• Contracts for necessities such as food, lodging and medical services
• Statutory exceptions including insurance contracts and student loans

In addition, as a matter of public policy, some courts will hold minors' contracts regarding military enlistment to be enforceable. Many states also do not allow a minor to repudiate a real estate transaction until after they reach the age of majority.

Emancipated Minors
Emancipated minors are minors who are legally treated the same as adults. Once emancipated, the minor may enter into any contract as an adult. Emancipated minors include those who are:

• Legally married
• Serving in the armed forces
• Legally emancipated through the courts

In addition, emancipated minors are generally held to the same legal responsibilities and liabilities as an adult.

Ratification of the Contract
Most states allow minors to "ratify" their contracts once they reach the age of majority. The effect of ratification is to affirm the contract, which renders it no longer voidable by the minor. However, this right to ratify the contract, similar to the right to avoid it, belongs only to the minor; another party may not seek to ratify the contract. Ratification does not have to be express, it may also be implied through the minor's conduct if they fail to disaffirm the contract or to return the benefits in a timely manner after reaching the age of majority.

Remedies for Repudiation by Minors
In general, when a contract with a minor has been performed completely or in part and is then disaffirmed by the minor, they must return any benefit that they have already received from the other party. If the minor no longer has the benefit that they received under the contract (e.g., consumed goods or services), many courts will not require the minor to pay for the used, lost or destroyed benefit. This result forces the other party to bear the risk of loss. However, minors (or their parents) are typically always liable to pay for the fair market value of all "necessities" even if they no longer have them.

For example, if a minor purchases a car from another party and later decides to back out of the deal, the minor must return the car to the other party in order to get their money back. However, if the car is destroyed in an accident, the minor may still exercise their right to back out of the contract and get their money back (less depreciation or value of benefit already received), but owes nothing to the other party.

Remedies for Misrepresentation of Age
Courts are divided on how to remedy a situation where the minor represented that they were of legal age when they entered the contract. Some courts regard the misrepresentation as immaterial and treat the contract in the same way as any other with a minor. Some courts allow the other party to avoid the contract on the grounds of fraud and get its full value back from the minor. Other courts use the minor's misrepresentation as justification to revoke the minor's right to back out of the contract.

• Spouses who lie about finances
• Easily intimidated spouses
• Contentious spouses
• Spouses who feel that the other spouse is incapable of child care
  

For example, if the ex-husband is required to maintain a $1 million life insurance policy on his life, naming his ex-wife as beneficiary, on the ex-husband's death his ex-wife will receive the $1 million face amount of the policy directly from the life insurance company. If the ex-husband was the owner of the life insurance policy and paid the premiums on the policy, the IRS will include the $1 million face amount of the policy in the ex-husband's estate for the purposes of calculating the amount of estate tax owed by the ex-husband's estate. If the ex-husband died in 2007 with a taxable estate of $3 million plus the $1 million in life insurance, the inclusion of the life insurance proceeds would result in a $450,000 increase in the estate tax owed.

The foregoing result may be avoided through the use of a tax-sensitive marital settlement agreement and an irrevocable life insurance trust. The ex-husband may still be required to maintain a $1 million life insurance policy with his ex-wife as beneficiary, but the life insurance policy would be owned by the trustee of the irrevocable life insurance trust. The ex-husband may transfer money to the trust for the payment of the premiums. Since the payments are required pursuant to a court order, the payments are not considered taxable gifts. Since the irrevocable life insurance trust, not the ex-husband, is the owner of the policy, the $1 million life insurance policy will not be included in the ex-husband's estate for the purpose of calculating the estate tax owed.

• The payments are made in cash, check or money order (no promissory notes, transfers or use of property, transfer of services, etc.) to the spouse, or to a third party in lieu of alimony at the written request of the recipient spouse, stating the payments are intended as alimony, and the request is received before the tax return is filed 
   
• The divorce decree, order or the written agreement of the parties does not identify the payments as something other than alimony
  
• The spouses do not file a joint return with each other
  
  
• The spouses are not members of the same household when the payments are made, if they are legally separated under a decree of divorce or separate maintenance – separation within the family home is not sufficient
  
  
• There is no liability to make the alimony payments after the death of the recipient spouse – if part of the payment amount continues after death, that portion is not deemed alimony, and if all of the payment continues, none of it is alimony
  
• The alimony payments are not treated as child support
  

Pension Plans and ERISA
Divorce and division of property are generally controlled by state law. However, when state law contradicts or is inconsistent with federal law, the federal law "preempts" the state law; federal law controls the outcome. In 1984, Congress passed the Employee Retirement Income Security Act (ERISA), which governs most private pension plans (government and some other plans are not covered).

Federal law prohibits the assignment of pension benefits in ERISA plans. This appeared to include transfers to a spouse during divorce, regardless of a state court decision on division. To remedy this, the Retirement Equity Act of 1984 (REA) established an exception to the rule through use of a "QDRO."

A QDRO creates or recognizes an "alternate payee's" right to receive all or a portion of the plan benefits, or actually assigns that right to the alternate payee. An "alternate payee" may only be a spouse, former spouse, child, or other dependent of the plan participant.

Types of Retirement Plans
Whether a pension plan is divisible as a marital asset depends on local law and the terms of the plan itself. Defined benefit plans, defined contribution plans and IRAs are all subject to division in a divorce:

• Defined Benefit Plan: Usually a retirement plan through an employer where the employee becomes entitled to receive a defined sum after being employed for a specified number of years ("vested"). The actual amount paid after retirement is usually based upon salary and years of service at the time of retirement. Such plans are more difficult to split, as the current worth of such a plan is difficult to calculate.
  
• Defined Contribution Plan: Typically a savings, 401(k) type or profit sharing plan through an employer. Such plans are easier to divide, as the current value is usually obvious.

QDRO Form
ERISA, as amended by REA, defines a DRO as a judgment, decree or order which both:

• Relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of an ERISA plan participant; and
• Is made pursuant to a state domestic relations law, including community property if the state recognizes community property law.

ERISA requires that, to be effective, a QDRO must be a judgment, decree, or order of a court that meets the above requirements and contains the following information:
The name and last known addresses of the plan participant and each alternate payee;

• The name of each plan to which the QDRO applies;
  
• The dollar amount or percentage (or method for determining the dollar amount or percentage) of the benefit to be paid to each alternate payee; and
  
  
• The number of payments or period of time to which the QDRO applies.
  Provisions That a QDRO Must Not Contain
  Payment of any benefit or any payment option to the alternate payee that is not authorized by the ERISA plan
  
  
• Payment of increased benefits, determined based on actuarial value
  
  
  
• Payments to an alternate payee that are already designated for another alternate payee in an earlier QDRO

QDRO Process
ERISA plans must establish a reasonable, written procedure for evaluating a QDRO and often provide a guide for what is necessary and acceptable. Some even provide a model QDRO form. The plan administrator must approve the QDRO before it becomes effective.

The QDRO may first be submitted to the court for approval and signing, but most seek prior approval by the plan administrator, to save the effort and expense of having to go back to the court to obtain another QDRO, if the plan administrator rejects it. The plan administrator is obligated to give explanations for any rejection; no fee may be charged for considering the QDRO. The plan administrator's rejection may also be appealable in federal court.

After the QDRO has been accepted by the plan administrator and approved and signed by the court, it becomes enforceable in federal court by the alternate payee.

In general, minors are liable for their misdeeds. However, when a minor acts intentionally or negligently in a manner that causes harm to another, it is difficult to collect damages from the minor. In such a situation, the minor's parents may also be held liable for their child's acts and/or ordered to pay for them. A "parent" can be anyone exercising parental authority over the child, but typically refers to the "custodial" parent. Although they vary widely by state, most parental liability laws target intentional, malicious or reckless behavior and exclude pure accidents. Parental liability stems from the custodial parents' obligation to supervise and educate their children.

Types of Acts by Minors for Which Parents May be Liable

Many states have enacted laws which hold custodial parents responsible for delinquent acts of their minor children including:

• Vandalism
• Theft and shoplifting
• Automobile accidents
• Fights and assaults
• File sharing (e.g., music industry copyright cases)

In general, individuals who are injured or harmed by a minor may be able to file suit against both the minor and the minor's parents.

Theories of Parental Liability

In general, the liability of parents for the acts of their minor children is based on their legal relationship. A parent may thus be considered to be "vicariously liable" for the acts of their children and the law may hold them responsible for the damages their child causes. Parental liability may be found in some of the following circumstances:

• The parent has knowledge of prior misconduct
• The parent signed the child's drivers' license application or the child drives the parents' car with permission
• The child is guilty of willful misconduct
• The child was given access to firearms
• The child defaces another's property
• The child is convicted of a crime and ordered to pay restitution

Amount of Parental Liability

State statutes holding parents liable for damages caused by their minor children vary widely on the type of delinquent act committed and the amount parents must pay. Some states cap the amount of damages for which parents are liable to pay to a few thousand dollars, while other states may hold parents liable for unlimited amounts. In California, for example, parents can be liable for up to $25,000 for each incident of property defacement by their child and up to $10,000 per incident for personal injury damages resulting from an assault. On the other hand, in Illinois and New York, parents are only liable for willful and malicious acts of their minor children up to $2,500 per incident.

Insurance Coverage

Although some homeowner's insurance policies may cover the costs of legal fees and pay for some claims of damage resulting from a minor child's acts, such coverage is usually limited. Policies and exclusions vary by state, but typically, most homeowners insurance will cover the acts of children under a certain age (such as 11, 12 or 13) and only for acts of negligence, not intentional acts. In some cases, depending on the insurer, additional "policy riders" might be available for purchase after a child reaches a certain age in order to extend the coverage. Generally, however, polices often exclude illegal or willful and malicious acts and thus may, for example, exclude property damages caused by burglary committed by a minor. In such a case, the parents may be required to pay the entire amount or the statutory cap.

Escaping Liability

Where it is recognized, parental liability is generally difficult to escape. In some instances, however, parents may be able to show that they should not be liable for the damages caused by their minor children. Depending on the state and applicable statute, parents may be able to escape liability where they can sufficiently demonstrate:

• That the minor's act was not willful and malicious
• The minor has been "emancipated" (treated as an adult under the eyes of the law)
• The parent was not the "custodial" parent of the minor at the time
• The minor was institutionalized
  

There are, however, tax implications following divorce that affect future taxes. More specifically, selling personal and real property in the future may require spouses who received such property (pursuant to a divorce) to pay taxes in connection to that property.

Personal and real property have a "basis" for federal tax purposes. The basis is usually the purchase price of the property. When the property is sold later, the amount by which the sales price exceeds the basis is called "capital gain." Capital gain is usually taxable at special rates. Thus, when property distributed pursuant to a divorce decree is subsequently sold by the receiving spouse, the receiving spouse may be required to pay taxes on the proceeds of the sale.

For example, in a divorce, the wife may receive the family home while the husband might receive stock or other investments equal in value to the house. If the house has a lower basis than the stock, when both are sold, the husband could end up with significantly more money, because he owes less capital gains tax.

On the other hand, under tax law applicable at the beginning of 2004, the first $250,000 (for individuals) or $500,000 (for couples) of the taxable gain on the sale of a qualifying personal residence is exempt from tax. In light of these tax issues, selling the house before the divorce, then dividing the proceeds, might make more sense.

Child Support
The parent who is granted custody of the child or children from the marriage, usually receives a set amount of money per month as "child support." Child support payments are not includable in the taxable income of the receiving spouse and are not tax deductible by the spouse making the payments.

If the written agreement or divorce decree orders both child support and alimony and the spouse making the payments pays less than the required total amount, for tax purposes, the child support obligation is deemed paid in full first. Only money exceeding the amount of the child support obligation is treated as alimony.

Alimony or "Spousal Support"
In general, for federal income tax purposes, alimony and "separate maintenance payments" are "deductible" from the income of the spouse paying and includable in income for the recipient. "Deductible" for federal income tax purposes means it is subtracted from a taxpayer's gross income before taxes are calculated, resulting in lower taxes. Taxpayers with a threshold amount of deductions must file a particular form with the IRS when paying income taxes and list such deductions.

Between the time a couple separates and a divorce decree is granted, one spouse may pay money for the support of the other spouse. These payments are deductible as long as they are made pursuant to a decree, court order or a "written separation agreement." In order for alimony payments to be deductible, federal tax laws and regulations require the following:

The payments are made in cash, check or money order (no promissory notes, transfers or use of property, transfer of services, etc.) to the spouse, or to a third party in lieu of alimony at the written request of the recipient spouse, stating the payments are intended as alimony, and the request is received before the tax return is filed

The divorce decree, order or the written agreement of the parties does not identify the payments as something other than alimony

The spouses do not file a joint return with each other

The spouses are not members of the same household when the payments are made, if they are legally separated under a decree of divorce or separate maintenance – separation within the family home is not sufficient

There is no liability to make the alimony payments after the death of the recipient spouse – if part of the payment amount continues after death, that portion is not deemed alimony, and if all of the payment continues, none of it is alimony

The alimony payments are not treated as child support