be uncivil to him, but when you do that, you are caught in his web. They will lead you to believe time after time that they are going to work with you, so you pull back, but the true cooperation you thought you were going to get never comes. The Southern Gentleman also has the capacity to court you like an old pal and then stick you right in the heart at the most unexpected time.
9. El Destructo. The Bad Lawyer. This lawyer simply doesn’t know what he is doing. Because he doesn’t, he usually causes a lot of damage, even though he is not winning. He is like the Chicago Bears of the late 60s, he may not beat you, but when you are through with the game, half your team is injured. Unfortunately, El Destructo has a lot of the qualities of Rambo, but not the skill.

Civility starts with common courtesy. The simplest example is calling the other lawyer before scheduling depositions or hearings. Unfortunately, lawyers as a group have a lot of work to do on this. But there are many kinds of incivility that occur just because of who we are. Each of us, no matter how good a lawyer we are, or how well-intentioned, has the capacity to act in ways that put the other lawyer on guard to our incivility. We should examine who we are and understand how we, too, can be uncivil. n

Mark A. Chinn graduated from the University of Mississippi in 1978 and operates a five lawyer firm dedicated to representing people in divorce. He is an A rated lawyer. He is listed in Best Lawyers in America and in The Bar Register of Preeminent Lawyers in the field of family law. He is former president of the Hinds County Bar Association, in Jackson, Miss., and was twice chairman of the Mississippi Bar Family Law Section. He is on the council of the ABA Family Law Section. Reply to Mark A. Chinn, P.O. Box 13483, Jackson, MS 39236, 1-888-477-4410 or e-mail at “mark@chinnandassoc.com” Web page: chinnandassoc.com


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Attorneys and Business Appraisers Working Together Effectively
By Kenneth W. Patton, Mercer Capital, Memphis
How can attorneys improve their practical knowledge of business valuation without becoming “technicians” themselves? This article contains a few suggestions that should be helpful for attorneys when working with business appraisers.

Assignment Definition
Assignment definition is critical because it creates the framework for the report. At Mercer Capital we use the following chart in every valuation assignment to delineate essential information about the valuation engagement.

Client Name
Business Name	v
Type of Entity
State of Incorporation
Principal Business Location
Business Interest Under Consideration
Standard of Value
Premise of Value
Effective Date
Purpose & Intended Use
Scope of Work

We moved to this “chart format” in lieu of a narrative description to solve a very practical problem — it is all too easy in a narrative description to omit critical information. The omission of this critical information obviously makes it difficult or even impossible to understand a valuation report or assess its validity. Four elements listed in the chart are worthy of specific attention.

• The Standard of Value must be explicitly defined. The standard of value is most often “fair market value” as defined in IRS Revenue Ruling 59-60; however, the standard of value isn’t always clear in family law proceedings. Attorneys should work with the appraiser to gain a mutual understanding of the definition of these terms and their applicability to the case at hand.

• The Premise of Value (sometimes called the Level of Value) is essential. The reader should know from the outset whether or not a minority interest or controlling interest is being valued. It should not be left to the reader to surmise this by analyzing the valuation methods employed. Furthermore, it should be no surprise that two appraisers would reach widely different conclusions of value if the Premises of Value were different.

• The Effective Date of the valuation, sometimes referred to as the “as of date,” is critical, because it drives the selection of financial information, market information, and industry data. The Effective Date can be uncertain, particularly in divorce matters, therefore careful attention is warranted. Keep in mind that there may also be multiple effective dates.

• The Scope of Work must be defined. Do not presume that any opinion of value is an “appraisal” under the professional standards of the appraiser. For example, the word “appraisal” has a very specific meaning under the business appraisal standards of the American Society of Appraisers. However, it may have a different connotation to members of another professional society.1 The point is simple — understand the scope of work as defined by the professional standards that govern business appraisal of the group to which your appraiser is affiliated. Ask for the professional standards of your appraiser and the opposing expert and then make a common sense comparison of the requirements of the standards to the actual work performed.

Begin with the End in Mind — Sometimes Called Relative Value Analysis
Every valuation report should include a relative value analysis. This concept may initially seem overly technical, but it is the basis for a sanity check on the conclusions of the report. Examples could include, but not be limited to, a price/earnings ratio, price-to-book value, price-to-net assets, and total market capitalization-to-EBITDA. The purpose of the relative value analysis is to demonstrate the reasonableness of the conclusion of value.

Carefully Explain the Rules of Evidence and Testimony to Your Appraiser
Do not assume that your appraiser is familiar with all of the rules of evidence in any litigated matter. Think about the following:

• If litigation can be reasonably anticipated, plan well in advance of the trial the work product that will be needed.

• As the trial approaches, speak with your appraiser about rules for talking with other witnesses. Remember that appraisers are not as familiar with your world of the courtroom.

• Prepare your witness by carefully reviewing key information to be presented at trial. Explore the possibility of exhibits, which simplifies material considered to be very technical.

• Ask your appraiser if any valuation methods have been used that might be perceived as outside the mainstream of general practice. This will allow you to anticipate Daubert challenges.2

Ask About Quality Control
This is best done when purchasing the valuation assignment; however, it is also worthy of monitoring as the assignment unfolds. Consider the following questions when engaging an appraiser and throughout the working
relationship:

• Will the report be reviewed by anyone other than the primary writer?

• Was the math checked and were critical sources of
information documented?

• Were any procedures or information compromised in the preparation of the report? If so, were the limitations properly noted?

Conclusion
Remember that the attorney can do many things to ensure a quality appraisal product. We hope these practical steps will help your work with business appraisers. n

1. There are four professional associations that confer business appraisal credentials. They are (1) the American Society of Appraisers (ASA), (2) the Institute of Business Appraisers (IBA), (3) the National Association of Certified Valuation Analysts (NACVA), and (4) the American Institute of Certified Public Accountants (AICPA). Currently, all professional associations have professional standards governing business appraisal with the exception of the AICPA.

2. Daubert v. Merrell Dow Pharmaceuticals Inc. 113 S.Ct. 2786 (1993).

Kenneth W. Patton, ASA, is president of Mercer Capital headquartered in Memphis, one of the leading independent business appraisal and transaction advisory firms in the nation. He can be reached at (901) 685-2120. For more information about Mercer Capital, visit http://www.mercercapital.com.


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Letter from Department of Human Services

STATE OF TENNESSEE
DEPARTMENT OF HUMAN SERVICES
OFFICE OF GENERAL COUNSEL
Citizens Plaza Building
400 DEADERICK STREET
NASHVILLE, TN 37248
TELEPHONE: (615) 313-4731 FAX: (615) 741-4165 TTY: 1-800-270-1349

DON SUNDQUIST, Governor
NATASHA K. METCALF, Commissioner

To: Tennessee Bar Association, Domestic Relations Committee

From: William B Russell, General Counsel, Tennessee Department of Human Services
Date: March 14, 2002

Subject: Child Support Liens and Administrative Seizure Orders For The Collection Of Overdue Child Support from Accounts in Financial Institutions

The following presents an overview of the child support lien and administrative seizure order process for the collection of overdue child support payments from the accounts in financial institutions of child support obligors who are delinquent in their payments of child support. Please use this information in such a manner as you find appropriate to bring this new process to the attention of the legal community. This same information, in a somewhat more abbreviated form, has been provided to the Tennessee Bankers Association, the Tennessee Credit Union League, and the Tennessee Department of Financial Institutions.


GENERAL OVERVIEW
On March 3, 2002, the Tennessee Department of Human Services’ regulations became effective which put into place, in Chapter 1240-2-5 of the Department’s rules, the authority to administratively seize assets in the accounts of child support obligors owing past due child support payments at financial institutions. The Department’s regulations for administrative seizures can be found on the Internet at the Secretary of State’s Website for State Regulations at http://www.state.tn.us/sos/rules/1240/1240-02/1240-02.htm. The Department will begin using account information in financial institutions identified by a Financial Institution Data Match (FIDM) process as the basis for issuing administrative orders to seize funds that are held at financial institutions for account holders who owe past-due child support. This Federally required process compares the Department’s child support records of delinquent child support obligors to a financial institution’s records through a computer data match process to determine if the financial institution has any accounts of the obligor and the amount of the funds in those accounts. Matches are reported back to the Department for enforcement. This memorandum provides an overview of the way that this administrative seizure process will be carried out in Tennessee.

LEGAL BASIS FOR LIENS AND ADMINISTRATIVE SEIZURE ORDERS
TO COLLECT OVERDUE CHILD SUPPORT
Under the provisions of 42 United States Code, § 666(a)(4) and Tennessee Code Annotated, § 36-5-901(a), and the regulations of the Tennessee Department of Human Services at 1240-2-5, a lien arises by operation of law against all real and personal property of a child support obligor whose child support payments are overdue as defined by T.C.A. § 36-5-901(b). The Tennessee Department of Human Services has authority pursuant to 42 U.S.C. § 666(c)(1)(G) and T.C.A. § 36-5-904(2) to enforce its lien by seizing assets of a delinquent child support obligor held in a financial institution as defined in T.C.A. § 36-5-910.

Tennessee Code Annotated § 36-5-905 provides that the lien may be enforced by the issuance of an administrative order of seizure directed to the person or entity holding the assets of the child support obligor. These administrative seizure orders are based upon prior judicial or administrative orders entered in Tennessee, or in another State, under which an order for support has been entered and under which an overdue support situation has arisen. The Department is required by Federal law at 42 U.S.C. §§ 666(a)(4)(B) and 666(c)(1) and by T.C.A. § 36-5-902 to enforce the liens of other States’ Title IV-D child support agencies for overdue support owed under their laws. Liens on assets in financial institutions are enforced, in part, through a financial institution data match (FIDM) process authorized under 42 United States Code § 666(a)(17) and T.C.A. § 45-19-101. The lien of the Department for overdue child support is subject to the priorities listed in T.C.A. § 36-5-901(c) and (d), and pursuant to T.C.A. § 36-5-905(c), to the orders of Federal bankruptcy courts and existing judicial attachments or executions on judgments in effect on the date of the administrative seizure order.

Pursuant to T.C.A. § 36-5-903(b), all assets in a financial institution that are jointly held are presumed to be available in full to the obligor unless this presumption can be overcome by the other joint account holder(s) by evidence provided to the Department. All information provided to the Department or its contractors as part of this process is maintained in confidential records by the Department and its contractors as required by T.C.A § 71-1-131. As provided in 42 U.S.C. 666(a)(17)(C) and by T.C.A. §§ 36-5-905(g) and 45-10-118, a financial institution has absolute immunity from civil or criminal actions for its good faith compliance with an administrative seizure order or its attempted compliance and the provision of information from its records to the Department of Human Services or its contractors who are enforcing child support obligations.

OUTLINE OF THE PROCESS
A standard form titled ADMINISTRATIVE ORDER FOR SEIZURE OF ASSETS will be used for all seizures issued by a Tennessee child support agency which may include a District Attorney’s Office, a private contractor such as MAXIMUS or Policy Studies, Inc., the Juvenile Court of Shelby County, or in the 4th Judicial District, a child support office operated directly by the Department of Human Services. A copy of this form is attached. Financial institutions should expect to begin receiving these administrative seizure orders in March 2002. When a Financial Institution Data Match (FIDM) report shows the child support obligor to have an account in that financial institution, an administrative seizure order will be issued to the financial institution by the local child support office that handles the individual child support case. Each order will contain the address, phone number and fax number for the local office. In most cases, the local office will send the order of seizure to the financial institution by First Class U.S. Mail.

The issuance of administrative seizure orders will be a manual process at this point. A child support worker will evaluate the FIDM data received in conjunction with the information contained in the individual child support case record in order to decide which accounts should be seized. The local child support attorney will then review and approve the issuance of each seizure before it is sent to the financial institution. The local child support office will notify the obligor/account holder of the seizure. A form titled NOTICE OF SEIZURE OF ASSETS will be mailed to him/her within five (5) days after the ADMINISTRATIVE ORDER FOR SEIZURE OF ASSETS is sent to the financial institution. A copy of this NOTICE is attached. The obligor/account holder will have fifteen (15) days from the date of the NOTICE to file an appeal with the Department contesting the seizure. During this period, no assets of the obligor will be distributed to the Department by the financial institution and no assets of the obligor will be distributed by the financial institution or by the Department while the administrative appeal process pursuant to T.C.A. §§ 36-5-1001 et seq. is being conducted. The rules provide that the obligor, or the joint account holder, can seek relief from the seizure order preliminarily (1240-2-5-.13(5)).

PLEASE NOTE: While the rules in Chapter 1240-2-5 refer to an automated lien filing system for purposes of encumbering personal property (See, 1240-2-5-.02(18) and 1240-2-5-.03(2)(b), the Tennessee Automated Child Support Lien Registry (TACSLR), which will be used to perfect liens on real and personal property of a delinquent child support obligor through an automated internet-based application, will not become effective before August 2002 and possibly as late as October 2002. The rules for this process will appear in Chapter 1240-2-6 of the Department’s rules. Until then, any liens on real or personal property will only be effective if filed under current law. After TACSLR becomes effective, this method will perfect those liens against the property of the delinquent child support obligor on the date they are entered on the TASCLR system and will need to be checked prior to transfers of any property of the obligor.

ALSO NOTE: While the rules at 1240-2-5-.03(2) refer to the filing of a Notice of Lien and the rules contain the form for such purpose at 1240-2-5-.16, the filing of this lien is not a prerequisite to the issuance of an administrative seizure order for the collection of child support arrears. (See, 1240-2-5-.03(5) and (6) and T.C.A. § 36-5-901(b)(4). This Notice, which is the standard Federal notice required for all States, will be used to perfect the lien where the issuance of an administrative order is not, for whatever reason, appropriate at the time the Notice is filed.

The following steps will be taken when a financial institution receives an ADMINISTRATIVE ORDER FOR SEIZURE OF ASSETS: The financial institution will be directed to immediately freeze the funds in each account(s) specified in the order up to the amount of the Department’s lien. The amount of the lien is stated in the order. The financial institution will notify the local child support office of the unencumbered balance in each of the account(s) listed on the order. A form for this purpose will be enclosed in the envelope with the ADMINISTRATIVE ORDER FOR SEIZURE OF ASSETS. The financial institution may mail or fax this information to the local child support office that issued the order. The financial institution will be directed to take no other action until receiving further instructions from the local child support office. Funds in the account will not be distributed by the financial institution to the Department, but, as noted above, the obligor or the joint account holder, may seek preliminary relief for full or partial release of the order through the administrative appeal process. The seizure of the assets of the child support obligor will, however, otherwise remain in effect until the financial institution is advised whether to (a) remit the seized funds to the Department, or (b) release the lien in full or in part. When remitting seized funds to the Department, the financial institution will make the check payable to “TENNESSEE CHILD SUPPORT”, note the obligor’s name and case number on the check, and clearly indicate on the check that the source of the payment is “FIDM.”

The financial institution will mail the payment to the following address:

Child Support Receipting Unit
P O Box 305200
Nashville TN 37229

This address is the Central Collection and Disbursement Unit established pursuant to T.C.A. § 36-5-116, and this will be included on each remittance notification the child support office sends to the financial institution. If the financial institution has questions about a specific seizure order, it will need to first contact the local child support office identified on the order form. That office has access to the child support case file and will be most familiar with the specific circumstances of the case. wever, a central phone number will also soon be available should the financial institutions have general questions about the FIDM program or the administrative seizure process. Financial institutions are also encouraged to call this number if they need assistance communicating with the local child support office. In the Nashville calling area please dial 313-6655. Outside the Nashville area, the toll-free number is 1-800-338-2175. These numbers are not currently operational, but they will be in the near future. Until these numbers are available, the financial institutions may direct questions to the following individuals:

Rene’ Kuhn
Kathleen Troope
Phone: (615) 313-4880
Email: rene.kuhn@state.tn.us kathleen.troope@state.tn.us

Please let me, or Barbara Broersma, Assistant General Counsel for Child Support, know if you should have any questions regarding this process.

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Report on Activities of the TBA Family Law Section Code Committee
By Mary Frances Lyle, Code Committee Chair
The Code Committee has been meeting monthly just prior to and during the legislative session. It was determined prior to the opening of this session of the Tennessee General Assembly to offer a piece of proposed legislation which would do the following:

a. Make it clear in the property division section of the Code that IRA accounts are to be treated similarly to other financial accounts in determining how to classify the funds in the account as separate or marital, and how to deal with the appreciation in any such account during the marriage.

b. A provision that the complainant in a default-based divorce case is automatically exempted from the parenting class.

c. A provision permitting alimony to be paid by wage assignment even when there is no child support order involved.

This legislation is moving well through the House and the Senate and is expected to pass.

The committee, through the Tennessee Bar Association, has acted in strong opposition to the mandatory joint custody legislation. Three bills were filed by proponents of mandatory joint custody. The most viable piece of legislation was SB 2427, HB 2476, which would create a rebuttable presumption that joint physical and legal custody and shared parenting is in the best interest of children, and defines those terms as meaning substantially equal but not less than 40 percent of the time with the non-primary-residential parent. This bill deletes the current Code provision, which expressly states that there is no preference for any certain type of custody and gives the court the widest discretion in ordering a custody arrangement in the best interest of the children. The bill was severely amended in the House to strike out the language creating a presumption and virtually all its original language. The amended bill, which passed the House Children & Family Affairs Committee on Tuesday, April 9, requires the court to make “affirmative” findings of fact, and states that custody modifications are subject to the parenting plan. The bill will now work its way through Calendar and Rules and on to the House floor in its current form.

At the time this publication went to press, the bill was to be considered in the Senate Judiciary Committee in its original form on Tuesday, April 16. Members of the Senate Judiciary Committee are as follows: Hon. Curtis S. Person, Hon. Doug Jackson, Hon. David Fowler, Hon. Stephen Cohen, Hon. Jim Kyle, Hon. Larry Trail, Hon. Mark Norris, Hon. Micheal Williams, and Hon. Joe Haynes.

If you have an opinion on this legislation and wish to have some impact, you are encouraged to contact these senators to let them know your thoughts.

Legislation that would have restored the rebuttable presumption that child support is payable on all income of the payor parent did not make it out of subcommittee in the House Children & Family Affairs Committee and is dead for this session. The Code Committee has a subcommittee on child support that will look at the entire child support issue, including some formula for dealing with upper-income families, with a goal of obtaining some degree of consistency and predictability to assist in settlement of cases. As the statute currently reads after the last-minute change in the law last year there is a presumption that child support is not payable above $10,000 net income per month. Given that there are large numbers of professionals earning in the $200,000 to $500,000 range in our state, it is appropriate to look at what other states have done to deal with cases of this type.
The Alimony Bench Book, prepared by the Family Law Section Code Committee’s Alimony Committee has been approved for publication by the TBA Publications Committee. A one-hour CLE on the bench book will be presented at the TBA Convention in Chattanooga on Friday, June 14.

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