What are Digital Assets?

Digital assets are broadly defined as anything of value that exists in digital form and can be stored or accessed electronically. Some common examples of digital assets include:

• Cryptocurrency
• NFTs and Digital Artwork
• Internet Businesses
• Video Games
• Websites and Domain Names
• Airline Miles
• Music Collections and Music Accounts
• Shared Social Media Accounts
• Shared Streaming Accounts – Netflix, Hulu, Spotify, etc.

Cryptocurrency is one of the most common and complex digital assets to address in the legal field. Unlike traditional currency, cryptocurrency is a decentralized form of digital currency that operates independently of governments or third-party banking systems. Because it is not regulated by outside entities, it often lacks oversight and consistency in valuation.

Well-known examples of cryptocurrency include:

• Bitcoin
• Ethereum
• Tether
• Binance Coin
• Dogecoin
• Chainlink

Common Complications of Cryptocurrency in Divorce

Although in the eyes of the court, cryptocurrency is viewed the same as physical property, cryptocurrency can create unique challenges during a divorce, particularly when it comes to discovery, access, and valuation.

Discovery & Access

With no connection to the physical world and little to no digital trail due to a lack of regulation, cryptocurrency is often hidden and intentionally kept from the eye of the opposing spouse. Further, since many cryptocurrencies operate within a peer-to-peer network, it can be difficult to decipher who to subpoena for records.

An experienced attorney understands that cryptocurrency transactions almost always leave a digital trail. If you know or suspect where funds were transferred to purchase cryptocurrency, it is important to share this information with your attorney.

One area of concern involves cold wallets, physical devices, such as USB or flash drives, that store private cryptocurrency keys offline. Cold wallets can complicate divorce proceedings if one party is unaware that the assets exist. However, when both parties are aware of a cold wallet, steps should be taken to confirm that it is properly accounted for and that it is being held in a secure location.

Valuation

If the party can find the digital asset and gain access to its information, the asset will require valuation for the purpose of division in divorce. Yet, cryptocurrency values change so often that it can be hard to determine at which point the value shows an accurate representation of the asset’s value. Courts will generally value the digital asset based on the day that a party filed for divorce.

Preparing for Divorce When Digital Assets Are Involved

Working closely with an experienced attorney, you can take the following steps to ensure that your digital assets are properly secured, documented, and accounted for during the divorce process.

Keep an Inventory

When managing digital assets during a divorce, it’s important to maintain a clear and comprehensive inventory of all assets. Make a list of all digital assets held during the marriage, including those you may not have direct access to. Even if certain accounts or investments are primarily managed by your spouse, documenting what you know or suspect exists can help ensure nothing is overlooked. Having open communication about shared digital assets can make this process more complete and accurate.

Obtain Usernames/Passwords for Accounts

Access is key. Make sure you have usernames, passwords, and private keys for any cryptocurrency or digital accounts you own. Being able to access your accounts allows you to accurately document balances, transactions, and holdings.

Document Your Assets

Keeping detailed records of your digital assets is equally important. Updated account values and balances from all cryptocurrency accounts, along with information from tax returns such as capital gains, losses, or income, can provide an essential record of digital activity and ownership.

Don’t Hide Your Assets

It’s also critical to be transparent about your assets. Attempting to hide digital holdings can result in serious legal consequences, including penalties, treble damages, and attorney fees.

Inform Your Attorney

Finally, when discussing your assets with your attorney, be sure to keep them informed about all of your digital assets, as well as any concerns you may have regarding them. Collaborating closely with a knowledgeable attorney ensures your digital assets are properly identified, secured, and accounted for throughout the divorce process.

For more information or to seek counsel from our Family Law group, please reach out to request a consultation or call us at 216-696-1422.

The post Protecting Your Digital Investments & Cryptocurrency In Divorce appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Subcontractor Recourse: Mechanic’s Lien

Then you start hearing from your builder’s subcontractors that they are not getting paid. When you ask your builder what’s going on, they assure you everything is under control, but in reality, that isn’t the case. In actuality, your builder has run out of money, diverted your payments to fund other projects, and is on the verge of going out of business. Your builder ultimately walks off the job, leaving subcontractors unpaid. At this point, the subcontractors utilize one of their only recourses – putting a mechanic’s lien on your future home.

A Homeowner’s Defense to a Mechanic’s Lien Under Ohio Law

With the uncertainty and volatility of costs in the current economic environment, this has become an all-too-common issue. But how can it be fair that you paid your builder, yet liens are still being put on your home?

Luckily, the Ohio Revised Code has a carve out for this exact scenario. Under R.C. 1311.011(B)(1), if you pay your builder the full amount under your home construction contract prior to a subcontractor putting a mechanic’s lien on your future home, then the lien is invalid under Ohio law. As long as you simply put the subcontractor on notice via affidavit that you paid the full amount of the home construction contract, then the subcontractor must release the lien.

On the other hand, what if you haven’t paid your builder in full? R.C. 1311.011(B)(2) covers that scenario. If you have paid your builder a portion of the cost of the home construction contract, but due to the builder’s mismanagement, the cost to complete the home will be greater than the contract balance, then the mechanic’s lien is invalid. To give an example, if your home construction contract is $500,000, and you pay your builder $400,000, the balance left on the contract is $100,000. However, after the builder walks off the job, you discover that the builder did not do all of the work you paid for and didn’t pay subcontractors for their work. In fact, you discover that it will actually cost $250,000 to finish the construction, not $100,00. In that instance, because the cost to complete the home is greater than the contract balance, the lien is invalid under Ohio law.

If you put the subcontractor/lienholders on notice in accordance with R.C. 1311.011, then the lienholders are obligated to release the liens. If not, and litigation is necessary to remove the liens, they may be liable for damages, court costs, and attorneys’ fees.

This is a difficult scenario in which no one wins. The homeowner has to pay above and beyond the contract price to finish their home, the subcontractor doesn’t get paid, and it creates a headache for everyone involved. Fortunately, from the homeowner’s perspective, there is recourse to have these mechanics’ liens released.

If you are dealing with a similar situation, consulting with a qualified construction law attorney can help you protect your rights and resolve the issue effectively. Likewise, before starting a major project, it’s important to understand your rights as a homeowner so you can take proactive steps to prevent these issues from arising.

For more information or to seek counsel from our Real Estate & Construction practice group, please reach out to request a consultation or call us at 216-696-1422.

The post Mechanic’s Lien: Dream Home Turned Legal Nightmare appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

What Qualifies as a Home Solicitation Sale?

While you may typically think of “home solicitation sales” as a door-to-door salesman, these in-home solicitations include solicitations in response to a request by a homeowner, such as requesting a contractor to come provide an estimate for goods or services. Should a homeowner and contractor agree to a contract in that instance, very specific language is required.

Key Contract Requirements Under the HSSA

Every sale that falls under the HSSA must be documented in writing, include basic identifying information, clearly set forth the project terms and scope of work, and ensure that the contractor does not engage in any misleading or deceptive practices within the transaction. However, what makes the HSSA a potential landmine for contractors and a goldmine for homeowners is that the agreement must also include a specific statutory notice advising the homeowner of their right to cancel the contract, without penalty, within three business days. The purpose is to allow a homeowner a cooling-off period in the event they change their mind. As part of that, the contract is also required to have a “Notice of Cancellation” form attached to it that a homeowner may fill out and return to a contractor if they do end up changing their mind.

While the HSSA allows a three-day cool-down period, that three-day period to cancel the contract does not begin to run until the contractor has provided the homeowner with the required “Notice of Cancellation” form. Failure to provide this document means that the homeowner can cancel the agreement at any time. Yes, this means that if a contractor does not provide the required form, a homeowner can cancel the contract after work has been done, receive a full refund, and keep whatever goods or services that were finished.

The Overlapping Reach of the Home Solicitation Sales Act & Ohio Consumer Sales Practices Act

Furthermore, even if a contractor provides the “Notice of Cancellation” form, any deceptive, misleading, or unfair conduct in connection with the transaction can still expose them to liability under the Ohio Consumer Sales Practices Act (CSPA). A violation of the CSPA can carry serious consequences, including the potential for the homeowner to recover attorney’s fees, triple their damages, and other costs, making compliance with both the HSSA and CSPA critically important for contractors.

For more information or to seek counsel from our Real Estate & Construction group, please reach out to request a consultation or call us at 216-696-1422. 

The post The Ohio Home Solicitation Sales Act appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Definitions Under Castle and House Bill No. 338

Under Castle and the new House Bill No. 338, there are some terms that are important to define and understand. They are as follows:

• Person with a Disability – A person with a mental or physical disability, whose disability began before the person reached the age of majority, and whose disability makes the person incapable of supporting or maintaining oneself.
• Age of Majority – All persons of the age of eighteen years or more, who are under no legal disability, are capable of contracting and are of full age for all purposes.
• Castle Child – A child that is physically or mentally disabled and unable to maintain themselves due to their physical or mental disability. Due to this fact, the court has ruled that they are unable to legally be deemed to have reached the age of majority and thus are still under the jurisdiction of the court for child support purposes, allowing them to have child support orders received for their care.

What Does House Bill No. 338 Modify?

The modifications of the Ohio Revised Code included in House Bill No. 338 change the law established through Castle in the following ways:

It no longer matters whether the child’s disability was attained while the child was a minor.

• Previously, a court could only order child support for a Castle child when the child was a minor and before the finalization of the proceeding.
• Now, a court within a divorce/dissolution/legal separation/annulment can order or modify child support for the parties’ Castle child, regardless of whether the child has reached the age of majority before or after the finalization of the proceeding.

House Bill No. 338 redefined “person with a disability.”

• A “person with a disability” now means a person with a mental or physical disability, whose disability began before the person reached the age of majority, and whose disability makes the person incapable of supporting or maintaining oneself.

A Castle child can lose their Castle status

• Previously, once a child was deemed to be physically or mentally disabled, as to warrant continuing support under Castle, that determination was final.
• Now, an order for child support for Castle children can be terminated upon satisfactory proof that the child who is the subject of the order is no longer mentally or physically disabled and/or can support or maintain themself.

How Does House Bill No. 338 Affect Me & My Family?

If you or someone you know has a child support order and a child with physical or mental disabilities who may not be self-supporting into adulthood, the new House Bill No. 338 could have future impacts. House Bill No. 338 also establishes an avenue for parents to seek support if their child develops physical or mental disabilities in adulthood that require additional care not needed during childhood.

If any of these situations sound familiar to you, you may have a claim through the courts to establish child support. A family law attorney can help you evaluate your options and determine the appropriate next steps.

To seek counsel from our Family Law practice group, please reach out to request a consultation or call us at 216-696-1422.

_____________________________________________

[1] Castle v. Castle, 15 Ohio St. 3d 279 (1984).

The post House Bill No. 338: Modifying Castle Child Support Orders & Regulation appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

The following information details the list as announced by the IRS. The official notice for this year’s “Dirty Dozen” can be found on the IRS website.

(1) Email Phishing Scams

The IRS continues to see a barrage of email and text scams targeting taxpayers and others. Taxpayers and tax professionals should be alert to fake communications from entities posing as legitimate organizations in the tax and financial community, including the IRS, state tax agencies and tax software companies. These messages arrive in the form of unsolicited texts or emails to lure unsuspecting victims into providing valuable personal and financial information that can lead to identity theft. There are two main types:

• Phishing: An email sent by fraudsters claiming to come from the IRS. The email lures the victims into the scam with a variety of ruses such as enticing victims with a phony tax refund or threatening them with false legal or criminal charges for tax fraud.
• Smishing: A text or smartphone SMS message where scammers often use alarming language such as, “Your account has now been put on hold,” or “Unusual Activity Report,” with a bogus “Solutions” link to restore the recipient’s account. The promise of unexpected tax refunds is another potential tactic used by scam artists.

As a reminder, never click on any unsolicited communication claiming to be from the IRS as it may surreptitiously load malware. This may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.

The IRS has special information available to help people understand and report email scams.

(2) Bad Social Media Advice

Another growing concern in 2025 continues to involve incorrect tax information on social media that can mislead honest taxpayers with bad advice, potentially leading to identity theft and tax problems. Social media platforms routinely circulate inaccurate or misleading tax information, including on TikTok where people share wildly inaccurate tax advice. Some involve urging people to misuse common tax documents like Form W-2.

The IRS and CASST warn people not to fall for these scams, and urge them to follow trusted social media advice from the IRS, tax professionals and other reputable sources. The IRS reminds taxpayers who knowingly file fraudulent tax returns that they could potentially face significant civil and criminal penalties.

(3) IRS Individual Online Account Help from Scammers

Swindlers can pose as a “helpful” third party and offer to help create a taxpayer’s IRS Individual Online Account at IRS.gov. In reality, no help is needed, and the agency offers tips on how to sign up and avoid scams. The IRS Individual Online Account provides taxpayers with valuable personal tax information. But watch out: Third parties making these offers will try to steal a taxpayer’s personal information and try to submit fraudulent tax returns in the victim’s name to get a big refund.

(4) Fake Charities

Bogus charities are a perennial problem that can intensify whenever a crisis or natural disaster strikes. Scammers set up these fake organizations to take advantage of the public’s generosity. They seek money and personal information, which can be used to further exploit victims through identity theft.

Taxpayers who give money or goods to a charity might be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

(5) False Fuel Tax Credit Claims

A major concern during the past year involved taxpayers who were misled into believing they were eligible for the Fuel Tax Credit. The credit is meant for off-highway business and farming use and is not available to most taxpayers. However, unscrupulous tax return preparers and promoters, including people on social media, continue enticing taxpayers into inflating their refunds by erroneously claiming the credit. The IRS has seen an increase in the promotion of filing certain refundable credits using Form 4136, Credit for Federal Tax Paid on Fuels. The IRS urges people to get more information and ensure they are properly claiming this credit.

(6) Credits for Sick Leave and Family Leave

This specialized credit is available for self-employed individuals for 2020 and 2021 during the pandemic; the credit is not available for later tax years. The IRS is seeing repeated instances where taxpayers are using Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to incorrectly claim a credit based on income earned as an employee and not as a self-employed individual.

(7) Bogus Self-Employment Tax Credit

Social media advice continues to circulate about a non-existent “Self-Employment Tax Credit” that’s misleading taxpayers into filing false claims. Promoters market it as a way for self-employed people and gig workers to get big payments for the COVID-19 pandemic period. Similar to misleading marketing around the Employee Retention Credit, there is inaccurate information being circulated that suggests many people qualify for the tax credit and payments of up to $32,000 when they actually do not.

In reality, the underlying credit being referred to in social media is not called the “Self-Employment Tax Credit,” it’s a much more limited and technical credit called the Credits for Sick Leave and Family Leave. Many people simply do not qualify for these credits, and the IRS is closely reviewing claims coming in under this provision, so taxpayers filing claims do so at their own risk.

(8) Improper Household Employment Taxes

Taxpayers “invent” fictional household employees and then file Schedule H (Form 1040), Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid.

(9) The Overstated Withholding Scam

This is a recent scheme circulating on social media encouraging people to fill out Form W-2, Wage and Tax Statement, or other forms like Form 1099-NEC and other 1099s with false income and withholding information.

In this overstated withholding scheme, scam artists suggest people make up large income and withholding amounts as well as the fictional employer supplying those amounts. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund due to the large amount of fraudulent withholding.

If the IRS cannot verify the wages, income or withholding credits entered on the tax return, the tax refund will be held pending further review. Taxpayers should always file a complete and accurate tax return. They should only use legitimate information returns, such as an employer issued Form W-2, to complete returns correctly.

There are multiple variations of the overstated withholding credit scheme, including those involving Forms W-2 and W-2G; Forms 1099-R, 1099-NEC, 1099-DIV, 1099-OID and 1099-B; as well as the Alaskan Dividend Fund, Schedule K-1 with Withholding Reported, and Unspecified Source of Withholding Credit Claimed.

(10) Misleading Offers in Compromise

The Offers in Compromise (OIC) program is an important program that helps people settle their federal tax debts when they are unable to pay in full. But “mills” can aggressively promote Offers in Compromise in misleading ways to people who clearly don’t meet the qualifications, frequently costing taxpayers thousands of dollars. A taxpayer can check their eligibility for free using the IRS Offer in Compromise Pre-Qualifier tool.

(11) Ghost Tax Return Preparers

Most tax preparers provide outstanding and professional service. However, people should be careful of shady tax professionals and watch for common warning signs, including charging a fee based on the size of the refund. A major red flag or bad sign is when the tax preparer is unwilling to sign the return. Avoid these “ghost” preparers, who will prepare a tax return but refuse to sign or include their IRS Preparer Tax Identification Number (PTIN) as required by law. Taxpayers should never sign a blank or incomplete return. Instead, the IRS reminds taxpayers to turn to a trusted tax professional for help.

(12) New Client Scams and Spear Phishing

In 2025, the IRS continues to see the “new client” scam, which involves spear phishing attempts that target tax pros. Cybercriminals impersonate new, potential clients to trick tax professionals and other businesses into responding to their emails. Once the tax pro responds, the scammer sends a malicious attachment or URL that can compromise the preparer’s computer systems and allow the attacker to access sensitive client information.

Phishing is a term given to emails or text messages designed to get users to provide personal information, and spear phishing is a phishing attempt tailored to a specific organization or business. Tax professionals frequently find themselves a target of this type of scam. Spear phishing holds greater potential for harm because a successful spear phishing attack can ultimately steal client data and the tax pro’s identity, allowing the thief to file fraudulent returns using the stolen information.

Businesses and individuals, including tax pros, should always be cautious and look out for any suspicious requests or unusual behavior before sharing any sensitive information or responding to an email. Warning signs include poorly constructed sentences and unusual word choices. Be aware that by gaining access to a hacked email account, scammers can locate a genuine email from a previous victim’s email account sent to their tax professional.

The IRS emphasizes that beyond the “Dirty Dozen,” there are numerous other abusive schemes and false tax avoidance strategies that can be deceiving. For more information on past schemes, taxpayers can visit the dedicated “Dirty Dozen” section on IRS.gov. This list serves as a critical alert to both taxpayers and tax professionals about potential scams and schemes to watch out for.

For more information or to seek counsel from our Taxation group, please reach out to request a consultation or call us at 216-696-1422.

The post LEGAL ADVISORY: IRS 2025 “Dirty Dozen” Tax Scams appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

What is Grandparent Visitation?

Grandparent visitation is defined under Ohio law, which states that in a divorce, dissolution of marriage, legal separation, annulment, or child support proceeding that involves a child, the court may grant reasonable companionship or visitation rights to any grandparent in certain instances. This visitation is scheduled time that the grandparent can spend with the child. A grandparent may want to establish a set schedule for visitation time in situations where they do not often or regularly see the child. This visitation can come in many different forms, such as:

• Phone/video calls – Established time for the grandparent and grandchild to talk via phone or video chat.
• Midweek visits – A time during the week when the grandparent is allowed to visit with the child for a few hours (dinner, movie, park, etc.).
• Overnight visits – The child stays with the grandparent overnight. This can be one night or even a full weekend.

Can a Parent Prevent Visitation with Grandparents?

The ability to visit with grandchildren will be determined by the court through a test of what is in the child’s best interests. A court will begin with the presumption that a fit parent is acting in the best interests of the child and will take into consideration a fit parent’s wishes regarding the child. The burden of proving that it is in the child’s best interests to visit with their grandparent is on the grandparent.

To determine a child’s best interests, the court will look at many factors, some of which include: 

• The prior interaction and interrelationships of the grandparents, parents, and children
• The geographical location of the residence of each person with visitation
• The child’s and parents’ available time, including, but not limited to, each parent’s employment schedule, the child’s school schedule, and the holiday and vacation schedules of both the child and the parents.
• The age of the child
• If the court has interviewed the child in chambers, the wishes and concerns of the child, as expressed to the court
• The health and safety of the child
• The amount of time that will be available for the child to spend with siblings
• The mental and physical health of all parties
• The wishes and concerns of the child’s parents

In What Instances are Grandparents Awarded Visitation?

There are some instances where an award of visitation rights to a grandparent are most likely/common. These include:

1. When the grandparent’s child (the mother or father of the child whose visitation is at issue) dies – If your child dies, it can cause your access to your grandchild to be restricted or cut off. In this instance, the grandparents would move the court for more time with the children due to the restriction of historically exercised time.
2. When married parents terminate their marriage – A parent may restrict a grandparent’s ability to see the grandchild or a grandparent’s time to see their grandchild may be limited due to the results of the termination of marriage. Some examples of this situation are where:
   • A father travels extensively for work restricting his parenting time to when he is in town, but the paternal grandparents are local and desire consistent contact with the child.
   • A mother is on military deployment for months at a time restricting her parenting time to the months when she is home, but the maternal grandparents are local and desire consistent contact with the child.
     Thus, the grandparents would move the court for more time with the children due to the restriction of historically exercised time.
3. When a child is born to an unmarried mother – In this instance, the father (unless he establishes paternity) does not have rights to visitation. The paternal grandparents in turn do not either. Thus, the paternal grandparents would move the court to establish paternity of the father and visitation for themselves.

In What Instances Is Grandparent Visitation Uncommonly Awarded?

There are certain instances where awarding visitation rights to a grandparent is uncommon and unlikely. These include:

1. When a child is in protective custody due to abuse, neglect, or dependency of the child – If the child is in protective custody, the court will likely not order visitation for grandparents of the child.
2. Paternal grandparents of a child who does not have established paternity – As explained in the above section, if a father does not establish paternity of a child, he does not have parental or visitation rights to that child. In turn, the paternal grandparents would not have the possibility of visitation rights.

What Do I Do Next?

If you are having trouble seeing your grandchildren, you may have a claim through the courts to establish visitation. To begin this process or for more information from our family law attorneys, please reach out to request a consultation or call us at 216-696-1422.

The post Establishing Grandparent Visitation: What Is It & Who Can Seek It? appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

What is Financial Misconduct?

Financial Misconduct is defined as a spouse engaging in actions, including, but not limited to, the dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of assets. Some common examples include:

• Acquiring significant debt that is unusual for the marriage
• Hiding financial assets
• Underreporting income
• Overpaying taxes
• Selling assets
• Extreme gambling
• Spending large sums on a paramour
• Transferring title to property to third parties
• Withdrawal of retirement funds
• Large gifts to third parties

Hiding financial assets by transferring money between financial institutions, and large withdrawals are two of the most common forms of financial misconduct in a divorce. This commonly occurs when one party is attempting to hide the parties’ marital money in separate accounts or worse yet, in their “dresser drawer,” so the other spouse is not able to receive their half interest.

However, another form of financial misconduct is acquiring significant debt that was not typical for the marriage. This occurs when, instead of hiding the marital money, a spouse will spend the marital assets in extreme ways, in order to ensure that the other spouse is not able to receive their one-half interest. The most common examples of this are pre-payment of taxes and utilities, extreme gambling, and overuse of joint credit cards.

How Do I Know and Show This is Happening?

To know that financial misconduct is happening or has occurred, one must be aware of what assets they have. To ensure that you know of all assets of the marriage, you can do the following:   

• Keep an Inventory – Keep a list of all the assets of your marriage.
• Get a Credit Report – If you are unsure of the extent of your assets, a simple credit report can identify the different financial accounts that are in your or your spouse’s name.
• Obtain Usernames/Passwords for Accounts – If you are aware of financial assets, such as bank and retirement accounts, try to obtain/retain usernames and passwords to all accounts.
• Keep Track of Your Assets’ Values – In addition to keeping a list of all financial accounts and property assets you own in the marriage, also make sure you know their current values.

The burden of proof to show this misconduct is on the complaining party. There is no requirement that you must show your spouse had malicious intent or bad faith in their actions. A complaining party must only show that the spouse is knowingly engaged in the wrongdoing that causes the dissipation, destruction, concealment, nondisclosure, or fraudulent disposition of assets.

Discovery: To prove the misconduct, a party will first obtain the necessary documents for all accounts, property, and any other asset. This can be done through the following methods: If you notice that your spouse is taking actions, such as those listed above, to dissipate, destroy, conceal, avoid disclosure of, or fraudulently dispose of your marital assets, there are ways you and your attorney can go about proving such, including:

• Subpoenas
• Credit Reports
• Requests for Production of Documents
• Requests for Interrogatories
• Requests for Admissions

Forensic Accounting: A spouse may hire a forensic accountant to track and trace the movement of assets. These forensic accounts will be able to create a report of the offending spouse’s actions.

How Will This Effect My Divorce?

If a court finds that financial misconduct was committed, they may compensate the offended spouse with a distributive award or with a greater award of the marital property. The court can decide to:

1. Make the offending spouse pay the offended spouse money damages to make up for their misconduct and the assets that were dissipated, destroyed, concealed, not disclosed, or fraudulently disposed of; or
2. Award the offended spouse a larger portion of the marital property to make up for the assets that the offending spouse dissipated, destroyed, concealed, not disclosed, or fraudulently disposed of.

To seek counsel from our Family Law group, please reach out to request a consultation or call us at 216-696-1422.

The post Financial Misconduct: Ensuring Property Division is Equitable in Divorce appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

The IRS is targeting transactions where the income tax basis from certain partnership assets is shifted to generate preferential tax treatments. The IRS has labeled those transactions made solely for the purpose of increasing depreciation deductions or reducing gain recognition on the sale of an asset as “Transactions of Interest.” These are defined as transactions that the IRS and the Treasury Department believe are undertaken for tax avoidance or evasion purposes. As such, these types of transactions have been added to the list of reportable transactions and require disclosure to the IRS on tax returns. If an individual, or entity, fails to disclose the required information of a Transaction of Interest, they may be subject to a fine no less than $5,000, or $10,000, respectively.

The targeted transactions include favorable income tax basis adjustments of $5 million or more executed under the partnership rules of the Internal Revenue Code. This includes those distributions of partnership property or, the transfer of partnership interests, to a party related to the partners of the partnership. For purposes of these rules, the term “partnership” includes any entity, including limited liability companies, filing tax returns as a “partnership.”

Further, through the publication of Revenue Ruling 2024-14, the IRS is placing taxpayers on notice that it will challenge these basis-shifting transactions as lacking economic substance. The economic substance doctrine specifies that a transaction must have both a substantial purpose and economic effect aside from its sole tax benefits. Thus, if a taxpayer creates disparities in its tax basis and attempts to capitalize on these disparities by claiming a tax deduction under the respective tax code provisions, the IRS may challenge the legitimacy of the transaction.

For more information about this new guidance or tax compliance, or to contact one of our Taxation attorneys, please reach out to request a consultation or call us at 216-696-1422.

____
McCarthy Lebit would like to thank law clerk Anthony Miduri for his effort in assisting with the preparation of this legal blog post for The More Report.

The post Department of the Treasury & IRS Continues Crack Down on Tax Abusive Transactions appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Scientifically, an embryo is defined as “an animal in the early stages of growth and differentiation that are characterized by cleavage, the laying down of fundamental tissues, and the formation of primitive organs and organ systems especially the developing human individual from the time of implantation to the end of the eighth week after conception.”

Legally, the definition and legal status of an embryo have been called into question in light of the 2022 Supreme Court decision in Dobbs v. Jackson Women’s Health Organization. As such, Ohio courts have overhauled the status of cryogenically frozen embryos. In Ohio, to engage in delayed assisted reproductive technology processes, like IVF, which requires the embryos to be frozen for a period of time, an individual or couple must enlist the services of a Cryopreservation Bank. If a couple decides to freeze their embryos, a healthcare provider will require them to read and sign consent forms, sometimes referred to as Informed Consent-Embryo Cryopreservation Agreements, which detail the process of cryopreservation, the method and duration of storage, and decisions that must be made in the event of contingencies

Before the 2022 Dobbs decision, Ohio courts used three methodologies to determine the disposition of embryos in contested litigation. The first method, Contemporaneous Mutual Consent, dictates that the embryos should remain in storage until the parties can reach an agreement regarding their disposition [1]. The second method, the Balancing Test, was employed when no valid pre- or post-embryo preservation contract existed. Under the Balancing Test, the court was required to balance the interests of all parties involved including the mother, father, any existing children, and the potential child arising from the embryo [2]. The final approach was the Contractual Method, which was employed by a majority of jurisdictions [3]. The Contractual Method reasoned that the fact that both parties expressed their intention to address the allocation of the embryos pursuant to the terms of the Informed Consent-Embryo Cryopreservation Agreement contracts, demonstrates that both parties intended to treat the embryos as marital property [4]. Moreover, the Supreme Court agreed that a “valid contract would remove any constitutional concerns as it would have represented the parties’ knowing and voluntary intentions at the time of the IVF treatment” [5].

Kotkowski-Paul v. Paul (2022), decided pre-Dobbs, was only the third time an Ohio court adjudicated on the disposition of embryos. Unlike the two previous Ohio decisions, Karmasu v. Karmasu and Cwik v. Cwik, which were decided under the Contractual Method, while the parties both stipulated that they signed an Informed Consent-Embryo Cryopreservation Agreement, neither party could produce a copy of the contract [6]. Therefore, although the trial court recognized that the stipulation alludes to the parties’ intention to treat the embryos as marital property, without the contract to guide its decision, the court chose to use the Balancing Approach to determine the disposition of the embryos [7]. In its analysis of the Balancing Approach the trial court weighed the mother’s desire to effectuate the birth of a child, the father’s adamant proclamation that he does not want the added responsibility of a new child, the existing children’s confusion over the potential status of their sibling, and the potential child’s hardship as a result of the father’s refusal of his parental status [8]. While the court recognized each individual’s constitutional right to procreate, or not to procreate, ultimately the court found that, as a matter of public policy, forced procreation and involuntary parentage are not amenable to judicial enforcement [9]. Therefore, the trial court ordered, and the appellate court upheld, the embryos be awarded to mother who must either donate them or destroy them (Id. at 69).

Dobbs v. Jackson introduced the concept of embryos as “potential life” which fundamentally altered the definition of embryo in a legal setting.

E.B.N. v. R.N. (2024) highlighted Ohio courts’ usage of this new classification of embryos in a legal setting. In this case, Husband and Wife could not agree to the disposition of their frozen embryos on divorce where Husband wanted the embryos donated and Wife wanted them for her personal use [10]. When deciding the allocation of the embryos, the trial court rejected the previous three methods of reasoning applied in these types of cases, the Contemporaneous Mutual Consent, the Contractual, and the Balancing Approaches, believing them all inadequate because they regard embryos as property and “do not account for the fact that what is involved is not property, but life or the potential for life” [11]. Furthermore, the trial court denotes Ohio’s express public policy to prefer preservation and the continuation of life whenever constitutionally permissible [12]. Although both parents wishes are in accordance with Ohio’s public policy, the court advances the notion that Husband’s decision to fertilize Wife’s eggs that produced the embryos in question served as his consent to create offspring biologically related to him [13]. As a result, the court award the Wife the remaining embryos believing her request to be more consistent with honoring the parties wishes at the outset of the IVF services to create a child [14].

The impact of the E.B.N v. R.N. decision throws into question the validity and enforceability of not only Informed Consent-Embryo Cryopreservation Agreements, but all other contracts, like prenuptial and postnuptial agreements, that deal with the disposition of embryos. If you or someone you know is considering IVF, be sure to contact a lawyer so that you can move forward with a complete understanding of your options and the potential implications of your decision.

For more information or to contact one of our Family Law attorneys, please reach out to request a consultation or call us at 216-696-1422.

______________________________________________

[1] Jessee v. Jessee, 74 Va. App. 40,866 S.E.2d 46,51-52 (Va. 2021)
[2] McQueen v. Gadbery, 507S.W.3d 127, 144-147 (Mo.2016)
[3] Kotkowski-Paul v. Paul, 2022-Ohio-4567, 204 N.E.3d 66, ¶76; Karmasu v. Karmasu, 5th Dist. Stark No. 2008 CA 00231, 2009-Ohio-5252; Cwik v. Cwik, 1st Dist. Hamilton No. C-090843, 2011-Ohio-463; Bilbao v. Goodwin, 333 Conn. 599, 217 A.3d 977, 992 (Conn.2019); Szafranski v. Dunston, 2015 IL App (1st) (Ill 2015)
[4] Id.
[5] Eisenstadt v. Baird, 405 U.S. 438, 453, 92 S. Ct. 1029, 31 L. Ed. 2d 349 (1972)
[6] Kotkowski-Paul v. Paul, at ¶70
[7] Id. at ¶76
[8] Id. at ¶79-82
[9] Id. at 80. Citing Eisenstadt v. Baird, 405 U.S. 438, 453, 92 S. Ct. 1029, 31 L. Ed. 2d 349 (1972) and A.Z. v. B.Z., 431 Mass. 150, 725 N.E.2d 1051,1057 (Mass. 2000)
[10] E.B.N. v. R.N., 2024-Ohio-1455, P18
[11] Id. at P10-11
[12] Id. See O.R.C. 9.041 Ann
[13] Id. at P19
[14] Id. at P20

____
McCarthy Lebit would like to thank law clerk Isabel Cohen for her effort in assisting with the preparation of this legal blog post for The More Report.

The post IVF: Implications Post-Dobbs appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

What is Mediation?

Mediation is a dispute resolution process facilitated by a neutral third party, known as a mediator. In collaboration with disputing parties, who typically are represented by attorneys, the mediator assists in facilitating dialogue, identifying issues, encouraging understanding, and guiding towards a mutually acceptable resolution. A good mediator has to be a very good listener and must be evaluative. Mediation is a process that prioritizes open communication, flexibility, and collaboration among all parties in developing the resolution of their dispute.

What is Arbitration?

Arbitration is a dispute resolution process where a neutral third party, known as an arbitrator, is chosen to hear the arguments and evidence presented by the disputing parties. Like a court proceeding, the arbitration process takes a structured approach, and the arbitrator makes a decision based on evidence and arguments presented by attorneys.

Key Differences Between Mediation & Arbitration

Voluntariness

Meditation is a voluntary process. Additionally, parties can choose to withdraw at any time during the process. Arbitration can be voluntary, where parties agree to arbitrate a dispute, or it can be mandatory, where a pre-existing agreement or court requires arbitration. Unlike mediation, once arbitration begins, parties have a limited ability to withdraw. The binding nature of this process limits the ability to opt out without consequences.

Formality

Mediation is a highly flexible process. Arbitration is a more formalized process, similar to that of traditional litigation.

Control

In mediation, the disputing parties work in collaboration with the mediator to achieve resolution. In arbitration, the arbitrator controls the flow and structure of the proceedings. Then, the arbitrator makes a final decision based on the arguments and evidence presented by the disputing parties.

Decision-Making Authority & Enforceability

Parties in mediation possess full control over the outcome of the dispute. The mediator facilitates discussions and assists parties in exploring potential solutions. However, the final decision is determined by the disputing parties. In arbitration, the arbitrator has the authority to render a final, binding decision. Once the arbitrator issues a decision, it is legally enforceable.

Similarities Between Mediation & Arbitration

Third Party Neutrality

Mediation involves a neutral third party, a mediator, who facilitates discussion, assists in problem-solving, and helps parties reach a mutually acceptable agreement. Arbitration also involves a neutral third party, an arbitrator, who listens to evidence, evaluates arguments, and renders a decision.

Confidentiality

The content of discussions that occur during mediation sessions is confidential by statute. This includes the parties’ offers, statements, and any materials generated throughout the process. Additionally, mediators are bound by confidentiality. Arbitration proceedings are more formalized, and the rules regarding confidentiality may vary based on the arbitration agreement and applicable laws; however, the process is generally considered private.

Time & Cost Efficiency

Both mediation and arbitration are often viewed as faster and more streamlined processes compared to traditional litigation. Additionally, the associated costs of mediation and arbitration can be much more cost effective than litigation.

Mediation provides parties with a high degree of control over the resolution process and outcome, fostering collaboration and flexibility. On the other hand, arbitration involves a more structured and formal process, with the arbitrator holding decision-making authority. The choice between mediation and arbitration depends on the nature of the dispute, the desired level of control, and the overall goals of the involved parties. A comprehensive understanding of each method allows for an informed decision to be made regarding how to move forward in achieving effective resolution.

To seek counsel from our Alternative Dispute Resolution group, please reach out to request a consultation or call us at 216-696-1422.

The post Decoding Dispute Resolution: Mediation & Arbitration appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.