Sunday, March 13, 2011

Property Division and Spousal Support (“Alimony”)



What is my spouse worth? Who gets the home? Is my spouse voluntarily under-employed? Can my spouse hide assets?
           Domestic relations courts resolve disputes over equitable division of marital assets and debts based on the evidence presented to the courts by the parties. When wives and husbands cannot reach a settlement detailed in a separation agreement, the court is left to equitably divide (allocate) marital assets and debts following a trial.
Business Valuation
In some cases, it may be dangerous to assume you know the value of the wealth or indebtedness your marriage is grounded in. If your spouse owns and operates a business (retail store, medical practice, dry cleaning company, landscaping business, etc.), at times it is prudent for your attorney to suggest you employ an expert to evaluate the equity of the business.
Such experts are expensive, but, proceeding with an unrealistic idea of what you think your share of your spouse’s business’s equity might be can be even more costly. The court needs credible testimony presented from someone qualified to evaluate the equity of the business. A spouse’s speculation does not serve that purpose.
A business started during a marriage is technically marital property. When such a business is clearly the enterprise of one spouse, and the business is laden with debt, the majority of the debt may be allocated to the spouse who is directly involved with the business. When the business has substantial equity, the court must determine a reasonable allocation of the equity between the spouses.
Some businesses produce substantial income for a spouse but have no equity. A dentist, for example, may earn a six figure income from the practice, but, the equipment, building and supplies may be so heavily financed that the practice itself has no equity.
Marital Home
            When the marital home is shown to have equity in the current market, then the equity will be allocated by the court between the spouses. One spouse may pay the other spouse the amount of equity allocated to her/him and the compensated spouse will be ordered to quit claim deed whatever interest the spouse has in the marital home. The spouse keeping the marital home will be ordered to remove the other spouse from any debt obligations regarding the home in exchange for the quit claim deed. The home may also be sold and the equity divided between the spouses according to court allocations.
            
Do not forget to inquire about credit for "Reduction of Principal". During divorce proceedings, when only one spouse has made monthly house payments from the date the parties separated, the spouse may receive credit ("offset") for the amount of reduction of the principal balance during that time. Each month your equity may be increased by the amount your principal balance is reduced.
            When the marital home is shown to have no equity in the current market, or negative equity (more loan balances than market value), one spouse may elect to keep the marital home. The other spouse would quit claim deed any interest in the home and be removed from the home’s debt obligations by the spouse electing to keep the home. Provided appropriate language is included, a certified copy of a final Decree of Divorce, Dissolution or Legal Separation may act as a transfer of such property.
Spousal Support (“Alimony”)
Spouses who expect to receive spousal support must consider how courts may calculate the amount of the support and the length of time the support will last. The following factors may be considered by the court: length of marriage; earnings history of spouses; earnings ability of spouses in current job market*; credit for child support; credit for length of time temporary spousal support was paid; and, offsets (credits) for other factors.
*At times it is prudent for your attorney to suggest you employ a vocational expert to evaluate your spouse’s earnings ability in the current job market. If your spouse has educational and/or professional background applicable to particular employment opportunities, a vocational expert can evaluate the current earnings ability of your spouse related to available jobs advertised in the local market. When a spouse has voluntarily left the job market, chosen to not work or voluntarily left one job for a lower paying job, the court will often be unable to impute (assign, give offsetting credit for, etc.) your spouse’s earnings ability in the current job market, beyond minimum wage. When your spouse has work related education or training you want to be able to present evidence that enables the court to appropriately impute your spouse’s earnings ability in the current local market.
Courts listen to vocational experts. If their testimony is credible, your spouse’s imputed income may be substantially greater than minimum wage and your current income will be offset by your spouse’s imputed earnings ability. An engineer who has voluntarily left the engineering field to follow the dream of being a massage therapist can, for example, be evaluated for current earnings and placement ability in the engineering job market versus the massage therapy market, without the requirement of any retraining. In some cases, the spouse’s imputed income can be double or triple their current earnings. Without the testimony of the vocational expert the judge may only be left to speculate. Speculation does not go far in court.

See:
Can my spouse hide assets?
            During a divorce your attorney may serve your spouse with a variety of discovery requests, including interrogatories and requests for production of documents. Interrogatories are questions regarding a variety of matters, including assets. The following are examples of financial matters that can be addressed in interrogatories:
  1. Gross annual income as set forth on any and all W-2 forms and 1099 forms and any other income your spouse is required to report to the Internal Revenue Service for certain calendar years;
  2. Income your spouse is presently receiving from various sources and the amount and duration of such income (rents, sales commissions, lotteries, interest and dividends, unemployment compensation, workers compensation, etc.);
  3. Identification of all accounts maintained at banks, financial institutions, or any investment institutions in your spouse’s name alone or with any other person or entity, or any accounts to which your spouse has signatory privileges, during certain years;
  4. Provision for each identified account of the location, account number, name(s) on account, the date opened, current balance and date closed;
  5. A listing of any and all retirement benefits that your spouse may have from any source whatsoever including, but not limited to, retirement plans, profit sharing plans, 401K plans, deferred compensation plans, individual retirement accounts, Keogh plans, social security and any other such interest of any kind whatsoever, detailing accumulations during your marriage;
  6. A listing of all vehicles in which your spouse has an interest or had an interest in the past year, stating the year, make, model, license number, name(s) of the registered owner, date of purchase and/or sale, purchase and/or sale price, amount of outstanding balance due and owing and from whom purchased and/or to whom sold;
  7. A listing of any residential or commercial property that your spouse has purchased in your spouse’s name or your spouse’s name and the name of another person or entity, and the purchase price for said property;
  8. Identification of anyone, other than you and your children, to whom your spouse has given any gift of the value of $500.00 or more, during a specified time period;
  9. A listing of any and all securities, mutual funds, retirement benefits, or any assets regarded as marital assets that your spouse may have liquidated, transferred and/or rolled over, in whole or in part, during a specified time period;
  10. Your spouse’s statement of the amount of money in your spouse’s possession or presently under your spouse’s control including: cash on hand; money on deposit in checking account(s), listing the account number(s), the bank(s), amount(s) on deposit and in whose name(s) the account(s) is held; money on deposit in savings account(s), listing the account number(s), the bank(s), amount(s) on deposit and in whose name(s) the account(s) is held; Certificate(s) of Deposit and Demand Note(s) listing the institution, account number(s), maturity date(s), and in whose name(s) the account(s) is held;
  11. Your spouse’s listing of all securities held by your spouse alone (or in trust to your spouse) or jointly with another individual or entity, such as stocks, bonds, mutual funds, commercial papers, notes, government securities, mortgage securities, commodities, currency options; with your spouse listing institution name(s), account number(s), current value(s), and in whose name(s) the account(s) is held.
  12. Your spouse’s listing of any and all records of life insurance policies on your spouse’s life with the following information for each policy: issuing company; policy number; face amount; type of policy; owner; present beneficiary and former beneficiary if policy has been changed in the past year and the name of the former beneficiary; present cash value including accumulated dividends and interest, amount of any loans against cash value and the specific dates and amount of loans.
Copies of financial statements related to the examples listed above, titles of vehicles, tax returns over a specified period, etc., can be requested in production of documents requests served on your spouse by your attorney.
Sometimes spouses do not comply in good faith with the above requests. An aggressive attorney may creatively acquire documents or other evidence regarding assets your spouse attempts to hide. One example involves an Ohio spouse whose employer or asset holder is headquartered in another state. In such cases, the issuing of county domestic relations court subpoenas will not have any legal power.
All business entities headquartered in other states but conducting business in Ohio are required to appoint and maintain a statutory agent with the Ohio Secretary of State. County domestic relations court subpoenas can be served on the statutory agents in order to acquire the documents you seek. This is just one example of how an attorney can creatively pierce an uncooperative spouse’s attempt to not comply in good faith with your above requests.

The above information is not offered as, and does not constitute, legal advice. The information presumes you are not currently represented by an attorney who knows your specific circumstances.


               




10 comments:

  1. Very well explained. These days people are to be educative about the laws for their own safety. Some times there always not any lawyer be seen. At that time. These information are a better guidance. Thank You. I will be looking forward more of your post.


    Houston Business Attorney

    ReplyDelete
  2. I would like to say property division can be both time-consuming and emotionally upsetting. Upon divorce, parties must agree to divide their personal belongings, including home, vehicles, retirement plans, furniture, and other personal belongings that were acquired during the marriage.

    ReplyDelete
  3. Thanks for the information as every thing has been explained very properly in details so it will really going to help.William C. Behrndt

    ReplyDelete
  4. Great thoughts you got there, believe I may possibly try just some of it throughout my daily life.

    Indian Divorce Guide

    ReplyDelete
  5. Best article i have ever read.Thanks for sharing such a useful information.Family law firms sydney

    ReplyDelete
  6. It is good to know that there are a lot of softwares today that could actualy help us in the business.
    llc

    ReplyDelete
  7. Ultimate post !! I was found this post for several days.

    Business valuation expert

    ReplyDelete
  8. Property division is one big point in divorce. when partners divorcing they should take expert advice, expert can help lot in whole process, and equal division of property.
    property settlement

    ReplyDelete
  9. Hi CRAIG,
    Thanks! I have just been searching for info about this topic for a while and yours is the best I have found out so far.

    jason
    property investment experts

    ReplyDelete
  10. HI,
    Thanks for great informations and good knowledge of Best Expert Lawyers.

    Best and Expert Lawyer in Delhi

    ReplyDelete