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In many divorce cases, the most thorny property division question is: what to do with the marital home?

That is especially likely in a depressed real estate market like the current one.

One commonly agreed to option is for the spouse who wants to remain in the house to refinance the other spouse’s name off the mortgage.

But what if the occupying spouse doesn’t have sufficient income or credit to accomplish what was agreed to?

Well, that may depend on what state you live in.

A Virginia women is apparently facing jail time for not being able to refinance as agreed.

Due to the downturn in the real estate market, she also has been unable to sell her way around the refinancing obligation.

Read more in this WAVY TV 10 (VA) article: York Co. woman faces possible jail time for failing to refinance, sell home.

An Oregon man is building up a criminal record. And that is putting the brakes on his divorce.

Over the last eight years since his divorce case was filed, the husband has allegedly been attempting to hide assets from his wife.

Upon learning of the supposed fraud, the wife renounced a settlement agreement.

The wife draws support for her position from fact that the husband, under oath in the divorce case, denied owning an interest in a resort owned by his half-brother - but then filed a separate lawsuit asserting a multi-million dollar interest in the resort.

Unfortunately for the husband, his brother testified under oath that the husband intentionally sought to divert income from his own business to the resort - to hide it from his wife in the divorce case.

Now the husband alleges that he purchased an ownership interest in the resort. And the brother contends that he purchased only an interest in the stream of net income.

The husband reportedly refused to enter a written agreement. After all, that could be found and used by the wife in the divorce case.

In the suit against his brother, the Court awarded the husband a substantial (but fixed) sum of money - but no ownership interest.

Part or all of the amount of the judgment may be subject to property division between the spouses - or, possibly, allocated to support.

Read more in this Salem, Oregon Statesman Journal article: Facing charges isn’t new for property owner.

A married Brooklyn pastor has built a very successful congregation during his 30 year marriage.

His wife, who is divorcing him, contends that he runs and profits from the church just the same as though it were a business.

Hardly a first time scenario in the news.

But the wife’s contention that the husband’s church should be treated like a marital asset, subject to equitable distribution in the divorce, is a rare divorce tactic.

And, at least in New York, what is a first is the judge’s appointment of a forensic accountant to examine the church’s books and operations, with a view toward valuing and equitably distributing the church.

The wife alleges that the pastor runs a catering business out of the million dollar church building, applies collected donations to personal expenses (including a mistress), and determines his own salary at will.

In other words, her position is: if it looks like a duck and quacks like a duck …

The wife also claims that she provided $50,000 in “startup money” for the church business. The Husbands responds that it was a “donation”.

This case certainly opens up a can of worms that could have far-reaching ramifications for so-called nonprofits involved in divorce.

Who knows who will be following more closely, divorce attorneys or the IRS?

Read more in this New York Daily News article: Grace Christian Church backdrop for pastor’s ugly divorce and this Associated Press article: Pastor’s Wife: Church Is a Divorce Asset.

Owning a home remains the American Dream.

And for many singles to achieve it, they are buying with another person who is not their spouse.

From a legal standpoint, this requires some extra legal preparation.

Frank conversation about mutual expectations, finances and debt and credit.

Reducing the terms of the arrangement to a written contract.

Some points to be covered:

1. Do the co-owners have identical interests, equal interests, or unequal interests?
2. What happens to the co-owner’s interest if that co-owner dies?
3. What happens if one co-owner wants to sell that co-owner’s interest?
4. What happens if the co-owners have a fight and cannot bear to occupy the house together anymore?
5. How are the co-owners’ respective interests valued?
6. What if one co-owner’s debts result in a lien on the property?
7. How will the mortgage be paid?
8. How will mandatory expenses of the property be paid (real estate taxes, probably homeowner’s insurance)?
9. How will (semi)optional expenses of the property be paid (repairs, improvements)?
10. How will a co-owner’s share of expenses be paid in the event of that co-owner’s death?
11. Should each co-owner be required to maintain life insurance for the benfit of the other co-owner?

A little advance consideration and planning is crucial to a successful real estate joint venture outside marriage.

Read more in this MS NBC article: Pros and cons of buying a house with friends.

Property division in divorce is called equitable distribution in North Carolina, Florida and other states.

From North Carolina comes an article explaining equitable distribution under North Carolina law. Perhaps surprisingly, most of the explanation applies equally well to Florida.

Steps:

1. Identification or classification as marital or nonmarital - were nonmarital assets mixed up with marital assets?
2. Valuation at fair market value - may require nonlawyer accounting/appraisal experts
3. Distribution - presumed to be equal unless the presumption is overcome as inequitable under the circumstances of the case

Fault is largely out of the picture - unless there is economic wrongdoing by a spouse.

Property settlement agreements are generally forever, except in unusual circumstances. So now is the time to speak, not after the divorce.

Read more in this Winston-Salem Journal article: Be wary: Dividing property in a divorce can be easy, or a minefield.

One issue that probably won’t come up during a divorce of non-senior citizens is social security retirement benefits.

But it is something that dependent ex-spouses should consider after both ex-spouses have reached 62 years of age, provided the marriage lasted at least 10 years and the dependent spouse is not married to someone else.

Once the dependent spouse applies for benefits, the Social Security Administration will determine whether the applying spouse’s own work record or an ex-spouse’s record will provided greater benefits, and should pay the highest benefit available to the applicant.

Read more in this Providence Journal MoneyLine column: Social Security survives divorce and at the Social Security Administration’s website.

Financial Considerations In A Divorce Settlement:

1. Personal exemptions for children
2. Child tax credits
3. Education tax credits
4. Future retirement pensions
5. Life insurance
6. Future income taxes on assets

Read more in this Kansas City Fox 4 News article, FOX 4 Finance: Divorce Settlements.

I previously posted on one installment of a series of articles on Basic Tax Questions for Divorcing Parties Answered.

A later installment in the series focuses on division of pension plans, IRAs and the like.

As the article explains, pension plans are often divided via special court orders called QDROs that cause the plan administrator to make part of the former employee’s pension payments directly to the former spouse.

The QDRO does not alter the total pension package payable as a result of the one spouse’s participation in the plan.

QDROs must be prepared with meticulous care. Errors can lead to inability to roll a benefit into another qualified plan without a tax event occurring.

After the divorce is finalized, it is prudent to update all beneficiary designations.

Read more in this Lancaster [PA] Intelligencer Journal article: Tax issues in divorce and separation - Dividing retirement plans and IRAs.

An emerging question for a growing number of splitting couples may be the still novel question that recently faced a divorcing Texas couple:

Who gets their frozen embryos?

In that case, the Texas trial court awarded them to the Wife.

But the Husband appealed to an intermediate court and won.

Then the Texas Supreme Court ducked the case, so the Husband remains the “victor”.

But note: this couple had actually signed a form consenting to the embryos being “discarded” in the event of the couple’s divorce.

It’s impossible to say how much of a bearing that consent form played in the appellate court’s ruling, but it seems reasonable to infer it may have been significant, if not compelling.

Read more in this KLTV 7 [Texas] article: Texas Supreme Court refuses to hear custody battle.

Granted, taxes are not foremost in the minds of most couples going through a divorce.

But for couples with sufficient assets, income and civility, tax impact is an important consideration which may be factored into any divorce settlement.

Couples should pay particular attention to alimony, the sale of the house, income tax filing status and timing of the divorce.

An interest in real estate can be transferred from one spouse to another tax-free, but alimony payments are normally taxable income to the receiving spouse.

Capital gains treatment on sale of real estate may favor selling as a couple before the divorce, rather than as a single after the divorce.

For late-in-year divorces, it may pay to wait until early the following year.

In appropriate cases, it may be well worth consulting a tax accountant or tax attorney on the structuring of any divorce settlement.

Read more in this [New Jersey] Courier Post article: Keep your cool in a divorce to avoid tax headaches.