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Posts tagged "equitable distribution"

Divorce and When to get the House Appraised

If you are getting divorced and own a home, the value of the home is considered for purposes of equitable distribution. If the home was owned by you prior to the marriage and remained in your name alone, the increase in value of the home from the date of the marriage until the date of separation is considered marital. In this case, you should get two appraisals done on your house, one from the date of the marriage and one as of the date of separation.

Equitable Distribution and Worker's Compensation

One asset in equitable distribution or support that parties should consider when getting divorced is worker's compensation awards. Depending on what state the worker lives, there may be a component not only for lost wages but also an award comparable to a personal injury award. In these instances, the lost wages should be calculated into any support award and the again, you will need to decide whether you want to lump sum the award portion as either income for purposes of support or as an asset for purposes of equitable distribution. In the event that it is considered as income, you cannot double dip and claim it as an asset. If, however, the award is for an injury that occurred outside of the marital period, either before or after separation, you will need to include it as income as you cannot include it as an asset. Your support order should be very detailed and specific and identify exactly what portion of any worker's compensation is included in the calculation of the income. Whether to have the worker's comp treated as an asset or income really depends on how the court will treat the asset. In some instances, the court may award the majority of that asset to the injured party and it may be better to then include it income if you are also eligible to receive support. Speaking with your attorney about the expected amounts would be wise to do before you make that decision so that you can decide whether it is better as support or as an asset. 

Income or Asset? Avoid the Double Dip

Oftentimes when getting divorced, an asset the generates income can either be considered in equitable distribution or in support. For example, if you receive stock options as part of your employment, they are considered an asset for purposes of divorce. If you cash them in during the divorce, it will either be considered an asset for income, but not both. If you have a pension that accumulated during the marriage and it goes into pay status during the divorce, or if it is already in pay status at the time of the divorce, it may be considered an asset or income but not both. You need to be careful that if you have a support order that the income from that pension or the stock option is not considered into the incomes if you want to have that asset considered an asset for equitable distribution. You need to be very careful that any support order entered specifically states whether any of the income was included, and if so, how much.

Dividing a Pension in Divorce and the Survivor Annuity

Oftentimes when parties get divorce, one of the biggest assets that they have accumulated is the pension of one or both of the spouses. In a Pennsylvania divorce, the pension portion that accumulates during the marriage is what is considered marital. There may also be a non-marital portion for the years of service prior to the marriage or the years of service after the marriage. When getting divorced, there are two methods of getting each spouse their share of that pension. One method is to do a percentage distribution of the marital years. When this method is use, the spouse receives a percentage multiplied by the number of years married that the pension accumulated divided by the total number of years that the pension accumulated. This is usually distributed by a separate document called a Qualified Domestic Relations Order which is often paid to and drafted by a company or firms that handles QDROs. The other method of distribution, and the preferred method by the Court (according to case law) is an offset. Under this method, the marital portion of the pension is assigned a dollar value based on a report prepared by a company who does pension valuations. This dollar value of the pension can then be swapped with other marital assets as an offset.

Tips for Keeping Divorce Costs Down

1. Understand that family lawyers charge based on their time. This includes time reading emails, talking to you and anything else related to your case. Sending daily emails or calling constantly to talk about your case is a surefire way to escalate your bill. Instead, keep a journal of your thoughts and schedule one block of time to go over all your issues with your attorney and be sure to engage a private therapist or good friend if most of your conversation is related to emotional struggles instead of legal issues.

Theories on Property Division

There are two different theories on how title to property may affect the division of the property at the time of divorce. The title theory looks at which spouse holds title to each asset. There are multiple forms of title. Sole title grants the unilateral power to control. Examples of assets that may be relevant in divorce that are solely titled include retirement accounts, individual bank accounts, and vehicles. The remaining forms of title often apply to real property. Tenancy in common is the co-possession of an entire asset where each party has a ½ interest. Joint tenancy with right of survivorship is also co-possession of an entire asset with the condition that the surviving party will receive sole possession upon death of the other party. Each party can potentially transfer their interest during their lifetime. Finally, tenancy by entireties is similar to joint tenancy with right of survivorship but can only exist between spouses and any transfer of the interest can only occur with consent of the other spouse. Most states prefer the title theory. Equitable distribution is the method for property division under this theory. 

My spouse left me, why do I now have to pay the mortgage?

If you are getting a divorce in Pennsylvania, oftentimes the court will require the occupant of the marital home to pay the mortgage. It does not matter whose name is on the mortgage. The theory behind requiring the occupant to pay the mortgage is that only that person is receiving a benefit for use of the home. Consider it fair rental value. The court will normally impose a support obligation on the spouse to pay you if they earn more and you have been married for at least a few years. If you have children with your spouse, you can seek a mortgage contribution as part of child support if they children remain the home with you. The mortgage contribution, however, is never going to be equal to the mortgage, nor is it even half of the mortgage. In some cases, you will not even get a mortgage contribution if your income and the child support amount do not mathematically warrant it. It is also in the discretion of the Judge whether to even award it. If you cannot afford to pay the mortgage between the income you have and the support you receive from your spouse, it may be time to consider selling the home. If you fail to pay the mortgage while living in the house during a divorce, the Court can intervene and order it sold. It is a good idea if you are separating to consult an attorney who can assist you by figuring out approximately how much you can expect to receive. This not only helps in deciding if you can afford to stay in your home during a divorce but will also help you decide how much you can afford to live elsewhere if you have to move. The attorney can also provide you with the documented expectation of support in order to help you secure a rental if your income does not support it alone. 

Insurance Policies

Questions regarding insurance policies often come up in the context of a divorce. Married couples may have commingled auto insurance policies, health insurance plans, and/or life insurance policies with their spouse as beneficiary. Technically, there are no rules on maintaining certain policies that existed at the commencement of the divorce in the sense that there is no automatic punishment or sanction for dropping these policies at separation. On the other hand, the courts have the power to order certain policies be maintained through their general equity powers in the period between separation and divorce. Perhaps, the most prudent action is to maintain all policies until finalization of the divorce or other mutual agreement or seek the advice of an attorney first to avoid the potential of additional fees that may be incurred if you are ordered to reinstate any policy and/or be responsible for any liability incurred while the other party was uninsured. Additionally, as it relates to health insurance specifically, it is routinely ordered as part of a support action and unreimbursed medical expenses, which can be substantial if there is a lapse insurance coverage, will also be shared.

Fair Rental Value

The issue of fair rental value arises where one spouse is no longer living in the marital residence pending finalization of a divorce action. The principle behind fair rental value is that the spouse that has moved out of the former marital residence still has a ½ interest in the property and accordingly, should be compensated for their interest. The court must consider a number of items in reaching an appropriate calculation of any rental credit due. First, the court must determine if there are any equitable defenses that should offset the total of any rental credit due. Second, the court must consider the length of the dispossession. Case law also establishes that the other spouse must be in actual possession of the home.

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