Florida Divorce * Child Custody * Domestic Violence Law Lawyer | Boynton Beach

It is not uncommon for either or both spouses to enter the marriage owning separate premarital property.

What happens with that premarital property during their marriages varies widely from couple to couple.

As to one couple, the titleholding spouse may keep the title separate, pay any loans or expenses for the property from a separate account funded with separate premarital funds and keep any income generated by the property in a separate account for entirely nonmarital use.

As to another couple, at the other end of the spectrum, things may be more complicated. Maybe the other spouse contributed toward expenses of the premarital property. Or perhaps they contributed time, energy and skill to make improvements to the premarital property.

In either case, the question must be asked: has the premarital property actually increased in value over the course of the marriage?

Possible considerations. If so, how and why? General appreciation of the market? Specific improvements made to the property? Who did the work? How was it paid for?

These are examples of the kinds of situations and questions that have made addressing separate premarital property quite complex in the event the couple later divorces in Florida.

Up until 2010, Florida case law was all over the ballpark and tended to vary from one region (technically known as a judicial “district”) of the state to another, making outcomes in family court often unpredictable and inconsistent across Florida.

But the treatment of premarital property in divorce court was finally settled in an important Florida Supreme Court decision in 2010, and now the law is uniform throughout the state of Florida.

Passive, market-driven appreciation during the marriage of separate premarital property in Florida is now considered marital property that should be divided between spouses in a divorce.

It is key to recognize that this new rule applies only to the appreciation of the premarital property, not to the entire value of the property as a whole. At least one spouse often glosses over this significant distinction.

And for anyone potentially impacted by this – or any other – dramatic change in the law, another takeaway lesson is that it is important never to lose sight of all of the particular facts and circumstances of your case.

As an example, I recently tried a case in which my client had purchased the marital home prior to the marriage, but had paid the mortgage with his salary earned during the marriage. Legally, considered marital funds.

Not surprisingly, the opposing party claimed an interest in the marital home. Half of the entire value of it. And my client’s goal was to defeat his spouse’s claim to any part of the home.

At first blush, my client’s goal might have seemed unattainable in light of the Florida Supreme Court case discussed here. That was certainly our family court’s initial take on the situation at trial.

But my client’s divorce court case had been filed by his spouse prior to rendering of this new divorce law ruling. When the family law in our particular district in Florida, the fourth district, still favored my client’s position.

So, I argued at trial in family court that the new Florida Supreme Court decision entered after my client’s case was filed should not apply to my client’s case.

And, after hearing my argument, the trial court in family court agreed with me.

And my client got to retain the full value of their marital home as his separate premarital property.

Read more in this Florida Supreme case on property division of premarital property in divorce.

Husband and Wife want to have a baby.

They resort to in vitro fertilization and freeze some of the embryos created for possible future use.

Husband’s and Wife’s marriage breaks down.

They are divorcing.

What happens to their frozen embryos?

Or, more precisely, which spouse gets to decide what happens to their frozen embryos?

To some extent, that depends on which state the couple live in. The case law, to the extent that there is state case law, goes every which way.

Prudence may suggest coming to an agreement on this issue before going down that road.

That may be done as part of a broader prenuptial agreement or postnuptial agreement.

Or it may be incorporated into an agreement with the in vitro fertility center.

The perfect solution? In theory, yes, but, in practice, maybe not so much, at least, depending upon where the interested parties live.

Because at least two states, New Jersey and Massachusetts, have reportedly cast such agreements aside in the face of one parent’s subsequent change of heart to no longer wanting to become a parent to a new baby.

Florida, on the other hand, not only recognizes agreements regarding frozen embryos but actually mandates that such agreements be made in advance (although this is not divorce-specific law but more a requirement of reproductive rights law).

It is worth noting, however, that, in the absence of such an agreement, Florida law explicitly recognizes the legal rights of both spouses over the embryos. A very good reason to make an agreement in advance and greatly reduce, if not eliminate, the uncertainty in the event of a later divorce.

But if the couple neglects to enter an agreement (or, presumably, if the agreement is ambiguous), it remains anyone’s guess what a court will decide to do with a couple’s frozen embryos.

Read more in this Wall Street Journal piece: In Divorce, Who Gets the Embryos?

Getting married later in life is generally more complicated. Each spouse is more likely to have kids, assets, debts and health issues.

Accordingly, couples should reach agreement on the following matters before tying the knot:

1. how will expenses be shared / paid

2. which spouse will provide medical insurance, and how will it be paid for

3. to whom will each spouse leave their assets upon their death

4. should each spouse’s life / estate planning documents (wills, living trusts, powers of attorney, health care surrogates, etc.) be changed

5. should designations of beneficiaries of each spouse’s nonprobate assets (life insurance, IRAs, bank and brokerage accounts, etc.) be changed

6. should the couple enter a prenuptial agreement or prenup

7. should each spouse change their designations of beneficiaries of any other retirement, social security or pension benefits, and should the other spouse sign any necessary waivers of interest in such assets

8. has each spouse assessed the impact on their cash flow of loss of alimony and survivor’s benefits from previous spouses

The above considerations are not exhaustive but should serve as a springboard for discussion.

Read more in this Fairfield CT Minuteman News article: Financial planning for later-life marriages.

Way too often, clients come in who are totally in the dark about family finances.

Their spouse has been bringing home the bacon, managing the family accounts, paying the family bills, working with the family or their business accountant to prepare tax returns.

In too many instances, the breadwinning spouse orders the the other spouse to sign a joint return right now without even reviewing it. “It’s all correct, I’ve already checked, just sign it.”

That spouse may well be abusive, to one degree or another.

As a result, the intimidated spouse really has no idea how much comes in or even what brings it in, let alone the difference between gross and net and the basis for the spread.

They may – or may not – have some vague hunch that something is not quite right. But they are afraid to ask any questions, much less challenge their spouse.

And so it always comes as a rude shock that they are generally just as accountable and responsible to the Internal Revenue Service (IRS) as the controlling, breadwinning spouse.

Unless they qualify under IRS rules as an Innocent Spouse.

And under the traditional rule, it wasn’t always so easy to qualify and the relief wasn’t always so expansive.

Thanks to recent changes in the rules, it is now easier for an ignorant spouse to qualify for meaningful relief as an innocent spouse, as long as the couple is divorced or living separately for a year.

The new rule may excuse or reduce the liability of not only an unknowing spouse but also even a knowing spouse who signs a return under duress from the breadwinning spouse.

The new rule also reduces the impact of a two year time limit on claims for innocent spouse status. This change will even allow previously rejected applicants to reapply for protection.

Read more in

• this Knoxville [TN] News Sentinel article: IRS ends innocent spouse rule

• this USA Today article: IRS ‘innocent spouse’ rules can be tough and

• this BST newsletter article: IRS eases liability rule for spouse’s tax debt

At the moment, marriage is on the decline, at least temporarily. So, more couples are cohabiting or living together.

Generally speaking, that represents freedom from commitment and obligations.

That may be agreeable to both partners, at least for a time. But the time may come when it is not so agreeable, at least to one of them.

Yet by then it may be too late.

For example, a fifty year old Swedish author (Boyfriend) cohabited with Girlfriend. For thirty-two years.

Boyfriend and Girlfriend had no written cohabitation agreement between them and Boyfriend did not have a will.

Boyfriend wrote a trilogy consisting of three novels. He entrusted all three to his publisher simultaneously.

Boyfriend’s trilogy went on to sell kazillion copies and generate a great deal of revenue and income. Sadly, Boyfriend met an untimely death and didn’t live to see that.

At the time of Boyfriend’s death, his estate was worth about $40 million.

Under Swedish law, Girlfriend inherited from Boyfriend … practically nothing. Despite thirty-two years of living together.

Absent legal marriage or a will, a cohabiting boyfriend or girlfriend in much of the United States wouldn’t fare any better than Girlfriend.

Although it appears to have survived to some degree in Canada, the concept of common law marriage has all but faded away in many states in the US.

While both partners may have open eyes regarding their mutual day to day “freedom”, they may not intend to sign up for absolutely nothing in the event of a breakup or death twenty or thirty years into their relationship.

The bottom line is that unmarried cohabitants for the long haul, at least, would do well to ponder their legal position and potential vulnerability in the event of a breakup or their cohabitant’s death.

Even couples who wish to circumvent all the day to day obligations accompanying marriage can still take some fairly simple and straightforward steps to give their long term partner a measure of protection and comfort in the event of one’s death or departure from a lengthy cohabitation.

Those steps are:

1. A will or trust. A will makes provision in the event of a partner’s death. A trust can make provision in the event of a partner’s death or in the event of a breakup. But it is very important to note that a trust or will can generally be changed at any time as long as the person who made it is still alive and legally competent … without notice to someone who was previously a beneficiary. There may be circumstances and conditions that may render a will or trust irrevocable and unmodifiable. But it’s simpler and more common to go with step 2 …

2. A cohabitation agreement. This is a contract that spells out both parties’ understanding of their economic rights and obligations arising out of their relationship. The agreement can pertain to their breakup, the death of either partner, or both situations – as well as the death of both partners simultaneously.

Read more in this [Canadian] Financial Post editorial: Don’t wait till death do you part.

Husband, who owns a Nevada strip club, is convicted of federal tax charges.

Husband and Wife split up.

Husband serves one year on the federal charges and is released on probation in 2008.

A patron of Husband’s strip club sues Husband over severe personal injuries he sustains at the club.

In his divorce settlement with Wife, Husband keeps his club. And gives Wife pretty much everything else.

Three marital residences in different cities.

A $7 million investment account.

$5 million in alimony payable over five years.

Husband reportedly sells another strip club in Pennsylvania for about $1 million.

Husband allegedly puts the proceeds of sale into an offshore bank account … and distributes them to relatives.

The Court finds that Husband is misleading or evasive in his responses to the injured plaintiff’s inquiries into Husband’s finances.

And now the federal judge orders Husband back to federal prison for nine more months.

For violating the terms of his probation and allegedly lying to his probation officers. For living high off the hog thanks to undisclosed, protected assets and using his divorce to protect assets from the injured plaintiff and other creditors.

Husband appeals the new sentence.

Read more in this Las Vegas Review Journal article: Ex-strip club owner Rizzolo appeals return to prison.

New York Mother and Father have a child together.

Mother and Father, if married, divorce, or, if unmarried, just go their own separate ways.

Then Father relocates to South Florida.

Afterwards, Mother serves Father in a New York action for child support, or enforcement of child support. (Or alimony, or enforcement of alimony, or enforcement of property division agreement or judgment, or enforcement of parenting plan or judgment, etc., etc.)

Living in South Florida now, Father visits a local South Florida divorce lawyer and South Florida family law attorney for help with his defense in this case.

Only, Father is surprised to learn, his local South Florida divorce lawyer and South Florida family law attorney won’t – can’t – help him.

Why not?

Mother’s case is a New York family law case, not a Florida family court case.

And only an attorney licensed to practice law in New York and admitted to practice law in New York may appear and represent a party in a New York family law court case.

That means Father needs a New York divorce lawyer and New York family law attorney (or New York child support lawyer or New York alimony attorney or New York child custody attorney) and so on.

At first blush, it probably sounds like this could get pretty inconvenient and expensive for Father to identify and consult with a New York attorney. And it could.

But it doesn’t have to … Because a New York attorney doesn’t have to be based in New York.

She might have an office right down the street here in South Florida. As I do.

If Father is lucky, his local South Florida divorce lawyer and South Florida family law attorney may refer him to a New York divorce lawyer and New York family law attorney who is located here in South Florida.

But, if not, Father should be able to locate one on his own, now that he knows what he’s looking for.

Needless to say, the above would also apply if Mother was the ex-spouse or parent who had relocated to Florida, instead of Father.

And the same rationale applies for any other state an ex-spouse or parent may have relocated from. New York is just an excellent illustration of the principle, because there are so many transplanted New Yorkers here in South Florida.

A Scottish-resident Mother of a young Daughter, who has accumulated substantial savings to date and already owns her own home, wonders whether she should have prenuptial agreement prior to her approaching wedding.

Without hesitation, absolutely yes. This Mother is the perfect example of whom a prenuptial or antenuptial agreement is for.

First, Mother has a young child to provide for who is not her future spouse’s child.

What would happen if Mother were to die?

Who would inherit Mother’s savings and other personal property? Her home? Would Daughter have to be uprooted? Rely on other relatives’ financial resources?

Depending upon precisely how it is drafted, a prenup may apply not only to divorce, but also in the event of one spouse’s death.

(Incidentally, that aspect of a prenup may make it more palatable to bring up with your fiance and may render your intended more receptive to it as well.)

And what if the couple does eventually divorce? As a very substantial percentage of married couples do.

Granted, from a pure, rigid, abstract, theoretical view, inheritances and premarital property are considered separate property and will not be divided between spouses in case of divorce.

But then there’s the often muddy, shifting, complex real world that we actually live in.

Where separate property may appreciate during the marriage, be renovated or improved during the marriage, get mixed up or commingled with marital property during the marriage, be spent on the family unit during the marriage, be maintained in part with the other partner’s income and/or assets and/or efforts, etc., etc.

And, when any of these things – or many others – happens, all legal bets are off … without a prenup, and related supporting legal documents.

Of course, Scottish law does not apply to Florida divorces, property, or death, estates and inheritance.

And prenuptial agreements or antenuptial agreements are well-recognized and accepted in Florida and throughout the US.

Read more in this Money help desk: Can I protect assets before wedding?

The divorce rate for baby boomers, those fifty years old and more, is higher than and climbing more rapidly than for younger couples.

Yet divorce may impact middle-aged couples financially in ways that have a more lasting impact than with younger people.

To protect and preserve a settlement (especially for a dependent spouse for whom it may be particularly critical), a divorce financial analyst recommends the following measures immediately following the divorce:

1. Check your credit report. You probably should have done this during the divorce as well. After the divorce is a good time to do it again. This should verify the status of any debts that your ex was supposed to be paying or that were supposed to be paid off, catches any confusion surrounding any name changes after divorce and, last but not least, brings mistakes to your attention – so you can follow up and make sure they get corrected. If you are establishing and building your individual credit, you may want to repeat the process a number of times to track your progress.

2. Buy long term care insurance. You may be on your own now, solely or largely responsible for supporting yourself. And maybe children. You no longer have your spouse as a safety net. One catastrophic accident or illness can be devastating. Long term care insurance can plug that hole.

3. Appoint an Agent in Case of Disability or Incapacity. Now that your accounts are individual rather than joint and you probably have exclusive authority over them, it is prudent to designate someone other than your now ex who you can trust and count on to act for you in the event of a temporary or permanent disability or incapacity, whether physical or mental. One or more documents can authorize someone to access your financial accounts for your care and for your dependent children’s care, possibly to manage and/or dispose of your other property and to make medical decisions for you if you are unable to do so for yourself.

Read more in this Wall Street Journal Smart Money piece: 3 Financial Tips for Recently Divorced Boomers

The divorce is finally final.

So, what’s next?

A divorce party? A trip?

Well, you may want to let loose, but you still have some unfinished business to tend to.

Financial housekeeping.

Such as changing your designations of beneficiary on your various payable on death assets and accounts, including 401(k)s and pension plans.

Even if you’ve already updated your will to eliminate your spouse as a beneficiary.

This type of account or asset, called nonprobate, does not pass under your will.

In most cases, your designated beneficiary inherits them.

Even if you have divorced since designating your now ex as your beneficiary.

Having said that, it’s also important to be aware that federal law, specifically ERISA, supersedes any attempts to disinherit a spouse of a qualified pension plan or 401(k).

That includes a second or third spouse.

So, if your intention is that someone other than, say, your second spouse inherit your pension / 401(k) (such as your childen), your new spouse must execute a spousal waiver and consent. Period.

A spouse can contractually commit to execute a waiver in a divorce settlement agreement and in a prenuptial agreement.

If that is too much of a hassle or doesn’t “feel good”, you can roll your retirement funds into an IRA, which is not regulated by federal ERISA law. Then all you have to do is change your beneficiary designation.

Read more in this Forbes piece: Don’t Let Your Ex-Husband Inherit Your 401(k). Or your Ex-Wife.

Canadian Husband and Wife are in the middle of a divorce, their second from each other.

Couple’s assets are appraised.

A division of assets is determined.

To equalize the property division, Husband must pay Wife about $41,000.

Husband files for bankruptcy.

And as part of Husband’s bankruptcy case, Husband lists and ultimately discharges through the bankruptcy the $41,000 debt Husband owes to creditor-Wife.

There is something of an outcry in Canada over Husband’s ability to avoid his marital divorce obligations thanks to Canada’s bankruptcy laws.

Canadian Supreme Court highlights the problem as requiring legislation to “close the loophole”.

US bankruptcy laws differ from Canada’s laws.

Read more in this [Edmonton] Canadian TV article: SCC: Under bankruptcy law, divorcee cleared of payments.

In some divorces, equitable distribution or asset division is more complicated than in others.

For example, the nature and source of ownership of any particular item of property can create various variables that may muddy the straightforward fair market valuation always desired.

Small businesses are almost always complex to value, particularly closely held service businesses.

Another aspect of property that adds considerable complexity to valuation is where the property is premarital property of one of the spouses.

Despite property being premarital and seemingly separate, there may be factors that, depending upon your point of view, re-cast or taint part or all of that property as marital.

One of those factors is appreciation during the marriage of what came into the marriage as separate property. But not any and all appreciation.

Appreciate can categorized as one of two types: active or passive.

In Florida, among some other states, active appreciation during the marriage, or appreciation as a consequence of the efforts of a spouse, is considered marital property.

But passive appreciation during the marriage of what came into the marriage as separate property, or appreciation deriving from larger or outside market influences during the marriage, is nonmarital property.

If this isn’t enough complexity, a single item of property may potentially undergo both passive and active appreciation. On top of that, some active appreciation may be attributable to the efforts of actors other than the spouse, rendering such appreciation equivalent to passive appreciation.

Depending upon all the particulars for a particular item of property, tracing valuation components and then assessing a valuation of certain assets for purposes of asset division in divorce can be somewhat elusive.

Read more in this forensic CPA’s article: Divorce Valuation: Active vs. Passive Appreciation.

Connecticut Husband and Wife are divorcing.

Husband and Wife have seven dogs.

Wife gives one puppy up for adoption at a local animal rescue, blaming economic constraints.

Later, Husband contacts the shelter wanting to retrieve the puppy.

In the end, Wife goes to the rescue facility and gets the puppy back.

While divorce law may view family pets as nothing more than personal property, pet lovers view them as members of the family, even like children.

Sometimes a spouse uses pets as pawns in a scheme to hurt the other spouse, ignoring the pet’s needs and preferences.

This is no more acceptable than using children as pawns in divorce.

Read more in this Westport [CT] Patch article: ‘Ruff’ Stuff – The family dog’s future is often at the center of contentious divorces.

Transplanted residents from other states are often surprised by this one … and sometimes clobbered.

Florida has a constitutional protection called homestead.

What homestead does, among other things, is require that the legal spouse of a homeowner:

1. join in any deed of a home to a third party and

2. join in or consent to any mortgage on a home

Florida confers these rights and protections on spouses by virtue of their legal status of being married. How the property is titled or when the property was acquired is irrelevant.

So … a married spouse cannot sell a house they own, or mortgage it, unless the other spouse joins in the transaction or signs a written consent to it.

And a spouse generally won’t be able to get a away with lying about their marital status.

Title insurance companies conduct public records searches that are bound to foil any such lie. When couples divorce in Florida, a final judgment is recorded, just like a deed or mortgage.

Read more in this Sun Sentinel column House Keys: Ask a real estate pro: Do I need my estranged wife’s consent to sell home?.

Whether it’s the economy or other forces at work, prenuptial agreements, or prenups, continue to gain popularity. While it used to typically be the husband-to-be who requested a prenup, these days it is slightly more likely to be the wife-to-be seeking it.

Prenups are no longer just about protecting assets. In this age of runaway debt, they are also about protecting one spouse from the other’s debt.

Some common mistakes to avoid are:

• Getting it done with only one attorney and thinking that that attorney represents both fiances. One attorney cannot represent the interests of both intendeds.

• Not knowing the property division law in the state in question.

• Not knowing how to enter a calm and clear-headed discussion about the issues with the other future spouse.

• Not carefully reviewing the agreement and not taking its words at face value. The less-endowed partner should be wary of provisions intended to regulate behavior … or deny the existence of any marital property that the less endowed spouse would leave the marriage with.

• Giving up too much without adequate consideration of long term consequences. For example, how would a stay at home caregiver and homemaker for many years support themself in the event of divorce if they waive alimony in the agreement?

Read more in this Reuters Wealth piece- Prenup: 5 ways to protect your assets and your marriage.

New Zealand Husband and Wife’s marriage hits the rocks.

Husband is – or at least was – quite wealthy. In 2006, Husband disclosed to a potential creditor assets worth $28 million and an annual income of $1 million.

According to Wife, Husband owns about 135 businesses and numerous properties and trusts.

Wife, on the other hand, appears to be on public assistance due to Husband allegedly withholding reasonable support.

In response, Husband claims to be bankrupted by $180 million in debt and contends that the couple’s debt exceeds their assets.

The New Zealand Family Court freezes Husband’s bank accounts and stocks.

Wife asserts that Husband’s life style has been constant since before the divorce, although he may have created an appearance on paper of hardship.

The New Zealand Family Court appears to be stuck in the middle, persuaded of the reality of Husband’s enormous legal debt load.

The couple separated in 2007 and their case was filed in or before 2008. But there does not appear to be an end in sight.

Read more in this New Zealand Stuff news article: Bankrupt keeps life of luxury says wife.

Retirement savings accumulated by either spouse during a marriage are marital property and subject to property division in a divorce. That’s the law in Florida.

But an astonishing number of spouses either don’t know this or choose to disregard it.

For a dependent spouse, nothing beats accumulating retirement savings in their own name.

But is that possible for a stay at home homemaker or parent who doesn’t have paid employment? Maybe.

Normally, a person has to have earned income in order to sock money into a retirement account. But there are some exceptions:

1. If the dependent spouse’s spouse has earned income, the dependent spouse can put money into their own retirement savings based on their spouse’s income. But keep in mind that the dependent spouse’s deposits reduce what the other spouse may put into their own retirement account.

2. If the dependent spouse receives alimony or spousal support, that support is considered income for purposes of determining whether and how much the dependent spouse may put into savings for their retirement.

Read more in this Forbes piece: 4 Ways to Make IRA Contributions – Without A Job!.

Divorce is about moving from here to there, emotionally. But it also represents a move from here to there, financially.

Many divorcing spouses focus on their emotional destination, to the exclusion of all else. They would benefit from putting some thought into their financial destination and situation as well.

For that purpose, it may be useful to:

1. create a realistic post-separation budget … before you agree to any settlement

2. open individual credit cards in just your name and close any joint credit card accounts

3. run your credit report with all the major credit reporting agencies … for the best chance of avoiding later surprises

4. don’t let your emotions alone rule big decisions such as whether to stay in the marital home … these should be at least partly financial decisions

5. be reasonable – don’t get caught up in waging expensive legal battles over (relative) trinkets

Read more in this Yahoo Shine article from Quizzle: Getting a Divorce? 5 Ways to Ensure It’s Not a Financial Disaster.

Husband, a partner at a large and prestigious New York law firm, and Wife, also an attorney, divorced in 2006. The couple had marital assets valued at $13 million at the time of their divorce.

Among their assets, the couple had invested several million dollars with Bernie Madoff. Husband opted to keep the Madoff account and other assets, so Husband wrote Wife a check as an equalization payment. In other words, so that Wife ended up with half of the value of the marital assets.

After the divorce, Husband invested additional money with Bernie Madoff.

Fast forward two years. Madoff is exposed for running a Ponzi scheme.

As things turned out, Husband figures he got the short end of the divorce stick. And that doesn’t sit right.

Husband wants to recoup his losses. So he sues …

Wife. Arguing, interestingly and creatively, that both Husband and Wife overestimated the value of their Madoff investments, so the equalization payment Husband made to Wife was larger than it should have been and …. should be refunded in part.

The New York family court dismissed Husband’s claim at trial. After all, as a matter of policy, divorce settlements are supposed to be final – unless, among a few narrow exceptions, one spouse commits fraud on the other.

There is no suggestion by Husband that Wife engaged in any fraud or nondisclosure. If anyone did, it was Bernie Madoff.

Husband’s law firm is representing him without charge, so … Husband appeals the family court’s ruling at trial.

On appeal, an intermediate appellate court reinstated Husband’s claim based on the contract law doctrine of “mutual mistake”. And yes, although most people probably don’t think of it that way, a marital settlement agreement is a contract.

Depending on the ultimate outcome of this case, not only might numerous divorce cases be revisited but also even more numerous contract disputes.

Read more in this Yahoo News Lookout piece: Citing Madoff fraud, lawyer wants divorce deal do-over and this New York Times article: Madoff Victim Seeks Divorce Do-Over.

I’ve posted before, in
Florida Public Defenders Seek Freeze and Lien for Attorney’s Fees on Marital Assets of Wife Who Allegedly Murdered Her Two Children With Husband, about a sad and fairly high profile case here in Florida where the Wife allegedly killed Husband and Wife’s children.

Husband just got his divorce … without any discussion of property division, although their assets are substantial.

How can that be?

Well, the above is a little misleading. It’s not that property division is eliminated. It’s just bypassed, for the moment.

A procedure called bifurcation literally allows the Florida family court to split the entire divorce case into two smaller components. Each component can be heard and ruled on at different points in time.

So, here, the bare divorce that made each spouse a single person again happened first. Property division will happen, but it will happen later.

Bifurcation doesn’t happen often, but it is used in certain kinds of circumstances. One of the most common is where one spouse is dying and wants to be divorced before their death.

There can be strategic reasons for seeking or opposing bifurcation, and bifurcation can create twists in property division.

Read more in this St. Petersburg Times article: Judge grants Parker Schenecker immediate divorce and this WTSP News 10 article: Parker and Julie Schenecker officially divorce.

A financial advisor briefly hits the financial highlights associated with divorce.

• Know Thy Divorce Law. It is astonishing how very close too many people come to finalizing divorce settlements without having the slightest idea of what they may be entitled to. Often, they believe that their spouse has accurately summarized the law for them, and that their spouse is being very reasonable, even generous … when neither may be the case.

• Property Division. In equitable distribution states like Florida, marital assets are divided equitably, often, but not necessarily, equally. Note that whether property is marital property or nonmarital in the eyes of the law may be more complex than the financial expert describes.

• Retirement Assets Division. In equitable distribution states like Florida, the marital portion of retirement assets is divided equitably, often, but not necessarily, equally. Note that whether retirement assets are marital property or nonmarital in the eyes of the law may be more complex than the financial expert describes. Division of retirement assets is often particularly contentious. And may be especially complicated where there are pension plan administrators.

• Debt Division. In equitable distribution states like Florida, marital debt is distributed equitably, often, but not necessarily, equally. Note that whether debt is classified as marital debt or nonmarital under Florida law is determined by different principles than this financial expert describes. This financial expert also does not address the distinction between potential liability to a creditor in civil court and potential liability to a spouse in divorce court. Further, whether a particular spouse should make paying down debt a priority really depends on the overall facts and circumstances of their divorce case and situation. One size does not fit all. And, freezing joint debt accounts may be prudent much earlier in the divorce process than suggested, whether through a court order or otherwise.

In Florida, technically, the term “equitable distribution” includes all of the assets and property division and debt division touched on above – and much more.

But it is often helpful and illustrative to break it down into its smaller components, even well beyond what this financial expert has done.

For many couples, however, the marital residence and retirement assets are by far the largest assets the couple have.

And very often, folks anticipating a divorce focus on division of assets, without giving a thought to debt.

Yet, unfortunately, in some cases, marital debt may exceed – or approach – the amount of marital assets. So the debt really must be considered early on and addressed squarely. Otherwise, a spouse, or their attorney, may spin their wheels fruitlessly – but expensively.

Read more in this US News – Money – Smarter Investor piece: 3 Ways Divorce Affects Your Finances.

It’s one of the most misunderstood areas of the law for divorcing spouses. So this bears repeating.

When it comes to debts, family court can only make orders as to and as between the spouses. Family court cannot enter orders which bind third party creditors.

So when the family court allocates a joint debt to one spouse, that does not absolve the other spouse of their legal obligations to creditors. It just creates an obligation from one spouse to the other.

If the spouse to whom a joint debt is allocated doesn’t pay it, the credit of both spouses will take a hit … and the creditor can pursue payment from the other spouse, who thought they were off the hook.

Now that spouse can still take their ex back to family court to enforce the allocation of the debt and obtain an order for reimbursement. But that does not affect the creditor’s rights.

It is sometimes possible for one spouse to have their name removed from a debt at the time of the divorce, but that isn’t typical, especially for non-mortgage, unsecured debt.

In the case of property buyouts by one spouse of the other, a refinancing of the mortgage can be utilized to take the “bought out” spouse’s name off the note and mortgage. The refinancing is essentially a new transaction for new “compensation” to the lender, and the lender re-underwrites the modified loan to satisfy itself that the soon-to-be-single spouse can carry the modified obligation.

But, with unsecured debts, creditors have little incentive to release a spouse from a debt and give up a potential source of payment. So they likely won’t do so.

Whereever possible, it is always “cleanest” to pay off joint debt and replace it with individual debt in the sole name of the spouse to whom the debt is allocated. Unfortunately though, that is often not feasible.

Moral of the story: no matter what is stated in a marital settlement agreement or ordered by a divorce court, neither spouse is free of joint debt until it is paid in full and discharged.

Read more in this El Paso Inc. news article: Debt and divorce decrees.

Husband and Wife are having a bitter – and lengthy – divorce. Going on five years now.

Husband was wealthy while the marriage was intact.

But claims to have suffered dramatic financial reversals … right around the time the divorce was filed. He asserts that he owes 28 million UK pounds to creditors.

Wife contends that Husband is actually hiding 2 billion UK pounds in assets, by re-routing them to overseas accounts and to trustworthy friends.

One such friend is said to have become wealthy only after associating with Husband. Now, the friend remains wealthy, while Husband is supposedly broke.

That friend has paid some monies to Wife to help her with her living expenses.

But Husband reportedly has not made one alimony payment to Wife since 2009, when ordered to do so. Husband is court ordered to pay Wife 27,500 UK pounds each month.

Husband’s former attorney suggests that 8 million UK pounds worth of the debts Husband is claiming are fraudulent and nonexistent.

The UK court’s ruling on this matter is anticipated … in October.

Read more in this UK Telegraph article: Growing riches of ‘penniless’ husband’s best friend.

One common question clients ask is: am I better off to file first for the divorce?

The truth is, the law does not care which spouse files first. There is no inherent advantage or disadvantage to being the petitioner (or plaintiff) or the respondent (or defendant).

Knowing that a divorce is going to be filed and, even better, knowing precisely when it will be filed and served, imparts a huge advantage though. It facilitates pre-filing planning and action, of a time-sensitive variety.

For example, it can dramatically affect a dependent spouse’s ability to weather the divorce storm, stay the course and emerge a survivor … and better.

By the same token, it can dramatically affect some well-off spouses’ ability to execute a plan of what may be described as self-impoverishment, in their effort to minimize what they will have to pay out in child and spousal support as well as what property will be equitably distributed between the spouses.

In that vein, what follow are a few warnings to keep in mind if a divorce may be heading your way:

1. Joint accounts. Either spouse has the power to clean out joint accounts at any time. That doesn’t mean they ultimately get to keep everything that was in them without sharing with the other spouse. But awaiting ultimate justice can be tough on a needy spouse. By the same token, striking while the iron is hot and proactively accessing an equitable share of joint accounts can turn out to be a lifesaver for a needy spouse.

2. Joint debt (versus marital debt). Depending on a couple’s circumstances, it may be prudent to close or freeze joint debt accounts. Depending upon a spouse’s circumstances, it may be prudent for them to have credit card accounts in their sole name. It is usually prudent to keep an eye on the balances of any joint credit or debt accounts. Debt is a complex area because a spouse’s rights and obligations as to a creditor may be inconsistent with their rights and obligations as to the other spouse. The legal information provided in the cited article is not entirely correct under Florida law.

3. The Marital Home. Since it is generally not feasible or desirable for both spouses to remain in the marital home, the couple must decide whether one spouse should remain in it or whether it should be sold. This decision is complicated these days by whether what the couple owes on the home exceeds its current fair market value … and whether they are even able to afford their mortgage under current circumstances.

4. Buying a New Home. For spouses who are named on the marital home and mortgage, this can be problematic under the best of circumstances if the home is not sold or refinanced and the nonresident spouse released. If the marital home is under water or the couple is otherwise behind on the mortgage, renting is likely going to be the only option.

5. Managing Money. This is probably an essential survival skill, especially in these times. A spouse who has relied on their partner to handle this function will need to take over this function, fast. Failing to do so may jeopardize their future, even if they obtain an excellent property and support settlement or court award of property and support.

Read more in this Investopedia article syndicated in the San Francisco Chronicle: The Financial Risks Of Leaving Your Spouse.

Service men and women may receive what is called “retainer pay”. Not salary. Not pension.

In a divorce from someone who serves in the military, should retainer pay be considered a marital asset that the other spouse shares in?

That is the law across the nation.

In Oklahoma, legislators acted to change the law, but they were unsuccessful. And the proposed legislation must now be tabled … for two years.

Military spouses and former spouses objected to the proposed change in the law.

They argue that the entire family serves.

And must put up with frequent reassignments that make it difficult for the nonmilitary spouse to keep a nonmilitary job and build up their own retirement and other personal savings.

Read more in this [Oklahoma City] Oklahoman article: Oklahoma House panel kills bill that would prevent nonmilitary ex-spouses from getting retention pay.

Hidden assets can potentially skew a divorce settlement to disproportionately favor one spouse over the other.

In most states, divorce law requires a division of marital property that generally tends toward equality between spouses. (These laws may go by different names and may include various exceptions, of course.)

But a family court can’t distribute what it doesn’t know about. And a spouse can’t ask the court to distribute what he or she doesn’t know about.

There are procedures and professionals who specialize in investigating and ferreting out undisclosed assets. But they are not inexpensive.

Whenever possible, it makes financial sense for the in-the-dark-spouse to do as much investigation of their own as possible, before resorting to increasingly specialized procedures and then increasingly specialized professionals.

Sources of tipoffs include:

• the other spouse’s personal and business tax returns

• the other spouse’s personal and business financial statements

• statements for bank and brokerage accounts, including those the other spouse has set up in their children’s or other relatives’ names

• the other spouse’s personal and business loan and credit card statements, on their own behalf or on behalf of their business

• the other spouse’s overpayments to the Internal Revenue Service, on their own behalf or on behalf of their business

• the other spouse’s overpayments to creditors, on their own behalf or on behalf of their business

• the other spouse’s business books and ledgers

• the other spouse’s paid bills, personal and for their business

• the other spouse’s business’ payroll tax returns

• and so on

Transfers of large sums of money or, for that matter, even smaller sums on a recurring basis, without legitimate purpose, should be red flags for further investigation.

Read more in this [California] press release: Getting a Divorce? Watch Out for Hidden Assets

OK. It’s not romantic. But it’s still sound advice.

Finances and related matters are a subject to address before walking down the aisle. Or face greater risk of heading to divorce court.

One aspect of the conversation is how you will handle your finances after the “merger”, as a couple. Especially if you both relate to finances differently as individuals.

Don’t know how your fiance relates to finances? Then the conversation is definitely overdue.

Does one of you have debt? Does one of you own a business? Does one of you have an inheritance? Does one of you have children from a prior relationship? And so on.

If the answer to any of the above is yes, then there are questions for the couple’s finances during the marriage. And others in the event of a divorce.

The other aspect of the conversation is about what happens, financially speaking, in the event of a divorce – or in the event of the death of one spouse.

Statistics confirm marriage is not forever in many instances. Put another way, many marriages will end in divorce, if not sooner, then later.

And it is inevitable that, sooner or later, one spouse will die. Sometimes it doesn’t require the arrival of old age.

You can just wait and see how your lives will go … or you can jointly work out the financial details of divorce or survivorship now, comparatively inexpensively, without being in crisis mode – or anger mode.

This process may entail consulting with some experts before the wedding. And getting an extremely valuable education that many do not obtain until too late … after a death or after being served in a divorce case. With much regret that the education comes too late.

In some marriages, addressing finances may include working out a prenuptial agreement (prenup), sometimes referred to as an antenuptial agreement. This is particularly worthwhile in the following situations:

1. where either spouse has one or more children from a previous relationship

2. where either spouse owns part or all of an existing business

3. where either spouse already owns significant assets, such as real estate, stock or retirement accounts

4. where either spouse has received or anticipates receiving a significant inheritance and

5. where one spouse will be supporting the other while he or she finishes their education or professional training

Read more in this Buffalo [NY] News article: Make finances part of wedding plans.

South Carolina Husband and Wife divorce.

The family court awards Wife permanent alimony and spousal support.

The family court also awards Wife a portion of Husband’s pension toward her share of equitable distribution and property division.

Some time after the divorce, Husband presses a modification action to terminate alimony or, at the least, reduce alimony.

Husband contends that there has been a substantial change in circumstances in that Husband (and Wife) are now receiving payouts from Husband’s pension. Husband argues that Wife’s alimony should be reduced dollar for dollar by the amount of the pension that she is now receiving.

The family court now rules that there is a substantial change of circumstances. And reduces, but does not terminate, the amount of alimony payable to Wife.

The family court also awards Wife her attorney’s fees in this modification proceeding.

Husband appeals the family court’s ruling on his modification case.

The appellate court holds that the alimony rulings made by the family court are within the family court’s exercise of discretion and affirms the family court’s rulings.

The appellate court also holds that the original property division award of the pension cannot be factored in to any modification, because the family court originally took it into account when it fashioned the original property division and alimony awards. Lastly, the appellate court upholds the award of attorney’s fees to Wife.

Read more in this [Orangeburg SC] Times and Democrat article: Court upholds divorce order.

Generally, withdrawing money from an IRA or similar retirement account prematurely is costly, in taxes and penalties. But this is exactly what must often happen in a divorce.

Giving rise to special exceptions rendering retirement account transfers incident to a divorce free of taxes or penalties.

If an entire IRA account is going to be transferred, it is permissible to simply change the name on the account from the original spouse-owner to the other spouse.

For partial transfers of an account, the methodology is “direct transfer”. In a nutshell, the owner spouse instructs the trustee to transfer a specified amount of the account’s funds to a retirement account in the other spouse’s name.

The transfer must be in accordance with a divorce judgment, so timing is important.

Pensions are divided via a different procedure, which I posted about in
Floridians: Don’t Take Your QDROs for Granted If You Are Entitled to Share in Your Ex’s Pension..

Read more in this Fox Business news article: Moving IRA Assets Under Divorce Decree.

One and one-half year old marriage of Russian Husband and Wife breaks down.

Couple and their child have apparently divided their time between England and Russia.

English wives reportedly typically receive more generous equitable distributions of marital assets than Russian wives.

Husband races to file for divorce in Russia and Wife races to file in England.

Husband wins that race. Sort of.

The British Court of Appeal has held that Wife is entitled to an additional equitable distribution property division award in England, upholding an award of 3 million UK pounds plus legal fees.

Only Husband hasn’t paid, and hasn’t set foot back in England since the court ruled … for fear of arrest.

The ruling undoubtedly bolsters England’s reputation as the so-called “divorce capital of the world”, and its popularity with international wives.

Read more in this UK Daily Mail article: Race to divorce: Russian wife, 27, wins £2.8million payout after just 18 months of marriage in UK