Westchester Divorce Blog

Question:  In 2003, I established a revocable living trust.  Since that time, my son has divorced.  If my wife, son, and I are deceased, will his children automatically receive his share?

Answer:

The Rules: You or an agent authorized by you under a comprehensive power of attorney can change a revocable living trust at any time.  The assets will automatically pass to your son’s children if the trust leaves your assets to him “per stirpes.”

How It Works: You should periodically review your trust with an experienced attorney who will look at whether and to what extend the trust is funded, i.e. what assets are held inside and outside the trust. Only the assets actually titled in the trust and assets naming the trust as beneficiary (retirement benefits, for example) are affected by the trust.  Any assets not titled in the trust should be included in a valid will in order to provide for their distribution.

The Strategy: Your son should execute a will creating a trust for his children.  Someone other than his ex-wife should be the trustee, especially if he has any concerns that she may use his assets to provide for the children while exhausting their inheritance.  You may wish to amend your trust to provide for spendthrift protection against his creditors and possibly his ex-wife.

July 03rd 2008 Posted to Finances
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Q:            I was severely injured in a car crash.  Among other things, my leg had to be amputated and I am no longer able to have sexual relations.  I can no longer work, and now my wife has asked for a divorce.  She also wants to get a portion of what we will receive from the company we have filed suit against.

Is she entitled to receive anything beyond her claim for loss of consortium and our resulting divorce?

A:            In terms of tort law, you are each able to claim damages for loss of consortium resulting in loss of intimacy and your divorce.  You are also able to claim damages for past, present and future loss of earnings, loss of wages, and medical expenses.

In terms of divorce law, your wife has no entitlement to a share of the award you receive for past, present, or future pain and suffering, or your future lost wages and medical expenses.  That means that you should have your personal injury lawyer agree with the defendant’s lawyer to assign a specific dollar amount to each element of damages in a settlement.

If the case goes to trial, make sure your lawyer asks the judge to instruct the jury to specify the amount awarded on each part of the damages and those of your wife.  If the judge does not, the jury will make a general or lump sum award.

If you receive a general award, then you will be required to argue to the divorce judge about the amount that should be attributed to your past and future pain and suffering, future wages, and medical expenses.

June 30th 2008 Posted to Finances
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The major difference between divorce and mountain climbing is that divorce is much more difficult.  Just as you would not dream of attempting to scale Mount Everest without the necessary preparation, you should not contemplate divorce without taking five crucial financial steps beforehand. 

1.            Make sure you have access to liquid funds.  There are many reasons why you are going to need access to cash leading up to and during your divorce.  You will need funds to retain an attorney and pay litigation expenses.  Also, you may have to pay living expenses in the event that you and your spouse physically separate.  The more cash to which you have ready access, the better.

2.            Set up a bank account in your sole name and make sure that you have at least one separate credit card.  If an account is held solely in your name, only you will have access to the funds in that account.  However, if you fund your separate account with money from a joint account, the funds in your separate account will still be marital property subject to division.  In that case, you should keep a meticulous accounting of your expenditures.

Divorce cases can be unpredictable.  Because you could find yourself with nowhere else to turn if you need quick access to funds, a credit card in your sole name can be a useful safety net.           

3.            Evaluate joint credit cards, lines of credit, and other liabilities.  If a divorce is imminent, you do not want to be liable on any accounts on which your spouse has charging privileges.  It is not unheard of for an angry spouse, upon learning of a divorce, to go on a shopping spree.  Likewise, some lawyers may advise their clients to take out cash advances on joint cards to provide a cushion while the divorce is pending, or to charge a large amount in attorney’s fees to joint cards.

You should consider fixing or reducing the spending limits on joint credit cards.  Similarly, you should consider restricting access to a joint home equity line of credit pending the resolution of the divorce.

However, before taking any action, discuss these issues with your attorney who can give you the best advice with regard to your particular circumstances.

You should also check your credit report (You can get one free copy per year at www.annualcreditreport.com).  It is not uncommon for one spouse to take out a credit card or a loan or to incur some other debt in joint names without the other spouse’s knowledge. 

4.            Gather and organize financial records and put them in a safe place.  Make sure you know the scope of all the assets - including cash, real estate, investments, retirement, and life insurance - that you own jointly and separately, as well as of all marital debt.  You should also make an inventory of valuables, such as the content of safety deposit boxes, jewelry, artwork and antiques.

In divorce, knowledge is power.  But it has to be documented knowledge.  It is not good enough for you to simply “know it.”  You have to have the paper trail to prove it.  If possible, get copies of financial statements, tax returns, retirement plan documents, brokerage statements, and insurance policies for the last five years.  And keep these records in a safe place.

5.            Consult with a good divorce lawyer.  Do not rely on the advice of friends and family who have gone through a divorce for advice on the potential financial consequences that divorce would entail for you.  You should consult with an attorney who focuses his/her practice on matrimonial and family law and who can give you sound, tailored advice based on the unique facts and circumstances of your particular case. 

June 13th 2008 Posted to Finances
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