South Carolina Divorce Lawyer & Attorney : Stevens-MacPhail Law Firm : Family Law Serving Spartanburg, Columbia, Charleston, Greenville, Rock Hill, Mount Pleasant, Spartanburg, Sumter, Hilton Head Island, and Florence

The U.S. Department of Labor published an article which answers the following common questions about drafting Qualified Domestic Relations Orders (QDROs):

• What is the best way to divide a participant's pension benefits in a QDRO?
• How much can be given to an alternate payee through a QDRO?
• Why are the reasons for dividing the pension benefits important?
• In deciding how to divide the participant's pension benefits, why is understanding the type of pension plan important?
• What are survivor benefits, and why should a QDRO take them into account?
• How may the participant's retirement benefit be divided if the pension plan is a defined contribution plan?
• How may the participant's retirement benefit be divided if the pension plan is a defined benefit plan?
• May the QDRO specify the form in which the alternate payee's benefits will be paid?
• When can the alternate payee get the benefits assigned under a QDRO?
• What is earliest retirement age, and why is it important?

Source:  "Drafting Qualified Domestic Relations Orders" published at the U.S. Department of Labor website.  Thanks to Grant D. Griffiths for his article on this subject published at his Kansas Family & DIvorce Lawyer blog.

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Qualified Domestic Relations Orders (QDROs) are documents used to allocate retirement accounts when parties get divorced.  For people that don't regularly deal with QDROs, they can be quite confusing.  Fortunately, the U.S. Department of Labor published an article which answers many of the most common questions in great detail, including:

• What is a Qualified Domestic Relations Order?
• What is a Domestic Relations Order?
• Must a Domestic Relations Order be issued by a state court?
• Who can be an Alternate Payee?
• What information must a domestic relations order contain to qualify as a QDRO under ERISA?
• Are there other requirements that a domestic relations order must meet to be a QDRO?
• May a QDRO be part of the divorce decree or property settlement?
• Must a domestic relations order be issued as part of a divorce proceeding to be a QDRO?
• May a QDRO provide for payment to the guardian of an alternate payee?
• Can a QDRO cover more than one plan?
• Must all QDROs have the same provisions?
• Who determines whether an order is a QDRO?
• Who is the administrator of the plan?
• Will the Department of Labor issue advisory opinions on whether a domestic relations order is a QDRO?
  

Source:  "Qualified Domestic Relations Orders" published at the U.S. Department of Labor website.  Thanks to Grant D. Griffiths for his article on this subject published at his Kansas Family & DIvorce Lawyer blog.

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This is the ninth installment in the series of posts by Michael Sherman of the Alabama Family Law Blog on the steps to take when it becomes apparent that a divorce may be imminent.  His series takes an honest, practical approach in showing people how to protect their interests and make prudent preparations in such a situation.  Here is Step 9 - Avoid additional debt or major purchases:

We continue our series on practical steps to take when you are about to face divorce.  We are now to step 9 which is simple, but important:

Avoid additional debt or major purchases.

This suggestion goes hand in hand with assessing how to handle the credit accounts, but deserves its own separate mention.  If a divorce is going to happen, you want to be conservative with the finances.  It is not time to be putting in a pool, buying a new car, or buying new furniture on credit.  You want to simplify the financial situation not make it more complex. 

When the divorce occurs, one of the primary things that has to happen is for the divorce court to allocate who will be responsible for what debts.  Generally speaking, the less complex the debt situation, the easier task that will be.

I should note again, all of this is general information.  Your own specific situation may cause you to need to vary from it.  For example, there are times when you may have to get an automobile and it would be better to do it before the divorce because you won't have sufficient credit on your own after the divorce.  So, obviously you will want to get specific advice from your own lawyer - which is why Step 1 was find a wise guide (an experienced, competent divorce law specialist)!

Source:  "Divorce Preparation: Step 9 - Avoid additional debt or major purchases" by Michael Sherman, published at his Alabama Family Law Blog.

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One question that is frequently asked is whether someone can put his/her spouse out of the home without his/her consent.  When spouses cannot get along and at least one party realizes that they are headed toward separation or divorce, this issue must be addressed sooner or later.

The answer is that until and unless the Family Court issues an Order stating otherwise, both spouses have equal rights to the residence.  As such, each can try to put or keep the other out, typically by changing the locks and alarm codes.  However, the displaced spouse can take any necessary steps to regain entry to the home, including "breaking in" if necessary.  One cannot be criminally charged in South Carolina for breaking into his/her own home. 

Once the Family Court addresses this issue, an Order will be issued which clearly sets forth the parties' rights, responsibilities, and obligations with regard to the home.  Such an Order will generally set forth which party has the exclusive temporary use and possession of the home, as well as how the expenses related to the home will be paid as the case progresses.

Please note that I am not recommending that anyone put his/her spouse out of the house or that anyone forcibly break back into his/her home.  Those issues are very fact specific and trial strategy  with an experienced family law attorney should play an important role in making such a decision.

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The South Carolina Retirement Systems has posted an updated Qualified Domestic Relations Order (QDRO)  Model Order and Guidelines on its website. The Model Order and Guidelines address all information that is required by statute and provides guidance on various methods of calculating the division of state retirement benefits from the defined benefit plans (not 401(k) or 457 plans). Although it is not required that a QDRO be prepared identically to the Model Order and Guidelines, conformance will make the approval process quicker and easier and will provide accuracy for future implementation of the QDRO.

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This is another portion of the second installment in the series of posts by Michael Sherman of the Alabama Family Law Blog on the steps to take when it becomes apparent that a divorce may be imminent.  His series takes an honest, practical approach in showing people how to protect their interests and make prudent preparations in such a situation.  Here is Step 2B - Determine What You Owe:

We are still on Step 2 of Preparing for a Divorce. Step 2 is "make an accounting of the family finances." We've discussed determining what you own. This step requires you to determine what you owe.

You will need to make a determination of all of the debts of the marriage without respect to the name in which it was incurred.The Judgment of Divorce will need to address who is responsible for the debt whether it is in your name, your spouse's name, or joint names.

I recommend that each of my clients obtain a copy of their credit report. This allows you to make sure that you know of all of the debt that is in your name. It is not unusual for a spouse to have incurred debt in the other spouse's name without their knowledge. If that has happened, you need to know it before the divorce is final, not after.

There are many ways to obtain a copy of your credit report. You can request a free copy once per year at www.annualcreditreport.com.

Once you see what all debt exists, obtain copies of the statements on these accounts to determine the balances. You may also need the statements if your spouse has made large or inappropriate purchases on the cards.

If you cannot find credit card statements on each of the accounts, contact the credit card company directly and request they send them to you. You may want to check their websites as you might be able to make the request online. I normally want my clients to get a minimum of 12 months worth. Check with your lawyer to see what he recommends.

Source:  "Step 2B - Determine What You Owe" by Michael Sherman, published at his Alabama Family Law Blog.

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This is a portion of the second installment in the series of posts by Michael Sherman of the Alabama Family Law Blog on the steps to take when it becomes apparent that a divorce may be imminent.  His series takes an honest, practical approach in showing people how to protect their interests and make prudent preparations in such a situation.  Here is Step 2A - Determine What You Own:

We are on Step 2 in our series regarding preparing for divorce. Step 2 involves making an accounting of the family finances. This includes determining what you own.

For some, that may be easy. If you have a good handle on the family finances, then you are a step ahead. If not, then it is time to do your homework.

Many of the assets of the marriage will be obvious - the home in which you reside, financial accounts, vehicles, recreational vehicles, etc. Others may not be so obvious - these include things like artwork, bearer bonds, a spouses deferred compensation, proceeds from a pending lawsuit, etc.

Then there is the possibility that your spouse is hiding assets (this is more likely if they are the ones initiating the divorce or if divorce has been discussed previously).

Review all possible assets. Attempt to gather documentation regardign each one including present value, where possible. Especially look for any recent appraisals of real estate.

If your lawyer is charging you hourly, then any of this information that you are able to gather should save you a lot of money. If there are documents you are not able to obtain, your lawyer may have to get them through the discovery process.

Source:  "Step 2A - Determine What You Own" by Michael Sherman, published at his Alabama Family Law Blog.

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I have previously posted about the importance of finding hidden assets in a divorce case.  This topic is important enough to warrant another post.  Alan Pearlman gave the following tips on his  Chicago Family Law Blog to protect yourself from falling victim if you suspect that your spouse might be hiding assets:

• Make copies of financial documents such as tax returns, bank statements, and pay stubs
• Protect assets by setting up individual accounts that only you can access
• Have your attorney conduct formal discovery to help find assets that have been hidden by your spouse
• Hire a forensic accountant to aid in locating hidden assets, since they are trained to assess the value of investments or businesses, interpret and evaluate various financial records, and testify in Court about their findings
• Hire a private investigator, if necessary, to help discover or locate specific assets
• Understand the tactics which can be used to hide assets of a business:
  • Money from the business is paid to a family member or close friend for phony services, then returned to the spouse after the divorce
  • Salary checks are written to non-existent employees
  • Collusion with the spouse's employer to delay business contracts, raises, or bonuses until after the divorce
  • Skimming cash from a business owned by one spouse
  • Cash converted into traveler's checks
  • Payment of a non-existent debt to a family member or friend that will be repaid to the spouse after the divorce
  • Unreported income on tax returns and financial statements
  • Investing in certificate "bearer" bonds and/or Series EE Savings Bonds
  • Artwork, antiques or other property whose value is undervalued or overlooked
  • Rent, college tuition or gifts given to a girlfriend/boyfriend
  • An account set up under a child's Social Security number
  • Retirement account that the other spouse never knew about

Several of these options are expensive, but you and your attorney should discuss what is appropriate for your particular case.  For instance, it is typically not worth hiring a forensic accountant if the hidden asset in question is only worth a few thousand dollars at best.  However, you should also remember that it is always much easier to address the division of assets (and debts) at the time of the divorce rather than trying to reopen the case to do so later.

Source:  "Divorce and Hidden Assets" by Alan Pearlman, published at the Chicago Family Law Blog.

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In an appeal involving a fraudulent conveyance pursuant to the Statute of Elizabeth, S.C. Code Ann. § 27-23-10, the Court of Appeals held that a conveyance of real property from husband to his then wife was void as a fraudulent transfer.

Under the Statute of Elizabeth, conveyances may be set aside under two conditions:

1. Where the transfer is made by the grantor with the actual intent of defrauding his creditors where that intent is imputable to the grantee, even though there is a valuable consideration; and,
   
2. Where a transfer is made without actual intent to defraud the grantor’s creditors, but without valuable consideration.

The court held that the record in this case compels a finding that the transfer in question was not supported by valuable consideration. Where a transfer is made without valuable consideration being exchanged, the transfer will be set aside only when the creditor establishes the following:

1. The grantor was indebted to the creditor at the time of the transfer;
   
2. The conveyance was voluntary; and
   
3. The grantor failed to retain sufficient property to pay his indebtedness to the creditor in full, not merely at the time of transfer, but in the final analysis when the creditor seeks to collect the debt.

Finding these requirements satisfied, the court held the conveyance was void as fraudulent. You can read the full text of Albertson v. Robinson by clicking HERE.

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You might not be surprised to find out that from time to time, divorcing spouses attempt to hide assets from each other.  They undoubtedly think that if they can conceal the asset until the case is over, then it will belong to him/her outright.

A good argument can be made that if the Court never allocates a particular asset, then it retains jurisdiction to do so in the future if / when the asset is later discovered.  However, it is always better to identify all assets at the time of the divorce and let the Court address them at that time if at all possible.

Where can you look to try to find these hidden assets?  The answer to this question varies from case to case, as every couple's financial situation varies, sometimes slightly and often widely. 

Certified Financial Planners and Certified Divorce Financial Analysts, William Donaldson and Adam Westphalen, of The Vista Companies, suggest beginning  your search with the following:

• Personal income tax returns are one of the best places to start. Most people are uneasy about misleading the IRS for fear of penalties, fines and even prison. Go back at least 5 years to look for any inconsistencies in income, the presence of trusts, partnerships or real estate holdings.
• If your spouse is a business owner, his/her corporate or partnership tax returns may show a change in salary, charging personal expenses to the company, or excessive retained earnings. Another common trick is to put a "friend" on the payroll, who agrees to give back the money paid to him after the divorce. A forensic tax professional is of tremendous help in this area.
• Checking account statements and cancelled checks for the past few years can also be quite revealing. A cancelled check for a purchase you never knew about, such as an investment property, can make a substantial difference in total assets to be divided.
• Savings account statements may reveal unusual deposits or withdrawals in amount or pattern that could point to a hidden asset such as a dividend producing investment. In addition, cash may be hidden almost anywhere.
• Brokerage account statements are valuable in tracking the purchase and sale of securities. If securities are sold and the proceeds are not accounted for, you can be sure that the assets are out there somewhere.
• Expense accounts can be abused when corporations give employees a great deal of leeway in their expense account reporting. Cross checking between expense account disbursements and savings/checking account deposits may indicate a pattern of abuse if the deposits exceed legitimate business expenditures.
• Children's bank accounts may be opened as a custodial account for the intent of hiding assets as well. In some of these cases, interest is not reported as income on tax returns, and no return is filed for the children.

Source:  "Divorce and Your Finances - The 7 Most Costly Mistakes," written by William Donaldson, CFP, CDFA and Adam Westphalen, CFP, CDFA for WomansDivorce.com.

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In a decision earlier this week, the S.C. Supreme Court declined to enforce a 1997 agreement resulting from mediation between Husband and Wife because the agreement was neither entered into the trial court’s record nor acknowledged in open court.

The Court further held that the Family Court correctly converted Wife’s share in a note to Husband from his real estate company into a money judgment because Husband never assigned the note to Wife and Husband should not be permitted to gain from his failure to assign by now claiming that Wife has not properly sought collection on the note.

The Court reversed the trial court’s decision to award Husband an equitable set-off, holding that Husband is not a party deserving of equitable treatment because of his own misdeeds in dealing with Wife and with the court.

You can read the full text of Buckley v. Shealy by clicking HERE.

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The S.C. Court of Appeals issued a decision earlier this week which addressed several important financial concepts in divorce cases:

• The Court affirmed the equitable distribution award, holding that, generally, in South Carolina marital property subject to equitable distribution is valued on the date marital litigation is commenced. Therefore, the Family Court did not err by failing to consider the IRA’s increase after the final hearing nor by failing to reconsider the valuation of the family’s house, which sold after the family court issued the divorce decree.

• The Court reversed and remanded the award of alimony because the Court relied only on Wife’s need and Husband’s ability to pay alimony in making its determination and it did not consider Wife’s non-marital assets.

• The Court reversed the award of expert fees to Wife, holding that she failed to produce evidence to support the award.  In this case, the expert did not testify and the Wife did not affirmatively establish what services he performed.

You can read the full text of Fuller v. Fuller by clicking HERE.

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I am pleased to present the following post from my law partner, Paul MacPhail:

One question that is frequently asked by our clients is “If I die before I’m divorced, will my spouse get anything from my estate?” Let's take a look...

Consider this example. The wife filed for divorce in June and the divorce was granted on September 27, 1996. The husband died on October 7, 1996, prior to the divorce order being signed and filed with the Clerk’s Office on October 11, 1996. The South Carolina Court of Appeals addressed this situation in Hatchell v. Freeman, and it held that the wife was still the husband’s spouse for the purposes of inheriting from his estate. As a result, the wife was able to make a claim against the estate of the husband for her intestate share, which, if there were no surviving children, would be 100 percent!

What happens in other scenarios? Subject to some exceptions, the following would apply:

• In the above situation, if the husband died after the filing of the divorce decree, the wife would no longer have been a surviving spouse, and she would not have had any right to inherit from his estate, even if named in his will. See S.C. Code Section 62-2-507 (revocation of disposition by divorce or order terminating property rights) and S.C. Code Section 62-2-802 (effect of final orders: Divorce Decree or Decree of Separate Maintenance).

• What if divorcing party makes a new will during the divorce disinheriting spouse and then dies before the divorce decree (or decree of separate maintenance) is filed in the clerk’s office? The surviving spouse would be entitled to an elective share of one-third of spouse’s estate. See S.C. Code Section 62-2-201 (elective share statute).

• What if the deceased spouse’s will pre-dates the marriage and doesn’t mention his/her spouse? Here, the surviving spouse would receive 100% of the estate if there are no children of the deceased spouse, or 50% if there are children. See S.C. Code Section 62-2-301 (omitted spouse provision).

• Are there ways to avoid the consequences of these laws? Yes, there are steps that you can take to protect your heirs and avoid enriching your estranged spouse. You should consult with your family lawyer and/or estate planning attorney to find out the steps you can take in your particular case.

Disclaimer: The above summaries of law are subject to exceptions. Your particular situation may involve facts that would allow for a different result. Consult with an attorney for advice.

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The South Carolina Court of Appeals has issued two opinions in the last six weeks which analyze what is (and what is not) a proper division of marital assets and debts in divorce. Since virtually every divorce involves the distribution of assets and debts, I believe that it is important to take a closer look at this issue.

The division of marital property is in the family court’s discretion and will not be disturbed absent an abuse of that discretion. South Carolina Code Section 20-7-472 provides fifteen factors for the family court to consider in apportioning marital property, and it is within the family court’s discretion to determine how much weight to give each of these factors. On appeal, even if the appellate court might have weighed specific factors differently, the Family Court's apportionment will be affirmed so long as it is fair overall. Even if the Family Court commits error in distributing marital property, that error will be deemed harmless if the overall distribution is fair

In these two recent cases, the Court of Appeals noted that while there is certainly no recognized presumption in favor of a fifty-fifty division of the marital estate, an equal division is an appropriate starting point for a Family Court judge attempting to divide an estate of a long-term marriage. However, the equal division of marital assets can, of course, be altered in favor of one spouse depending on the circumstances of each case.

In Doe v. Doe, the Family Court distributed 70 percent of the marital property to husband and only 30 percent to wife. The appellate court noted that the Wife’s adultery caused the breakup of the marriage, and it was therefore appropriate to consider that factor for equitable apportionment. However, our case law is clear that fault does not justify a severe penalty. Accordingly, the Court of Appeals found that the Wife’s adultery alone did not justify a forty percent differential between her portion of the marital estate and Husband’s portion and that such a lopsided division could only be sustainable if our equitable division laws sanctioned the consideration of fault as a permissible punitive factor, which ours do not.

In Avery v. Avery, the Family Court had awarded 62.5 percent of the marital estate to the husband and 37.5 percent to the wife. However, the Court of Appeals could not discern any special circumstances tilting the equitable division scale in favor of one spouse over the other. The Court noted that this was a lengthy marriage wherein the parties agreed to a traditional "breadwinner/homemaker" arrangement. With such an arrangement, both parties made significant, albeit different, contributions to the acquisition, preservation, depreciation, and appreciation in value of their marital property. Neither party was at fault for the separation, nor does either party earn a significant income. When considering those circumstances, the Court of Appeals found that the Family Court abused its discretion by awarding twenty-five percent more of the marital estate to husband, and it remanded the case so that the marital estate could be divided equally between the spouses.

That is not to say that all long term marriages ending in divorce will necessarily have estates that are divided equally. The Court of Appeals reminded us that the Family Court is charged with looking at all fifteen factors of Section 20-7-472 and that it may give one party a larger portion of the estate based on the circumstances of each particular case.

You can read the full text of Doe v. Doe by clicking HERE and the full text of Avery v. Avery by clicking HERE.

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Ever wonder what happens to the family pets when couples divorce? If so, consider the following article from the Florida Divorce Law Blog:

In most states, pets are viewed legally as property, to be equitably distributed in a divorce. In practice, pets typically follow the children in a divorce. But what about when the pets are the children, the only children? Childless couples can be as attached to their “pet children” as couples with human children are to their children.

The law’s very different current view of pets can be powerful incentive to settle pet “custody” by mutual agreement, rather than incur the displeasure of a judge. But change may be in the wind. More and more divorcing couples do see what happens to the family pets as a custody / visitation issue. And the Animal Legal Defense Fund is lending support to their cause.

In an 18 page friend of the court legal brief, the Fund makes it clear that pets do have preferences as to caretakers and the best interests of the pet deserve consideration. And animal law, including animal rights law, is gaining recognition as a distinct branch of the law. It’s likely only a matter of time before custody law catches up to pet owners’ (or pet parents’) perceptions.

Read more in this Hartford Courant article: It Can Be A Regular Dog Fight.

Source: "Pet Custody: Still Ahead of the Times?" by Janet Langjahr, published at the Florida Divorce Law Blog.

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It is easy for divorcing spouses to get caught up in fighting over 'who gets what' and 'who pays what' without even considering what 'what' is.

Here are quick definitions for both marital assets and marital debts:

• Marital Assets are those assets acquired during the marriage with marital funds.

• Marital Debts are those debts incurred during the marriage for a marital purpose.

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The S.C. Court of Appeals issued an opinion earlier this week which addressed a spouse's waiver of his/her interest in the other spouse's retirement account. In Stribling v. Stribling, the wife entered into a settlement agreement which provided that the husband would receive both of his IRA accounts. He later remarried and died, having never changed the beneficiary designation on either account from his former spouse to his subsequent wife (now widow).

The widow, as personal representative of Husband's estate, brought an action against the former wife seeking a court order requiring her to waive her claim to the husband's IRA's pursuant to the Divorce Decree. The Court found that the Divorce Decree was clearly and sufficiently comprehensive to establish that the first wife waived any interest in the husband's retirement accounts, which included both of the IRA accounts at issue in this case.

The Court also explained that a separation agreement may preclude a named beneficiary from recovery of an expectancy interest in either of two ways:

1. A named beneficiary may be precluded from recovery when a separation agreement specifically addresses a particular policy/account providing an expectancy interest and the agreement contains language of release applicable to the policy/account; or

2. When a separation agreement provides general language of release without specifically addressing the policy/account providing the expectancy interest, a named beneficiary may be precluded from recovery when the policy/account owner intended for the general waiver to apply to the expectancy interest.

You can read the full text of this opinion by clicking here.

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M. Travis Robbins of the The Online Lawyer blog recently posted an article, Child Support: He's Hiding Assets, which discusses the subject of a parent concealing assets and the impact this had on his child support obligation. In the case discussed by Mr. Robbins, the mother petitioned the Court reassess the father's finances to potentially increase his child support obligation. The issue was that the father had several real estate holdings which had skyrocketed in value but were not considered in the child support analysis.

Mr. Robbins points out that most states have statutes which set uniform guidelines for awarding child support and allow the court to periodically increase or decrease a child support award when the finances of the paying parent change and that the uniform guidelines primarily base the child support amount on the parents' monthly income. In his client's case, he petitioned the Court for an equitable adjustment to the child support based on the increased value of the father's assets, but he acknowledges that it is unlikely that his client will prevail.

I can understand both sides of this issue, and good arguments can be made in support of each. On the one hand, the person receiving the child support wants to make sure that the other parent pays his/her "fair share," which is often times defined by that person as "the most I can squeeze out of him/her." At the same time, the person paying the child support wants to pay his/her "fair share," which is often defined as "the minimum I can get by with paying."

South Carolina's Child Support Guidelines take the following factors into account when calculating the child support obligation:

• Father's gross monthly income;
  
• Mother's gross monthly income;
  
• Amount of work-related child care expenses;
  
• Amount paid for health insurance on the child(ren);
  
• Amount of extraordinary medical expenses for the child(ren);
  
• Number of other children living in each parent's home; and
  
• Amount of alimony paid and received between the parents.

The Court has the ability to deviate upward or downward from the amount calculated under the Child Support Guidelines, but it is unusual for the Court to actually do so. The above-listed factors were chosen because they are more objective and easier to verify than other items such as assets. For instance, the mother in Mr. Robbins scenario wants the Court to factor in the appreciate of the father's real estate, but how would the amount of appreciation be conclusively determined? Certainly, each parent would produce different appraisals, perhaps drastically different. Also, what happens if the property value plummets? Would the mother be willing to accept a drastic reduction in the father's child support obligation? I suspect not.

I guess that the point of this post is that there is no perfect way to calculate child support, nor is there any method that encompasses all the variations and nuances of every case. I believe that the best method is calculating the obligation per the "guidelines," treating that amount literally as a guideline and not set in stone, and giving the Court discretion to deviate from that amount if the specific situation warrants it. However, I am interested in hearing your thoughts on this subject and invite you to post your comments.

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When you separate or divorce, one of the most important decisions that must be made is what to do with the house. Do you want it? Does your spouse want it? Can either of you afford it? What should you do with it?

The answer depends on your particular situation, and no two situations are alike. Making the wrong decision on this issue can have serious, far-reaching implications -- custody, financial security, or financial ruin.

The following issues (at a minimum) should be considered in your analysis:

• Dealing with the mortgage

  Can you afford to make the mortgage payments? What if your spouse is required to provide financial assistance to you (as alimony, debt contribution, or child support)? Will your credit history allow you to refinance the mortgage?
  
  

• Factor in upkeep costs

  In addition to the mortgage, you should also consider the other "normal" expenses that accompany home ownership: utilities, maintenance, and repairs. It makes no sense to only focus on the mortgage without those other items that are inevitable if you own a home.

• Consider tax implications

  Tax issues come in many different forms. Of course, there are property taxes, which can (and typically do) increase over time as the property appreciates in value. If you have a mortgage, you will need to factor in the (positive) impact of the mortgage interest deduction, the head of household deduction, and the capital-gains tax exclusion.

• Trading assets

  Depending on the amount of equity in the home, you may have to give up something else in order to receive the house. Many times, the husband will keep his retirement account and the wife will receive the house to equalize the value. However, it is extremely important to have an accurate value of the house. Most times, having an appraisal performed is a fantastic investment because the house can be worth considerably more or less than your estimate.

• Consider downsizing

  In some cases, it makes sense to downsize immediately to a smaller house, especially if the expenses involved in keeping the house are more than you can afford. Some people associate the house with their failed marriage and are anxious to start fresh somewhere else.

  On the other hand, in some areas of the country, rents and housing prices are so high that even a smaller house or condo may be out of your price range. Also, it may not be possible to find an affordable house in the same or another high-quality school district.

• The long term

  Consider now only the "right now" or the "what feels good." Think about what you want and where you want to be in five years, ten years, or more. Resist the temptation to get caught up in the battle and try to "win" at any cost. Get the advice of a good, qualified family law attorney and other financial professionals, if need be. This decision is too important for you not to do so.

Source: "Should you keep the house in a divorce?" by Amy Crane published at MSN Money.

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"Divorce and Dissipation: Hidden Assets and Spending" by Suzanne Griffiths, published in Colorado Biz, contains an excellent discussion on the topic of dissipation. She states, "marital asset dissipation occurs when one spouse has previously consumed, given away or otherwise transferred, mismanaged, converted, or otherwise adversely affected property that, had it been before the court, would have been subject to equitable distribution. This commonly takes the form of spending marital funds for the benefit of paramours or wasting marital property."

This article points out that when making a dissipation claim, a spouse needs only to prove that the expenditure was made at or during the time of the marriage breakdown or was spent for a non-marital purpose, (such as significant gifts, hotel rooms, air tickets etc for a mistress,) during the marriage. Once this has been established, it is the burden of the other spouse to prove the funds were spent on a legitimate purpose. If the court finds that dissipation has occurred, it will appropriately adjust its division of property to offset the dissipation.

Ms. Griffiths recommends considering the following points in analyzing a potential claim for marital asset dissipation:

• Your attorney should be your first resource in making a dissipation claim. Through interrogatories, requests for production of documents, financial releases and depositions, she or he can trace just about any of your spouse's expenditures during the time of the marriage and can use documents turned up to file a dissipation claim.

• By the same token, be aware that any expenditure you make -- be it with credit cards, checking accounts, cash withdrawals or rewards and mileage accounts -- are subject to review by your spouses' attorney through the normal course of divorce proceedings and can be used against you in a dissipation claim.

• It's not size that matters: The fact that you or your spouse dissipated items of little monetary value will not stop the court from adjusting its allocation of resources, although you personally might determine that the costs of pursuing the dissipation claim exceeds the benefits of having it remedied.

• Ease up on the vice: Excessive expenditures on gambling, drinking, or indiscriminate spending are considered grounds for a marital asset dissipation claim. In addition bad behavior that is seen as economic fault can significantly influence the judge's discretion in making an equitable division of marital assets.

• Trim down the transfers: If you or your spouse transfer assets to a family member, lover, or third party, one of you may be allocated another asset to make up for the loss caused by the transfer.

• Play down the paramour: Spending marital property on gifts for a significant other is a prime example of asset dissipation and very likely to result in a court-ordered adjustment of property division. It also infuriates the spouse who discovers the dissipation, and may substantially reduce any prospect of reaching an amicable settlement out of court.

• Business is business: Business expenses, are not usually considered dissipation when they are within the range of day-to-day operations and comparable salaries.

• Your word is your bond: If you or your spouse agreed to an expenditure during or after the breakdown of the marriage then there are no grounds for a claim of asset dissipation.

• Hobbling hobbies: Expenditures on recreational activities or hobbies that both parties enjoyed, or approved of, during the marriage are not usually considered examples of dissipation.

• Assessing the damage: The court values dissipated marital assets as at the date that they were dissipated. This is particularly important as it pertains to investment or retirement accounts, as if one spouse cashes out, the court will value the investments based upon on the date they were sold, not based upon what they might have turned into had they remained invested.

Source: Thanks to The Art of Divorce blog for its post on this article.

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In making an equitable distribution of marital property, the Family Court must:

1. Identify the marital property, both real and personal, to be divided between the parties;
   
2. Determine the fair market value of the identified property;
   
3. Apportion the marital estate according to the contributions, both direct and indirect, of each party to the acquisition of the property during the marriage, their respective assets and incomes, and any special equities they may have in marital assets; and
   
4. Provide for an equitable division of the marital estate, including the manner in which the distribution is to take place.
   Johnson v. Johnson, 296 S.C. 289 (Ct. App. 1988).

In general, marital property subject to equitable distribution is valued as of the date the marital litigation is filed or commenced. Fields v. Fields, 342 S.C. 182 (Ct. App. 2001). However, the parties may be entitled to share in any appreciation or depreciation in marital assets occurring after separation but before divorce. See Dixon v. Dixon, 334 S.C. 222 (Ct. App. 1999) (stating that because our Family Courts handle a large number of cases, there often is a substantial delay between the commencement of an action and its ultimate resolution. Thus, it is not unusual for the value of marital assets to change between the time the action was commenced and its final resolution.)

In the recent case, Gardner v. Gardner, Mr. Gardner argued that the Family Court erred in the valuation of several marital assets, specifically his retirement account. While this case was pending, he died. As a result of his death, the retirement account ceased to exist, and other assets awarded to both Mr. and Mrs. Gardner also declined in value during the litigation. The Court noted that Mr. Gardner failed to offer any evidence of appropriate values for the marital property at the Family Court (trial) level and did not offer any suggestion of their value in his appellate brief.

As a result, the Supreme Court held that the date of the filing of the litigation should be used as the date of valuation for purposes of equitably dividing the marital estate. In addition, the Court held that a court reviewing a property distribution must look at the appreciation or depreciation of marital assets with regard to the entire martial estate and not the assets individually.

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Can a wife and husband enter into a contract providing for frozen embryos to be discarded in the event of their future divorce? If so, is such an agreement valid and enforceable? The Texas Court of Appeals issued a decision on February 9, 2006, in Roman v. Roman which it answers both questions "yes." This decision contains a thorough discussion of how this and similar issues have been decided in other jurisdictions, and you can read the entire decision here.

Source: Post at the New Jersey Family Law blog by Charles C. Abut, Esq.

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In a divorce, the Court will divide the marital assets and debts between the spouses. Generally, everyone is quite willing the debts known -- because no one wants to get stuck paying them. However, that is not always the case with the assets, as spouses sometimes attempt to keep all for themselves by hiding them.

Having an experienced attorney can go a long way toward identifying, locating, and valuing such assets, but sometimes it becomes necessary to hire experts, such as forensic accountants, in particularly complex cases. The more that spouses can educate themselves on this issue, the more assistance / guidance they can provide to their attorney, their experts, and ultimately to the Court.

To help begin to understand the hidden asset problem, you should consider the following list of ways, as compiled by Richard S. Granat, Esquire, that spouses commonly use to attempt to hide assets:

• Collusion with an employer to delay bonuses, stock options or raises until after the divorce. You might find this information by taking the deposition of your spouse's boss or payroll supervisor, but more likely you'll need a forensic accountant.
• Salary paid to a nonexistent employee. The checks will be voided after divorce. Again, you might find this information by taking the deposition of your spouse's boss or payroll supervisor, but you'll probably need a forensic accountant.
• Money paid from the business to someone close -- such as a father, mother, girlfriend or boyfriend -- for services never rendered. The money will no doubt be given back to your spouse after the divorce is final.
• A custodial account set up in the name of a child, using the child's Social Security number.
• Delay in signing long-term business contracts until after the divorce. Although this may seem like smart planning, if the intent is to lower the value of the business, it is considered hiding assets.
• Skimming cash from a business he or she owns.
• Antiques, artwork, hobby equipment, gun collections and tools that are overlooked or undervalued. Look for lush furnishings, paintings or collector-level carpets at the office; income that is unreported on tax returns and financial statements.
• Debt repayment to a friend for a phony debt.
• Expenses paid for a girlfriend or boyfriend such as gifts, travel, rent or tuition for college or special classes.
• Investment in certificate "bearer" municipal bonds or Series EE Savings Bonds, which do not appear on account statements because they are not registered with the IRS. (The government is phasing out these bonds, realizing that it is losing a lot of money.)
• Cash kept in the form of traveler's checks. You may be able to find these by tracing bank account deposits and withdrawals.

Mr. Granat also recommends that you "Get the Goods (on Paper) Before It Ends"

If you suspect that your spouse may attempt to hide assets, it's best to start investigating your household and business finances before initiating divorce proceedings. Make copies of important documents such as tax returns from the past several years, bank account statements, pay stubs and any other documents that reflect joint assets or debts. Keep copies of these documents outside the home if you're still living with your spouse or partner. Also, as a precautionary measure, you might want to open a separate savings account in your name only. If your spouse hides assets, you may find yourself in need of a nest egg. Down the line, you may have to relinquish some of your savings to your spouse -- after all, we're not encouraging you deal with a dishonest spouse by stooping to his or her level -- but having a little extra cash on hand may ward off a crisis in the wake of your divorce.

Source: Searching for Hidden Assets in a Maryland Divorce by Richard S. Granat, Esquire.

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In Simmons v. Simmons, the South Carolina Court of Appeals was faced with the issue of whether the Family Court may divide Social Security benefits in property distributions. The parties in this case reached an agreement which provided in part that the wife would receive a portion of the husband's Social Security benefits in the future.

The Social Security Act (42 U.S.C. Sec. 407(a)) (1998) provides that Social Security benefits "shall not be transferable or assignable." The U.S. Supreme Court found that section 407(a) imposed a "broad bar against the use of legal process to reach all social security benefits." Philpott v. Essex County Welfare Bd., 409 U.S. 413 (1973).

Because the Social Security Act preempts state law, the Family Court lacked subject matter jurisdiction to divide husband's Social Security benefits in a property distribution. Inasmuch as the trial court did not have subject matter jurisdiction over Husband's Social Security benefits, it could not approve the settlement agreement dividing such benefits. The full opinion can be found here.

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The following was posted last month on the Florida Asset Protection Blog, published by Jonathan Alper, an asset protection and bankruptcy attorney in Orlando, Florida:

A few married people who are concerned about asset protection have asked whether it is better to hold property jointly as tenants by entireties or title property in the name of the one spouse least likely to be sued. Both forms of ownership are protected from creditors of the spouse most likely to become a judgment debtor. There are different consequences in the event the non-debtor spouse predeceases.

Upon the death of the non-debtor spouse the property owned tenants by entireties vest in the name of the surviving spouse where the property would be vulnerable to the surviving spouse's individual creditors. The title conveyance is automatic and no probate is necessary. Tenants by entireties ownership is easy and inexpensive to establish without the assistance of an attorney.

If the non-debtor spouse owns property in their own name, rather than jointly with the debtor spouse, upon the death of the non-debtor spouse probate will likely be necessary. However, probate can be avoided if the non-debtor spouse leaves the property in trust for the debtor spouse and other heirs. The trust agreement could include "spendthrift provisions" which protects the property from the creditors of the surviving spouse and other heirs. Establishing such a trust requires the assistance of an estate planning attorney.

If either spouse is unlikely be sued then titling non-exempt property in their individual name is probably better asset protection provided there is also an effective estate plan. This issue illustrates how asset protection should be designed in conjunction with estate planning.

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Many spouses begin, build, and own businesses together. Doing so enables them to experience the joys that such an endeavor can bring. However, if those spouses divorce, they must deal with the pain that can be involved in deciding what to do with such a business. "Business Can Feel Like a Child in Divorce" published in yesterday's The Ledger-Enquirer (Columbus, GA) gives a unique, first-hand account from someone who has been through such a breakup. The author, Susan Miller, states that their business "is like a child I lost whom I can no longer contact, much less share in the joy of its success -- even though I was an equal partner in its creation." The full text of this article can be read here.

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In divorce cases, the marital assets must be allocated between the spouses. However, the assets must first be identified before they can be distributed. Therefore, it is vitally important that you and your attorney act diligently and thoroughly in this area. Financial expert, Ginita Wall, CPA, CFP, wrote an excellent article, Where to Search for Hidden Assets During Divorce, in which she suggests checking the following places:

• Antiques, artwork or hobby equipment that is overlooked and undervalued. Look for lush furnishings in his office.

• Collusion with his employer to delay payment of bonuses, stock options or raises until after the divorce.

• Income, often cash, that is unreported on tax returns and financial statements. You life-style costs during marriage probably exceeded reported income, so document your cash expenditures.

• A custodial account set up in the name of a child, using the child's social security number.

• Debt repayment of a phony debt to a friend or family member, with the pre-arrangement that the friend will hold the money until after the divorce, then give it to your husband.
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  Tags: Assets and Debts
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Question: Is there a stepped-up basis on a property after a divorce? My former husband and I built in 1972. We divorced in 1984 and I got his quit claim deed for the home. I would like to sell. The home has appreciated so much I am hoping the stepped-up basis rule applies.

Answer: Sorry, the stepped-up basis rule only applies to inherited property. It does not apply to a property title transferred as part of a divorce.

Source: The Charlotte Observer.

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The more you know about your and your spouse's financial situation, the better off you are. Period. There is no reason to not educate yourself in this area. With that in mind, I commend Jenny McKinney's article 5 Questions to Ask Yourself About Your Retirement Plan from About.com for your review:

Do you know the answers to these questions?

No matter what your age, sex, or marital status, you need to know a few things about your and/or your spouse's retirement plan. When setting your retirement goals, you shouldn't leave anything to chance and getting the answers to these questions can eliminate future surprises.

1. Do you have a pension or retirement plan at your place of employment and are you eligible?

Some companies do not offer retirement or pension plans and some jobs within companies are not eligible for these plans even if they are offered.

2. How much will your pension or retirement plan be worth when you retire?

This information is necessary so you can decide if you need additional savings such as an IRA to supplement your retirement benefits when you decide to retire.

3. If your employer provides a retirement plan, what happens to it if you change jobs?

Your employer can tell you if your retirement plan can be rolled over into an IRA, cashed in, or left with the company if you should leave the company. You will need to decide which is best for you to do.

4. If you retire early, what happens to your retirement plan with your employer?

Your employer can tell you when you are vested with the company and what you can expect to receive in the way of retirement benefits when you decide to retire.

5. Will pension benefits be reduced by Social Security?

In some instances, your benefits could be reduced by the amount of Social Security you draw. Discuss this with your employer to see if this happens with your pension.

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Dividing retirement accounts in a divorce can be a very complicated process. Parties must understand the different types of retirement benefits, and attorneys must know how to identify, value, and divide these accounts. Those attorneys who do not have an emphasis on family law issues often do not understand all of the intricacies involved in this area, and their clients often suffer as a result.

Retirement plans come in many different varieties, such as 401(k), 403(b), SEP, pension, IRA, Keogh, and ESOP, to name a few. Qualified plans, like 401(k) plans, must be allocated via a QDRO, whereas non-qualified plans, like IRAs can be divided much easier (although the exact process may vary from state to state).

Jenny McKinney wrote an article for About.com, Divorce and Retirement Benefits, in which she suggests everyone ask these questions when going through a divorce:

Continue Reading...

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A question that is frequently asked by clients considering separating from their spouses is "Can I withdraw funds from our joint checking/savings account? If so, should I, and how much?" The answer to the first part of this question is clearly "yes." The funds in a joint account are marital funds, and as such, may be withdrawn by either party at any time. It does not matter which party deposited the funds into the account, so the fact that one spouse may have worked in the home (raising children perhaps) instead of outside the home does not matter.

Whether one should remove the funds is a little more fact specific question. The best course of action across the board is to safeguard the marital estate. With that thought in mind, it is always easier to protect those assets which are in your direct possession or under your control. For instance, you will know the location of all funds that you remove from a joint account, as opposed to possibly not knowing if your spouse were to remove them.

Well, how much should you remove from the account? This is often the most difficult question to answer, and I believe that the answer is largely based on strategy. In many cases, it makes sense to remove roughly half of the funds in the account, which has the potential for creating less ill will. In those cases in which generating goodwill is more important than immediate access to the funds, it might make sense to leave all or most of the funds in this account. On the other hand, if you do not have access to funds with which to live or you fear that your spouse may hide those funds, it might be appropriate to withdraw all or most of the funds immediately. Of course, if you do so, you should be prepared to account for those funds at the appropriate time.

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The South Carolina Court of Appeals recently addressed the novel issue of whether the Family Court may divide Social Security benefits in a property distribution. In Simmons v. Simmons, the Court found that pursuant to 42 U.S.C. � 407(b), Social Security benefits cannot be divided in an equitable division award whether by agreement or otherwise. The full text of this opinion is available here.

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In Craig v. Craig (Opinion No. 25970), the S.C. Supreme Court affirmed the decision of the Court of Appeals, which reversed the family court order to sell the marital home and increased the amount of alimony. The Court held that the family court erred in not considering factors relating to the desirability of maintaining the marital home when it apportioned the estate. Accordingly, the Court of Appeals correctly awarded the wife the marital home in the distribution of the estate. Further, the Court held that the family court abused its discretion by not addressing the standard of living established by the couple during the marriage, making the increase by the Court of Appeals appropriate.

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Well, will you? I realize that death is a topic that is not very high on most people's list of favorite topics. However, whether we like it or not, it's coming -- hopefully later rather than sooner.

Since we will all die, it is certainly a good idea for everyone to do some basic planning for the inevitable. Estate planning is essential if you are married, have one or more children, own a business, have any significant assets, or simply want to spare your family from additional and unnecessary stress. Odds are that you fall into one or more of these categories.

A will is your opportunity to address such important issues as: who will care for your children; how your assets will be divided; who will be responsible for administering your estate; and what extent government and taxes will come into play in your personal business.

AskMen.com has an excellent article, How To Write A Will, that elaborates on the advantages of estate planning, the expenses involved, the types of issues to consider beforehand, and the process itself. Once again, AskMen.com has published a very practical article that can be a great benefit to men and women alike.

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"I owe, I owe, it's off to work I go." Virtually all couple going through a separation or a divorce have debt. Some have much more than others, and many may have debts that they wish to dispute or question. Unfortunately, most people are not familiar with the Fair Debt Collection Practices Act and the protections that it offers to consumers.

For instance, if you send a letter requesting verification of a debt after receiving a collection notice, the creditor cannot take any legal action until it provides written verification to you. If you ask for information about the debt, such as the payment history and amortization schedule (where applicable), this information must be provided before the creditor can file a lawsuit.

Should the creditor fail to respond to your dispute and/or request for verification, you can use that failure in court to defend or delay collection suits. Even after you receive the information from the creditor, you may write back stating the information is insufficient or unclear and demand more information.

Thanks to Jonathan B. Alper of the Florida Asset Protection Blog for this great tip.

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