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

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

In most married couples, one has a greater tendency than the other to run up debt. When the couple breaks up, the other spouse worries whether they will be liable for the debt their spouse incurred.

This probably sounds as though the answer should be clear and straightforward. But the question may be a little more complicated than it appears at first blush.

For example, is the debt account in the other spouse’s sole name? Or is it a joint account?

This is a key question. If the account is joint, it doesn’t matter which partner actually “spent” the debt.

All account debtors are liable … for the entire amount of the debt. The creditor can go after both debtors or choose the best prospect for recovery.

Now, that’s the story as to the third party creditor. Family court can’t limit the third party creditor’s legal rights.

But family court can order the big-spending spouse to pay off or reimburse the other spouse for all or part of the debt they incurred on their own.

That’s not the only issue either. Even if a debt is in only the other spouse’s name, if the debt is incurred to pay for basic family necessities (”necessaries”), the other spouse may be held liable for the debt as well.

A slightly different question is whether one spouse’s or both spouses’ “stuff” can be made to answer for the other spouse’s debt, regardless of whether, technically speaking, the other spouse is personally responsible for the debt. Unfortunately, the answer to this question varies from state to state and may also vary according to the type of “stuff” the spouses own.

Read more in this Colorado Springs [CO] Gazette article: Money & the Law: Spouse’s debt woes likely your woes, too .

Canadian Husband is convicted of rape and murder.

Husband and Wife are divorcing.

Wife seeks to seal records in their divorce, allegedly to protect her privacy.

Some of Husband’s alleged victims contend that Husband began fraudulently transferring assets to Wife shortly after his arrest to avoid anticipated payouts which may be ordered to them and other judgment creditors.

Media attorneys also oppose sealing of the records or court-ordered bans on publication.

The Canadian family court has ordered that a written agreement between Husband and Wife be disclosed to media attorneys only, until the family court’s ruling after a full hearing on the merits of sealing or prohibiting publication.

As in Florida, Canada reportedly has a strong policy favoring treating divorce court case files as public records and disfavoring sealing records or prohibiting publication.

Read more in this CBC News article: Williams’s wife wants divorce records sealed and this Ottawa Citizen article: Judge: Russell Williams’ wife must disclose contract transferring marital assets.

A personal finance expert opines that “modern” divorce is about money. And to a large extent, that’s true.

Of course, there may also be important noneconomic issues pertaining to parental responsibility and timesharing. But those are outside the focus of a personal finance expert.

Relative to the money aspects of divorce, however, here are some tips from the personal finance expert:

1. Follow the money. Copy records you can gain access to. Tax returns. Savings account statements. Retirement plans. Insurance policies. Financial statements. Wills. Trusts. Brokerage account statements. Credit card statements. Credit reports. Etc.

2. Poke around in the business. Business records. If the stakes are high enough, a forensic accountant may be warranted.

3. Protect yourself. Squirrel away a nest egg to see you through the case. A separate savings account is prudent. Ditto a separate credit card. Freeze the joint credit cards and any home equity lines of credit to avoid your spouse maxing them out.

4. Itemize premarital / nonmarital assets. Identify which were maintained separately and which were commingled with marital assets.

5. Don’t overlook your spouse’s pension and retirement accounts.

6. Be realistic in your expectations for alimony under the circumstances of your case and the law of your state. Also be aware that this is a rapidly evolving area of the law in many states. Depending upon both, you may want to have good handle on your reasonable employment and salary expectations.

7. Don’t overlook health care coverage and COBRA benefits.

8. If the assets and/or income involved are substantial, a tax advisor can be helpful in structuring a settlement to get the most tax-bang for your bucks.

9. Similarly, a divorce financial planner can also be helpful in evaluating settlement proposals and making your money work as hard for you as possible.

10. Bitter, protracted legal battles cost money. It is worth considering whether the reasonably anticipated benefits really justify the costs.

Read more in this CBS TV Money Watch article: 10 Steps to Avoid Losing Your Shirt in a Divorce.

Sixty year old UK Husband and Wife are divorcing after twenty-one years of marriage.

Husband is a trust fund millionaire in the hotel business, currently living in Spain and managing a property there.

Husband is worth about 4 million UK pounds in assets he owns outright.

There is also 6 million UK pounds in a trust fund his father established during the marriage.

The UK family court awards Wife some properties, along with a 3 million pound lump sum payment from Husband based on the trust.

Husband asserts that the trust is not for his benefit but for future generations of his family, and that he has no control over it. Husband further insists that the trustees of the trust will not cooperate in making trust funds available to pay Wife the court-ordered obligations.

Husband further asserts that the upshot is that he will be forced to sell the assets he controls to pay the award to Wife and his court-ordered child support obligations, and that he will be left homeless.

The UK family court finds that Husband is misrepresenting his finances and relationship to the trust and trustees.

Husband has appealed the trial court’s rulings.

Read more in this UK Daily Mail article: Millionaire claims he faces homelessness after unique divorce ruling orders trust funds to go to wife.

Connecticut Boyfriend and Girlfriend start dating in 2007.

Boyfriend takes Girlfriend to Italy toward end of 2008.

While there, Boyfriend proposes and presents Girlfriend with a $5,000 engagement ring.

Ring is a little too shabby for Girlfriend’s tastes.

Boyfriend takes it back.

And presents Girlfriend with a $12,000 ring.

That sits better with Girlfriend, and she accepts it.

Possibly because of the substitution or perhaps not, Boyfriend falls upon some harder financial times.

As a result, Boyfriend and Girlfriend break up.

What of the ring?

Well, Boyfriend wants it back now.

Girlfriend refuses, claiming it was a Christmas present.

Who gets the engagement ring?

A Connecticut family court rules that Girlfriend must return the engagement ring to Boyfriend.

This holding represents something of a (modern) shift in the law of premarital breakups.

Read more in this Connecticut Post article: Not only is the romance over, but the fiance gets his ring back.

Own a marital home and going through a divorce?

Then what will happen to that marital home has to be resolved in the divorce.

One outcome is for the parent with whom the children reside most of the time to remain in the marital home.

This outcome can come about in two different ways.

One, the spouse who stays in the home can have exclusive use and possession of the home until the youngest child turns eighteen. In this scenario, both parents remain owners of the home and remain on the mortgage until the property is sold and the proceeds divided.

Alternatively, the spouse who stays in the home can buy out the other spouse’s equity interest at the time of the divorce and refinance the mortgage to remove the other spouse from the mortgage as well as the title. This scenario, of course, requires the spouse who stays in the home to qualify for a new mortgage without the other spouse.

The last alternative is for both spouses to sell the home to a third party and divide the net proceeds.

A mortgage professional offers some advice for those going the sometimes thorny buyout route.

• keep in mind that not keeping joint debts current during the divorce process can adversely affect both spouses’ credit and the buying out spouse’s qualification for refinancing, regardless of whom any particular debt is ultimately assigned to in the divorce

• as early in the process as possible, the spouse who will be buying out the other spouse should open their own new credit accounts and close all joint accounts and also verify their credit rating, to avoid surprises

• from the vantage point of buying out the other spouse’s net equity, it is best to resolve all property division as soon as possible, with determining the marital home’s current fair market value, to both spouses’ satisfaction, being a top priority

• the spouse buying out the other spouse should remember, for purposes of refinancing, to add to their income the amount of child support and any alimony they should be receiving

• the spouse being bought out would do well to verify that the mortgage lender has in fact satisfied and released their obligations under the original note and mortgage

Read more in this Toronto Move Smartly article: Mortgage Advice for Couples Planning a Divorce.

In too many divorces, one spouse has, at least arguably, legitimate concerns about the other spouse’s willingness to hide or dispose of assets acquired during their marriage. Such assets are generally marital assets, subject to property division in the couple’s divorce.

What to do?

The spouse who does not control such assets can request that the family court enter a restraining order, or injunction, freezing such assets and prohibiting the spouse who controls them (or both spouses) from hiding, transferring or otherwise using them unilaterally, until division of property in the divorce case is resolved.

In a recent high profile case abroad, the Colombian family court has ordered that the assets of Wife, a politician, be seized, at the request of Husband.

The restraining order, or injunction, is, arguably, particularly appropriate in that case because marital assets are distributed across the globe.

But such measures are by no means restricted to high profile cases.

Read more in this Colombia Reports article: ‘Ingrid Betancourt’s properties seized’ and this Miami Herald article: Colombia freezes Betancourt assets in divorce case.

Connecticut Husband and Wife divorce.

Theirs is not the garden-variety divorce.

Husband is an advertising executive. Wife is an attorney.

Husband allegedly kidnaps Wife, holding her hostage in one of their homes. During the hostage crisis, Husband asserts to police that the home is rigged with explosives.

Before torching the home.

The home, by the way, is contingently awarded to Wife in the event that Husband fails to pay her $100,000 in attorney’s fees. Accordingly, Wife is entitled to any insurance proceeds.

Husband is also required to transfer to Wife his interest in another marital property, a beach home.

But, rather than do that, prior to his deadline, Husband allegedly burns this house to the ground too.

At this time, Husband stands charged with two counts of arson, as well as other charges related to the hostage-taking situation.

Trial in both cases lies ahead for Husband.

Notwithstanding all of the above, Husband sues his property insurer … for his emotional distress. He attributes same to the insurer denying his insurance claim – after reportedly summarily concluding that Husband burned the home down himself.

Husband asserts that the insurer should have commissioned an independent investigation before reaching any conclusions about it.

The civil trial court dismisses Husband’s lawsuit against his property insurance company.

On appeal, however, an intermediate level court unanimously reinstates Husband’s claims for emotional distress.

Read more in this Insurance Journal article: Connecticut Court: Man Charged in Arson Can Sue Insurer.

Florida Husband and Wife have two teen-aged Children.

Wife allegedly murders both Children.

Wife is arrested on murder charges.

Wife is represented in criminal court by public defenders.

The County seeks to freeze Wife’s assets and slap a lien on them to recover legal fees for the public defenders’ services.

Wife agrees to the freezing and lien.

But Wife’s assets are marital property – shared with Husband.

Husband objects to both the freezing and lien in the criminal court proceedings.

Husband has recently filed for divorce from Wife.

Husband argues that it is family court, not criminal court, that should rule on Husband’s and Wife’s marital assets.

Further, Husband asserts, he should not be forced into funding Wife’s defense.

Wife contends, without explanation, that Husband’s interest in their marital assets would not be affected by the freezing and lien.

After a hearing on the issue, the criminal court denies the motion to freeze Husband’s and Wife’s assets and subject them to a lien in favor of Wife’s public defenders.

Read more in this St. Petersburg Times article: Schenecker contests wife’s motion to freeze assets and this St. Petersburg Times article: Judge denies motion to freeze Julie Schenecker’s assets.

Under current Utah law, no-fault divorce is available. And in such a divorce, fault is not a factor in determining alimony.

Proposed legislation is pending in Utah to modify this approach.

The bill would allow a judge to consider whether a stay-at-home, custodial parent was at fault in the divorce and, if not, award additional alimony toward the goal that they remain stay-at-home parents after the divorce.

Paradoxically, a different bill pending in Utah seeks to phase out permanent or long term (greater than five years) alimony. This mirrors debates and shifts in law playing out across the nation.

The role of fault in alimony and / or property division in no-fault divorce states such as Florida can be confusing. Some believe fault should be irrelevant.

Others believe that courts should be permitted to consider fault. Still others believe that economic fault alone should be considered.

Here in Florida, although divorce itself is granted without consideration of fault, the court may consider fault in both alimony or spousal support awards and in property division or equitable distribution. However, in practice, fault rarely comes into play unless the fault is economic in nature or the fault imposes an economic impact on the other spouse.

Read more in this [Salt Lake City] Desert News article: Bills would allow Utah judges to consider fault when awarding alimony.

UK Husband is injured in car accident and his leg is amputated.

Husband receives a substantial legal recovery due to the accident.

Husband and Wife later meet and marry. They have two children.

Husband and Wife decide to divorce. Wife seeks half of Husband’s legal recovery.

UK court awards Wife more than half of Husband’s legal recovery.

In light of the Court’s awards, Husband reportedly will have to sell his disabled-friendly home to move away from his children to a less expensive area.

Husband may appeal.

This ruling seems questionable in several respects were Florida law applicable.

Read more in this [UK] Daily Mirror article: Amputee has to give more than half his crash compo to wife in divorce.

Canadian Husband and Wife have their ups and downs.

Wife files for divorce in March of 2008, but the couple reconcile.

In 2009, Husband, who does well playing a TV game show at home, tries out to appear on the show – after Wife applies for him.

Husband is accepted on the show.

The couple travel together to California in October 2009 for Husband to appear on the show.

And Husband wins. $51,600.

A pretty good chunk of change for the couple, being a school teacher and a part-time longshoreman.

After Husband’s victory, Wife again takes up her divorce case.

Now, Wife asserts a claim to half of the game show winnings as marital property.

Husband maintains that the entire pot should go to him alone, since Wife had filed for divorce before his game show appearance. Husband also suggests that the prize money is not “income” or “earnings” as contemplated by (Canadian) divorce law.

To protect her interests, Wife asks the court to order that the entire prize be deposited into a special account until the couple agrees what happens to it or the court enters an order on the subject.

A year later, the battle drags on.

Trial, and a ruling on the pot, approaches.

Generally, under Florida divorce law, the date of filing of the petition for divorce is the cut-off date for purposes of determining whether property acquired by either or both spouses is marital or nonmarital. But, where, as here, an open divorce case is not active and the couple resumes the marital relationship in all respects, it tends to negate the breakdown of the marriage legally required for a divorce under Florida divorce law.

Timing is everything.

Read more in this [Vancouver, WA] Columbian article: ‘Wheel of Fortune’ jackpot at heart of divorce battle.

There are many ways that parties and/or conscientious counsel can try to keep costs down in divorce cases in family court (among others). Unfortunately, the legal system often doesn’t make it easy.

And may punish you. Regrettably, economizing can turn out to be very expensive.

The above observations apply in countless situations in divorce courts (and others) throughout Florida, New York, New Jersey (these I can speak to from personal experience). Likely, the world.

Here’s yet another example that just caught my attention.

Husband and Wife are working toward an amicable, uncontested divorce.

They own a marital business.

Husband and Wife agree on a fair market value for the business of $60,000. It’s not clear how they arrive at that number.

But that number underlies their property division, marital settlement agreement and final judgment of divorce.

Several months later, Wife seeks to throw out all three.

She now asserts that the business was worth $172,000, rather than $60,000. A difference of $112,000, half of which, presumably, would be allocated to Wife.

How does Wife arrive at that $172,000 value?

Wife hires an appraiser to perform a limited, qualified valuation – after the fact.

What’s that?

In a nutshell, a limited, qualified appraisal is performed based on strictly limited documentation and inputs.

Why?

Such documentation and inputs are often within the sole control of one spouse, and often may only be obtained through what is called the discovery process in the divorce court case. (Less documentation and inputs requires less expert review and analysis.)

In amicable cases, discovery may be sharply curtailed to contain costs and because there is trust.

In adversarial, contested cases, even where full discovery is desired by the spouse with less knowledge of the finances, it may nonetheless be limited because of the cost in both legal fees and experts’ fees of pursuing it from a spouse who is fully committed to avoiding full disclosure and who likely has the resources to stonewall, dodge, delay, and otherwise drive up the cost and increase delay as much as possible.

In this particular case, it is likely that timely discovery was voluntarily limited. And then, after Wife’s window of opportunity closed (there are rules that bar going back after the fact to do what you could have and should have done at an earlier time), Wife realized she “got took”.

And, likely because of limited information as well as limited financial resources, all Wife could obtain at that point was a limited, qualified valuation. And that just wasn’t good enough to persuade a court to set aside a previously agreed upon valuation, however arrived at.

If Wife’s change of heart was right on, she took a beating in the divorce property division.

She certainly saved legal fees up front by not pursuing discovery timely. And she certainly saved experts’ fees by obtaining only a limited or qualified valuation.

Hopefully, Wife saved enough money in the original case to offset the loss of her half of the difference between the two valuations. (Of course, the qualified valuation may have been low too. That will never be known for certain now.)

Read more in this Business Valuation Resources LLC newsletter article: More problems using preliminary valuations in divorce

According to a divorce financial analyst, the following are the Top Five financial mistakes people make in divorce:

1. Not appreciating the liquidity or illiquidity of each asset

2. Not appreciating the consequence of taxes on each asset and transfer

3. Not appreciating the special considerations associated with retirement assets (taxes, early withdrawal penalties, etc.)

4. Not appreciating legal obligations regarding debt, and how credit ratings work

5. Not appreciating the unpleasant consequences of trying to hide / transfer marital assets

Read more in this [State College, PA] Centre Daily Times article: Identify all assets in divorce.

Chinese Husband and Wife meet playing games online and marry in 2008.

Husband and Wife both just want to play games online though.

After they marry, they both play on Husband’s account.

Both rack up virtual or digital prizes and jackpots … on Husband’s account.

Turns out, Husband’s and Wife’s real life marriage is not as entertaining as their online game playing.

Wife files for divorce.

And Wife seeks half of the couple’s virtual cyber-wealth accumulated during their marriage.

At trial, a Chinese divorce court denies Wife’s property division claim for half of the couple’s digital assets. Because the Court doesn’t know how to value the web assets.

In one sense, these intangible assets may have no value in the real world in the usual sense. But Wife may simply have failed to meet her evidentiary burden of proof.

There is reportedly an active resale market in which Western newbies to the online games actually buy points accumulated by others in order to leapfrog to higher tiers of competition in the online games. And the resale market should furnish a fair market value for the digital assets on terra firma.

Read more in this China Daily article: Court dismisses woman’s claim to virtual assets and this Time Healthland article: Memo to Gamer-Wives: You Can’t Take it with You.

Some clients (or opposing parties) are really quite businesslike in their approach to divorce.

They know they want to settle and it is just a question of arriving at the right numbers through negotiation.

They almost always have very specific final numbers in mind.

It is not unheard of for them to encourage their partner to sign an agreement behind their attorney’s back if they have an attorney or, better yet, before they hire an attorney.

After all, it’s all about the numbers. Not words.

Right? Wrong.

When it comes to legal matters, the words actually matter quite a lot.

As just one example …

Imagine a one paragraph marital settlement agreement. Yes, there really are such things out there.

Such an agreement always gets straight to the point – and the number(s).

“Husband agrees to pay Wife $1 million as full settlement.”

Do-it-yourselfers too often favor this type of language.

But what does that $1 million payment represent?

Is it lump sum alimony?

Is it lump sum child support?

Is it property division?

Is it a combination of all of the above?

Who cares?

Well, the Internal Revenue Service for one.

Precisely what the money represents will bear directly on the tax consequences, if any, associated with the payment.

As a result, both spouses will become interested as well, sooner or later.

For example, unless there is an agreement otherwise, alimony payments are deductible by the spouse who makes them … and taxable as income to the spouse who receives them.

Child support is neither includible nor deductible.

Equalization payments are generally neither includible nor deductible, but payments made in kind (by transferring things) may have tax consequences, sometimes unforeseen and undesirable.

The point is, settlement isn’t just about the numbers at all. The words count a lot.

In the end, all that really matters is the bottom line numbers, not the numbers that may be referred to in the agreement. If the words aren’t right, the bottom line numbers may be very, very different from the numbers specified in the settlement.

And that can be an unpleasant surprise that can hit you between the eyes.

Read more in this Florida Times Union article: TTT – December 28, 2010, Divorce & Alimony.

UK Husband and Wife divorce.

Husband, a multi-millionaire, allegedly “overlooks” some assets in his required disclosures … about 2 million pounds’ worth.

Such as three gold bars smuggled out of Austria in the 1930s, and offshore bank accounts.

Husband claims not to have the “overlooked” assets.

The divorce court doesn’t buy that.

And awards Wife 2.4 million pounds.

Husband appeals.

The appellate court dismisses Husband’s appeal of the divorce trial court’s property award to Wife.

Husband now lives in Florida …

Read more in this UK Daily Mail article: Wife wins battle of the Nazi gold: £2.4m divorce payout after husband hid assets.

Wedding approaching?

• Anticipating an inheritance?

• Active in a family owned business?

• Have children from a previous marriage you want to provide for?

• Accumulated premarital property?

These are just a few of the circumstances in which a prenuptial agreement, or prenup, should be considered.

Without a prenup, what happens in the event of a divorce, or one spouse’s death, can be uncertain or simply not what the spouses intended.

With a prenuptial agreement, intended spouses can reduce uncertainty and exert control over issues like property division and alimony in the event of a divorce, and inheritance in the event of a spouse’s death.

They may not be romantic, but prenups permit post-divorce (or post-death) financial affairs to be settled more rapidly, less expensively and more predictably.

Read more in this Local Tech Wire release: Premarital agreements – Hoping for the best, planning for the worst.

Father lives in South Korea.

Father has four children in South Korea.

Father dies … leaving behind a multi-million dollar estate.

Four people in North Korea believe that they are Father’s children as well, from a previous marriage when Father lived in North Korea.

The North Koreans file a paternity lawsuit in South Korea against Father in order to assert a claim directly against Father’s estate and/or indirectly against Father’s beneficiaries in South Korea.

DNA tests confirm that the four North Koreans are indeed Father’s biological children.

This litigation is reported to be the of its kind in South Korea.

The disposition of the case is anticipated to be followed closely by North Koreans and South Koreans.

Read more in this Korean Chosun Ilbo news article: N.Koreans Win Paternity Suit in Inheritance Battle with S.Korean Siblings and this Korea Joongang Daily article: Children in North win paternity suit in South.

Husband and Wife live in New York. They married in the US.

But they come from France. And it just so happens that they entered a prenuptial agreement (prenup) on an occasion when they were in France.

It was Wife, or rather her family who pushed for the prenup.

Flash forward thirteen years.

It turns out Husband has done pretty well over the intervening years.

Now Husband and Wife are divorcing, in New York.

Wife argues that the New York law should control their divorce. And the prenuptial agreement they signed in France should be ignored.

If so, the couple’s assets would likely be divided equally.

Husband, on the other hand, argues that the prenup should be enforced. And French law should govern their divorce.

If so, each spouse would keep the assets held in their respective names.

Of course, a third alternative may be the most likely outcome: the prenup is upheld and New York law applies to it.

Read more in this UPI article: Over the years, though, Husband has done pretty well and this Business Insider article: Sarkozy’s Banker Brother Got Rich And Now His Wife Wants Their Pre-Nup Voided.

Property division can be complicated.

Staying in the family home often appeals to the parent with primary timesharing.

In many cases, to achieve an even split of the total marital assets, this means that all the other assets are allocated to the other spouse.

What may appear to be a fair, even split on paper sometimes isn’t so even over the long haul.

Pensions and financial accounts do not require maintenance and typically will appreciate over time.

Real estate may well appreciate too over time but it also demands sometimes significant maintenance and upkeep expenses as well as routine mortgage service, property taxes and insurance.

Financially less sophisticated spouses often don’t fully appreciate how these costs and expenses can mount.

Before long, they may be forced to sell the home anyway. At a price the market will bear. If they can. The outcome is not always positive, especially in economies such as the present one.

The emotional choice to stay in the home may be a poor decision for the financially weaker spouse … at least if they would have to buy out the other spouse’s interest at or about the time of the divorce.

Of course, the assessment may be different if both spouses will share ownership and expenses of the home until their youngest child is emancipated, and then split the proceeds upon sale.

Read more in this TheStreet article: Life’s Tragedies Take Toll on Finances.

Lenders bankrolling court cases and keeping litigants afloat until final judgment – and collection – are nothing new really. In civil court.

But in divorce court and family court, they’re breaking new ground. Although they make perfect sense and there’s a huge need.

Millions of dollars in assets and / or revenues in businesses controlled by one spouse all too often allegedly disappear or shrink as soon as one of the couple wants a divorce.

Garnering the proof to support a truly equitable distribution of marital property can require considerable expertise and time from attorneys, accountants and investigators. And that costs money.

Money that one of the couple often does not have access to when needed. Enter private funding of contentious, high-stakes divorce cases for profit.

It’s a high risk business, but the rewards can be high too. Many charge a contingency fee (a percentage of the recovery) rather than interest.

Read more in this New York Times article: Taking Sides in a Divorce, Chasing Profit.

UK Husband and Wife divorce after forty years of marriage.

Husband and Wife have one adult child, Son.

Couple are wealthy and own a hotel and some other commercial real estate.

Court awards Wife about 5 million pounds UK, to be paid out in installments, plus some property.

The court also orders Wife to exit the business, and Husband to hold Wife harmless from any liabilities arising during her time in the business.

Two months after their divorce is final, Wife, who is 70 years old, unexpectedly passes away.

Son is Wife’s sole heir.

A baby was severely injured in one of the couple’s properties several years ago.

After Wife’s death, the liability insurer denies coverage on a 3 million UK pound lawsuit claim.

In the midst of an appeal, Husband seeks to modify the property division between Husband and Wife in order to set aside the hold harmless and have Wife’s estate bear some of the now uncovered liability for the baby’s injuries.

The justification Husband offers is that he didn’t know the insurer would deny coverage.

Son opposes.

The court takes the matter under advisement and will issue its ruling at a later date.

Under Florida law, a property award is fairly difficult to set aside … unless there is nondisclosure or fraud or overreaching.

Read more in this [UK] Westmorland Gazette article: Father and son fight over £5m divorce payment after ex-wife’s death

Prenuptial agreements, or prenups, are highly recommended for owners of closely held businesses.

After all, the future Husband and Wife may not be the only ones impacted by a prenup, or lack of same. There may be children.

And there may be other extended family members also affected.

A prenuptial agreement is the only way of protecting the interests of all those other folks and the business itself, in addition to the actively involved future spouse.

For the faint-hearted future spouse uncomfortable with broaching the subject, there is a simple solution.

Incorporate the requirement of a prenuptial agreement right into the shareholders’ agreement or members’ agreement, or other business management documents.

This approach makes the prenup mandatory, but depersonalizes the issue.

After all, divorce of a principal is de-stabilizing to the entire business, and the threat of a fragmentation of a spouse’s ownership interest and rights threatens harmonious management.

A prenup can specify ownership, voting rights, valuation, buyout where appropriate, characterize property as marital or nonmarital by agreement, and provide for death of a future spouse as well as the possibility of divorce. As well as other issues.

Read more in this Delmarva [MD] Daily Times article: Business owners: Consider prenuptial policy.