Monday, January 25, 2016
Getting divorced has a significant impact on your finances — and some missteps can make it even more costly.
Divorce is an issue plenty of Americans will find themselves navigating. In 2014, divorces and annulments occurred at a rate of 3.2 per 1,000 people, according to provisional data from the Centers for Disease Control. At least anecdotally, lawyers say, the number of filings and proceedings initiated tends to pick up in January — leading to the nickname Divorce Month.
"We definitely see an uptick," said Joslin Davis, president of the American Academy of Matrimonial Lawyers. "People just really don't want to do anything during the holidays — for emotional reasons, primarily." The new year seems like the ideal time for a fresh start, she said.
As much as you might want to get the process over with as soon as possible, moving quickly through a divorce can be a mistake. Take time to consult with a financial advisor and accountant, as well as your attorney.
"There are a lot of financial 'gotcha' nuances that people aren't aware of, because they aren't your day-to-day," said certified public accountant Tracy Stewart, a member of the American Institute of Certified Public Accountants' personal financial planning executive committee.
"Everything matters in a divorce," she said. "Pay attention."
Moves made without due consideration could mean you give up more than you need to or don't get your fair share. Worse, some aren't fixable, or they initiate a domino effect of problems — like an acquaintance of Stewart's who (without asking for professional advice first) dipped into his IRA early to pay off joint debt during his divorce. Not only did that affect his retirement prospects, but it also more immediately triggered penalties and a taxable-income increase that phased him out of valuable deductions.
Read more here.
Sunday, June 17, 2012
Margaret Ryznar (Indiana University Robert H. McKinney School of Law) and Anna Stępień-Sporek (University of Gdańsk School of Law) have posted The Harmonization of Matrimonial Property Regimes on SSRN. Here is the abstract:
Although family law often differs by jurisdiction, harmonization efforts would make such state laws uniform. In the United States, the major obstacle to the harmonization of family law is the federal system. In the European Union, on the other hand, efforts to harmonize the family laws of member states are increasingly successful. This significant experiment in harmonization offers lessons into the roles of jurisdictional autonomy, cultural relativism, and legal absolutes in society, all of growing importance in an increasingly mobile society and in light of the European Union Commission’s pending proposal for harmonization of matrimonial property regimes.
Sunday, November 21, 2010
From The Vancouver Sun:
MONTREAL — A groundbreaking decision from Quebec's Court of Appeal opens the door for common-law partners to collect alimony, affecting about 1.2 million Quebecers and bringing the province in line with the rest of the country.
But the woman who brought the issue to a head by taking her billionaire ex to court, claiming alimony payments of the kind most women can only dream, might be out of luck.
Two out of three judges on the panel Wednesday gave the provincial government a year to revamp the family law section of the Civil Code so that unmarried couples can't be excluded from the right to claim alimony.
Read more here.
Friday, November 19, 2010
Let's add to the media frenzy surrounding Kate & William's engagement by pointing out that it has brought much attention to the English premarital agreement, which is entering a new era of enforceability in the UK.
From Business & Law:
Britain's Prince William and his long-time girlfriend Kate Middleton ended speculations about their future by announcing their engagement on Tuesday but triggered a new speculation over whether the couple will opt for a prenuptial agreement.
To date, no member of the British royal family has signed a prenuptial agreement but William and Kate could set a royal precedence.
According to divorce and family law experts, a prenuptial agreement would make William and Kate be seen as a modern couple and would help avoid a lot of unnecessary headache and heartache later.
Last month, the U.K. Supreme Court, in a landmark ruling, swept away hundreds of years of legal precedent that a married couple should be together for life and their property should be shared, by saying that prenuptial agreements are enforceable under British divorce law.
The court had ruled against Nicolas Granatino, a former investment banker who had challenged a prenuptial agreement he signed with German heiress Katrin Radmacher.
Court President Lord Phillips said that the law cannot prevent a couple deciding how to arrange their affairs should they come to live apart. The court said that all English courts should follow its precedence and after its ruling "it will be natural to infer that parties entering into agreements will intend that effect be given to them."
However, Lord Phillips also said that prenuptials will not be legally binding in all circumstances and the courts would still have the discretion to waive any pre- or postnuptial agreement, especially when it was unfair to any children of the marriage.
UK is known as the "divorce capital of Europe."
Read more here.
Saturday, September 25, 2010
The ownership of the Dodgers might hinge on a lawyer’s mistake in drafting a marital property agreement. According to AmericanLawyer.com, the lawyer drafting the agreement recently “took the stand and admitted he changed the document after it was signed--without consulting the McCourts--to list Frank McCourt's sole property as ‘inclusive’ rather than ‘exclusive’ of the Dodgers.” This was to correct an initial mistake in the agreement. On the stand, the lawyer said, “Sometimes I garble the language.” Read more here.
Wednesday, August 4, 2010
The Massachusetts Supreme Court ruled last week that postnuptial agreements dividing property on the eve of divorce are permissible, ending years of uncertainty about the enforceablity of such contracts in Massachusetts.
Addressing a matter that has long sown doubt among Massachusetts family law specialists, the Supreme Judicial Court said postnuptial agreements that divide financial assets must be scrutinized to make sure they were not negotiated fraudulently or coerced by a spouse with threats of divorce. But if the agreements meet stringent standards, they should be enforced.
“Marital contracts are not the product of classic arm’s-length bargaining, but that does not make them necessarily coercive,’’ Chief Justice Margaret H. Marshall wrote on behalf of the seven-member court. “Such contracts may inhibit the dissolution of a marriage or may protect the interests of third parties such as children from a prior relationship.’’
Several states, including Alabama, Louisiana, and Wisconsin, have laws authorizing such agreements, the court said. At least one state, Ohio, forbids them. But many states have not addressed the issue.
Such contracts are uncommon in Massachusetts compared with prenuptial agreements, said divorce lawyers, but that may be partly attributable to uncertainty over whether they would be upheld.
Given the confusion, couples marrying in Massachusetts had only two options if they wanted to sign a binding contract dealing with their assets: a prenuptial agreement before their wedding or a separation agreement if their marriage crumbled.
The SJC’s ruling carves out a third option. Thomas J. Barbar, a Boston family law specialist, said postnuptial agreements are a particularly good choice for more affluent couples who want to address financial issues when their marriages are strong, rather than wrestle with them through costly and painful litigation during a divorce.
The high court spelled out a five-step review that judges must conduct before approving such contracts, a process that must include making sure there was no fraud or coercion.
David H. Lee, the Boston lawyer who represented Ansin, said he was pleased that the court upheld the contract and finally addressed such agreements. Lee said he has negotiated fewer than 10 postnuptial agreements in his 37 years practicing family law, compared with more than 100 prenuptial agreements, because of concerns about whether they could be enforced.
Such agreements, he said, can benefit couples with marital woes who want to settle financial matters so they can focus on rebuilding their relationships. Postnuptial agreements are also signed by couples as part of estate planning or to address issues over inheritance that arise in second marriages.
Wednesday, March 31, 2010
Law.com discusses a New York trial court's rejection of constructive trust and unjust enrichment arguments to transfer any property interest from a New York ad-exec to his long-time girlfriend:
A prominent advertising executive's alleged promises to support his longtime girlfriend if they broke up are unenforceable because the couple never married, a Manhattan judge has ruled.
In declining to impose a constructive trust, Supreme Court Justice Ellen Gesmer ruled that such statements as "I will always take care of you" and "everything that we put in, we will enjoy together" do not constitute legally binding promises.
"Indeed, even if [the defendant] had made an explicit promise that, upon separation, [the plaintiff] would be entitled to 'equitable distribution' of their assets, it would be unenforceable, as it would be contrary to the long-standing law and policy in New York that unmarried partners are not entitled to the same property and financial rights upon termination of the relationship as married people," Justice Gesmer wrote.
"Unless and until the law imposes equitable distribution on unmarried couples, in New York, as least, the legal status of marriage remains vitally important to establishing the economic rights of members of a couple."
The plaintiff, Malin Ericson, filed suit in 2009 against Fabien Baron, the advertising executive and creative director best known for reinventing Burberry, producing racy ads for Calvin Klein and designing Madonna's "Sex" book. According to her complaint, Ericson began working for Baron's fledgling company, Baron & Baron, in 1993, and became romantically involved with Baron in 1994. They moved in together later that year, had a daughter in 1999 and remained a couple until 2007, though they never married.
Ericson alleged that, in addition to the assurances Baron made throughout their relationship, when they broke up, he promised he would treat the separation as if the couple had married.
When Baron purportedly failed to live up to that promise, Ericson filed the present petition seeking a constructive trust on his Mercer Street loft, which was purchased in 1997 for nearly $1.5 million, his Amagansett real estate, bought in 1999 for nearly $1.3 million, and three years of profits from Baron & Baron. The company, according to the decision, has gross annual revenues of some $20 million.
Ericson claimed she contributed to the couple's household and Baron's burgeoning business in reliance on his assurances.
Monday, March 22, 2010
England's highest court is hearing argument today in a case between a German paper industry heiress and her French ex-husband about the enforceability of a prenuptial agreement they signed in advance of their 1998 marriage.
At stake in the legal tussle between Katrin Radmacher, heiress to a paper industry fortune, and her French ex-husband Nicolas Granatino, is a settlement worth millions of pounds and the status of pre-nuptial agreements in English law.
A lower court in 2008 awarded Granatino 5.9 million pounds but Radmacher appealed, citing an agreement signed in Germany in 1998 before the couple married in London that stipulated he would get nothing if the pair divorced.
In a landmark decision, the Court of Appeal ruled last July that the pre-nuptial agreement was valid, reducing Granatino's settlement to 1 million pounds.
Before that ruling, English courts did not recognise such agreements, in which couples decide before their marriage how they would split their assets in the event of a divorce.
The hearing is scheduled to last two days, with a decision due several weeks later.
The couple's marriage began to break down in 2003 after Granatino gave up an investment banking job that Radmacher said paid him up to 330,000 pounds a year, to become a biotechnology researcher at Oxford University earning 30,000 pounds a year.
Read more here.
Thursday, January 28, 2010
The Tennesee Supreme Court has ruled that a $17 million class action settlement fee received by a husband-attorney after his wife filed for divorce is marital property subject to equitable division. The decision is consistent with the wealth of jurisprudence on marital and community property - acquisitions that are the result of effort, skill, or industry expended during marriage should be susceptible of being shared. But to reach this decision, the Court had to creatively interpret a Tennessee statute which requires that property be "owned by either or both spouses as of the date of filing of a complaint for divorce" to qualify as marital property.
Tuesday, January 19, 2010
Years ago, the New Jersey Supreme Court held that a spouse may continue divorce litigation after the other's death for the sole purpose of proving that the deceased spouse had diverted marital assets. The divorce is an equitable method of recovering those diverted assets for equitable distribution.
Last week, the New Jersey Supreme Court considered for the first time the reverse scenario. In Kay v. Kay, the deceased spouse raised the claim that marital assets had been diverted during marriage. The question was whether a divorce action to recover diverted assets for equitable distribution could be maintained by the deceased spouse's estate.
The Court held that the right to continue divorce litigation under these circumstances is reciprocal. Equitable distribution statutes exist to promote equity and fair dealing between the spouses, and depriving the estate of the opportunity to pursue its claim would not serve those policies.
Read the opinion here.
Tuesday, December 29, 2009
Business Week reports on an unsuccessful argument that a divorce settlement might be rescinded for mutual mistake relating to the Madoff scam.
A judge says a prominent New York City lawyer can't recover money he paid in a divorce agreement when he believed he and his ex-wife had millions of dollars invested with Bernard Madoff.
Steven Simkin says he gave Laura Blank $6.6 million as her share of marital assets in July 2006 after more than 30 years of marriage. The figure included $2.7 million that was half the value of Simkin's Madoff account.
But the account with Bernard L. Madoff Investment Securities was empty. Madoff later admitted cheating thousands of investors and was imprisoned.
A Manhattan Supreme Court justice ruled Blank didn't have to "shoulder her share" of the Madoff losses and threw out the case.
Read the story here.
Friday, December 11, 2009
The North Dakota Supreme Court heard a case last week questioning whether a wife's breast implants and surgical eye improvements (through Lasik) are marital assets to be divided on divorce.
"Do we have any lines to be drawn? Is dental work a marital asset? Is a hip replacement a marital asset?" Justice Daniel Crothers asked attorney Christina Sambor during Supreme Court arguments on Thursday.
Sambor represents Erik Isaacson, of Mandan, who is appealing South Central District Judge Robert Wefald's decision to exclude the value of his former wife Traci's breast implants and Lasik vision improvement surgery from a list of their assets and debts. Sambor said the expense should be included in instances when a medical expense is "clearly cosmetic, elective, (and) non-necessary." Insurance companies often make those judgments in deciding what to cover, she said.
I think the district judge's comments about the issue are great:
"I can't imagine people would actually waste time thinking that breast implants are marital assets. It just defies common sense. I don't know how you would expect me to award breast implants, if you want me to have them cut out and given to Mr. Isaacson. It is absolutely nonsense."
Read the news report here.
Wednesday, December 9, 2009
Monopoli: "Marriage, Property and [In]Equality: Remedying Erisa's Disparate Impact on Spousal Wealth"
Paula Monopoli (University of Maryland School of Law) has posted "Marriage, Property and [In]Equality: Remedying Erisa's Disparate Impact on Spousal Wealth," Yale Law Journal Online, Vol. 119, p. 61-65 on SSRN. Here is the abstract:
Congress is considering pension reform in the wake of the tremendous loss in market value of retirement plans during the current recession. This article suggests that this is a historic moment to remedy a previously unidentified, unintended but profound gender disparity embedded in the federal law governing retirement plans in this country. It explores the common perception that while contemporary law and policy aim to facilitate equality within marriage, including in the area of property ownership, embracing equitable distribution in reallocating property upon divorce, the Employment Retirement Income Security Act’s (ERISA) structuring of retirement asset accumulation runs counter to this trend and in fact incentivizes the concentration of wealth in the hands of husbands rather than wives within intact marriages. It suggests that in order to remedy this inconsistency and facilitate equality within intact marriages, Congress should amend ERISA to confer an immediate ownership interest in one-half of the assets in each spouse as they are earned and contributed by one spouse, akin to a community property theory of ownership. Each half should then be allocated to a separate account, one in each spouses’s name. While this second step may be somewhat inconsistent with the view of marriage as a partnership, it minimizes the risk that one spouse will dominate investment decisions with regard to the assets. In the alternative, ERISA should at least provide that each spouse’s defined contribution plan be held in a joint account as a default rule. A less fundamental but equally important additional reform would be to allow married couples to equalize ownership by transferring unlimited amounts between their accounts without triggering income taxation and the 10% early withdrawal penalty. This would be akin to the existing unlimited marital deduction as applied to transfers under the current federal gift tax. The article concludes that, with these amendments, Congress could align federal pension law with the overall movement toward gender equality in marital property law.
Tuesday, December 8, 2009
Maybe. A California Court of Appeals just ruled (reversing the lower court's decision) that a Porsche bought for husband with wife's separate funds was to be classified as community property. California law generally requires a writing to transmute the classification of property, but there is an exception for gifts of "tangible articles of a personal nature." The California court held that a Porsche was not such property. Read the full opinion here. And if you're in a community property state, delight in the fact that you'll still own a portion of most items you gift to your spouse!
Thursday, October 29, 2009
We'll find out soon enough. With the filing of a petition for divorce on Tuesday, Jamie and Frank McCourt have begun what seems likely to become a long and bitter divorce battle. Among the issues raised in the petition for divorce is ownership of the Los Angeles Dodgers. Frank claims he is the sole owner of the team. Jamie claims the team is community property. A 2004 marital property agreement executed just after the Dodgers purchase indicates that the team may be Frank's separate property. No doubt the enforceability of that agreement will be questioned, and there are reports that Frank himself did not believe the agreement made him sole owner of the team. Read early news coverage of the case here and here.
Tuesday, October 20, 2009
When spouses in a community property regime hold certain federal assets, the doctrine of preemption often results in the inability of state community property law to step in to regulate their classification. The United States Supreme Court's decision in Boggs v. Boggs is a classic example in the pension context, though there are countless other such assets (intellectual property, IRAs, social security benefits, just to name a few).
Louisiana has an interesting 2001 statute clearly designed to work around preemption (La. Rev. Stat. 9:2801.1). It provides:
When federal law or the provisions of a statutory pension or retirement plan, state or federal, preempt or preclude community classification of property that would have been classified as community property under the principles of the Civil Code, the spouse of the person entitled to such property shall be allocated or assigned the ownership of community property equal in value to such property prior to the division of the rest of the community property...
A Louisiana appellate court, in the first decision directly applying the statute, recently approved use of the statute to allocate more community property to wife because preemption required that her husband's social security benefits, earned through effort expended during the marriage, be classified as husband's separate property. The opinion includes no discussion of the constitutional implications of so blatantly undermining the result of the preemption doctrine.
Are there other examples of state law which so clearly undermine federal preemption?
Wednesday, October 14, 2009
Some people may think they win the lottery solely by
marrying their soul mates. Others may
think, in the age of high divorce rates, that to achieve life-long marriage is to
hit the jackpot. A recent newspaper article
in Bermuda, however, suggests that divorce laws favoring near equal property
division between spouses, particularly in the United Kingdom
Luckily, it's still a more pleasant lottery to play than Shirley Jackson's.
Wednesday, January 14, 2009
In a case from NY that sounds like an examination question, the legal issue might be expressed as whether a kidney is a marital asset.
According to the BBC,
He said he had not only given his heart to his wife, Dawnell, but donated his kidney to save her life.
But divorce lawyers say a donated organ is not a marital asset to be divided.
Dr Batista married Dawnell in 1990 and donated the kidney to her in 2001. She filed for divorce in 2005 and a settlement has still not been reached.
CBS has some videos here, as well as an analysis of how valuable the kidney might be (she had other relatives who might have donated a kidney). More coverage (local) by Newsday here, which will be the site to watch for updates.
Friday, August 24, 2007
The Fifth Circuit Court of Appeals holds that a QDRO is the only route to waiver of pension rights upon divorce. This case involved Decedent-Husband, who was a DuPont employee and participant in its savings and investment plan (SIP). Decedent had signed a beneficiary-designation form in 1974, identifying Wife as the SIP’s sole beneficiary. Decedent and Wife were divorced in 1994. In the divorce decree, Wife agreed to be divested of “all right, title, interest, and claim in and to … the proceeds therefrom, and any other rights related to any … retirement plan, pension plan, or like benefit program existing by reason of [decedent’s] employment.” However, no QDRO was ever submitted to DuPont. Decedent never changed or removed the Wife as the SIP beneficiary.
Decedent’s estate demanded DuPont distribute SIP funds to the estate, claiming that Wife’s beneficiary designation was invalid under the Texas Family Code, which provides that spousal beneficiary designations are rendered invalid by a divorce. While the district court held that federal law preempted state law, it found that a federal common law approach applied, allowing waiver of the benefits.
The court of appeals reversed, finding that the anti-alienation provision of ERISA applied to this plan because it was a pension plan, distinguishing the district court’s common-law waiver approach as having been applied only to life insurance plans, to which the anti-alienation provision does not apply.Moreover, the court rejected the estate’s argument that a “waiver” is not an “alienation” and thus does not run afoul of the anti-alienation provision. Rather the court concluded that:
In the marital-dissolution context, the QDRO provisions supply the sole exception to the anti-alienation provision, they exempt a state domestic-relations order determined to be a QDRO, under the standards set forth in ERISA… When, as here, ERISA provides a specific mechanism – the QDRO – for addressing the elimination of a souse’s interest in plan benefits, but that mechanism is not invoked, there is no basis to formulate a federal-common-law rule. Requiring DuPont to recognize the waiver in this situation would conflict with ERISA by purporting to determine rights to pension-plan benefits in a manner not authorized by the QDRO provisions, 29 U.S.C. § 1056(d)(3), and therefore, not permitted by the anti-alienation provision, 29 U.S.C. § 1056(d)(1).
Kennedy v. Plan Administrator for DuPont Saving and Investment Plan, U.S Court of Appeals for the Fifth Circuit, August 15, 2007
Opinion online (last visited August 24, 2007 bgf)
Saturday, August 18, 2007
Case Law Development: Contempt Appropriate Remedy for Failure to Abide by Divorce Decree's Hold Harmless Provision
In a divorce decree, Husband was ordered to make certain credit card and mortgage payments and to hold Wife harmless with regard to the debts. Husband failed to do so and Wife requested that he be held in contempt. The trial court ruled that it could not use contempt as a remedy for failure to abide by hold-harmless agreements. The Indiana Court of Appeals reversed, holdindg that while contempt could not be used to remedy noncompliance with a money judgment, Ind. Code § 31-15-7-10(1) made contempt an available remedy for other noncompliance with a dissolution decree. Because the noncompliance in this case did not involve a money judgment, the trial court could properly use its contempt powers to enforce the order.
Mitchell v. Mitchell, 2007 Ind. App. LEXIS 1805 (August 8, 2007)
Opinion online (last visited August 18, 2007 bgf)