Divorce: Everything You Need To Know But Were Afraid to Ask


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A comprehensive guide to <a>divorce and separation by Avvo.com</a>. For additional information regarding Divorce, visit http://www.avvo.com to <a>find legal advice online</a> from licensed professionals, or to <a>ask a question in Avvo’s free Q&A forum</a>.

With more than 100,000 participating lawyers, Avvo’s professional directory enables consumers to find a lawyer by providing comprehensive profiles, client and patient reviews, peer endorsements and the industry-recognized Avvo Rating for more than 90 percent of lawyers in the United States.

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Divorce: Everything You Need To Know But Were Afraid to Ask

  2. 2. AVVO.COM PRESENTS DIVORCEEVERYTHING YOU NEED TO KNOW BUT WERE AFRAID TO ASK Avvo, Inc. th 1501 4 Avenue • Suite 1900 Seattle, WA 98101 Phone 206.734.1111 • Fax 206.340.6040  2012 • All Rights Reserved
  3. 3. Table of ContentsOVERVIEW ..................................................................... 6 THE TOP FIVE SIGNS YOUR MARRIAGE IS IN TROUBLE .......................... 7BASICS ........................................................................... 9 NO-FAULT DIVORCE ................................................................................. 10 UNCONTESTED DIVORCE VS. CONTESTED DIVORCE ............................ 12 SIMPLE DIVORCE / SUMMARY DIVORCE BASICS ................................... 14 COLLABORATIVE DIVORCE ...................................................................... 16 DIVORCE MEDIATION............................................................................... 18CHOOSING A LAWYER ................................................ 21 HOW TO HIRE A DIVORCE LAWYER ......................................................... 22 HOW TO PREPARE FOR (AND GET THE MOST OUT OF) YOUR FIRST MEETING WITH A DIVORCE LAWYER ...................................................... 27 DOCUMENTS TO GATHER FOR YOUR ATTORNEY IN A DIVORCE ......... 31 BUDGETING AND ORGANIZING RECORDS DURING A DIVORCE.......... 33 3
  4. 4. COSTS .......................................................................... 38 HOW MUCH WILL MY DIVORCE COST & HOW DO I SAVE MONEY ON IT? ………………………………………………………………………………………………39 FIVE TIPS THAT WILL HELP SAVE MONEY ON YOUR DIVORCE ............. 43 HOW TO PREPARE YOUR FINANCES IN THE TIME OF DIVORCE ........... 47 DIVORCE AND TAXES ................................................................................ 52PROCESS...................................................................... 55PROPERTY DIVISION .................................................. 67 COMMUNITY PROPERTY DIVISION VS. EQUITABLE PROPERTY DIVISION IN DIVORCE ............................................................................................... 68 WHAT IS NON-MARITAL PROPERTY? ...................................................... 71 DIVORCE PROPERTY SETTLEMENT: TIPS FOR PROPERTY DIVISION ..... 75 DIVIDING PROPERTY IN A DIVORCE: WHO GETS THE FAMILY HOME? 78 DIVIDING RETIREMENT PLANS IN DIVORCE .......................................... 80 DIVIDING A BUSINESS IN A DIVORCE ..................................................... 84 DIVORCE DEBT AND CREDIT ISSUES ....................................................... 87 UNDERSTANDING BANKRUPTCY AND DIVORCE ................................... 91 HIDDEN ASSETS AND DIVORCE ............................................................... 93 PAYING ALIMONY (SPOUSAL SUPPORT) ................................................ 98 ALIMONY PENDENTE LITE ....................................................................... 99 REHABILITATIVE ALIMONY .................................................................... 101 FACTORS AFFECTING SPOUSAL SUPPORT (ALIMONY) AWARDS ....... 104 4
  5. 5. ALIMONY (SPOUSAL SUPPORT) MODIFICATION ................................ 107 ALIMONY (SPOUSAL SUPPORT) TERMINATION .................................. 109CHILDREN AND DIVORCE......................................... 113 HOW TO TELL YOUR CHILDREN YOU’RE DIVORCING ........................ 114 WAYS TO HELP YOUR CHILDREN GET THROUGH A DIVORCE ........... 117 PARENTING PLANS ................................................................................ 123 HOW DO I CALCULATE CHILD SUPPORT? ........................................... 125 FAMILY LAW - RELOCATION WITH CHILDREN ..................................... 128AFTER DIVORCE ........................................................ 132 ENFORCING YOUR DIVORCE DECREE .................................................. 133 APPEALING YOUR DIVORCE DECREE ................................................... 136 PARENTING CONSULTANTS POST-DIVORCE ....................................... 138 5
  6. 6. OverviewWhether youre just starting the divorce process or youre inthe midst of a custody battle with your ex-spouse, we haveyou covered. Here youll find everything you need to knowabout divorce, property division, alimony, and choosing adivorce lawyer. 6
  7. 7. The Top Five Signs Your Marriage is in TroubleWritten by: Nathan Templeton Anderson, Litigation Lawyer 1. You Dream of a Life Without Your Spouse It is not uncommon for us all to wonder “what if” during our day-to-day lives, but when you start thinking about how your life would be better without your spouse, you’ve definitely got a sign that your marriage is in trouble. 2. You Keep Things to Yourself I’m surprised at how often clients come in and tell me that they simply quit communicating their needs and concerns to their spouse. When your marriage has reached a point to where its not worth it to “bother” your spouse with your concerns and needs, this is another sign the marriage is in trouble. Open communication is a key to any successful relationship, and holding things back from your spouse is quite unhealthy to the marriage. 3. Youre the Only One Working on the Marriage If you feel that your spouse is not putting the same amount of effort into the marriage, then feelings of resentment and anger can really kick in. Anger sometimes fuels people to make rash decisions; 7
  8. 8. however, feeling a lack of reciprocal effort is a definite sign the marriage is on rocky grounds.4. Your Marriage Lacks Intimacy Sex is an important part of any healthy marriage. If one spouse seems uninterested in sexual intimacy with the other, this is a sign the marriage is in trouble. Even more so, if one spouse is withholding sex as a form of “revenge,” then this too indicates a storm is brewing.5. The Bad Outweighs the Good This one ties in closely with all the other signs. If you feel there is more trouble in paradise, then there are some issues that need to be confronted. 8
  9. 9. BasicsThe kind of divorce you want and how well you and yourspouse can agree on issues will affect the choice to hire anattorney, and what type of services you need from them.Learn more about the different types of divorce anddetermine which one is right for your circumstances. 9
  10. 10. No-Fault DivorceNo-fault divorce is the most common type of divorce case,and is available in all states except New York. A no-faultdivorce is one where the spouse seeking a divorce doesnthave to prove the other spouse did something wrong, butinstead gives a reason recognized by their state, such asirreconcilable differences.Getting a no-fault divorceIf you are seeking a divorce, a no-fault divorce may save youmoney as you do not have to sue your spouse and prove thathe or she caused the marriage to break up due to an issuesuch as adultery or spousal abuse. However, some statesrequire the couple to live apart for a period of time before ano-fault divorce can be granted.If the couple agrees on how to divide their assets andon alimony, child support, and custody issues, they maysave money by representing themselves, or by using a familymediator to hammer out the details of their divorce. If thereis disagreement about these issues, you will want to get adivorce lawyer to represent you in court. 10
  11. 11. No-fault vs. fault divorceIn some states, you can still pursue a fault divorce, where thespouse seeking the divorce must prove that his or her spouseis at fault for breaking up the marriage. Typical grounds for afault divorce are cruelty, adultery, desertion, imprisonmentfor a period of time, and inability to have sex if that wasntknown before the marriage.While no-fault divorce is far more common and easier toobtain, some people choose a fault divorce. They may notwant to wait through their states required separationperiod. In some states, they may receive more of the assetsor more alimony by proving fault.If you choose a no-fault divorce, your spouse cannot stopthe divorce. In a fault divorce, however, the spouse couldprevent the divorce by proving the charge against them isuntrue. The person accused of the fault could also stop thedivorce by proving that his or her spouse in some waycondoned or provoked the activities that put the spouse atfault. An experienced divorce attorney can help youdetermine which type of divorce is right for you. 11
  12. 12. Where to file for divorceIdeally, you will want to file for divorce in the state whereyou live. All states require that you reside in the state beforefiling for divorce there, though the length of residencyrequired varies from state to state. Divorce proceedings maydrag on for some time, so you will save on travel and lostwork time if the divorce court is near you. If you suspectyour spouse may file for divorce in another state, you maywant to take the lead and file in your home state.Uncontested Divorce vs. Contested DivorceWhen people think of divorce, many usually envision a nastybattle in court over every last stick of property—even theugly wedding china no one really wants. However, what theymay not know is that approximately 90% of divorces areuncontested. What this means is that the parties involved areable to settle their differences without even going to trial. 12
  13. 13. Uncontested divorcesIn an uncontested divorce, the spouses reach mutualagreement on relevant issues like alimony, child custody,child support, and asset division. The court doesn’t getinvolved because the two parties manage to settle all theirissues without litigation. Because of this, uncontesteddivorces usually save significant time and money comparedto contested divorces.Contested divorcesBy contrast, two spouses go through a contested divorceprocess when they’re unable to reach an agreement onissues even after trying alternatives like mediation. Whenthis happens, the divorce case then goes before the courtwhere the judge (or jury) makes the final call on each issue.Whereas having an attorney isn’t always necessary for anuncontested divorce, getting an attorney for a contesteddivorce is probably a prudent measure. This is because theissues involved are usually complex and may involvenavigation of technical legal procedures. In general,contested divorces tend to be much more stressful, takemuch longer to complete, and also cost more due to attorneyfees. 13
  14. 14. Simple Divorce / Summary Divorce BasicsIf you want a divorce and you and your spouse have nochildren and no property together, then you may want toconsider getting a simple divorce (aka summary divorce,summary dissolution). A simple divorce is the cheapest typeof divorce and also the quickest to complete.Requirements of a summary divorceEach state’s laws may have slightly varying requirements fora married couple’s eligibility for a summary divorce, but theyusually include some version of the following conditions:  No children  A short marriage (typically 5 years or shorter)  Little or no property/debts owned together  Total value of marital property is less than a certain amount (usually about $35,000)  Each spouse’s total separate property value is less than a certain amount (usually same ceiling as marital property) 14
  15. 15. Benefits of a simple divorceBenefits of a simple divorce compared to a traditionaldivorce:  Much cheaper. The costs usually only encompass the filing fee, and minimal attorney fees if you hired representation.  Few or no court appearances. In some states a court doesn’t require you to make an appearance at all, whereas courts in other states may have you show up just once or twice.  Extremely quick. Since couples filing for a simple divorce have no children and very little to no property, a big portion of what usually takes up most of the time in normal divorces is cut out. In some states a simple divorce can be completely concluded in about one month if all the paperwork is filed on time.Check with your specific states laws to find out more ifyoure interested in seeing whether you can get asimple/summary divorce. If a simple divorce isntappropriate for your situation, then you may want to checkout information on uncontested divorce or contesteddivorce. 15
  16. 16. Collaborative DivorceCollaborative divorce occurs when spouses and their lawyerscommit to negotiating a settlement agreement without goingto trial. This increasingly popular approach brings eachspouse and their specially trained collaborative lawyerstogether in face-to-face meetings to work out their issues.Often, a collaborative divorce is simpler, quicker to achieve,cheaper, and less acrimonious than a traditionaldivorce trial.How collaborative divorce worksEach spouse hires his or her own lawyer experienced incollaborative law. In a series of four-way meetings, thelawyers facilitate communication between the husband andwife regarding child custody, property distribution, alimony,and other issues. Each party identifies its goals andpriorities and listens to the others point of view.Documents that clarify issues are disclosed to ensurecomplete transparency. The spouses and their lawyers workas a team to solve problems and brainstorm solutions untilthey reach a mutually beneficial settlement agreement. Thisagreement is put in writing and presented to a family courtjudge for signature and inclusion in the final divorce decree. 16
  17. 17. If the husband and wife fail to reach a settlement and the casegoes to court, the collaborative lawyers are legally bound towithdraw from the case. Each spouse will need to hire newlawyers for litigation.Collaborative divorce versus divorce mediationThe critical difference between collaborative divorceand divorce mediation is that a mediator cant provide legaladvice. A mediator helps spouses identify issues, examineoptions, and reach resolution without advocating for eitherside. If either spouse needs advice in regard to a particularissue, they must turn to a lawyer.However, both mediation and a collaborative approach helpreduce the emotional strain of divorce and keep decision-making in the divorcing couples control. They createconditions where a couple can continue to have a civilrelationship. This is especially important when divorcingcouples have children and plan to share custody.When to get a collaborative divorceA collaborative divorce is a good option if both you and yourspouse are committed to working together. If one partyrefuses to share important information, or is unwilling to beopen and flexible, a collaborative divorce wont work. 17
  18. 18. Furthermore, if there is a history of abuse, serious mentalillness, or financial misconduct, a collaborative divorce isntan option.Divorce MediationIn some states, divorce mediation is an alternative to goingto trial to decide the issues of a divorce. In others, divorcemediation is required before a divorce trial can begin. Indivorce mediation, a mediator meets with a husband andwife and acts as an impartial third party to facilitate anagreement. Often, mediation is a quick, less costly way toresolve disputes and reach a mutually beneficial outcome.How divorce mediation worksIn divorce mediation, couples choose a mediator (or thecourt appoints one) to discuss their cases. The mediator isoften a lawyer or retired judge, but is not required tobe. Over a single or several formal sessions, the mediatormeets with the husband and wife separately or, at times,separately with the husband and wife and their lawyers. Themediator helps each party clearly define their issues andpriorities and freely express their emotions and points ofview. Each party presents documentation that clarifies andsubstantiates his or her issues. The mediator then 18
  19. 19. encourages both parties to identify common goals,brainstorm options and accept compromise.The husband and wife evaluate their options and decideupon workable solutions. The process concludes with awritten mediation agreement, sometimes called aMemorandum of Understanding, which outlines all thedetails that the mediation has covered.Its important to note that a mediator tries to guide couplesto reach an acceptable settlement. He or she does not givelegal advice or make decisions for the couple. Both thehusband and wife should have their lawyers review themediation agreement before signing it. Once its signed, thecourt uses the mediation agreement to create the finaldivorce settlement.Benefits of divorce mediationWith divorce mediation, the husband and wife have controlof the major decisions that affect their post-marriage life.Litigation, on the other hand, leaves the decisions up to thecourt. In states that do not require divorce mediation, manycouples still choose it in order to bypass the uncertainty andcosts that come with litigation. 19
  20. 20. Divorce mediation doesnt simply decide who gets what. Ittakes into account the unique issues that underlie thecouples conflicts. The process is intended to resolvedifferences and create a situation where a relationship cancontinue. This is especially important where divorcingcouples have children and plan to share custody. In fact,many state courts mandate mediation in child custodydisputes.When to seek divorce mediationIf your state does not already require divorce mediation, itmay be a wise choice if you and your spouse seek joint childcustody, or agree about parenting issues, and plan on a fairdistribution of property. Divorce mediation creates a lessadversarial environment for your children and helps you andyour spouse put together a co-parenting plan based onmutual interests.Divorce mediation is also recommended after a divorce hasdragged on for some time, to reduce additional costs anddelays. 20
  21. 21. Choosing a LawyerIf youve decided that you need a divorce lawyer, you maywant to check out these tips. Find out how to choose a gooddivorce attorney, get the most of your consultation, andwhat documents to prepare for meeting with your lawyer. 21
  22. 22. How to Hire a Divorce LawyerWritten by: Marshall William Waller, Divorce / Separation LawyerI’m Thinking about a Divorce: What Do I Do Now?Developing a plan of action for handling your divorce is notall that hard to do. Sit down with a pad of paper and list theissues that you feel you will be dealing with during thedivorce. The major issues are: child custody, child support,spousal support (alimony) and property division. Do you andyour soon-to-be ex-spouse agree on any of these issues?The more you agree upon the less there is to fight about, andthe less there is to fight about, the less costly the processwill be, both financially and emotionally. On the issues whereyou have agreement, write down in simple and clear termsexactly what you and your spouse agree on. Don’t leaveanything out; if you wonder whether or not a detail isimportant, it is.Should I Hire an Attorney Or Should I Go it Alone?If you are financially able to afford an attorney, you willalmost always be better served by hiring a professional torepresent your interests than by trying to do it yourself. Thishas nothing to do with your ability to learn the informationand procedures needed to present your case. Indeed, many 22
  23. 23. attorneys who find they getting a divorce do not representthemselves, not even the divorce attorneys.I Don’t Know Anything about Attorneys. What Kind ofAttorney Should I Hire?Most people spend more time buying a new car than they dopicking out an attorney to represent them in one of the mostemotionally trying and difficult times of their lives. Youshould first gather up all the information and personalreferrals you can from friends, family, co-workers and otherpeople who went through the same thing that you are aboutto go through and who were happy with their attorney.Next, research and review the qualifications of attorneys inyour area on the Internet. Then, go out and interviewlawyers. Make sure the attorney practices in the area ofFamily Law. Be aware that some lawyers these days advertisethemselves as being the “best lawyer” or “super lawyers,” butthese self-aggrandizing titles have the potential of creatingan unjustified expectation about results the lawyer canachieve. 23
  24. 24. Should I Go to War with My Ex-Spouse?A divorce should not be a war. The quickest way to burnthrough your savings, your children’s college funds, all ofyour assets, and everything that you have worked so hard forthroughout your life, is to go to war with your spouse. It issuch an easy thing to do; many good and decent people aredrawn into that without even realizing what is happening. Itis said that criminal lawyers see bad people at their best andfamily lawyers see good people at their worst. Don’t be oneof the good people who end up behaving “at your worst.”Nobody will win, except the attorneys.What Is a Certified Family Law Specialist?Not every family law attorney is a Certified Family LawSpecialist, and depending on the complexity of your case,you may not always need a specialist. Certification requiresextensive education and experience in the field of family law.In California, to become certified as a Family Law Specialistby the Board of Certification of the state Bar of California, alawyer must pass a second specialized bar examination in thesubject area. They must demonstrate that they have a certainlevel of experience handling a sufficient number of family lawcases with varying degrees of complexity. 24
  25. 25. It normally takes years of family law practice for an attorneyto acquire the experience of the various types of family lawcases required by the Board of legal specialization. Theuymust also undergo a positive peer review process andmaintain a minimum number of hours of continuingeducation in the family law field.What Can I Expect at the First Meeting with the Lawyer?This initial consultation gives you both the opportunity toscreen and evaluate one another. You need to have a senseof trust and confidence in the attorney.Don’t be afraid to ask questions: Where did you go to school?How long have you been practicing this kind of law? Do youknow my spouse? Do you know my spouse’s attorney? Howmany of these cases (like yours) have you handled? Do youhave any specialties or specializations? What percentage ofyour practice is devoted to family law? How many family lawcases have you taken to trial? How many have you won? (As apoint of personal observation, be wary of the attorney whosays he or she has never lost a case. That usually means theyare not taking very many of them to trial). Have you everbeen sued for malpractice and, if so, why? Has anyone everfiled a complaint against you with the state bar? 25
  26. 26. What Should I Expect Regarding Fees?This initial consultation gives you both the opportunity toscreen and evaluate one another. You need to have a senseof trust and confidence in the attorney.Don’t be afraid to ask questions: Where did you go to school?How long have you been practicing this kind of law? Do youknow my spouse? Do you know my spouse’s attorney? Howmany of these cases (like yours) have you handled? Do youhave any specialties or specializations? What percentage ofyour practice is devoted to family law? How many family lawcases have you taken to trial? How many have you won? (As apoint of personal observation, be wary of the attorney whosays he or she has never lost a case. That usually means theyare not taking very many of them to trial). Have you everbeen sued for malpractice and, if so, why? Has anyone everfiled a complaint against you with the state bar? 26
  27. 27. How to Prepare for (and Get the Most Out of)Your First Meeting with a Divorce LawyerWritten by: Monica H Donaldson Stewart, Divorce / Separation LawyerPrepare a list of questions in advance.Before your appointment, prepare a list of questionsregarding your situation. The most frequently askedquestions we encounter are 1) How long will this take; and 2)How much will this cost. Do not be afraid to ask anyquestions, even if you think they are silly or minor. Beprepared that the attorney may not be able to answer all ofyour questions immediately. Many of the answers willdepend on the information you provide. You may not like allof the answers you receive. If you get the sense that anattorney is only telling you what you want to hear, it isprobably not the right attorney for you.Take some time to review your finances before yourappointment.If you have been the spouse to maintain the householdfinances, make sure you have a general idea of your maritalassets (e.g. house, cars, bank accounts, retirement accounts,stocks/bonds, etc.) and marital debts (e.g. credit cards,personal loans, lines of credit, mortgage(s), etc.). If you have 27
  28. 28. not had access to this information, your attorney can requestthat the other spouse provide the information. Try to gatherdetails regarding both partys incomes (e.g. copies ofpaystubs, prior years tax returns, etc.).Finally, be prepared to discuss a budget of what yourcombined household expenses have been vs. what youanticipate your expenses will be after separation. Do nothold back information - an attorney cannot effectivelyrepresent you without full, accurate information.Arrive a few minutes before your appointment is scheduledUsually, attorneys will expect you to complete intakepaperwork prior to the start of your appointment. If you canrequest this paperwork in advance, you can save some time.Otherwise, arrive early and make sure you have basicinformation such as both parties full names, contactinformation, employment and income information, dates ofbirth and social security numbers. Further, if you havechildren, you will need their names, dates of birth, andaddresses for the past 5 years. 28
  29. 29. Bring any paperwork that has been filedIf you have already been served with paperwork, bring it withyou so your attorney can review it and provide you withspecific information rather than having to speculate basedon what the papers "might" say. Further, if you have beenserved, make your appointment as soon as possible. Theremay be deadlines for responding to the paperwork and if youfail to meet the deadline, your rights may be affected.Ask your attorney to discuss a budget for your caseUnless you are quoted a fixed/flat fee (unusual in divorcecases), it is impossible at the first meeting for an attorney todefinitively say how much the case will cost. Every case isdifferent, and there is no way to predict how complicated acase might become. Nevertheless, there are certain stepsthat will occur in any divorce action, and your attorneyshould be able to give you a sense of how much time shouldbe involved in each of these steps. If you have limitedresources, be sure to make this clear to your attorney so youcan have the "money" conversation before it becomes anissue down the road. 29
  30. 30. If you dont get a good feeling, this is not the lawyer for you.You must feel comfortable with the person you choose torepresent/advise you. Your attorney will know everythingabout your life and will be counseling you on how to conductyourself during the course of your case and beyond. Nomatter how highly recommended someone comes, if youdont think it is a good "fit," move on to someone else. 30
  31. 31. Documents to Gather for Your Attorney in a DivorceWritten by: Alan Scott Funk, Divorce / Separation LawyerHere is a list of the main source documents used in a divorce: 1. Real property records. o Local address o Legal description o Copy of the most recent real estate assessors statement o Information as to any outstanding mortgage, deed of trust or real estate contract o Exact name(s) in which title is held o Estimated value of property 2. Bank records o All bank accounts of either party or businesses owned by either party 3. Tax returns and supporting documents both personal and business 4. Pay stubs, W2, K1, 1099 5. Balance sheets and profit / loss statements for self- employed, or parties with ownership interest in a business 6. Contracts showing right to income in the future 31
  32. 32. 7. Investment account records with sufficient information to assess tax consequences of sale of stock after award. If tracing is an issue, continuous records without a gap are necessary8. Promissory notes, including those showing obligation and those showing right to income9. Purchase / sale agreements - car10. Statements for retirement benefits, and copy of Defined benefits plan, or other documents describing rights11. Shareholders agreements, and other corporate documents for closely held businesses12. Lists, loan applications, or other documents showing assets owned by either party13. Present and prior Wills14. Trust instruments with party either grantor, trustee or beneficiary15. Gift tax returns (all)16. Credit card statements17. Real and personal property tax bills18. Deeds to property 32
  33. 33. Tips for Budgeting and Organizing RecordsDuring a DivorceWritten by: Constance Pifer Brunt, Divorce / Separation LawyerDivorce can be a very stressful and confusing time. Beingorganized and gathering the information needed to makeeducated decisions is critical. This transition can also befinancially challenging, requiring preparation for thenecessary budget adjustments.Gather Important RecordsWhen contemplating or beginning a divorce process, one ofyour most important tasks is to gather the records anddocuments that will help develop a complete picture of yourfamily’s financial situation. In order for you to make solidlong-term decisions about the distribution of assets, thepayment of debts and management of the family’s cash flow,it is critical to have comprehensive, accurate and currentinformation. 33
  34. 34. What Records Will I Need?Although each family’s situation is unique, here are some ofthe more common records that should be accumulated:  Income tax returns for the past 3 years  Most recent paystubs  Employment contracts  Statements of employment benefits  Current statements for all retirement plans and IRAs  Copies of all stocks, bonds, savings bonds, CDs, options, employee stock ownership plans, etc.  Current statements for all bank or credit union accounts, investment accounts and mutual funds  Life insurance policy declaration pages & current statements of value  Deeds to all real estate  Current statements for all debts  Vehicle titles and registration documents  Homeowners and auto insurance policy declaration sheets  Current financial statements, tax returns, partnership or shareholder agreements for businesses  Any prenuptial agreements 34
  35. 35. What About Personal Papers?In addition to financial documents, you should locate andsecure in a safe place these important personal papers:  Birth certificates for the entire family  Social security cards for everyone  Marriage license or certificate  Military paperwork  Passports  Wills, trusts and other estate planning documents that have been createdGet Your Budget in OrderSeparating or divorcing families almost always experiencesignificant financial strain as they restructure into twoseparate households. Lifestyles of intact families are usuallypremised on a single household, often with two incomes. Theaddition of extra expenses for a second residence canuncomfortably stretch the family’s resources. 35
  36. 36. How Can I Prepare For The Financial Transition?Here are some ways to prepare for this transitional period:  Develop a budget, listing all expenses. Reviewing credit card statements and check registers for the last year can help in this task.  Cut non-essential spending by identifying expenses that can be reduced, eliminated or postponed.  Examples might include dining out, clothing purchases, gym fees, and entertainment expenses. Try to pay cash for any purchases, reducing credit card use.  Identify your fixed, necessary expenses such as rent or mortgage payments, car payments, utilities, food, medical insurance and expenses, etc.  Review all outstanding debt to see if some can be eliminated or minimized by transferring balances to lower interest-rate credit cards or loans.  Try to accumulate a cash reserve. This can be a lifeline if you lose your job or have difficulty receiving support payments. It will also help you fund the cost of divorce proceedings and prepare for a secure financial future. 36
  37. 37. SummarySeparation and divorce can be a scary time emotionally. Itcan also be a very financially challenging lifestyle change.Preparation and thoughtful budgeting can ease thetransition. It is also important to seek legal advice as early aspossible to avoid costly mistakes and to help you to planmost effectively for this huge change in your life. 37
  38. 38. CostsTo most people, divorce can be painful not just emotionally,but also financially. Below youll find a wealth of informationon how to manage your divorce costs. Discover great tipssuch as how to keep your legal fees from breaking the bankand how to get your finances in order at the time of divorce. 38
  39. 39. How Much Will My Divorce Cost AND How DoI Save Money On It?Written by: David Alexander Browde, Divorce / Separation LawyerHow Do the Charges Work in a Divorce Case?Lawyers in divorce cases work for an hourly rate, usuallybilled in tenths of an hour. Thats because most states do notallow any other form of compensation - contingent fees indivorce cases are usually prohibited by state law. Atop yourlawyers fee will be fees charged by the Court - these vary bystate but usually are less than $500 even in the most bitterlycontested divorce cases. In New York there is an Index Fee(currently $210) at the start of the case, and several otherfees along the way, including separate fees for the Requestfor Judicial Intervention ($95), the Note of Issue ($30) andany motions along the way ($45 each). Think of these fees astolls taken by the State Court system as your case travelsthrough the courthouse. In a truly uncontested divorce theCourt fees may total as much as the fees you pay yourattorney. In a contested case the legal fees will be the largestfactor in the cost. 39
  40. 40. How Expensive Should My Lawyer Be?Lawyers charge fees based on their experience and uponwhat they think the market will bear. Depending on whereyou live, lawyers who work on divorce cases usually chargehourly fees that range anywhere between $150 and $1100 -no kidding, there are top level divorce attorneys who can anddo charge well above one thousand dollars an hour. Yournext question will likely be "Can you tell how good anattorney is by the amount they charge?" The answer is whatyoud expect: no. In choosing an attorney you should looknot just at the hourly rate but at how efficiently they work,what their reputation is and, most importantly, whether youcan communicate effectively with the lawyer. Does theattorney understand your situation? Has he or she dealt withthese issues before? Do the solutions and tactics beingproposed make sense? Are they likely to be cost effective? 40
  41. 41. What Drives the Cost of the Divorce?What drives divorce costs dramatically higher is one thingand one thing only: disagreement between the parties. If thehusband and wife can agree on the key issues, such asgrounds, custody, child support and property division, allthat remains is drafting of documents. But when there arebattles, negotiations, debates - all those things take time.And as noted above, the lawyers are charging by the tenth ofan hour. So, if both sides are represented by attorneys (andthey should be!) a debate over who gets to keep the paintingin the living room or Aunt Sallys wedding present canquickly become far more expensive than the painting orbuying a new toaster oven. Thats not to say that key issuesand disagreements shouldnt be fought out - either innegotiation or litigation - but simply a word to the wise. Itoften makes sense to settle economic issues rather thanlitigate them.Why Cant My Lawyer Tell Me Now How Much its Goingto Cost?A good question, with a simple answer. Your lawyer cantpredict what the other side is going to do. If theres reasonprevailing, issues can be resolved inexpensively. However, ifemotions are running high (and, understandably, they oftenare in divorce cases) then there can be bumps in the road to 41
  42. 42. your divorce. Each of those bumps can cause delays andincrease costs, as issues come up that have to be resolved,delaying resolution of the case and adding to the legal fees.What Can I Do to Keep My Divorce Costs Down?This could become a guide all by itself, but the primarypoints to remember are: 1. Be organized. Your lawyer will need documents and information in order to negotiate and prepare your divorce. If you have that information available, you can save time and money. 2. Try to control your emotions. Divorce is a difficult thing for many people, but try to see this aspect as a business deal. Youve already dealt with the emotionally difficult issue of breaking up. Now youre just dividing the dishes. 3. Be reasonable. Litigating issues is expensive. If you can reach an agreement, do so. Save the fights for the really important things. 42
  43. 43. 4. Communicate honestly with your lawyer. Ask questions when you have them. But make sure youve given accurate answers to the lawyers questions, in order to avoid expense and delays when the other side comes up with something that surprises your attorney.Five Tips that Will Help Save Money on Your DivorceWritten by: David Alexander Browde, Divorce / Separation LawyerDivorce is almost always a painful experience. But you canlimit the pain to your finances if you remember one basicprinciple: your lawyer is working on an hourly basis. Thatmeans that to save money you will want to minimize thenumber of hours the lawyer spends working on your case.Your mileage may vary, and some of the suggestions in thisguide may not be appropriate for your case. But for most,these guidelines will steer you away from the pitfalls that canresult in extra expense on the way to escaping a failedmarriage. 43
  44. 44. 1. Be organizedOrganize your personal information in advance. Have thestatistical information ready: full names of adults andchildren, social security numbers, dates and places of birth,date and place of marriage, whether it was a civil or religiousceremony. If you have all this information in advance, yourlawyer will be able to plug it in to the multiple places thestatistical stuff is needed as you move towards your divorce.Get your tax returns and other financial information ready. Ifchild support or spousal support is at issue youll need up tothree years of tax returns as well as your most recent checkstubs to show current income.2. Control your emotionsDivorce is a difficult thing for many people, but tries to seethis aspect as a business deal. Sure, youll have to deal withthe emotionally difficult issue of breaking up. But try to dealwith the legal aspect as just dividing the dishes. Think of thisas #2-A: be reasonable.Litigating is expensive, so you should always try to resolve asmuch as you can with your spouse before bringing in thelawyers. If you can resolve issues like custody, visitation andholiday schedules, property distribution or grounds for adivorce, youre cutting down on the time it will take to finish 44
  45. 45. the negotiations the lawyers will be doing. Remember, whenthe lawyers are negotiating, the clock is ticking – at leastdouble time. The lawyers can help you get past issues onwhich you disagree, but if youre arguing over little things,the cost of the argument will be more than the cost ofreplacing whatever wedding present you think you shouldhave.3. Unless you need instant answers, e-mail your attorneywith questions rather than asking them on the phoneThat way youll get a complete answer that youll be able toabsorb at your own pace, rather than trying to take notes ona conversation and perhaps having to repeat things that youdont understand when theyre spoken rather than written.Dont let your lawyer get caught by surprise. That meansdont be embarrassed, tell your lawyer the unvarnished truthabout everything youre asked. The attorney wont be judgingyou, but you and the attorney will be the losers if the otherside contradicts something your attorney has put forth as afact. 45
  46. 46. 4. Try to limit the amount of hand holding you needOf course divorce is an painful process, an emotionalrollercoaster. Youll need to talk to your lawyer about anynumber of important issues. Ask questions whenever youhave them, and dont be shy about making suggestions if youhave them. But if you can get your emotional support fromfriends rather than your attorney, you can save significantamounts of money.5. Above all, remember, you can be penny wise andpound foolishSaving money on legal fees isnt a good idea if the result is abad outcome. But if you can use some of these suggestionsyoull find that your legal costs are lowered substantially overthe course of a contested divorce. 46
  47. 47. How to Prepare Your Finances in the Time of DivorceWritten by: Maury Devereau Beaulier, Divorce / Separation LawyerClose Joint AccountsIf a divorce is imminent, you should immediately contactjoint-credit-card companies in writing to freeze or cancelyour joint accounts. You do not want to be responsible foryour spouses new credit card charges, particularly whenthose charges may include attorneys fees. This protectsyour credit. It is important to remember that, although acreditor may freeze a joint account, the outstanding balancemust be paid off before the account can be closed.You may also wish to close your joint bank accounts. If anyproceeds are removed, keep a carefully accounting wherethe money is placed or how the proceeds are spent. You willundoubtedly be asked for that accounting as part of thedivorce process. You can save yourself time and money bykeeping accurate records. 47
  48. 48. Establish Your Own CreditMake sure your name is listed on all household accounts andinvestments. Establish at least one credit card in your ownname. This will help to create an individual credit history.When you are on your own, you will have a better chancequalifying for loans, mortgages and credit cards. These are allimportant considerations after a divorce.Keep Non-Marital Assets SeparateNon-marital assets are not part of the assets divided in adivorce. Instead, they are considered the asset of either thehusband or the wife and generally awarded to that person ina divorce proceeding. Categories of non-marital assetsinclude: property you inherit; proceeds from personal injuryawards (eg. Workers compensation or accident proceeds);items owned prior to marriage; and gifts to one party ratherthan the family.If non-marital assets are commingled with assets purchasedor improved during the marriage, it may not be possible toclaim the asset as yours in the event of divorce. However,some "tracing" of non-marital assets may be possible. Forexample, if a non-marital asset is sold during the marriageand the proceeds from the sale are used to purchase anotherasset, it may be possible to "trace" a non-marital interest in 48
  49. 49. the new asset. For example, if a car owned before a marriageis sold during the marriage and the proceeds are used to buya new car.Review Your Financial Holdings RegularlyMaintain complete and separate records of your financialholdings such as bank accounts, IRAs, 401K, land purchases,and stocks. This includes assets in your spouses name aswell. You may wish to maintain copies of these records atyour place of employment or in a safety deposit box in yourname. Records have a way of disappearing after a divorce hasbeen started.Time Your DivorceThe timing of your divorce may carry with it a significantfinancial impact. For example, in a single income family, thenon-working spouse may not have earned enough money toqualify for Social Security at the age of retirement. However,if spouses are married at least 10 years and dont re-marry,the non-earning spouse may qualify for Social Securitybenefits based on the ex-spouses earnings when both reachthe age of 62. 49
  50. 50. Video Tape AssetsYou should photograph of videotape the contents of yourhome including any garages, sheds or out buildings, torecord the assets and fixtures contained in each. In anydivorce, it is possible that one party may be required torelocate from the family residence. Once you relocate, it maybe difficult to recall all of the assets and furnishings that arecontained in the house. If you forget them, there is a goodchance that they wont be factored into the values that eachparty receives in the property settlement.Dont Leave the Marital ResidenceIn a custody case, leaving the marital residence may impairyour ability to successfully seek custody of the children or anaward of the real estate after the divorce. By relocating, youcreate a sort of status quo that courts are often reluctant todisturb.Freeze or Cancel Joint Credit CardsIf a divorce is imminent, you should immediately contactjoint-credit-card companies in writing to freeze or cancelyour joint accounts. You do not want to be responsible foryour spouses new credit card charges, particularly whenthose charges may include attorneys fees. This protectsyour credit. It is important to remember that, although a 50
  51. 51. creditor may freeze a joint account, the outstanding balancemust be paid off before the account can be closed.Collect Information Related to ChildrenIn any case that involves children, custody disputes are adistinct possibility. As a result, documents relating to yourchildren may be critical to support your contentionregarding medical issues, care during the marriage, or whowas the parent providing their primary care.Some items you may wish to obtain or retain include: Familyphotographs including those depicting family vacations orthe childrens extracurricular activities; Social Security,Student Body, and State ID cards; Medical records andprescription information including the names and addressesof any treating physicians or counselors for the children orthe parties; Report cards and school records.Hire an Experienced Divorce LawyerIt may be very important to hire a good lawyer early in yourdivorce planning process. An experienced attorney can helpyou avoid mistakes that could later cost you in your divorceproceeding. By choosing an attorney early in the process,there is less of a chance that you will be caught off guard andwind up playing catch up on the issues. There are many 51
  52. 52. lawyers to choose from so it is important that you askimportant questions in order to choose one that isknowledgeable and right for you. Ask about their experiencein family practice and specifically divorce. Ask the attorneyto explain the legal issues as well as the legal process in yourparticular county.Divorce And TaxesWritten by: Mary G. Commander, Divorce / Separation LawyerTransfers Between SpousesUnder the general rule, transfers of property betweenspouses and former spouses is not a taxable event if it is"incident to the divorce". If the transfer is NOT madepursuant to a written separation/divorce agreement ordecree OR the transfer takes place more than 6 years afterthe end of the marriage, there is a rebuttable presumptionthat it was not related to the cessation of the marriage. Theburden then would shift to the taxpayer.Spousal Support (Alimony)Under 26 U.S.C. Section 71, spousal support is taxable incometo the payee, and a deduction to the payor. Certainrequirements must be met: It must not be designated as or in 52
  53. 53. reality be "child support"; it must be received by or or behalfof the payee; it must end on the payees death and it must bepayable under an existing agreement or order. The partiescannot file a joint tax return, and they cannot be members ofthe same household.House PaymentsEspecially in temporary orders, one party may be required tomake payments on the former marital residence while it isoccupied by the other party. If the payor spouse is the soleowner of the house and is solely liable on the mortgage thathe is paying, then he cannot deduct the payment as spousalsupport. If both parties own the house and are liable on themortgage, one-half will be treated as spousal support. If thepayee owns the house the mortgage payments are spousalsupport.Attorneys FeesAttorneys fees that are incurred to obtain or defend spousalsupport are deductible. If a party is required to pay the otherpartys attorneys fees as "spousal support", these fees aredeductible. It may be necessary to segregate out whichamount of an attorneys bill relates to spousal support for taxpurposes. 53
  54. 54. Tax RefundsNothing is held hostage so often in divorce cases as theincome tax refund check. Generally speaking, just becausethe parties file a joint return does not mean that they areentitled to share equally in the refund amount. Instead, thisis determined by the income earned by each as if they filedseparate returns.DependentsThe custodial parent is the one who can claim the child(ren)as a dependent. This can be given to the other party byexecution of IRS Form 8332. If both parents claim the child,you WILL be audited. 54
  55. 55. ProcessMost divorces tend to follow similar procedures. Check outthe Legal Guides below to learn what to expect in thedivorce process from beginning to end, both inside andoutside the courtroom.Just keep in mind that there may be some variation in theprocess across different states. This is because the divorceprocess is dictated by the laws of the state in which you filefor divorce. 55
  56. 56. The Complete Divorce ProcessWritten by: Maury Devereau Beaulier, Divorce / Separation LawyerCases vary state to stateThe length of your case may depend on the state and countythat your case is filed in. It often depends on how crowdedthe court docket may be and often may take a year or morefor your case to get to trial.JurisdictionBefore a divorce is filed, you must determine where thematter will be heard. Different states have different rules forbestowing jurisdiction. In many states, a party must havelived in that state for 180 days prior to filing. If there are twopossible jurisdictions, it may benefit the party filing to servethe Divorce documents first to choose jurisdiction in theirstate. That is the primary benefit of serving and filing first.There is little benefit to serving and filing first other than toprepare in advance and to choose the jurisdiction. 56
  57. 57. SummonsA divorce case is usually commenced by serving on the otherparty a Summons and Petition for Divorce or LegalSeparation. In some states, a divorce is also called aDissolution of Marriage. Service in most states must becomplete by actually personally serving the other party or aperson who resides in their home who is considered to be ofsuitable age and maturity.In most states, a party may not serve their own divorcepapers. The Summons is a generally document announcingthat a divorce or legal separation action is beingcommenced. In some states, that document also indicatesthat from that point forward neither party may dispose ofmarital assets, change insurance coverage or modify anyother significant holdings except for the necessities of life.PetitionThe Petition has two parts. The first part is a statement offacts which sets out basic facts such as the identities of theparties, whether they have children and what assets theymay hold. The second part of the Petition seeks relief such asan award of custody, spousal maintenance or child supportand a division of assets and debts. The Petition is oftentailored to seek the maximum relief. It is a positioning paper 57
  58. 58. that will often seek as much relief as the proponent couldpossibly seek.Answer and Counter-petitionThe opposing party has thirty (30) days in most states tosubmit an answer to the petition. The Answer is very simplythe opposing party’s statement of facts and their request forrelief. Often the service of an Answer is waived. This is oftendone to save the parties the cost of an additional filing feeshould the matter be settled. However, if a waiver orextension is not granted by the opposing party and ananswer is not filed within thirty (30) Days, the original partymay seek a default. A default means that the original movingparty may request the relief requested in their petitionwithout opposition. Late answers are often accepted sinceCourts prefer determining cases on their merits rather thanby default.Temporary HearingsA temporary hearing may also be called a “Pendente litehearing”. Such hearings may be scheduled by either party byfiling a Motion supported by an affidavit. 58
  59. 59. Temporary/Pendente lite hearings are designed to resolveissues while the divorce is pending such as who will havetemporary custody; temporary support and/or maintenance;where the parties are going to reside pending the resolutionof the case; protection from harassment and domesticviolence; injunctions against financial improprieties; use ofassets. In most states, temporary hearings should not affectthe final outcome. However, from a practical perspective,temporary hearings can be very important since Courtsoften favor a policy of maintaining the status quo. Temporaryorders may be changed if there is a substantial change incircumstance during the pendency of the divorce to makethe change in the temporary order necessary.MediationMany courts require the parties to attempt to mediate theirdisputes before the matter is submitted to the Court. Oneexception to this rule may be where domestic abuse hasoccurred. Mediation may occur between the parties of withattorneys present. Mediation means that the parties visitwith a qualified neutral who will attempt to get them toresolve their differences. In mediation, the neutral is not anadvocate and still not provide legal advice. Most discussionsthat occur in mediation are not admissible in Court underthe public policy consideration that favors a free exchange of 59
  60. 60. information between the parties to help them resolve theirdifferences.Co-parenting ClassesMany states have adopted a policy that requires parents toattend co-parenting classes where children are involved. Thegoal is to teach parents how to minimize the impact ofchildren involve in a divorce. In most cases, the parents neednot attend together. Some states also require that childrenof a certain age attend a class to teach them the skills to dealwith divorcing parents. This is not embraced in all states andis primarily found in Northern states.Advance Case ReviewMany states have a hearing that is called an advance casereview or early case resolution meeting or Case ManagementConference. In such a hearing, the parties meet with theJudge assigned to the case or a referee to discuss the issues,or what discovery may be necessary. This is the parties firstchance to resolve the case or portion of the case.DiscoveryDiscovery refers to the "investigation" phase of the case. It isprimarily dedicated to identifying the contested issues, a 60
  61. 61. determination of assets, income and debt of the parties. Thisexchange of information can be conducted informally witheth parties agreeing to freely exchange the information orformally, through the submission of formal documents thatrequire answers under oath.InterrogatoriesInterrogatories refer to a form of discovery where writtenquestions are submitted to the opposing party to a lawsuit.These questions must be answered in writing under oath orunder penalty of perjury within a specified time (usually 30days). Objections may be made to questions that areoverbroad or unlikely to lead to admissible evidence. Moststates limit the number of interrogatories that may be askedwithout the courts permission to keep the questions frombeing a means of oppression rather than a source ofinformation.Document RequestsA request for production is another part of the discoveryprocess. Either party may send a request to an opposingparty or witness for relevant documents related to theproceeding. You may wish to review our list of Documentsthat may be relevant to your case. Generally, documentsrequests require that the party served provide any and all 61
  62. 62. documents requested that they have in their possessionwithin a specified period of time (usually 30 days). If you donot possess the documents requested, you do not have toacquire them if it is not easy to do so. The opposing counselmay acquire those documents through other remedies suchas subpoena or by having a party sign a Release ofInformation.Releases of InformationThe opposing party may send a release of information to theother party seeking to acquire documents from a third partythat is relevant to the case. Examples of documents that maybe requested include bank statements, medical records,financial records, work schedules and income information.Requests for AdmissionsEither party may submit to the other a Request forAdmission seeking admissions on certain facts relevant tothe proceeding. Much like interrogatories and documentrequests, the responses must be returned within a specifiedperiod of time and must be made under oath (notarized).DepositionsA deposition can be a more expensive form of discovery. Itallows a party to subpoena and depose any individuals who 62
  63. 63. may have information relevant to the case. This includesparties and non-parties alike. In a deposition, the party beingdeposed appears at the attorney’s office or a neutral locationto answer questions put by the other sides attorneyregarding the facts of the case. Depositions are under oathwith a court reporter present so that everything that is saidis recorded. A deposition is scheduled to pin a witness downto certain facts and to discover all possible documents andwitnesses related to a case.Failures to provide discoveryThe penalties related to a failure to respond to discovery orto appear at a deposition may be severe. The opposing partymay file a motion to compel discovery and/or seek sanctionsrelated to that failure. Severe sanctions may includeestablishing facts related to a case. That means that theCourt disallows an opposing party from presenting anevidence or testimony at trial to contest an issue wherediscovery was not provided. Default is the most severesanction where the Court allows a party to proceed as if theentire case or any individual issue is uncontested. The Courtmay also award attorney’s fees to the party that submittedthe unanswered discovery. If you require additional time torespond to discovery, you should request the same in writingincluding a specific time line when it can be completed. 63
  64. 64. ExpertsExperts are often employed to determine certain facts.Those experts may be jointly agreed upon by the parties,which can save on the cost of having individual expertstestify at trial. However, where that is not possible, each sidemay hire an expert to contest an issue and require theirtestimony at trial.Common experts include: custody evaluators; financialplanners to determine future economic circumstances;business evaluators to value businesses; real estateappraisers to value real estate; personal property appraiserto value furnishings and other assets (generally anauctioneer experience d in home goods); vocationalevaluator to determine earning capacity; psychologists totestify to mental health issues.SettlementA divorce or legal separation case may be resolved at anytime the parties come to an agreement on the issues. In suchcases, the parties would sign a Marital Settlement Agreementor some other form of stipulation resolving their issues. Thiscan occur right up to the point of trial. 64
  65. 65. TrialIf you are unable to settle your case with your spouse, it willgo to trial. Some states have a trial by jury. Other states havea trial by judge. At trial you each tell your story to the judge.It is told through your testimony, the testimony of otherwitnesses, and documents called exhibits. st trial, the movingparty (usually called the petitioner or plaintiff) presents theircase first. The call their witnesses who are subject to cross-examination by the opposing party. When the plaintiff orpetitioner rests their case, the Respondent or Defendantpresents their own case with witnesses and evidence, eachsubject to cross examination by the opposing party.AppealsAfter a divorce, either party has a right to an appeal if theydisagree with e Judge’s ruling. The time lines for appeal areseverely limited. As a result, you should consult with a lawyerin your state regarding those time lines.ModificationWhether the issues in your divorce are settled by you andyour spouse or are decided by a judge, some things in yourjudgment can be modified (changed) by a judge after a 65
  66. 66. hearing. Usually, child support, alimony, child custody, andchild visitation can be modified, but only if one of you canshow that there has been a change in circumstances.EnforcementIf you or your spouse disobeys an order that the court makesin your divorce judgment, you may file a Motion to compelcompliance. Such motions are generally for contempt andrequire the service of an Order to Show Cause and a Motion. 66
  67. 67. Property DivisionDepending on how contentious your divorce is, the processof dividing all of your marriage assets can be anywhere fromrelatively painless to extremely complicated. Thankfully,most divorcing couples are able to reach an agreement ontheir own without resorting to legal warfare. Here you canlearn the basics of how property, other assets, and debts aredivided in a divorce. 67
  68. 68. Community Property Division vs. EquitableProperty Division in DivorceThe issue of how to divide property comes up in mostdivorces, which is why it’s important to know if you live in acommunity property state or an equitable property state.The way your state handles property division depends onwhich of these property systems apply. The exceptions tothis happen when there was a prenuptial agreement, or if theparties to the divorce draft an agreement that divides theproperty according to those specific terms. 68
  69. 69. Equitable propertyMost states are equitable property states (or separateproperty states). Under the equitable system, a court dividesmarital property according to what it considers to beequitable, or just, to both parties. This is why an equitabledivision isn’t necessarily always a 50-50 split. In some of therarer circumstances, one spouse can end up with almost allof the assets if this is what the court deems as fair.In equitable property states spouses are generally awardedproperty in proportion to how much they contributed to themarriage. Often, the spouse who earned more will receivethe larger portion of the property and assets because theycontributed more financially to the union.However, a court often balances things out by taking otherfactors into consideration as well. Some of examples of thesefactors include the length of the marriage, the earningpotential of each spouse, the standard of living establishedduring the marriage, the value of a stay-at-home spouse whotook care of the children, etc.The court evaluates the financial ability of each spouse whenconsidering marital debt and liability distribution. 69
  70. 70. Community propertyCommunity property law only applies to these nine states:California, Arizona, Idaho, Nevada, Louisiana, New Mexico,Wisconsin, Washington, and Texas. (Puerto Rico also fallsinto this category.)In a community property state, a court looks at all assets thatwere acquired during marriage and then divides themequally between the spouses during divorce. All assets aredivided equally regardless of who owns title to them. Forexample, both spouses are considered to own all moneyequally even if one spouse doesn’t work. The only time whenmarital assets aren’t split equally is if a prenuptial agreementwas in place.In addition, community property laws also apply to all jointdebts and liabilities because these count as marital property.This means that all debts and liabilities are equally dividedbetween both spouses. 70
  71. 71. What is Non-Marital Property?Written by: Maury Devereau Beaulier, Divorce / Separation LawyerIn a divorce, some assets may be considered non-maritaland, as a result, are not divided in a divorce proceeding.What is the marital estate?In a divorce, the parties divide up what is called the "MaritalEstate." The marital estate includes any assets or debts thatthe parties own at the time of the divorce. Each spouse isdeemed to have an equal interest in marital assets or debts.This is true no matter how property is titled or held and nomatter which spouses job paid for the asset or which partyincurred the debt. That means the marital estate includes a401K account or credit card debt that is in your spouse’sname alone.In fact, marital property is inclusive and encompasses 401Kplans, stock plans, stock options, real estate, frequent flierentitlements, bank account proceeds, couches, chairs, cars,utility debts, credit card debts and any other form of asset orliability. 71
  72. 72. What are categories of non-marital assets?Some states have classifications of property that areexceptions from the marital estate that is divided. Theseassets are often called non-marital assets. Any non-maritalassets that you possess remain yours and any non-maritalassets of your spouse remain his/her assets. Among statesthat take this approach, some listed non-maritalclassifications include:  Premarital. Any asset acquired before the marriage (if the asset was encumbered by a loan that was paid off during the marriage, it may only have a partial non- marital value).  Prenuptial Exclusions. An asset excluded by a valid prenuptial agreement;  Personal Injury Proceeds. Personal injury settlements are generally considered personal to the injured party and are non-marital in nature. Some states also include Social Security benefits, Workers Compensation and Disability in this category;  Inheritance. Any proceeds or assets from an inheritance;  Gifts. Any asset acquired as a gift to one, but not both. 72
  73. 73. Losing Non-Marital StatusIt is possible for non-marital assets may have both a maritaland non-marital value. In some cases, non-marital assetsmay lose their non-marital characteristic. This can occur inseveral ways:  Commingling: If non-marital proceeds are co- mingled with marital proceeds so that is becomes difficult to identify the non-marital asset, the non- marital characteristic may be lost. For example, placing non-marital proceeds in a joint bank account may not immediately eliminate a non-marital interest. However, if marital proceeds are added to the bank account or if proceeds from the account are paid out for regular living expenses, it is more likely that the non-marital value will diminish since it is impossible to determine which proceeds came out first - the marital proceeds or the non-marital proceeds.  Marital Improvements: Additionally, spending marital money (any money earned by either party during the marriage) to improve a non-marital asset may also create a partial marital interest in an otherwise non- marital asset. The increase in the value of the asset attributable to the improvement is likely to be considered marital. 73
  74. 74.  Appreciation: The Courts make a distinction between "active" and "passive" appreciation. Passive appreciation of a non-marital asset remains non- marital. Passive appreciation occurs when an asset increases in value without any action by the parties. For example, if the value of real estate increases without the parties improving the property, it is considered passive. Active appreciation is a marital asset. Active appreciation occurs when the value of an asset increases because of an act by the either of the parties during the marriage. Capital improvements to real estate during a marriage may create a marital interest since a capital improvement is likely to add to the property’s value. Manipulating a stock account or transferring a mutual fund from one account to another resulting in an increase in value may also be "active appreciation" which creates a marital interest in an otherwise non-marital asset.Tracing Non-Marital ValueNon-marital assets may often be "traced" into later acquiredassets giving the party with the original non-marital interesta non-marital interest in the new asset. For example, if onespouse owned a vehicle before marriage and that vehicle islater traded in for a new vehicle during the marriage, that 74
  75. 75. party may be able to trace a non-marital interest in the newvehicle. Tracing is really the process of establishing asufficient paper trail to claim a non-marital interest in asubsequently purchased asset.Often, presenting a persuasive property case depends onclear cut documentation, and expert testimony.Divorce Property Settlement: Tips forProperty DivisionEvery divorce has unique factors, but nearly all divorcesinvolve many of the same issues, such as property division.Although property is one of the biggest sources ofdisagreement in divorces, the vast majority of divorcingspouses are able to reach a compromise outside of court.In general, you’re more likely to be satisfied with yourproperty division if you negotiate it yourself.If you and your spouse can’t come to an agreement then ajudge will make the decisions for you. Remember that no oneknows better than you what your financial needs are andhow best to meet them, so it’s probably prudent to see if youcan work out an agreement yourself. Here are some common 75
  76. 76. negotiation guidelines that can help you reach a propertysettlement without litigation.Preparing before negotiation  Review your states property laws. Before you sit down at the negotiating table, you may want to take a look at your state’s property divorce laws. Knowing what you’re lawfully entitled to will help you ensure that the division is fair when negotiating the terms of the agreement.  Define your financial needs. Next, consider your financial needs, and define your overall goals for the negotiation. Major components of your financial need include: your income, earning capacity, age, health, number of children, retirement plans, etc.  Know where you stand financially. It’s also important to look at your asset-to-debt ratio. You may or may not be legally liable for debt incurred during your marriage, so it pays to be informed. If you are liable for the debt, the creditor will still require you to pay even after your divorce. Getting a complete picture of your true financial situation through an inventory will help you establish a good benchmark of what to expect. Typically, the division of property includes assets like your marital home, household items, 76
  77. 77. vehicle(s), insurance, retirement plan(s), any businesses, securities (stocks, mutual funds, bonds, CDs, etc.), cash, and collections and other valuables. Using a property checklist can help you take a complete inventory of everything. Attorneys usually have these checklists, so make sure to ask yours for one.The negotiations  Traditional negotiations. Traditional style negotiations usually involve each spouse’s attorney. Each side presents their respective interests until an agreement is achieved. The negotiations may span several meetings between both parties and their lawyers. In difficult cases when the parties are unable to agree, the lawyers may draft the terms and negotiate on behalf of their clients.  Mediation. This process is a good choice because it is non-adversarial, thereby allowing a husband and wife to come to an agreement on their own through the assistance of a neutral third party. Usually the third party has experience with conflict resolution and can help reduce hostilities significantly on both sides.  Collaborative divorce. Both parties sign an agreement beforehand which commits them to reaching a 77
  78. 78. settlement; if a settlement is not reached then the lawyers withdraw from the subsequent litigation. The parties may use experts or specialists to help them reach mutual agreement on issues.  Other alternatives. If you and your spouse just cant agree on how to split the property, then you may find these other methods useful (like silent auctions, taking turns from a list, etc.).Dividing Property in a Divorce: Who gets theFamily Home?Written by: Suzanne Griffiths, Divorce / Separation LawyerAlways check your states specific lawsHow courts determine which party gets the family homevaries state to state. Remember to always check your state’sspecific laws. For example, a Colorado court may ruledifferently on the matter than a court in another state. All ofthe following scenarios are examples of how a Coloradocourt could handle allocation of the family home.Parent with primary care of childrenWhen considering the division of property, courts considerthe economic circumstances of each spouse at the time the 78
  79. 79. division of property is to become effective. The Court mustconsider the desirability of awarding the family home or theright to live therein for reasonable periods to the spousewith whom any children reside the majority of the time.Therefore the parent who has primary care of the childrenhas the advantage.Financial feasibilityA court may also consider whether it is financially feasiblefor the primary parent to maintain the home, refinance themortgage and pay the obligations related to the home.No fault divorce vs. fault divorce statesWhether your state is one that grants divorces based onfault, could possibly affect the court’s decision. For example,Colorado is considered to be a “no fault” state. What thismeans is that if one of the parties is having an affair or hasabused the other, the court cannot take that informationinto account when allocating the assets. However, a court ina state that allows divorces based on fault might possiblyassess the situation in a different way. 79
  80. 80. Gift, inheritance, or owned prior to marriageIf the family home in a divorce was received by gift,inheritance or was owned before the marriage then it willgenerally be awarded to the spouse who received the gift orinheritance or who owned the home prior to marriage.Additional factorsOther factors that a court will consider in allocating thefamily home include the contribution of each spouse to theacquisition of the marital property, including thecontribution of a spouse as a homemaker.Dividing Retirement Plans in DivorceWritten by: Maury Devereau Beaulier, Divorce / Separation LawyerDeferred compensation refers to pension plans, 401K plans,IRAs and other retirement assets. Such plans are divisible aspart of a property settlement in divorce regardless of whichparty is named on the plan. How they are divided depends onthe value and nature of the asset. Perhaps one of the worstscenarios in a divorce is when retirement assets aretransferred to a former spouse but the original owner is 80
  81. 81. liable for liable for the taxes, including penalties for earlywithdrawal.Types of Retirement AssetsThere are three main kinds of deferred compensation plans. 1. Savings plans include retirement assets such as IRAs, 401(k) Plans, ESOPs, and Thrift Savings Plans. 2. A defined contribution plan is one in which the value of the plan is determined in part by the amount of contributions made into the plan. The money contributed may be invested and grow. 3. With a defined benefit plan, an employee is provided a monthly payment starting at retirement age and ending at the end of his/her lifetime.Dividing Savings PlansDividing Savings Plans: Savings plans such as an IRA areconsidered "cash" plans since they may be liquidated beforeretirement age. They are divisible as part of a divorce.However, before any division may occur, a custodian of theaccount must receive and review a certified copy of thecourt order dividing the plan. Additionally, the spousereceiving a portion of the plan must fill out documentsrelating to the manner of payout. 81
  82. 82. IRA proceeds may be cashed out and paid directly to thereceiving spouse or they may be "rolled" over into a new IRAin the name of the receiving spouse. However, the taxconsequences related to cashing out the plan may reducethe plan proceeds by more than thirty percent (30%) fortaxes and early withdrawal penalties.Dividing Defined Contribution PlansValuing and Dividing Defined Contribution Plans. Thevaluation of a defined contribution plan can be determinedby multiplying the account balance by the percentage ofvesting. This is a relatively simple way to value the plan anddetermine marital value. Generally, such plans may bedivided currently with each party receiving one half of thecurrent vested value.Dividing Defined Benefit PlansValuing and Dividing Defined Benefit Plans. With a DefinedBenefit Plan, generally the participants benefits cannot beliquidated prior to retirement age and the non-participantspouse may receive a retirement plan in her namerepresenting her marital interest in the participants plan.This plan is generally subject to the same terms andconditions of the original plan. 82
  83. 83. Often, the Participant may choose a payment method fromseveral options. The chosen method will affect the amount ortiming of the payments to both the participant and anyreceiving spouse. This may mean that retirement benefitsare received when the original participant decides to retire,not when the recipient spouse retires.A defined benefit plan may be divided in one of two ways: 1. Cashing Out/Present Value Calculation. First, a recipient spouse may elect to receive money effectively cashing out his/her interest in the plan. To cash out, a present value of the plan proceeds must be determine. "Present Value" is the current value of a future benefit. In simple terms, a dollar that you receive today is more valuable than a dollar you receive next week since you may invest the dollar or deposit the dollar and accrue interest. Therefore, retirement benefits that are received at retirement age would have a lower value if paid in a lump sum currently. Often, a calculation or of present value requires an actuary or accountant. 83
  84. 84. 2. Division of Future Benefit. Rather than using a present-day cash value, a defined benefit plan may be divided by dividing the future stream of income. This is accomplished by drafting a Qualified Domestic Relations Order (QDRO). This is a court order which instructs a pension plan to pay an Alternate Payee (or former spouse) a portion of retirement benefits accrued by a Participant due to an equitable distribution agreement in a divorce. With this method, the court retains jurisdiction until the benefits are paid.Dividing a Business in a DivorceProperty division in divorce can become fairly complex if oneor both of the spouses owns a business. The incomegenerated by a business is usually significant, so there’s oftensome conflict over who gets the business, or how it will bedivided in the divorce settlement. Even if the businessbelongs to only one spouse, chances are that the businesscounts as marital property, which is why it’s still subject to adivorce property settlement. 84
  85. 85. Business valuationsOne of the first and most important steps to take is to get abusiness valuation. Even if your soon-to-be ex tells you thatthey’ve been earning X amount from the business every yearand that the business is worth Y amount, don’t take theirword for it. Always keep in mind that they don’t necessarilyhave your best interests at heart, so you should take basicprecautions to protect yourself. This includes getting anindependent appraisal, or engaging a joint appraiser withyour spouse.Calculating the value of a business isn’t exactly a science,which is why in most cases two different appraisers willassess different values to a business. However, the Instituteof Business Appraisers (IBA) and the American Society ofAppraisers (ASA) have issued standards for valuingbusinesses, which means that appraisers tend to follow asimilar general procedure. This helps ensure that even if twodifferent appraisers arrive at different values, the two valueamounts should be fairly close to each other. 85
  86. 86. What actually happens to the business?Here are some common scenarios for businesses after adivorce:  One spouse buys the other one out. One spouse gets the business, and makes payments over time to the other to compensate financially.  The spouses separate different facets of the business. Each spouse receives a part of the business to operate how they want. For example, a couple with 2 different branches of a business may choose to divide the business so that each gets one branch office.  They keep working together. Sometimes couples are able to remain business partners even after a divorce, but this is fairly rare.No matter the size of the business, it’s always a good idea toengage an attorney who is experienced in complex propertyissues to help you determine what’ll happen to the businessin your divorce. 86
  87. 87. Divorce Debt and Credit IssuesIt is a common misconception that a court in a divorce canrelieve one party from the financial obligations incurredduring the marriage. Although the Court may require oneparty to pay a joint debt, that ruling does not prevent acreditor from pursuing either party for an unpaid debt. Thecreditor is not a party to the divorce action. The Court hasno authority to modify the terms of the contract that wasexecuted with the creditor.Even in cases where the parties have an amicablerelationship and reach an agreement on the issues, dangerlurks. Problems with joint debts are often the result ofmistakes and ignorance rather than an intent to harm theother party. As a result, if you arent careful to protect yourrights as part of your divorce and if you do not placeprotections into a divorce agreement, your finances may beadversely affected for years. 87
  88. 88. Dangers  Even a debt that is current may affect your ability to qualify for new credit since the outstanding debt will appear on your credit report;  Unpaid joint debt may adversely affect your credit rating and impair your ability to acquire new loans;  An unpaid joint debt may result in collection efforts and costly court appearances; • An unpaid joint debt may result in the entry of a Judgment against you;  An unpaid joint debt may result in garnishments or liens.How can I avoid these difficulties?  Pay Off Debt. Any joint debts should be paid off. This is the most practical and bullet proof solution. If the parties do not have the liquid resources to pay off existing joint debts, they may wish to consider selling other assets or tapping into other financial resources to settle the debt. Obviously, this is the most effective way to eliminate the debt and prevent future collection issues.  Transfer Debt. Joint debts may be divided by transferring the debt solely into the name of the party responsible. This can often be accomplished by 88
  89. 89. satisfying the debt with a credit card in that party’s name. This may be more difficult with larger obligations like a homestead mortgage. Sell Assets. Sell any assets that are encumbered by a joint security interest. This specifically includes real estate. It is important to remember that transferring the title of the asset into one person’s name does not eliminate responsibility for the debt. If you take your name off of title, whether the asset is a car or a house, you are removing ownership but not loan responsibility. Refinance the Debt. Have one spouse refinance the home in his/her own name. If one spouse is going to keep the house, you should insist upon new financing. The mortgage company will not simply remove one party from the responsibility for the loan. As with any new financing, the party seeking to refinance will be required to qualify financially. Often, the financial impact of the divorce may make qualifying difficult. In such cases, it may be possible to find a relative willing to co-sign on the new loan. Include Protective Language. Clearly, the best way to resolve joint debt issues is to eliminate the debt or the joint nature of the debt. Sometimes, however, those options are impractical. In such cases, you must be 89
  90. 90. very careful to place protective language into the divorce agreement or to specifically request protective language from the Court at trial. This is a last resort and an imperfect way to resolve joint debt issues. Often, protective language allows recourse against a party that fails to pay court ordered debts, but does not prevent damage to other party’s credit. The language used must be carefully crafted to comply with state and federal law. Any omission may result in language that is unenforceable and ineffective.Protective language may include:  Requiring the party obligated on the joint secured debt to remain current and in the event that a payment is not made in a timely matter, require that the secured asset be placed immediately on the market for sale;  Allowing the party that is not obligated to make payment on any delinquent debt in order to protect his/her credit rating and to seek reimbursement in addition to interest and attorney’s fees from the other party;  Establishing the allocation of joint debts as an integral part of the financial settlement and support payments 90
  91. 91. in the divorce proceeding which renders the debts non-dischargeable in bankruptcy.Understanding Bankruptcy and DivorceWritten by: Richard George Fonfrias, Divorce / Separation LawyerSpouses often use bankruptcy differentlySome spouses use bankruptcy after a divorce has beenfinalized as an offensive weapon to delay or prevent havingto refinance a mortgage. Other couples file bankruptcybefore a divorce to simplify the debts before they separate.So how you use bankruptcy depends on your goals in thedivorce. Generally it’s wise to file a bankruptcy beforedivorce so you know how the debts are going to be handled.When one spouse files a bankruptcy after the divorce,creditors usually come after the other spouse to satisfyjointly incurred marital debts. This means that one spouse’sbankruptcy filing could send the other spouse intobankruptcy.The bankruptcy includes everythingYour bankruptcy estate is everything you own and owe atthe time the bankruptcy is filed. When spouses filebankruptcy, all property acquired during the marriage is 91
  92. 92. included and potentially available to pay debts. Yourbankruptcy estate is everything you own at the time thebankruptcy is filed. Once the bankruptcy is filed, the courtissues an immediate stay to stop creditors from collectingdebts. Your spouse will still have to pay child support oralimony; however, they may not have to perform other tasks,such as refinancing to remove one spouse from themortgage.I am involved in a case now where the wife is under a courtorder to refinance and remove her husband’s name from themortgage. For the last several years she has not compliedwith the order. The wife filed a bankruptcy to restructureher debts and the divorce court is powerless to force her tocomplete the refinance.Property settlementsWhether the bankruptcy court discharges a divorce propertysettlement will depend on whether the debtor can show theycannot pay the debt and still take care of themselves, theirdependents, and their business. Generally, propertysettlements are not dischargeable in bankruptcy. Exemptproperty is protected and not available to be sold to paydebts. Each state where a bankruptcy is filed has its own 92
  93. 93. exemptions. For example, in Illinois each filing spouse can“exempt” $15,000.00 of home equity.Protect YourselfAn effective way to protect yourself against your spousefiling a bankruptcy is to take lien on property your spousegets in the property settlement. This makes you a securedcreditor. If later, they file a bankruptcy you can repossess theproperty to pay the debt.Hidden Assets and DivorceIf you know you’re going to be getting a divorce soon, thenyou may want to start tracking marital finances. Not only isthis necessary to your divorce, it’s also a prudent measure totake so you can see if your spouse has any hidden assetstucked away. Being attentive to the relevant financial detailscan help ensure that your divorce settlement is fair to you.Overview of hidden assetsA hidden asset is one that isn’t readily visible in normalaccounting records because all usual signs of ownershiphave been concealed through complicated measures.Diligence and thorough preparation go a long way towardstracing assets which are deliberately disguised by a spouse. 93