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May 2012 Archives

Hidden Assets in Divorce

Often in the context of divorce parties may attempt to hide assets in an attempt to keep them out of the marital estate that will be up for distribution. One of the biggest red flags as far as potential hidden assets is if the spending/assets of the party are way more than would be expected based on their reported income. A party who has a small business and deals in cash can easily hide money. It may become necessary to hire an expert to analyze the income flow and see if their reported income is correct after a thorough investigation. Top level executives may receive alternative forms of income. Examples include stock options, bonuses, car allowances, and deferred compensation plans to name a few. Military members also often have a compensation package that goes beyond their base salary. It is important to obtain information on all benefits of employment so they can be either be included as income in a potential support calculation or treated as an asset subject to distribution. Another potential problem as far as hidden assets is offshore accounts. Many offshore banks have confidentiality provisions that deflect detection. Parties should also be weary of the other party transferring assets over to family members or friends.

Spousal Support

Section 4321 of the Domestic Relations laws provides that married persons are liable for the support of each other according to their respective abilities to provide support as provided by law. Similar to child support, spousal support will be calculated based on a statewide guideline. Without children, spousal support is 40% of the difference of the net incomes of the parties. If there is also a child support order, spousal support will only be 30% of the difference of the net incomes.

Contempt for Non-Payment of Support

In Warmkessel v. Heffner, 2011 PA Super 46, the Superior Court held that credit will not be given for time already spent in jail between being taking into custody and the support hearing due to non-payment of child support. The Defendant Father had been ordered to pay $260 per month in child support for his two children. After failing to pay regularly, several contempt petitions and a missed support enforcement hearing, the court issued a bench warrant for Father's arrest. Police took the Father into custody a few months later and a hearing was scheduled for approximately 3 weeks out. At the hearing, the court found Defendant Father owed $6,037 in late child support payments and sanctioned him to a maximum of 3 months imprisonment. Defendant Father's attorney asked the court to give Father credit for the 21 days already served and the court declined.

Division of Pensions in Divorce

Pensions, as well as other retirement plans, are often one of the assets up for division in a divorce. The court will equitably divide the marital portion of a pension plan after considering all the relevant factors in equitable distribution. The marital portion of a plan would be the portion that accrued from the date of marriage through the date of separation. In some cases, the entire pension will be marital depending on the timing of the marriage alongside the start date of the pension plan.

Embryos are Marital Property

Frozen embyros are considered marital property and hence, technically up for division in a divorce, however there is some disagreement on exactly how the "property" should be dealt with. This is a relatively new issue in family law and different states have applied different methods for resolving the matter. The Pennsylvania Superior Court recently released a decision regarding the marital status of frozen pre-embryos in Reber v. Reiss, 2012 PA Super 86. In Reber, the court had to determine what should happen to the frozen pre-embyros of a divorced couple. Wife wanted to use the frozen pre-embryos in order to have children of her own whereas Husband wanted the frozen pre-embryos either destroyed or donated for research.

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