Tag: property division

Why Are Expert Witnesses Important to My Case?

Why Are Expert Witnesses Important to My Case?

Many lawyers will tell you that the truth is whatever can be proven in the courtroom. Oftentimes, in order to prove a specific fact it is necessary to call in an expert witness to testify about that fact or subject area. An expert witness is someone who by virtue of education, training, skill, or experience has expertise and specialized knowledge in a particular subject beyond that of the average person sufficient that others may rely upon that person’s opinion in that area as an assistance to the judge. Basically, they know more about a particular subject than you, the lawyers, or the judge and can help the judge decide your case.

Expert witnesses may be needed for many different reasons in your divorce. Some examples of expert witnesses are:

  • Custodial evaluators
  • Real estate appraisers
  • Personal property appraisers (e.g. antiques, special collections, etc.)
  • Mental health professionals
  • Business valuators
  • Forensic accountants
  • Vocational experts

An expert witness may be needed to establish the value of certain property, discuss the physical, mental or emotional health of one of the parties or children, whether one spouse is concealing assets, or any other point that would assist the judge in making a decision. Early on in your case and as the case progresses, your attorney should discuss with you the need for possible expert witnesses. More than likely, you will need to hire someone with whom neither you nor your spouse has had a previous relationship to avoid a conflict of interest. In other words, you are probably not going to be able to use your family accountant to conduct a business valuation.

You should be prepared for the fact that expert witnesses will charge for their services. Some of those services are not cheap either. While there are provisions in the rules to petition the court for advancement of fees for retention of expert witnesses from a higher wage earning spouse, many judges seem hesitant to order it. However, some judges will appoint an expert witness and direct that the parties split the cost. This avoids a “battle of experts” where each side has an expert and the judge has to decide which one to believe.

So what happens if you simply do not have the money to hire an expert and the court will not order the other party to advance those expenses? This can create a very difficult situation depending on the facts of your case. While you and your attorney may wish to present the case one way, if there are not sufficient funds, you will have to make do with what you have. It may also be an incentive to try to settle the case outside of court without being forced to rely on expert testimony. If financing your litigation is going to be a major hurdle to the success of your case, you need to discuss your options with your attorney sooner rather than later.

Photo courtesy of Brad Shorr

Will the Judge Make Me Auction Everything in My Kentucky Divorce?

Will the Judge Make Me Auction Everything in My Kentucky Divorce?

While it is possible that a family court judge could order the property in a divorce case to be sold and the proceeds divided, the courts usually try to avoid it.  As a general rule courts have no interest in getting mired down in the process of selling property, especially personal property.

While many believe that everything in divorce is divided “fifty-fifty,” that is not truly accurate.  Rather, the Court is to divide the property in equitable proportions.  This usually means that the Court will require that for every dollar’s worth of property one party receives, that party must also take a dollar’s worth of debt to cancel it out.  The idea is that each party will net out at zero.  For example, if one party receives $100,000 worth of property, the Court will try to assign $100,000 worth of debt to that person.  The other party may receive $50,000 worth of property and $50,000 worth of debt.  While this division may not be “fifty-fifty,” it is considered equitable since each party netted out at zero.

This is the general rule attorneys use in trying to negotiate a settlement of your divorce case.  A problem can arise when neither party actually wants a certain pieces of property, such as the marital residence.  In this instance, there may be little choice but to sell the property and divide the proceeds. This may be done by placing the property with someone specifically in the business of selling such property (a realtor in the instance of real estate for example) or having the property auctioned.  The upside of an auction is that it gets the property sold quickly.  The downside, of course, is that the property will most likely only fetch pennies on the dollar.  If the parties cannot agree on a method of sale, the Court may be forced to decide.

Forcing the Court to decide on the method of sale may have unintended consequences for your case.  Oftentimes, a great deal of the success of your case can come down to the judge’s assessment of your credibility and even likability.  Normally, the person who is being the most unreasonable comes up short in these types of cases.  Therefore, if the Court determines that it must get bogged down in dividing property that no one wants at the final hearing because you have been the recalcitrant party, the Court may hold that against you in determining another issue.

As with most things in resolving a dispute in a divorce case, you should strive to be reasonable and listen to the advice of your divorce and child custody attorney.

Photo courtesy of Colleen Lane

Should I Get a Prenuptial Agreement?

Should I Get a Prenuptial Agreement?

Many people who have felt the sting of a divorce decide to once again take the plunge and tie the know once again.  When they do, they often want to minimize the chance of going through the divorce experience again.  That is where a prenuptial agreement comes in.

Prenuptial agreements are also called antenuptial agreements, premarital agreements, or prenups.  Prior to approximately 1990 they were not even allowed in the Commonwealth of Kentucky because it was believed that they would actually encourage divorce.  A Kentucky Supreme Court case allowed couples to determine how their assets and debts would be divided in the event of a divorce thereby bringing Kentucky into line with a number of other states on this issue.

The issue of whether you should even bother with a prenuptial agreement really depends on your situation.  If either one of the soon-to-be-spouses has significant assets that they wish to keep separate from the other spouse, a prenuptial agreement is a definite consideration.  If neither party is coming into the marriage with any significant financial holdings, there probably is no real need for one.

If you have determined that a prenuptial agreement is something that you want to consider, it is important to understand what can be covered and what cannot.  Moreover, the actual drafting and way the document is executed is important as well.

A prenuptial agreement can cover a number of issues such as:

  • What property is each party’s non-marital property
  • What property will remain each party’s non-marital property
  • How marital property will be determined in the event of a divorce
  • How each party’s property will be divided in the event of a divorce or even death
  • How debts will be divided in the event of a divorce
  • The effect commingling assets will have in the event of a divorce
  • How income and appreciation in value of assets will be treated in the event of a divorce
  • What happens to each spouse’s retirement benefits in the event of a divorce
  • Whether maintenance will be awarded and how much

A prenuptial agreement cannot deal with any issues involving child custody or the payment of child support.  Those issues will have to be decided upon either by agreement of the parties in event of a divorce with approval by the court or the court will have to make the final decision.  The reason for this is that the court is the final arbiter of child custody and, more specifically, the child’s best interest in the event of a couple’s divorce.  That decision cannot be predetermined prior to the marriage even taking place.  Additionally, child support is typically seen as a right of the child which cannot be bargained away by either parent prior to the divorce.  In fact, many judges are loathe to allow child support to be waived absent a showing of good cause in the event of an actual divorce.

In a future post, we will discuss the actual execution and enforceability of a prenuptial agreement.  For now, if you think a prenuptial agreement may be right for you, it is important that you meet with your family law attorney, estate planning attorney and financial adviser to discuss your options.

Photo courtesy of scienceatlife

Can I Change the Locks on the House?

Can I Change the Locks on the House?

One question that comes up all the time, especially at the beginning of a divorce case, is “Can I change the locks on my house during the divorce.”  The short answer is yes, but please do not stop reading yet.  As with anything else in a divorce, the answer is actually more complicated than a simple yes or no.

In Kentucky, when the parties are married, unless and until the court says otherwise, they each have equal access and rights to marital property regardless of whether it is titled in the name of the husband, the wife or jointly.  In other words, until a ruling from the court, either party has just as much right to the house as the other.

This means that either spouse has the right to change the locks.  Likewise, either spouse has the right to force his/her way into the house and that should not be arrested for breaking into his/her own home.  (Keep in mind that if the house is damaged during the break-in, the party who did so may be required to pay to repair the damage or otherwise be penalized in the final property division.)  As a practical matter, changing the locks on the residence is a fairly hostile action.  It could escalate an already volatile situation and increase tension between the parties.  Increased tension and hostility usually results in more litigation and more attorney fees.

Normally, one of the first motions that is filed in a divorce case is a motion for temporary relief which usually includes a request for exclusive use and possession of the former marital residence.  Once the court has awarded temporary, exclusive use and possession to one party, the other party may not come into the home without the express permission of the party to whom it was awarded or an order of the court.  At that point, it is not only reasonable to change the locks, you are probably stupid if you do not change them.  If the other spouse enters the home uninvited at that point, he/she could be subject to contempt sanctions or possibly even criminal charges.

In addition to changing the locks on the house, do not forget the other points of access.  Security system codes need to be changed and garage door openers need to be secured or the codes changed.  If you have a security company monitoring your home, you may need to provide them with a copy of the temporary order so they know your estranged spouse is not to be on the premises.

As with anything else in a divorce case, before you act, consult with your divorce and custody attorney before taking any steps that may escalate an already tense situation.

Photo courtesy of Matthias Ripp

Marital Property: I Paid For Everything! Why Should My Spouse Get Anything?!?

Marital Property: I Paid For Everything! Why Should My Spouse Get Anything?!?

Many people go into a marriage and never fully commit to the marriage being a joint effort.  They keep separate bank accounts.  They divide up their bills so that the husband pays certain bills and the wife pays certain bills.  Even if they do not go the point of keeping everything divided, in their mind nothing ever becomes “ours.”  Everything is thought of in terms of mine and the other spouse’s.  Those people get a very rude awakening when they go through a divorce.

In Kentucky, a court is going to presume that anything that is acquired during the marriage is marital property.  The few exceptions are property or money that is acquired during the marriage as a gift, an inheritance, income derived from pre-marital property without any joint efforts of the parties, or property/income that can be traced back to one of those types of properties.  That means that money you earn through your employment is marital property.

When you spend that money to purchase things or make a payment on the house or car, you are accumulating marital property.  Marital property is what the court divides in a divorce case.  Regardless of whether your spouse also directly contributed money from his/her income to purchase the thing or make the house or car payment, he/she will be entitled to a share of that property.  Courts take a very broad view of what is marital property and how it should be divided.  Even when one spouse does not work outside of the home, the court is required to consider the contributions that spouse made to the marriage as a homemaker and stay-at-home parent.  Therefore, unless absolutely everything that was acquired during the marriage was paid for with non-marital funds, it will be divided by the court.

When you get married very little you acquire during the marriage remains “yours” or “mine.”  Most everything becomes “ours.”  Understanding this will make it much easier for you to get your case resolved quickly and efficiently.

Photo courtesy of David Goehring

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

What Should I Bring to My Divorce Attorney’s Office at the First Meeting?

What Should I Bring to My Divorce Attorney’s Office at the First Meeting?

In actuality, you do not need to bring anything to your initial meeting with your attorney.  However, if you want to be efficient, there are a number of documents that will be needed in almost every case.  The sooner you provide these to your attorney the sooner your attorney can get your case positioned for settlement or trial.  (It also saves your attorney the time of having to chase you down to get you to produce these documents, which ultimately saves you money in attorney fees.)  The following is a non-exhaustive list of what you will need to gather for your attorney:

1.  Copies of your last three most recent paycheck stubs.

2.  Copies of Federal and State Income taxes for the most recent tax year.

3.  Documentation of all other income for the past 48 months, including the source of the income and the amount of income received year to date.

4.  Verification of work-related child care expenses.

5.  Verification of cost of health/dental insurance for children’s portion (e.g. difference between cost of single and family plan).

6.  Most recent statement of each bank account.

7.  Most recent brokerage statement or documentation of purchase and/or value for each investment.

8.  Copies of all deeds, mortgages, liens, etc. including current tax assessments for all property.

9.  Declaration page(s) of life insurance policies and documentation of cash surrender value. (This only applies to whole-life policies.  Term policies do not have a cash value.)

10.  Documentation of benefits accrued in pension, profit sharing, 401(k) or other retirement plans, including most recent statements of each such plan and the name, address and phone number of plan administrator.  If any portion was acquired prior to the marriage, provide documentation of the value as of the date of the marriage.

11.  Payoffs of any vehicles and copies of titles.

12.  For each business interest, list name of business, extent of interest or title in business (i.e., owner, shareholder, partner, etc.), provide a copy of last income tax return filed by business and documentation of income earned (or portion received) through business during last twenty-four months.

13.  Provide a list describing any other assets you have an interest in, including any documentation as to the value of the non-marital interest, date asset was acquired, and source of non-marital interest (trace and document non-marital funds used to acquire each asset).

14.  For each asset in which you claim a non-marital interest, provide the basis and approximate value of non-marital claim.  Documentation tracing any non-marital assets shall be produced if available, and if not currently available, shall be produced when available or as specified by separate court order.

15.  For each debt, provide the last statement or documentation of unpaid balance, or explain why documentation is not available.  A short summary of why the debt was incurred would be helpful as well.

16.  For each debt designated as “non-marital,” list the party you think should assume responsibility for said debt and why.

When you deliver this information to your attorney, the more organized you can make the information, the better.  A neatly tabbed three-ring binder is much, much easier to review than a garbage bag full of documents that may or may not have any relevance to your case.  We have had numerous clients show up with garbage bags and shoeboxes full of documents that we have to wade through to get their case prepared for trial.  They then get upset when we have to charge them to do that.  Save yourself the money and the stress, get organized and help your attorney help you.

Photo courtesy of alborzshawn