By Conrad van Loggerenberg

If you purchased the marital home after the date on which you got married, under the law it will be classified as “marital property”. In most cases that means each of you will be entitled to a 50% share in the house when the marital property is divided up during a divorce. But what happens if your home was not purchased, but rather it was gift to one of you from a third party, such as a relative?

As a general rule, property acquired by gift or inheritance is the separate property of the spouse to whom the gift or bequest was made. But where the gift or inheritance was made to both spouses jointly, the court will view that property as marital – as if it was simply purchased during the marriage. Even if the property was given to one spouse and the donor had the intent to give it to that one spouse alone, the property may still be classified as “marital property” subject to equitable distribution. If the spouse who received the gift places the title of the property in the names of both spouses, the court may interpret that as the intent to transform the character of “separate property” (the gifted house) into “marital property.” In such cases, the marital residence may still be subject to equitable distribution as if it was simply purchased by the two of you during your marriage.

The key take away here is that if your spouse has inherited or received a gift of property, after which your spouse placed both your names on the title of that property – you may still be entitled to your equitable share of that property in the event of divorce, even though it was a gift or an inheritance made solely to your spouse.

December 19th 2009 Posted to Finances
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Media reports recently have targeted a new trend in some states – people representing themselves in their divorce cases.  The statistics on this “trend” is somewhat spotty, but news stories are popping up all over the country about the numbers of people who believe it is worthwhile and cost effective to be their own advocate.  We beg to differ in the strongest possible terms.

The adage “anyone who represents himself in court has a fool for a client” is true.  Matrimonial and family law is an ever-changing landscape that even lawyers need to brush up on every year.  In fact, continuing legal education, known in the business as “CLE,” is mandatory in order for lawyers to maintain their licenses to practice law.

The lure for most who decide to go the DIY route is monetary, and, in these times, cutting costs is something everyone is trying to do (from buying less expensive groceries to taking fewer trips in the family car). Times are increasingly difficult and the model on how to manage one’s life needs updating, no doubt.

But to transfer that logic to a divorce action is, in our opinion, a very bad idea.  There are ways to cut costs in a divorce.  Agree on as many elements of property division and support with your spouse, without emotion getting in the way.  Accept the premise that compromise will likely shorten the process and the pain, and allow both of you to move on with the rest of your lives.  Consider mediation or collaborative law, instead of litigation, as dispute resolution options.

You don’t want to be one of those poor souls who end up losing custody of their kids because they were ignorant of the law.  That is not a lesson anyone needs to learn.

Find a lawyer who is easy to communicate with, and who is willing to work with you to come up with a fee schedule that works for you.  That is the best way to ensure you get the most bang for your buck and the fairest deal with your ex-spouse. 

December 29th 2008 Posted to Finances
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There is definitely more than one school of thought when contemplating an action plan for divorce.  Things like:

·      Establishing your own line of credit

·      Deciding what personal property you want to keep after your divorce

·      Therapy for you and/or your children

·      Custody matters

·      Financial concerns

Above is but a small sample of the myriad of issues you must consider when plotting out the steps leading to the dissolution of your marriage.  Let me throw one more out there.  If you are a stay-at-home parent, should you go out and try and find a job?  For many, the answer can be a resounding “yes!”

First of all, extra income during a separation and during the often drawn-out divorce process is welcome.  That should not be underestimated.  But income is only one reason to consider diving back into the work force.  There are other reasons as well.  Working can:

·      Help increase self-esteem

·      Provide new friends and people to interact with

·      Get you out of the house and focusing on things other than divorce and children

·      Establish new credit information that can help with securing a new mortgage, new credit cards and other lines of credit

The point is that a job can be a godsend, particularly in these darkening economic times.  It’s something definitely worth thinking about and to discuss with your attorney. 

December 13th 2008 Posted to Finances
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That’s really not as simple a question as one might think.  If you are someone who requires daily phone calls and e-mails with your attorney, if you change your mind about strategy like some people change shirts, and if you want to argue over every aspect of your divorce, the answer is usually “yes.”  The more difficult and time consuming the divorce, the more expensive it can be.

But for someone who is motivated, clear-headed about their objectives, and willing to work with the other side, the answer is often times a resounding “no!”  In our practice, my partner and I work very hard to be flexible with our clients, and we have different methods to bring divorce to closure.  Some of these are far less expensive than all-out litigation.  Collaborative law, mediation, and just old-fashioned negotiation in which you have realistic expectations about settlement, custody, visitation and other matters, can work to keep costs to a minimum.

Most matrimonial and family lawyers charge by the hour.  In our practice, we have implemented fixed fees, agreed-upon in advance so that our clients never have to worry about getting a surprise bill in the mail.  Sit down with the law firm you have chosen, and decide what works best for you now and going forward.  Find an attorney you are comfortable with, and who will listen to you and work with you.   

There are ways for you to minimize your legal bills in a proactive way that will help you and your attorney to settle the matter and not to unnecessarily dragging it out.  Remember, time is money, and the less time spent haggling over small things, the better off you might be in the end.

A few things to keep in mind:

·            Make sure you have a written retainer agreement with your attorney that is as comprehensive as possible.  An attorney who appears cheaper on the surface might not be after you check out the fine print.  There could be hidden costs.

·            Come to some resolution with your spouse over easily agreed-upon elements of your divorce.  That way your attorney will not waste time and money working on aspects you can work out yourself.

·            Keep emotions out of the process as much as possible.  Sorting out emotions takes time and therefore money.  Resolve ahead of time to keep emotions to a minimum.

·            Consider collaborative law and mediation as possible options. They cost less in both money and emotion.

These are just a few pointers.  The best thing to do is to find an attorney that you feel you can trust, and listen to their advice.  Divorce can definitely be expensive, but it doesn’t have to be.

November 21st 2008 Posted to Finances
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A recent phenomenon has been for municipalities to put up billboards with faces and names of deadbeat dads who owe child support to ex-wives for the support their children. 

But a recent case in Ohio highlights the fact that nowadays mothers are sometimes the ones responsible for child support, and they don’t always fulfill their responsibilities.

Dawn Newman, who now lives in Greenup, Kentucky, but used to live in Akron, Ohio, pleaded guilty to a single charge of criminal non-support, a felony.  The judge sentenced her to five years of probation and ordered full restitution, in the amount of $13,514.70.

She had gone over four years without making support payments for the care of her children, ages 11 and 13, who live in Ohio with their father.  A tipster saw the billboard and alerted authorities.

It is still the norm across the United States for mothers to retain primary custody of their children when couples divorce.  But nowadays, mothers don’t always seek custody due to work issues or any other number of reasons. And sometimes fathers prevail in custody disputes.

More fathers than ever before have custody of their children. A recent survey by the American Academy of Matrimonial Lawyers showed that more than half the lawyers surveyed said support payments by women is up over the past five years.

What both former partners need to remember is that child support is not a punishment – it is for raising and caring for your children.  So whatever side of the divide you are on, remember that the welfare of the children always has to be the key concern.  Like most issues, ask your attorney if you have questions.

October 13th 2008 Posted to Finances
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A recent phenomenon is that in more than a few families, wives are out-earning their husbands.  This byproduct of the women’s movement is welcome news to women - who for years may have had the same jobs as men, but were paid lower salaries.

But when those marriages fail, women are now forced to face that aspect of divorce that men have been grousing about for years – spousal maintenance, or more commonly know as “alimony.”

That’s right, even if in a divorce action the wife retains primary custody of the children and therefore receives child support, the wife may have to pay her ex-husband alimony.  Laws are intentionally written to be gender neutral, so both spouses have an equal right to retain the same standard of living after divorce, even when the lower earning spouse is a husband.

For that reason, many more women are opting for pre-nuptial agreements.  The American Academy of Matrimonial Lawyers recently conducted a survey of family law practitioners and found that 44% of family law attorneys have seen an increase in women asking for pre-nuptial agreements.  In the past, men almost exclusively were the partners who sought a pre-nup.

A recent case that drew some notoriety was that of former Mets baseball star, Art Shamsky.  The ex-outfielder sued his wife Kim for alimony and won.  His former wife was a successful businesswoman and out-earned her husband by a considerable margin.  In the end, she was made to pay her ex thousands of dollars per month in alimony.

She is not alone.  The celebrity world is littered with other examples.  Singers Britney Spears and Jessica Simpson and actress Kirstie Alley - all have been forced to pay alimony to ex husbands who earned far less than they did.

The lessons are clear.  Professional women need to do what their male counterparts have been doing for years now: recognize that marriage is an economic partnership and people should do whatever they can to protect themselves in the event the partnership dissolves.  That means seeing an attorney prior to marriage and have the attorney draw up a pre-nuptial agreement, and, of course, getting her soon-to-be husband to sign it.  It may not sound romantic, but if your marriage doesn’t work out, you might be able to save yourself thousands upon thousands of dollars. 

October 06th 2008 Posted to Finances
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There is so much to think about when you are getting divorced.  Many of those thoughts are emotional, while others are financial.  When you are going through the financial checklist, remember to zealously guard your credit rating during this most trying period of your life.

Even if you were a stay at home parent during some of your marriage, you will have a credit rating.  Keeping it clean, accurate and up to date is something you should do the moment you realize you will have to make your way without your spouse.  A good credit rating is paramount when you want to get a mortgage, get lower credit card rates, and establish other lines of credit.  Even getting insurance can be affected by a poor credit rating.  Increasingly, potential employers will also check on your credit rating when deciding whether to hire you.  So it’s hard to overvalue a good credit rating.

So many people fall into a trap during and after a divorce.  Maxing out credit cards, paying the mortgage a little late, all those things diminish your credit rating and can come back and bite you later.  So make plans from the outset.  See your lawyer, set up a meeting with your accountant.  Follow through on the game plan you develop. Things you can do to start include:

·      Fixing the spending limit on all jointly held credit cards (outright canceling joint credit cards may be a mistake).

·      Safeguard all jointly owned bank accounts.

·      Make an accurate record of all marital property.

·      Get a copy of your last known credit rating and correct anything that may be wrong on the report.

If you plan well, know your options and follow through, at least this part of your divorce can go smoothly and predictably. 

September 29th 2008 Posted to Finances
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While watching the news and seeing all the investment banks going bankrupt or losing billions of dollars in value, my mind turned to my business and how people were going to react when they saw their potential nest eggs shrink in the wake of the deepening financial crisis.

In divorce, the equitable division of assets is often rife with emotional issues.  So let’s take a deep breath and think about a potential asset that you can protect and is almost litigation-proof: your inheritance.

But, like anything else of a financial nature, forethought and planning are essential.  One misstep, and that which on the surface would appear to be your separate property, clear and simple, instead reverts into a muddled mass of marital property that could cause untold headaches when separating assets. 

If your parent were to leave you an inheritance, you would do best to take that money and place it in a separate account apart from your joint funds. Under the law, that money belongs solely to you and in divorce will be considered your separate property.

But if you decide to place the money in a joint account (so-called “comingling”), or use some or all of it to remodel your house, or to go on a family vacation (so-called “transmutation”), for example, it becomes problematic whether or not that money would revert to you if you end up divorcing your spouse.

Another thing to think about is whether both parties paid taxes on that inheritance.  If that is the case, the spouse who did not receive the inheritance might be entitled to a credit for a portion of the taxes paid.  That is a question to ask your lawyer.  

Rather than have to deal with this issue, the best thing to do would be to keep any inheritance separate and apart from marital assets from the beginning.  There are enough issues to deal with in divorce.  This needn’t be one of them.

September 25th 2008 Posted to Finances
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Divorce is no easy matter.  Now plummeting home values and sluggish real estate sales have made divorce even more difficult.

Gone are the days when couples fought over ownership of the house.  Now they are fighting over who will be saddled with the burden it carries.  We see more clients remaining married, if only temporarily, simply because they cannot afford to go their separate ways.

There are several ways in which this tough housing market affects divorcing couples.

If the value of a couple’s home has fallen below the amount owed on the mortgage, neither spouse wants to be burdened with the liability.  If one spouse wishes to keep the home, refinancing the mortgage to absolve the departing spouse of the responsibility for part of the debt is getting increasingly difficult.

Complicating this already difficult situation is the fact that few divorcing couples get along well enough to work in unison to minimize their losses.  Most often, they are unable to agree on a course of action, which can lead to an even bigger financial mess.

Before the onset of this current economic slump, divorcing couples battled over who would keep the home.  Specifically, women fought to keep the house in which the children were/are being raised.  However, even in rosier economic times, this was not always wise, particularly if her income alone was not enough to cover the mortgage, taxes, and other carrying charges.

So what can you do?

The most important thing is to pay close attention to your home’s value when you and your spouse divide the assets.  It is best to get a formal real estate appraisal instead of simply guessing what the resale value of the home may be, especially considering the current weak market.  If the value is skewed, the entirety of equitable distribution of marital assets and liabilities will be distorted.

It may also be necessary to sell some of your investments to generate funds to pay off the mortgage and allow each of you to move on.

If you wish to stay in the home after the divorce, take a long, hard look at the ongoing maintenance costs associated with staying there.  No longer having two incomes and two people sharing expenses can make the home a long-term financial drain instead of an asset. 

September 03rd 2008 Posted to Finances
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Q:  Could you discuss Social Security benefits for divorced couples?  For example, can a divorced spouse who has never worked claim Social Security benefits based on the record of the spouse who has worked the requisite time?  What happens if the “working” spouse remarries?  Can his new spouse, who also has never worked, also claim Social Security benefits?

A:  A divorced spouse will be able to collect retirement benefits from Social Security based on the work record of a former spouse with no effect upon the latter’s retirement benefit or his or her current spouse, if remarried.  In fact, a person will not even been notified by the Social Security Administration if a retirement benefit based on that person’s earnings record is collected by a former spouse.

According to an SSA spokesman, typically, a divorced spouse who has never been employed can claim Social Security based on a “working” former spouse’s record.  If the divorced spouse wishes to collect on that record, the working spouse must be at least age 52, and either be collecting, or be eligible to collect, retirement benefits from Social Security.  The divorced spouse is also required to be at least 62-years-old and unmarried.

Another important requirement is that a couple’s marriage must have lasted for at least 10 years before the divorce is finalized for the divorced spouse to receive retirement benefits based on the working spouse’s work record.

The size of the benefit the divorced spouse will receive depends upon the age at which he or she first files to receive benefits, in addition to the size of the benefit of the working spouse at his or her full retirement age.

The divorced spouse is also eligible to receive widow’s benefits upon the death of the working spouse (referred to as “divorced survivor benefits” by the SSA).

Original Source:  Wall Street Journal Online 

July 31st 2008 Posted to Finances
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