I googled Ms. Kupferman and discovered she’s been a practicing attorney specializing in divorce law since 1992. This is not exactly a wet-behind-the-ears lawyer. (In fact, she even ran for Congress. Although her bid was unsuccessful, she attracted the support of George Bush and Rudy Giuliani. Author Tom Wolfe held a fundraiser for her.)

Even though she’s not a tax law specialist, it’s hard to imagine that she wouldn’t realize that withdrawals from retirement funds can carry significant tax consequences! Surely in 18 years of practice she must have had other clients whose assets included retirement plans.

It seems to me that any responsible attorney specializing in divorce law should make it her business to know at least enough about tax law to recognize that this client’s situation called for a consult with a tax pro.

Indeed, since she is apparently a small business owner herself (a partner in a law firm), it seems to me that she should be learning something about self-employment retirement plans so she can make responsible plans for her own personal financial future. For that matter, if she has a Keogh plan of her own, she should look into her own possible tax consequences if she is forced to liquidate it in order to settle or pay a judgment to Dr. Fielding! (Although ERISA retirement plans are protected against creditors, many Keogh plans do not fall under ERISA, so she might ironically find herself facing the prospect of liquidating her own Keogh, if she has one, to pay Dr. Fielding.)

Tax touches just about every aspect of life, and therefore, tax touches just about every aspect of law.

In my opinion, EVERY lawyer needs to know enough about tax to recognize when they need to consult an expert.

Here’s another troubling situation involving another tax law specialty: an elderly woman on a very modest income consulted an attorney specializing in elder law when her seriously mentally ill husband could no longer live at home, because he was a danger to himself. He needed to be committed to a locked ward of a specialized nursing home, and it was clear that their assets would need to be almost totally “spent down” before he could qualify for Medicaid. The eldercare lawyer told her that she could keep her house and her car, but she would have to pretty much drain their savings accounts before Medicaid would start paying for her husband’s care.

So she dutifully followed her attorney’s instructions. Almost all of their savings were in IRA’s in her husband’s name, so she used those funds to pay for her husband’s care until the money ran out some months later.

What she did not realize at the time, and what the eldercare lawyer failed to warn her about, was that her draining the IRA would cause a significant tax bill that year. (For many years, she and her husband had not had any income tax bills at all, because they had just taken minimal required IRA withdrawals, which were very small, and their total income had been so low that they had no taxable income since their retirement.)

So….you can probably guess what happened next. The following year, when she went to do her taxes, she was hit with a huge unexpected tax bill–and no money to pay it, because she’d already spent the proceeds of the IRAs on her husband’s nursing home care.

She called her eldercare attorney and asked what she should do. The attorney could only advise her to take out a mortgage on her house in order to pay the tax bill. She did this, and she is now stretching her small social security income and tiny pension to make the payments on that mortgage.

In my opinion, the eldercare lawyer would have served her client much better if she’d advised her to consult a tax pro UP FRONT and to have the proper amount withheld from the IRA before she spent the rest of the proceeds on her husband’s care.