Category: attorney

Five Sure-Fire Ways to Increase the Costs of Your Divorce

Five Sure-Fire Ways to Increase the Costs of Your Divorce

The old joke is that divorces are expensive because they are worth it.  Nevertheless, some people insist on making their case as absolutely expensive as possible.  Here are five ways to drastically increase the costs of your divorce.

Overcommit financially – Often people under stress deal with that stress with a little “retail therapy.”  They continue spending as though nothing has changed, or worse, they spend even more than during the marriage.  They shower the children with new gifts trying to buy their affection or they overcommit to the lease or purchase of a new home.  While it is perfectly reasonable to want nice things and provide a lovely home for your family, you have to keep in mind your current (and future) financial situation.
Involve your lawyer in every decision – You should definitely consult your lawyer when necessary about your case, but I have had clients who asked me to give them advice on dating.  Definitely not money well spent.  I heard the story in USA Today about a woman who would call her lawyer every day to ask him to speak with her parrot thinking that her husband would eventually have to pay the huge legal fees.  She was wrong and had to pay her own $70,000 legal bill
Demand an absolute even split down to the penny – Marital finances never work out that way neither do divorce finances.  Keep in mind the statute requires a “just” division of property not an equal one.  When you are fighting over the value of a TV or a sofa, keep in mind that the amount spent in lawyer fees will likely not make the difference in values worth fighting over.
Insist on fighting over everything – Not saying that you have to roll over by any stretch of the imagination, but I mediated a case one time where two seemingly intelligent people were arguing over everything right down to the Post-it notes in the house.  Some things simply are not worth it especially when you compare what you gain to what you will pay in time and litigation costs.

Do something stupid that results in criminal charges – In divorce cases, there is a lot of stress and conflict.  I have seen otherwise normally reasonable people flip out and do things that they would never otherwise think of doing.  Before they know it, they have criminal charges against them for things like criminal mischief (property damage), animal cruelty, stalking, driving under the influence, and assault/domestic violence.  Then they are not only having to pay legal fees to defend those charges, but, most likely, fines and court costs as well.
These are just a few ways you can make your divorce more expensive.  The two key words of advice that will help control your costs more than anything else? “Be reasonable.”
Photo courtesy of Chris Potter
When is a Prenuptial Agreement Enforceable?

When is a Prenuptial Agreement Enforceable?

For years prenuptial agreements were not enforceable in Kentucky.  That all changed with two Kentucky Supreme Court decisions that were handed down in 1990.  Those decisions held that prenuptial agreements were enforceable subject to appropriate limitations.

In order to be enforceable, a prenuptial agreement must meet several requirements.  First, there must be full disclosure by both parties as to his/her financial status and holdings.  The full disclosure of assets rests primarily on the party who intends to rely on the agreement (i.e. the person with the most assets).  Courts will usually take a reasonable view of this requirement and, where it appears that a spouse was aware of the other party’s assets prior to the marriage, will deem this requirement met.

The agreement must also be freely entered by the parties without fraud, material omission, misrepresentation, duress, or mistake.  The court will usually review the agreement to determine if it is unconscionable both at the time it was executed and at the time it is sought to be enforced.  If the court finds the agreement to be unconscionable, it may modify so much of the agreement as necessary to satisfy the conscionability requirement, but should otherwise give effect to as much of the agreement as possible as long as there was no fraud or duress in its execution.

It is also wise for both parties to be represented by separate counsel during the negotiation and execution of the agreement.  This helps to show that the agreement was entered as an arms length transaction and further combat claims of fraud or duress.

Duress is a complicated issue that the court will look at based on the totality of the circumstances surrounding its execution.  As a practical matter, the agreement should be signed as far in advance of the wedding day as possible.  Courts have been concerned where agreements are presented to would-be spouses on the eve of a wedding when the church is booked, the guests are arriving, and the possible embarrassment of being “left at the altar” looms large.

Once the agreement is executed and the marriage is solemnized, the agreement may be revoked by the parties.  This may be done by physically destroying the agreement itself as with any other contract.  A court may also find that the parties through their actions and behaviors have abandoned the agreement.

A prenuptial agreement is a complicated issue that should not be taken lightly.  If you choose to enter a prenuptial agreement, be sure you understand all of its provisions and a very particular about the method in which it is executed.

Photo courtesy of Jim Hammer

Should I Move Out of The House or Will It Hurt My Case?

Should I Move Out of The House or Will It Hurt My Case?

You have decided it is over, maybe papers have been filed, all you want to do is be away from the other person.  But should you move out of the house?  I am asked that question with some regularity. Many people are scared that they might be accused of abandonment, but with the advent of Kentucky’s no-fault divorce system, that is no longer a concern.  Nevertheless, it does not necessarily mean that you should immediately move out.

The first question is whether you will be asking the court to designate you as the primary residential parent for your children.  If so, you will want to stay with the children and maintain as much stability for them as possible.  Therefore, remaining in the home would be best.
If you believe that ultimately, you will want to keep the residence, it is usually a good idea for you to remain in the home.  Oftentimes, once one party moves out he/she establishes another residence, it is very easy for a court to see that the living situation is working and award the house to the party still residing in the house.  That is not to say it happens every time, but it often comes into the court’s decision making process.
If you have decided to leave, you need to think about the process rationally.  Leaving is going to most likely increase your emotional and financial stress.  Whether it is to escape domestic violence or you have simply decided that leaving is the best thing for you and your family, you need to approach this situation with a great deal of planning.  You will never have a better opportunity to prepare for your divorce case than when you are in the home.  Consider the following points:
  1. Figure out the finances.  If you are leaving you need to assess both parties’ incomes (or lack thereof), document that income, and work out a budget.  The last thing you need to do is stretch yourself too thin by renting a place you can barely afford and then get hit with a child support obligation.
  2. Prepare for co-parenting.  Help the children cope with mommy or daddy moving out.  Kentucky now requires some form of co-parenting class in divorces involving children.
  3. Itemize the property and debt.  You will never have a better opportunity to catalog the property that may be in dispute than when you are in the home.  Do it before you leave.  This includes the residence itself, intangible assets (financial records, stocks, bonds, etc.), business interests, and physical assets such as furniture, artwork, vehicles, etc.
  4. Marshal your resources.  Make sure you have access to as much money as possible.  Divorces are expensive and so it setting up your new place.  Talk with family and friends about helping you with loans/gifts.  Access bank accounts and credit accounts.  You may consider selling some items, but discuss this with your attorney first.
  5. Do not think that just because you have moved out that you can behave in any manner you like.  You need to assume you are being watched or that your actions will get back to your spouse.  It is best not to date or do anything that might make you look bad in court.  Talk with your attorney about possible dos and don’ts.

Moving out of the marital residence is an important decision that should not be taken lightly or without preparation.  Make sure you understand all of the relevant issues before you make a move.  Above all preparation is key.  Do not do anything without discussing it with your divorce lawyer.

Photo courtesy of Meathead Movers

What Is A QDRO & Why Is It So Important?

What Is A QDRO & Why Is It So Important?

Unless you have been through a divorce, you have probably never heard of a QDRO.  If you are going through a divorce and a retirement account is involved, a QDRO is extremely important.  QDRO is a term that means qualified domestic relations order.  This is a special order that is needed to divide a retirement account, such as a 401k account, while minimizing the penalties and taxes.

At its most basic, a QDRO divides a party’s retirement account in a divorce.  It may be drafted by either of the attorney’s involved in the case or by a neutral third party company.  Regardless of who drafts the QDRO, it must conform to certain provisions of the Internal Revenue Service Code, the specific rules of the retirement plan itself and the plan administrator.  Finally, it must be approved by the Court.  As you can imagine, with all of the requirements that must be satisfied, these documents must be prepared with some degree of precision.

Once the QDRO is signed by the court, the circuit clerk will mail the order to the plan administrator who will then begin the process of dividing the retirement account.  Generally, the plan administrator will do his/her best to maximize the tax benefits under the terms of the plan and the QDRO.  Again this division is done without any of the penalties normally associated with taking money out of one of these plans and thereby saving both you and your ex-spouse potentially thousands of dollars.

With a QDRO in place, one spouse will be receiving a portion of the other spouse’s retirement.  The party receiving this portion is called the “alternate payee.”  The only way to get this designation is with a QDRO, otherwise, such a distribution would be deemed an early withdrawal and subject to all of the penalties of an early withdrawal.

This brings up another point, during your divorce, you should never withdraw or borrow money from your retirement account without first consulting with your divorce lawyer.  First, you will most likely run afoul of orders of the court that prohibit such behavior.  Second, you may also be accused of dissipating (wasting) assets because you will incur penalties with the withdrawal.  Third, you will increase your tax obligations for the year.  Finally, it is just a bad idea because you are leave less money for you and your spouse to divide.  Often a retirement account is the second largest asset to divide behind the marital home.  Just like you should not start tearing walls out of the house and destroying the home’s value, you should not damage the value of the retirement account.

Obviously, QDROs are extremely important when going through a divorce.  As with most other things in a divorce, it is something you need to discuss with your family law attorney.

Photo courtesy of 401(K) 2012

The High Cost of Not Hiring a Lawyer

The High Cost of Not Hiring a Lawyer

I am often asked, “Do I really need to hire a lawyer for my divorce.”  That answer is no, there is no law that requires you to hire a lawyer to represent yourself.  There is also nothing that says you could not perform your own amputation if you need to, but things usually work out better if you hire a surgeon to do it.

Representing yourself in court is called being pro se (you have now fulfilled your quota of pompous legal terms for the day).  The problem with trying to represent yourself in a divorce is that things rarely work out as well as you had hoped they would.  Many people start off with the best of intentions that their divorce will be “uncontested” only to find that they cannot agree on some very important issues.  This is only the beginning of the problems with self representation.

Another major concern is that you may not get everything to which you are entitled.  Many people I talk to on a daily basis are surprised by what the law entitles them to in a divorce.  If you do not know  to what you are entitled, you have no idea what to ask for and can wind up “leaving money on the table.”  This can make the prospect of starting over in a new life as a single person much more challenging if you have even fewer resources.  Your lack of knowledge and hopes of saving yourself a few thousand dollars on an attorney could wind up costing you tens of thousands of dollars.

That same lack of knowledge of the law can also be a detriment to you if you have to go to court.  Courtrooms are operated using a complicated set of rules and procedures that attorneys often spend years learning and studying.  If you are representing yourself, you are held to the same standard as an attorney and you must know all of these rules inside and out.  Additionally, you are responsible for knowing and understanding all of the substantive law that applies to your case and whether an argument or motion you file is considered frivolous or without foundation.  If your lack of knowledge or procedure results in unnecessary litigation or your pleadings are deemed baseless or harassing you could wind up owing the opposing party’s attorney fees.  At a minimum, a skilled attorney on the opposing side will most likely be able to prevent you from presenting all of the evidence you want the judge to review and otherwise put you at a tremendous disadvantage.

The final concern is that you will let your emotions take over.  An attorney’s job is to look at your case, the facts and the law objectively and advise you as to the best course of action.  When you are representing yourself, there is a real fear that emotions such as anger, hurt, the desire for revenge will take over and cloud your judgment.  This can cause you to make some very, very stupid mistakes causing you to act like a hurt and angry spouse instead of a rational attorney.  Settlement negotiations wind up going nowhere, which results in you having to go before the judge, where you again let your emotions get out of control and you wind up with an even worse result.

There is a reason that the old adage “he who acts as his own attorney has a fool for a client” is an old adage.  It is just as correct today as when it was first uttered probably hundreds of years ago.  Do yourself a favor and hire a lawyer.

Photo courtesy of Pat Loika (cropped for space)

Who Has to Pay Attorney Fees in a Divorce?

Who Has to Pay Attorney Fees in a Divorce?

Divorce cases are expensive; no doubt about it.  Johnny Carson is often credited with making the joke that they are so expensive because they are worth it.  Nevertheless, cost is a question that almost always comes up in a new divorce case.  Along with that is whether the other party can be forced to pay one’s attorney fees.

The concept of the opposing party having to pay the other side’s attorney fees is more prevalent in other areas of civil practice.  It also often comes out of the notion that the “loser pays.”  That actually is how the system tends to work in many European countries, but is not a doctrine that has been adopted in the United States save for certain very limited types of cases.  The reason being that it would tend to discourage people from bringing valid legal claims to court.

Moreover, the idea that there is a “winner” and a “loser” in a divorce case is a misconception.  There really are no winners.  The court is trying to make an equitable decision and solve difficult problems in the most just way possible or in the best interest of the child.

With all that being said, it would be wrong to get the idea that attorney fees are never awarded in a divorce case.  They are.  Kentucky Statute allows for attorney fees and costs of an action to be awarded “from time to time.”  However, going into a case, you would be wise to make sure that you have funds available with which to support your litigation.  Otherwise, you may be forced to sell your case short and accept a settlement that is far less than it should be simply because you cannot pay for certain expert witnesses, your attorney, or otherwise support yourself.  The reason I say this is because, even though the statute allows the court to order the other party to advance attorney fees and costs to the more indigent spouse, many judges refuse to do so and, instead, wait until the end of the litigation to order attorney fees.  That does not mean that a motion for advancement of fees should not be made especially in situations of wide income disparity.  Just be forewarned that it might not pan out.

When courts do award attorney fees whether during the pendency of the action or at the end, the case usually falls into three categories:

  • As alluded to earlier, where there is a wide income disparity between the parties, the court is more likely to look favorably upon a request for an award of attorney fees.  Sometimes, this is referred to as “leveling the playing field.”  For example, where you have a wealthy physician on one side and a stay-at-home mother with limited income potential or earning capacity on the other, it is more likely that the court will award the wife her attorney fees and costs.  Keep in mind the court will temper this decision based on how the property is ultimately awarded and what, if any, maintenance is awarded.
  • To reimburse one party for fees incurred to litigate a case that should never have been tried in the first place.  This would be a situation where the law is fairly clear and the case should have been settled outside of court, but one party is simply too stubborn or unreasonable.  If you hire a skilled family law attorney, he/she is better able to prevent you from finding yourself in this situation.
  • The final reason would be to discourage misconduct by the parties during litigation.  Many times during a case one party is particularly unwilling to cooperate or obey court orders.  This results in the other party having to come before the judge to seek sanctions to force the recalcitrant party to do what he/she was supposed to do in the first place.  As a sanction the court might force the misbehaving party to pay attorney fees to the other side.

Once the court decides to award attorney fees, the judge has to then decide how much to award.  The court may require the attorney seeking the award to submit an affidavit setting out his/her fees and how the figure was reached.  The court will then evaluate the fee charged/requested in light of the complexity of the case, the reasonableness of the charges, and any other relevant equities of the case. Once awarded, the attorney fees are enforceable as any other money judgment and may be garnished from the obligee’s wages and assets.

Photo courtesy of Tax Credits

The Divorce is Over. Now What?

The Divorce is Over. Now What?

The divorce is over and the dust has settled.  The court has said that you are no longer husband and
wife.  Now what do you do?  The time has come to notify other necessary people that you are divorced and take steps to change your official records and important papers.  Below is a list of some of the issues you need to deal with and people you need to notify.

  • Your Employer:  Make sure your employment records reflect your new single status.  This will require you to change your wage deductions, beneficiaries and possibly other withholdings.
  • Retirement Benefits:  This may fall under contacting your employer, but if you received a share of your spouse’s retirement, make sure you also received a copy of the qualified domestic relations order and contact the plan administrator to make sure they have everything they need to get you the benefits you were awarded.
  • Banks & Investments:  Notify banks, investment clubs, credit unions, etc. of your new single status and make sure your spouse’s name is removed from any accounts you received.  Destroy all old checks from any joint accounts.
  • Insurance:  Again change your beneficiaries.  If you are no longer required to carry certain family members on your policy, contact your company and have them dropped.  If you were covered under your ex-spouse’s employer’s plan, contact the employer immediately about COBRA benefits if you have not made other arrangements for health insurance.
  • Taxes:  Contact your tax professional to discuss your new tax status and what you need to do to prepare for the next tax season.
  • Credit Cards:  Destroy all joint cards and close the accounts or have them transferred to your name alone (or your ex’s if he/she was ordered to pay the debt).  Verify your ending balances.
  • Important Documents:  Review all deeds, titles, and other documents of ownership to make sure property is placed in the name of the person who received it in the divorce.
  • Will/Estate plan:  Review your estate plan and modify your beneficiaries and testamentary gifts accordingly.
  • Power of Attorney:  If your ex spouse had power of attorney over you, revoke it and have a new one prepared.
  • Name Change:  If you changed your name as part of your divorce, you need to have it changed on your driver’s license, the Social Security Administration, and your financial institutions.
  • Social Security Benefits:  If you were married for ten (10) years or more, you have the right upon retirement to claim the higher of your benefits or your ex-spouse’s level of benefits.  Keep a copy of your marriage license and divorce decree to show the Social Security Administration when you qualify to file.
  • Child Support:  If you are receiving or paying child support contact your local child support office to make sure they have your contact information and a case open on you.  This will ensure that you receive proper credit if you are paying or provide a way to prove that you have not received support you are owed.  If there is a substantial change in your or your ex-spouse’s financial condition, you may be eligible for a child support modification at any time after the divorce.

Finally, always keep a copy of your divorce papers in a secure location that you can readily access.  While this list is not an exhaustive list of post-divorce action steps, it will cover most issues that will or could arise after your divorce.  For more detailed information, contact your family law professional.

Photo courtesy of CollegeDegrees360

Can I Deduct My Attorney Fees From My Divorce?

Can I Deduct My Attorney Fees From My Divorce?

It is possible in some limited circumstances.

Let me preface this article by saying that I am in no way a tax expert and you should consult with your tax advisor on your specific situation.

With that being said, yes, attorney fees for a divorce can be deductible.  Attorney fees, along with other litigations costs, are only deductible to the extent that they are incurred to produce taxable income.  For example, if you incurred attorney fees to secure an award of maintenance and that maintenance award is taxable as income, which it generally is, then you can deduct a portion of your attorney fees and litigation costs.  Likewise, if you incurred attorney fees to modify a maintenance award, you may be able to deduct your fees.

Conversely, since child support is non-taxable, you can never deduct your attorney fees incurred to pursue a child support claim or modification.  However, you can always go through your local county attorney office for free child support enforcement assistance.

Other areas where attorney fees in a divorce may be tax deductible include fees incurred to secure a portion of a spouse’s retirement account, since the account payments will be taxable when they are withdrawn.  If the retirement account was generated with taxed income and is not taxable upon withdrawal, then the fees are probably not deductible.  You may also be able to deduct your fees if they were incurred to secure things like rights to patents, royalties, and other similar assets that will generate taxable income for you.

The right to deduct your attorney fees is not total.  The attorney fees can be deducted as miscellaneous itemized deductions.  Sorry, if you take the standard deduction you are out of luck.  Additionally, the fees are only deductible to the extent in which they exceed 2% of your adjusted gross income.

As you can see, this is a very complex area and I would reiterate that you should never try to deduct your attorney fees without first discussing it with your accountant.  Your accountant may want you to request a letter from your attorney to specifically designate what portion of the attorney fees were incurred to produce taxable income because such a letter or other statement will likely be required by the IRS if there is ever a dispute.  Since many attorneys move their files to storage upon completion of the case, the sooner you ask for that documentation, the better.

Photo courtesy of Ken Teegardin

A Great Lawyer Knows the Judge

A Great Lawyer Knows the Judge

No, I do not mean that a great lawyer is also the judge’s best friend.  Obviously, if a judge and lawyer who appears before him/her have a close relationship, it creates a conflict of interest that would prohibit the judge from hearing that lawyer’s cases.  The same would be true if there was a high level of personal animosity between the judge and a lawyer.  I recently heard the story of a lawyer who was divorcing his wife, who was a judge.  This lawyer was actually bombarded with calls offering to pay him for the privilege of representing him in the divorce so that his future-ex-wife-the judge would have to recuse herself from all of their cases as well.

In a family law case, it is often vitally important that the attorney you choose is able to accurately predict how the judge assigned to your specific case may rule based on the facts of your case.  I routinely practice in front of approximately nineteen different judges across numerous counties in two states.  Each of those judges have different viewpoints, attitudes, and ideas about what is equitable or in the best interests of children.  There are some judges that regularly award equal timesharing while other judges are opposed to it and would never award it absent an agreement of the parties.  One judge is very generous in awarding maintenance while the judge in an adjacent county almost never awards maintenance.

Having an attorney who can anticipate how a judge may rule in your case can shape not only how your case is prepared for trial, but also possible settlement.  If the opposing party is making demands at a settlement conference that your attorney knows the judge is likely never to award at trial regardless of the evidence, it will inform your negotiation strategy.  Conversely, if your attorney is unable to predict the judge’s actions, you may wind up giving up more than necessary which could negatively affect your financial future.

During your initial consultation your attorney should be able to give you an idea of what you can expect from the judge who may be assigned to your case.  Keep in mind, some judges are easier to predict than others, but the attorney can discuss that issue as well.  If the attorney with whom you are meeting is unable or unwilling anticipate possible outcomes of your case based on different facts and variables, it might be a sign you need to hire a new lawyer.  Who you hire can make a difference.

Photo courtesy of Mike Licht

Jennifer Lawrence & Other Celebs Learn – Your Photos Are Never Completely Private

Jennifer Lawrence & Other Celebs Learn – Your Photos Are Never Completely Private

You have zero privacy . . .”
Scott McNealy, then CEO of Sun Microsystems

The latest photo scandal for Jennifer Lawrence, Victoria Justice and other celebrities illustrates an important point to remember in your divorce or custody case.  Your photos and your information are never as secure as you think they are.

I previously discussed the fact that your Facebook and other social media can be used against you in court.  Nevertheless, people often feel much more secure having their own “private” stash of photos, videos, etc.  These “private” images almost certainly will not remain “private” once a civil suit is filed.  If anonymous hackers are able to seemingly routinely get their hands on private photos of celebrities, how much easier will it be for someone close to you (i.e. a spouse or lover) to figure out a password or supposedly secret hiding place?

Unless you wind up with a child as a result of a one night stand, most likely the person on the other side of your divorce or custody case kno
ws you quite well.  Most likely, they can guess your password to your phone without a lot of effort or they know that supposedly super-secret hiding place you use.  Those will be some of the first places they look to dig up dirt on you.

In the years I have been handling divorce and custody cases, believe me I have seen people who felt the need to record, write about or photograph some pretty bizarre things.  The relevance of these depends on the facts of the case and may actually be of dubious value from a litigation standpoint.  However, their value for settlement negotiations can be immeasurable when the writer, video star or photo subject really, really does not want them released into the public record.  The value of these can go up exponentially if you are seeking maintenance and have already started a new relationship and decided to “document” it.  Why put yourself at risk?

Anything that is photographed, written down or recorded has the potential to be used against you in court.  So before you decide to be a star in your own movie or you decide the world needs photos of you in your unmentionables (trust me, we don’t), ask yourself if you would want your grandma to see it.  Unless your grandma looks like this, in which case you should just cut to the chase and decide if you would ever want a judge to see it when deciding if you are a good parent.  The best advice is simply to keep your privates private.

Photo courtesy of Amy Wilbanks