A similar question relates to who is responsible for credit card debt after divorce. With this issue, the first question to answer is how the credit account is held. Is it a joint account, an individual account, an individual account with an authorized user?
]]> If the account is held jointly, the bank who issued the card will be able to sue either spouse or ex-spouse, regardless of any divorce decree or settlement. If the account is individual, the account owner is the only one who is ultimately responsible. An authorized user will not be pursued by a bank for debts on the account.Community property states, of which Michigan is not one, will treat credit card debt a bit differently than equitable division states like Michigan. In community property states, debt occurred during marriage are considered joint debts, regardless of who incurs them or who is responsible for paying the bank back directly.
In Michigan, divorced spouses are well advised to separate any credit card accounts during divorce proceedings in order to protect the credit of both parties. This may be more difficult with joint credit accounts, but it is definitely worth looking into.
Source: Fox Business, "Does Wife Owe Ex-Hubby's Credit Card Debt?," Janna Herron, May 9, 2012.
]]>While parties may have a divorce settlement or decree to divvy up liability a certain way, such agreements don't give the full picture of who is legally responsible for the debt, or how they are liable. This can cause problems when one party promises to pay a debt in a divorce agreement, but fails to do so or files for bankruptcy later on, leaving the other party to pay the debt.
]]> The key to answering this question is to understand that divorce decrees and settlement agreements don't get rid of contractual promises signed for a mortgage loan. Neither do they require the lender to sue an ex-spouse who promised to pay if the loan ends up defaulting. Ultimately, the lender doesn't care who pays the loan, and they will go after whoever they can to secure repayment. A mortgage loan that was jointly singed by spouses allows a lender to sue either party for the full amount.Bankruptcy can complicate matters a bit. A spouse who has successfully gone through bankruptcy, for instance, will be relieved of responsibility for the mortgage, but the ex-spouse will not. If an ex-spouse who promised to pay the mortgage leaves his or her mortgage debt out of the bankruptcy filing, though, they will still be responsible for that debt, either in response to the bank or in reimbursing the ex-spouse in order to comply with a divorce settlement or decree. In the latter case, the responsible spouse will end up having to pay the debt, but their former partner may have to initiate a legal proceeding to get them to do so.
Source: Fox Business, "Must My Ex Pay for 2nd Mortgage if I Sell Home?," Justin Harelik, May 1, 2012.
]]>One issue that is determined by the state papers are filed in is when assets are classified as material. Depending on where one files, the cutoff date for accumulation of marital assets could be the filing date, the date the divorce is final, or some other date.
]]> The state of filing also determines who has the right to inherited property. Generally, inheritances are considered separate property, and so are not subject to equitable distribution or equal division. State law does determine, though, how an inheritance is treated once it is shared by spouses. The term usually used for this is "commingling," and states have varied rules in this area.Determination of child support also varies by state law. Some states focus on the non-residential parent's net income, while others focus on the non-residential parent's income and the number of overnights that parent has with the child. Each state defines its own way of making these determinations.
State law can also determine who pays the legal fees associated with a divorce, and whether college tuition can be ordered to be shared by parents. These rules, again, will vary by state though.
Michigan, like every other state, has its own way of making these and other determinations in divorce proceedings. Michigan readers who are considering divorce should speak with a family law attorney to get their questions answered and seek guidance about the process involved in getting a divorce.
Source: Fox Business, "How State Differ on Divorce Laws," Cindy Vanegas, May 7, 2012.
]]>For couples already going through divorce, this needs to be done anyway, as a financial statement of the couple's income, assets, liabilities, and expenses is required in order to make determinations related to property division, child support and alimony. For those preparing for divorce, taking a financial inventory will ensure that everything is accurately accounted for and will reduce the possibility of a spouse hiding assets.
]]> Evaluating assets is a huge aspect of the financial inventory. Among the items to be accounted for, the family home is often the largest asset. But it is also important to account for retirement accounts and pensions from previous jobs, stock options, deferred compensation and implied benefits. State have different approaches to how all this property will be divided up, but it is important to know what is there.Debts also need to be accounted for, as they will factor into the property division determination. In particular, credit card and loan debts are important to account for. Because it is often difficult to remove one spouse from a credit card, loan or line of credit which isn't fully paid off, it is often recommended that spouses pay off as much as they can prior to divorce. As part of this process, it is a really good idea to run a credit check.
Tracking spending is an important part of the process as well, since it will go toward creating a practical budget after the divorce. Generally, people will underestimate how much they spend, so it is helpful to have some hard numbers beforehand.
Couple's should also identify the sources of their income, so they know how much money is coming in and where it is coming from. This is particularly important when one spouse is self-employed, since business expenses easily get muddled with business expenses and the value of a license or business assets could affect a divorce settlement.
Taking a financial inventory can be a taxing process, but it is important that it is done accurately and completely, as this will ensure a fair outcome for both parties and prevent one party from doing financial harm to the other.
Source: Fox Business, "Five Things to Know About Your Finances Before a Divorce," Cindy Vanegas, May 4, 2012
]]>Oftentimes, adultery has little to no impact on property division, except perhaps in cases where one party has used marital assets in an adulterous relationship. If such a circumstance exists, a court would likely take that into consideration when determining the distribution of assets.
]]> With respect to custody, adultery likewise often has little affect, unless perhaps the adulterous relationship has been seen by the children. Where children have been exposed to the affair, it will be seen by a court as damaging.Not every state still permits fault to be a factor in divorce proceedings, but in those that do, adultery can significantly reduce or eliminate spousal support for the unfaithful spouse, no matter what their need for it may be. Where a spouse or ex-spouse is living with another person, spousal support will often be terminated even if it is already in place.
In Michigan, courts may consider fault when dividing martial assets and spousal support, but typically don't always significantly change the division of assets for fault reasons. In some cases they do, but attempting to prove fault could end up being a distraction and it is important to consider whether the payoff in proving fault is worth the distraction.
As the author of the article points out, the biggest way adultery will impact the divorce proceedings is willingness of the cheated spouse to settle. Understandably, spouses that have been cheated on are less likely to want to work together.
Source: Huffington Post, "Divorce questions: How Does Adultery Affect A Divorce Case?," May 3, 2012.
]]>According to court documents, Lawrence will be seeking joint legal and physical custody of their children, which would allow both him and his wife to share decision-making with respect to the children upbringing and welfare, and that the children will be spending their time equally between the former couple.
]]> Every Michigan couple that divorces with minor children must have a custody arrangement in place. The decision to select joint legal and physical custody a common alternative to sole custody, where one parent is responsible for the care and control of the children and decision-making related to their welfare. In joint custody arrangements, like that of Lawrence and his wife, parents share decision-making and sometimes physical custody.Parents who cannot agree on a child custody arrangement for their children will have to have a court decide one for them. In doing so, they will consider a number of factors related to the qualities of each parent and the child's relationship with each parent.
As sources point out, Lawrence and his wife have a prenuptial agreement, but as we've noted in a recent post, prenuptial agreements may not address matters of child custody, and rather focus on financial matters.
Source: Reuters, "Martin Lawrence Seeks Divorce, Joint Custody of Kids," Andrew Chow, May 1, 2012.
]]>With a prenuptial agreement couples can decide a number of issues right off the bat, rather than leaving it for a judge to determine. Each state has its own rules about what types of issues can and cannot be on a prenuptial agreement. No state permits restrictions of child custody, child support or visitation rights. Some states permit waivers of spousal support rights, though others don't.
]]> The key to prenuptial agreements is that they are validly constructed. This means that they are free of fraud, duress, mistake and misrepresentation or nondisclosure of material fact. It also means that they are unconscionable at the time of execution. If the facts and circumstances surrounding the agreement end up changing over time so as to make it unfair or unreasonable, a judge may decide it is unenforceable. Short of that, though, the agreement will be enforced.One of the things a couple should be sure to include on their prenuptial agreement is any outstanding debt they have prior to marriage and how that will be dealt with in the marriage and in the event of divorce.
Other issues an older couple should be sure to address are benefits, possible long-term care insurance, tax consequences of marriage and retirement. This last issue is particularly important for older couples. They should particularly discuss whether their plans for retirement are compatible and how they are going to make it happen financially.
Source: Fox Business, "Putting the 'Aged' in Engaged: Financial tips for Late Marriages," Julie Bawden-Davis, April 19, 2012
]]>The first piece of advice for older persons becoming engaged is to look into the possibility of setting up a prenuptial agreement. While these agreements are sometimes felt to be negative way to begin a life together, they can also save one from potential financial ruin.
]]> Every couple's situation will be different. Some couple's may be better served by such agreements than others. If you feel you may be financially harmed if you and your spouse were to divorce one day, it is worth speaking to an attorney. For couples with significant separate property or children from previous relationships, it is definitely worth considering.It is important for older persons to think about protecting their assets, particularly retirement accounts and life insurance. Because different states have different laws regarding property division, it is good to think through how those laws will affect one's property in a potential dissolution.
Michigan courts use the principle of equitable distribution for marital property. This means that all property owned by both parties is split between the couple in an equitable manner, which may or may not be 50-50. It is important to realize that, in equitable distribution states, property owned by both parties together and by either party separately is considered marital property.
A number of factors go into the consideration of what makes for an equitable distribution. Older couples should determine prior to marriage what assets they wish to keep off the table during a potential divorce, and work this into a prenuptial agreement.
In our next post, we'll continue with this topic.
Source: Fox Business, "Putting the 'Aged' in Engaged: Financial tips for Late Marriages," Julie Bawden-Davis, April 19, 2012
]]>A large part of the reason for the frustration is that the tattered relationship keeps a former couple from working together the way they need to in order to avoid an IRS audit. Here we'll take a look at common trouble areas for divorced couples.
]]> Procrastination, a common problem for many taxpayers, is also common for divorced couples. That should not come as too much of a surprise.The question of whether to file jointly or separately is no small one. Filing jointly may offer certain benefits, including that it is often a lot cheaper, but it also makes a couple liable for their spouse's tax liability. One good thing to realize is that, if you file separately, you are always able to change your filing status to joint later, but a joint return cannot be amended.
When a divorced couple has children, the one who has custody of the children over 50 percent of the year is the one who can claim Head of Household status for the dependency deduction. Couples need to make sure that only one of them claims the deduction, otherwise the IRS will most certainly initiate an audit. Couples will have to decide, though, whether the one who is eligible for the deduction will opt to give it up to the other. There is a process to do this, but couples need to get on board with one another for it to work smoothly.
Spousal support, or alimony, is one of the above the line deductions available to paying spouses. Couples often negotiate nontaxable spousal support, however, during divorce proceedings, so this should be discussed prior to dissolution.
Other income tax issues can arise besides those listed here. Those who are facing these or any other divorce-related tax issues do well to consult an attorney to get their questions answered and determine the best way to proceed.
Source: Business Insider, "Divorced Couples Are Walking Right Into These Tax Traps," Mandi Woodruff, April 3, 2012.
]]>Child custody disputes center on the important question of the best interest of the children involved. A number of factors may be taken into consideration, such as the child's relationship with each parent, employment, history of taking responsibility, and so on. The bill would reduce the weight of a rather common obstacle for service members-service to their country.
]]> In a typical military child custody dispute, the nonmilitary parent is able to use the military parent's absence from the child's life as a means to get the judge to deny them primary custody. The bill would modify how judges approach the issue of a military parent's extended absences.The bill has been considered in previous years, going back to 2008, and has passed the U.S. House several times, but it has repeatedly been struck down in the Senate. Sources say a large part of the opposition comes from the Defense Department, which says the measure should be handled by state courts. The current Secretary of Defense, Robert Gates, though, has said he supports the bill, despite the varying opinions on the matter.
Service members deserve a fair shot at being parents, just like anybody else. Military service should not be a mark against one's ability to parent one's child. This bill recognizes that.
Source: military.com, "Law Would Strengthen Troops' Child Custody Rights," Charlie Reed, April 10, 2012
]]>The story involves a 47-year-old former Arlington police officer who decided to help out a friend who wanted children by donating to a California sperm bank. The man reportedly agreed to be a donor, but never to be a parent. The woman, however, filed lawsuit in 2008 in order to demand child support shortly after she gave birth to triplets, one of whom died shortly after being born.
]]> The two reportedly met in the apartment complex where they lived in 1991. They had had a mutual interest in bodybuilding and a casual sexual relationship. According to the man, the relationship was never serious, but she claims that it was and that they had discussed marriage and children.Because of the lawsuit, the man had been ordered to pay as much as $5,000 per month in child support. Recently, though, an appeals court in California ruled that the payments would stop because the donor of semen provided to a licensed physician, surgeon or licensed sperm bank for use in artificial insemination or in vitro fertilization in a woman other than the donor's wife is not legally treated as the natural father of a child.
The decision is surely a relief to the man, who has been financially harmed by the continued payments.
Source: myfoxdc.com, "Texan Sperm Donor Does Not Owe Child Support, Appeals Court Rules," April 11, 2012.
]]>In addition to treating one's wife blamelessly and avoiding taking on a significant relationship during the divorce process, there are several other things one can do to increase one's chance of obtaining a favorable child custody judgment.
]]> It is important to be careful about criticizing one's spouse in front of family and friends and children. People talk, and whatever one says in front of family and friends may end up getting back to one's spouse.A similar problem is tearing a spouse down in front of one's children. This kind of behavior, along with attempting to keep one's children away from the other parent or keeping them from communicating with that parent, can be misinterpreted as parental alienation.
Parental alienation is an age-old problem, and one that nearly every state considers a factor in determining child custody. Such activity may risk one's chances at a favorable custody judgment.
Communication with one's spouse about taking children out of the area is also very important. Failure to communicate taking a trip may be interpreted as kidnapping, which could result in a restriction or termination of parenting time.
Some of these mistakes are easy to fall into, particularly when a marriage ends with a lot of bitterness. Obtaining a favorable child custody judgment will be more likely, though, if these tips are kept in mind.
Source : Huffington Post, "Ways To Sabotage Child Custody ," Joseph E. Cordell, April 2, 2012.
]]>As is well known among divorce attorneys, men sometimes heightened challenges in obtaining favorable child custody judgments. Custody determinations are centered on the question of what is in the best interests of the child, and judges may sometimes assume that the mother is the better caretaker. That said, men can and do obtain favorable custody judgments. The following are some tips for men to increase the chances of a favorable judgment.
]]> First off, it is important to maintain civil relations with one's spouse. In considering the best interests of children, judges will look for any signs of abuse or mistreatment. The abusing spouse will face an enormous challenge in winning a custody battle if a judge finds evidence of such abuse or mistreatment. Embittered spouses may also falsely accuse their spouse in order to obtain protection orders as a tactical advantage. Therefore, it is important to keep one's nose clean.Taking on a new girlfriend during divorce is a risky move, and moving in with a girlfriend during a divorce has even higher risks. Because judges tend to look for stability for children, such changing circumstances may result in an unfavorable judgment. Best to wait until the divorce is final before making such changes in one's life.
In our next post, we'll continue looking at more tips for setting oneself up for a favorable custody determination.
Source : Huffington Post, "Ways To Sabotage Child Custody ," Joseph E. Cordell, April 2, 2012.
]]>According to a recent CNN Money article, an increasing number of unmarried couples are establishing agreements prior to moving in together. These cohabitation agreements, similar in many respects to prenuptial agreements, address many of the same issues, such as each person's assets, child custody and support obligations.
]]> There are several factors behind the increased popularity, one of them being that it is more common to forego marriage. Roughly 51 percent of all adults decide to get married nowadays, which is a record low. Those who choose not to get married may wish to add some protection to their relationship by means of a cohabitation agreement.Another factor may be that more are deciding to delay marriage. The later one decides to marry, the greater chance that there are more assets to protect. Interestingly, the majority of the increased numbers of folks seeking out these agreements are not same-sex couples, but heterosexual couples.
Another factor behind the increase could be increased consumer debt. Cohabitation agreements often not only specify who gets what in terms of property, but also who pays for what in terms of debt.
Whatever the reasons for the increase, it is certainly the case that both married and unmarried couples could benefit from these types of agreements, which increase the security of both parties and make a split up more streamlined, and a bit less difficult.
Source: CNN Money, "Prenups aren't just for married couples anymore," Jessica Dickler, March 20, 2012.
]]>For military members, another unique challenge is the government pension. For many military couples, a government pension is their biggest asset, and so an object of contention.
]]> For an ex-spouse of a military member, obtaining their share of a pension can be difficult. Federal and state rules governing military pensions often make it difficult for an ex-spouse to collect benefits, even when they are awarded by a court.A former spouse of a military member is entitled to one-half of the amount that accrued to the pension during the marriage. In marriages that lasted during military service for 10 years or longer, the government will send the benefit to the ex-spouse directly. If the period was less than 10 years, the government does not enforce a court order, and it becomes the burden of the military ex-spouse to petition a divorce court in the state in which the military spouse lives.
Knowing which state to file in can be tricky for spouses of military members who have been moved around. As one might guess, dealing with this and other matters can take a significant amount of time and money.
Attorneys for ex-spouses of military members sometimes choose to avoid the costs and hassles of this process by negotiating a sum of money roughly equal to the value of the spouse's share of the government pension. An attorney advising such a person should be sure to avoid common pitfalls, such as failure to file forms in a timely manner. This mistake can jeopardize the ex-spouse's ability to receive benefits.
Because of the complications that can be involved in military divorce, particularly with pensions, it is wise to consult an attorney familiar with this area.
Source: Wall Street Journal, "Divorce: Splitting Up a Rich Military Pension," Ellen E. Schultz, March 9, 2012.
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