blank
Written by Canterbury Law Group

What Is Equitable Distribution And Separate Property In Divorce

Family courts divide property in one of two ways: equitable distribution or community property. Most states divide marital property according to what’s fair, or equitable, for both parties during a divorce. This isn’t the same as equal distribution, however, as the goal of equitable distribution is to consider the needs of each party and the facts of the case.

The equitable distribution of marital assets is determined on a case-by-case basis. It is subject to negotiation between the two parties and the discretion of the judge. If you’re getting divorced in a common law property state (where equitable distribution is recognized), you’ll want to understand how property division will be determined.

This article addresses the two ways in which assets are divided between a couple during their divorce.

Community Property vs. Equitable Distribution: The Basics

In the nine community property states, which include California and Texas, marital property (generally, all property acquired between the date of the marriage and the date of separation) is generally divided fairly equally. This is done regardless of who contributed more to the marriage (whether in regard to money, housekeeping, etc.), who has more separate property, or whether one of the spouses is largely to blame for the divorce.

 

Generally, anything purchased with money earned by either spouse during the marriage is considered community property. Community property is subject to a roughly 50/50 split in a divorce. However, separate property may be established through a written contract. Examples of such contracts are prenuptial agreements or postnuptial agreements, sometimes called antenuptial agreements.

In equitable division property states, courts take a much more delicate approach to property division. Instead of automatically dividing marital property down the middle, these states take a step back and consider what would be the fairest to both parties. This includes consideration of separate property as well as marital property, and the needs and means of each spouse.

For example, consider if one spouse gave up their career in order to stay home and raise children. They now have a difficult time earning a living after the divorce. In this instance, the court may award that party a larger cut of the marital property. Conversely, if one spouse was abusive or otherwise at fault for the failure of the marriage (even in a “no-fault” divorce), the court may award them a smaller percentage of the marital property.

Determining What’s Equitable: Factors Considered

Like community property states, in equitable distribution states, the divorcing couple has an opportunity to reach an agreement on their own (subject to court approval) before the courts intervene. This may take place in a collaborative environment or through the parties’ attorneys. If the parties are unable to reach an agreement about the division of marital property, the courts will use their discretion (within the parameters of state marital property law) in order to reach a resolution.

When courts are tasked with determining the division of assets, they’ll generally consider the following factors under equitable distribution laws:

  • Duration of the marriage;
  • Which spouse has primary custody of minor children;
  • The financial needs and liabilities of each spouse, present and future (for instance, one party may need to invest in a college degree in order to earn a decent wage);
  • The financial well-being and earning power of each spouse, present and future;
  • Amount contributed by each spouse to the combined marital property;
  • Pensions earned by either spouse;
  • Non-monetary contributions to the family (such as child-rearing, unpaid work on the home, etc.);
  • Marital debt accumulated during the duration of the marriage (such as credit card debt);
  • Age, health, and special needs of each spouse;
  • Child support (and/or spousal support) obligations of either spouse for previous relationships;
  • Total fair market value of separate property (again, this isn’t subject to division, but does factor into the overall determination); and
  • Marital misconduct by each spouse (such as gambling debts, extramarital affairs, or instances of domestic violence).

Note that premarital property is not included in equitable distribution. This is because personal property acquired before the marriage is not considered part of the marital estate. Only assets acquired during the marriage are considered part of the marital estate and are subject to equitable distribution.

Individuals often decide to get married after falling in love and realizing they have similar values and life goals. But, romantic ideals aside, marriage is at its core a merger of two entities into a single unit, with shared assets and liabilities. And just as a business merger results in the commingling of assets, so too does marriage (to a degree).

But the question of who owns what typically is addressed only when a married couple decides to call it quits and go their separate ways. Marital property is that which is subject to division upon divorce, but what is separate property in a divorce?

Marital Property vs. Separate Property: The Basics

In order to define separate property in the context of a marriage, we also need to cover the meaning of marital property. Most assets (and debts) acquired during the marriage are considered marital property and thus subject to division in divorce. The way in which marital property is divided depends upon the laws of your state, with a handful of states using the “community property” approach (generally, a 50/50 split).

 

All other property is considered separate property, which means it belongs to just one of the parties in a marriage. When a couple gets divorced, separate property is not subject to division.

 

Assets Considered Separate Property

Unlike marital property, separate property (sometimes called “individual property”) belongs to just one individual before, during, and after the marriage. This mainly consists of that which was acquired before the couple gets married, with a few notable exceptions. Debt also follows these rules; someone who enters a marriage with a heavy debt load typically will be responsible for that debt after the marriage ends.

State laws determine what’s considered separate property, but they’re fairly consistent with one another. Generally, the following is considered separate property:

  • Property owned by one spouse prior to the marriage;
  • Gifts or inheritances received by one spouse prior to or during the marriage;
  • Property acquired by one spouse (in that individual’s name only) during the marriage and not used by the other spouse or for the benefit of the marriage (unless it’s a community property state);
  • Property/debts designated as separate in a legally enforceable contract, such as a prenuptial agreement;
  • Personal injury awards, minus any compensation for lost wages (unless it’s a community property state); and
  • Any property obtained by one party using their separate property assets (such as inheritance funds) with the clear intention of maintaining the acquired property as separate.

Separate property that’s been so commingled with marital property that it’s virtually impossible to identify will be considered marital property (and subject to division) in a divorce. For instance, if marital property (shared income) is used to pay off a car originally purchased by one spouse before the marriage, the car (or a portion of its value) will be considered marital property.

Separate Property: Community Property vs. Common Law States

It’s important to understand how community property states and common law property states differ in how separate property is distinguished. Common law property states, for the most part, automatically define that which is registered in one spouse’s name only as separate property. This isn’t the case in community property states (such as California), where an express, written agreement is required for such a determination.

Additionally, common law property states will take into consideration each spouse’s separate property when determining how to equitably distribute marital property during a divorce. Since community property states split marital property in half, they don’t consider each party’s separate property.

blank
Written by Canterbury Law Group

What Is Equitable Distribution?

Family courts divide property in one of two ways: equitable distribution or community property. Most states divide marital property according to what’s fair, or equitable, for both parties during a divorce. This isn’t the same as equal distribution, however, as the goal of equitable distribution is to consider the needs of each party and the facts of the case.

 

The equitable distribution of marital assets is determined on a case-by-case basis. It is subject to negotiation between the two parties and the discretion of the judge. If you’re getting divorced in a common law property state (where equitable distribution is recognized), you’ll want to understand how property division will be determined.

 

This article addresses the two ways in which assets are divided between a couple during their divorce.

 

Community Property vs. Equitable Distribution: The Basics

In the nine community property states, which include California and Texas, marital property (generally, all property acquired between the date of the marriage and the date of separation) is generally divided fairly equally. This is done regardless of who contributed more to the marriage (whether in regard to money, housekeeping, etc.), who has more separate property, or whether one of the spouses is largely to blame for the divorce.

 

Generally, anything purchased with money earned by either spouse during the marriage is considered community property. Community property is subject to a roughly 50/50 split in a divorce. However, separate property may be established through a written contract. Examples of such contracts are prenuptial agreements or postnuptial agreements, sometimes called antenuptial agreements.

 

In equitable division property states, courts take a much more delicate approach to property division. Instead of automatically dividing marital property down the middle, these states take a step back and consider what would be the fairest to both parties. This includes consideration of separate property as well as marital property, and the needs and means of each spouse.

 

For example, consider if one spouse gave up their career in order to stay home and raise children. They now have a difficult time earning a living after the divorce. In this instance, the court may award that party a larger cut of the marital property. Conversely, if one spouse was abusive or otherwise at fault for the failure of the marriage (even in a “no-fault” divorce), the court may award them a smaller percentage of the marital property.

 

Determining What’s Equitable: Factors Considered

Like community property states, in equitable distribution states, the divorcing couple has an opportunity to reach an agreement on their own (subject to court approval) before the courts intervene. This may take place in a collaborative environment or through the parties’ attorneys. If the parties are unable to reach an agreement about the division of marital property, the courts will use their discretion (within the parameters of state marital property law) in order to reach a resolution.

When courts are tasked with determining the division of assets, they’ll generally consider the following factors under equitable distribution laws:

 

  • Duration of the marriage;
  • Which spouse has primary custody of minor children;
  • The financial needs and liabilities of each spouse, present and future (for instance, one party may need to invest in a college degree in order to earn a decent wage);
  • The financial well-being and earning power of each spouse, present and future;
  • Amount contributed by each spouse to the combined marital property;
  • Pensions earned by either spouse;
  • Non-monetary contributions to the family (such as child-rearing, unpaid work on the home, etc.);
  • Marital debt accumulated during the duration of the marriage (such as credit card debt);
  • Age, health, and special needs of each spouse;
  • Child support (and/or spousal support) obligations of either spouse for previous relationships;
  • Total fair market value of separate property (again, this isn’t subject to division, but does factor into the overall determination); and
  • Marital misconduct by each spouse (such as gambling debts, extramarital affairs, or instances of domestic violence).

Note that premarital property is not included in equitable distribution. This is because personal property acquired before the marriage is not considered part of the marital estate. Only assets acquired during the marriage are considered part of the marital estate and are subject to equitable distribution.

blank
Written by Canterbury Law Group

Does Divorce Impact Social Security Benefits?

Credit and Divorce

You’ll want to pay attention to how divorce and remarriage affect your Social Security, just as you would with marriage. For example, a name change must be recorded to the Social Security Administration (SSA) in order for your earnings to be accurately reported, and remarriage affects survivor benefits.

Essentially, if you have been married for at least 10 years, you will likely continue to get Social Security benefits. If your marriage lasted fewer than ten years, you would not be eligible for your ex-benefits. spouse’s Remarriage and other variables can affect your benefits.

During a divorce, it is not overly complicated, but you must understand your rights and take care of these matters immediately.

How long must a couple be married before receiving benefits?

To be eligible for spousal benefits, you must have been married for at least 10 years.

How much Social Security does a divorced spouse receive?

This is crucial information for your divorce financial planning. To comprehend your spouse’s or ex-retirement spouse’s funds, you must obtain their Social Security benefits statement. This is particularly significant if you lack your own earnings or employment history.

When you reach the full retirement age, you will get full or unreduced benefits as well as fifty percent of your retirement savings account. Typically, if you have your own benefits, you will receive them first. If your spouse receives a bigger benefit than you do, you will also receive funds from their record.

The current full retirement age is 66, but it will shortly increase to 67. You can apply for Social Security payments at the age of 62, but the amount you get will be decreased. You may be eligible for delayed retirement credits if you or your spouse prolong your retirement age. These raise your monthly benefit amount.

Can You Continue Receiving Social Security Benefits After Divorce?

You can only get Social Security benefits after a divorce if:

  • You were wed for a decade.
  • You have not married again*
  • Your ex-spouse is qualified for Social Security and disability benefits.
  • Your personal retirement benefits are lower than those of your ex-spouse.
  • You are age 66 or older
  • You have been divorced for a minimum of two years.
  • Generally, remarriage will nullify your former spouse’s benefits.

How Are Social Security Benefits Divided Upon Divorce?

Social Security can be split in a variety of ways. Still, it is common for each spouse to get fifty percent of the retirement account. You may be subject to Social Security regulations, or you may be eligible for a greater payment or additional benefits. Divorcees must consult with an attorney to guarantee that each party receives what is due.

A delayed retirement can affect the timing and amount of benefits received. Overall, delaying retirement is preferable to retiring early, so your benefits will not be lowered.

Can You Collect Social Security If Your Ex-Spouse Has Died?

Yes, you will receive the full amount of their retirement benefit if your ex-spouse dies. At age 62 or beyond, you will begin receiving Social Security. Delaying your Social Security payments until age 65 or 67 ensures you receive the entire amount (retiring before age 67 can result in a reduction of 0 to 15% in benefits till age 67).

How Divorce Affects Benefits for Survivors

If your divorced spouse dies, you are eligible for widow/widower payments if your marriage lasted at least 10 years. However, you will not be required to meet the length-of-marriage criteria if you are caring for your deceased ex-minor spouse’s or disabled child. Benefits paid to a 60-year-old or older surviving divorced spouse do not influence the benefit rates of other survivors receiving benefits.

Keep in mind that the SSA will not notify your ex-relatives spouse’s if you apply for survivor benefits. In addition, there is no limit on the number of individuals who may claim for benefits from a single Social Security account.

How Remarriage Affects Benefits for Survivors

In general, if you remarry before the age of 60, you are ineligible for survivors payments until the second marriage ends by death, divorce, or annulment. You can continue to claim benefits on your former spouse’s record if you remarry after age 60 (50 if disabled).

At age 66 or older, you are eligible to receive retirement benefits based on your new or current spouse’s record if it is greater. Your remarriage would not affect the amount of child support given to your children.

Name Modification on Your Social Security Card

If you change your name, you must inform both the Social Security Administration and your employer. This will ensure that your earnings are reported and documented accurately by your company.

You can obtain a new Social Security card bearing your new name. You must produce a copy of your birth certificate, adoption decree, or other appropriate documentation to confirm your date of birth. To establish your identity, you’ll need a valid U.S. driver’s license, state identification card, or passport.

Are You Afraid of Divorce, Remarriage, and Social Security? Consult a Lawyer

Social Security-related information is available at SSA.gov. A divorce can effect many aspects of one’s life, even after death. It is essential to comprehend the legal ramifications of a divorce, from retirement benefits to name changes on Social Security cards.

Put your mind at ease by allowing an expert divorce attorney in your state to assist you in making the right decisions regarding divorce, remarriage, and Social Security.

blank
Written by Canterbury Law Group

Military Divorce

While military divorces are not more complicated than civilian divorces, there are particular divorce procedures and requirements that apply to U.S. service members and their spouses. These differences may pertain to support payment compliance, service of process, residency or filing requirements, or the distribution of military pensions. The following is an outline of the laws that govern the divorce of U.S. servicemen and women.

Military Marriage Statutes

Both state and federal laws govern military divorce. For instance, federal rules may govern where divorcing spouses end up in court or how military pensions are shared, whereas state laws may govern the issuance of alimony and spousal support. The exact state laws applicable to a divorce depend on the state in which the divorce is filed.

Jurisdiction

Before a court may award military members or their wives a divorce, it must have “jurisdiction,” or the authority to hear the case. Generally, a person’s place of residence determines the court’s jurisdiction over them. However, for military personnel, jurisdiction may be the place where the person holds legal residence, even if the service member is stationed somewhere else.

Residency, Filing Requirements, and Proceedings Stays

Numerous states have decreased or removed the residency requirement in military divorces, allowing service personnel or their wives to petition for divorce in the state where they are stationed, even if they are not legal citizens.

In general, military members and their wives can petition for divorce in one of three states:

  • The state of residence of the filing spouse
  • State in which the service man is stationed.
  • The state in which a service member asserts legal residency

The reasons for divorce, including property division, child custody, and child support, are defined by the state where the divorce is filed. As a result, the specific conditions of a divorce will change based on that particular state’s laws.

It is important to note that active-duty service members have certain protections against court proceedings. Under the Servicemembers Civil Relief Act (SCRA), for instance, service members are protected from default judgment and can apply for a “stay” — a temporary halt — of any civil action, including child custody proceedings, initiated against them during active duty or within 90 days of their release from active duty.

This stay is in place so that service members can devote their time and attention to defending the nation while still being subject to court orders or verdicts while they are unable to appear in court. If a servicemember desires a delay that continues beyond 90 days, he or she may petition the court to grant it, but the court has the discretion to grant or deny any additional extensions.

Pensions and Military Benefits

Like civilian retirement benefits, military pensions are subject to distribution between spouses in the case of divorce. Depending on the jurisdiction, the Uniformed Services Former Spouses’ Protection Act (USFSPA) permits state courts to recognize military retirement money as either sole or communal property. While the USFSPA does not specify a method for distributing retired pay, the amount is often established and distributed in accordance with state regulations.

In addition, the Defense Finance and Accounting Service (DFAS) pays the former spouse’s portion of military retirement immediately if there were at least 10 years of marriage and 10 years of military service overlap (known as the 10/10 rule).

However, regardless of the length of the marriage, a court may sanction an offset payment to a military spouse who has been married for less than 10 years. In such a case, payment would come from the retiring spouse, not DFAS.

In addition to pension benefits, spouses of former military personnel are eligible for full medical, commissary, and exchange privileges following a military divorce if they meet the following criteria:

  • The couple was married for 20 years or more
  • At least 20 years of service are credited toward the service member’s retirement compensation.
  • There was at least a 15 year overlap between marriage and military duty

Matrimony and Child Support

There are particular restrictions regarding spousal maintenance (alimony) and child support in the military. The purpose of these regulations is to ensure that a service member’s family support obligations continue after a divorce or separation.

A court may enforce spousal and child support obligations in a number of ways, including by:

  • Court-order
  • Garnishment
  • Willful or Unwilling Allotment
  • A court may also mandate the paying spouse to retain life insurance to cover child or spousal support payments for a predetermined amount of time.

Consult a Lawyer Regarding Your Military Divorce

Because a military divorce needs understanding of laws that do not apply to civilian divorces, it is prudent to consult with a divorce attorney who has experience handling military divorce matters. An expert, local divorce attorney can assist you understand the many laws that may apply to your situation, your rights as member of the armed forces, and more.

blank
Written by Canterbury Law Group

Divorce And Business Ownership

Eric and Ariel reached the terrible choice to divorce after 19 years of marriage. Ariel’s profession of collecting and selling various collectibles began before their marriage. However, now that she is getting a divorce, she is concerned about the future of her business. Will it be divided between her and Eric, or does she retain sole ownership as she owned it before to their marriage? Well, it depends.

A business will be evaluated as an asset in the case of a divorce. Whether it will be shared depends, among other things, on state rules, whether the business is considered marital property, and whether a prenuptial agreement is in existence. Learn more about divorce and company ownership by reading on.

Define Conjugal Property

The key determinant of whether an enterprise is subject to property division is whether it is classified as marital or separate property. The term “marital property” refers to the joint property of a married couple, which is more complicated than it may appear.

First, state rules influence the definition of marital property, which is typically community property or property susceptible to equitable division. Second, how the property is handled and even what happens to it throughout a marriage might influence how it is finally classified.

Community Property versus Equitable Distribution in Business Ownership upon Divorce

A divorcing couple must first establish whether they reside in a community property state or an equitable distribution jurisdiction. In states with community property, practically all property acquired during a marriage is considered joint property, while property owned prior to the marriage is considered separate. Obviously, the law is seldom straightforward, thus exceptions exist. Gifts and inheritances received by one spouse during a marriage are regarded separate property; however, combining them with communal property can alter their status.

In states with equitable distribution, the partition of property is less easy because a judge decides how it should be shared. Obviously, state laws establish specific standards about how property should be split. Additionally, the concept of equitable distribution is that property is divided “fairly” but not necessarily evenly.

When Is a Business Marital Property In the Context of Divorce?

The business will be considered marital property if the couples are co-owners. However, this is not the only method in which a business might be considered marital property. If a business was established after the marriage, it is likely to be regarded marital property.

Sometimes, businesses created by one spouse prior to marriage are not considered marital property. However, this is not always the case. For instance, if the non-owner spouse made contributions to the firm throughout the marriage, it may still be considered marital property. It is vital to remember that “contributed” can refer not just to direct contributions of time to the business, but also to caring for the home while the business owner ran the company.

Using a prenuptial agreement to safeguard business ownership

A prenuptial agreement is the greatest approach to ensure that a business is not subject to property division in the event of a divorce. Occasionally, a spouse may start a business after the wedding, in which case it would be impossible to include it in a prenuptial agreement. However, it is possible to obtain a postnuptial agreement to define business ownership, which is similar to a prenuptial agreement except that it is executed after the couple is married.

blank
Written by Canterbury Law Group

Credit and Divorce

Credit and Divorce

If you have just gone through a divorce or are planning one, you may want to examine credit and divorce concerns attentively to prevent the predicament described above. In addition, understanding the various types of credit accounts acquired during a marriage can provide light on the potential advantages and disadvantages of each.

Does Divorce Affect Credit Scores? Your credit score may decline.

Divorce does not influence your credit score by itself. Unless you take the necessary safeguards, the divorce process, which sometimes involves joint credit accounts, may negatively impact your credit.

The divorce order defines who is liable for accounts opened during the marriage. This judgment does not, however, bind the lenders. This means that you may still be liable for an account bearing your name.

Types of Credit Accounts and Financial Obligation

There are two different sorts of credit accounts: individual and joint. You can also allow approved others to use your account when applying for credit.

Personal Accounts

The creditor takes your income, assets, and credit history into consideration. Regardless of your marital status, you are solely responsible for paying off the debt in your individual account. The account will appear on your credit report, as well as that of any “approved” users.

Nonetheless, if you reside in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may be reflected on the credit report of the other.

Advantages/Disadvantages

If you are not employed outside the home, work part-time, or have a low-paying job, having an individual account could be detrimental. Because it may be difficult to provide a solid financial picture without your spouse’s salary.

Alternatively, if you start an account in your own name and are responsible, no one else’s actions (or nonpayment) can negatively impact your credit rating.

Shared Accounts

Considerations for a joint account include the income, financial assets, and credit history of both account holders. In a joint account, you and your spouse are jointly accountable for paying debts, regardless of who pays the bills. A creditor who reports the credit history of a joint account must include both parties’ names (if the account was opened after June 1, 1977).

Advantages/Disadvantages

A creditor accepting a loan or credit card may consider the combined financial resources of two applicants as evidence of their creditworthiness.

However, because two people jointly applied for the credit, both are liable for the debt. This is true even if a divorce ruling assigns each spouse distinct debt liabilities. On jointly-held accounts, ex-spouses who run up expenses and don’t pay them can harm their ex-partners’ credit histories.

Account titled “Users”

If you create a personal account, you can grant access to another individual. If you list your spouse as an authorized user, a creditor who reports your credit history to a credit bureau must also include your spouse’s name (if the account was opened after June 1, 1977). A creditor is also permitted to report the credit history of any other authorized user.

Advantages/Disadvantages

Frequently, user accounts are created for convenience. Students and housewives, who may not qualify for credit on their own, benefit from these loans. These individuals may use the account, but they are not contractually obligated to pay the bill.

What Happens to Your Credit If You Divorce?

If you are contemplating divorce or separation, pay close attention to the status of your credit accounts and the relationship between credit and divorce. If you keep joint accounts during this time, it is imperative that you make regular payments to protect your credit rating. As long as a joint account has an outstanding amount, you and your spouse are accountable for it.

Will a divorce save assets from creditors?

As noted previously, a judge’s divorce judgment does not apply to creditors. This means that creditors may pursue you for any missed payments or unpaid credit card balances. Additionally, they will submit your credit history to a credit bureau.

Should Debt and Credit Cards Be Paid Off Prior to Divorce?

Yes! If at all possible, it is preferable to pay off or decrease as much of your joint debt as possible prior to or as part of the divorce process. If that is not practicable, stop making new purchases with shared credit cards.

Preventing an Ex-Spouse From Ruining Their Credit During or After a Divorce

Divorce by itself can be quite hard. However, it is essential to consider the financial ramifications, especially in terms of credit scores. The following recommendations can assist you in maintaining good credit as you go in life.

Early closure of joint accounts

You might want to close any joint accounts or accounts where your ex-spouse was an authorized user. You might also ask the creditor to convert these accounts to individual accounts.

A creditor cannot automatically liquidate a joint account due to a change in marital status, but may do so at the request of one of the divorcing spouses. However, creditors are not required to convert joint accounts into individual accounts.

Instead, they may force you to reapply for credit individually and, based on your new application, grant or deny credit. To remove a spouse from an obligation on a mortgage, vehicle loan, or home equity loan, a lender will usually need refinancing.

2. Obtain Your Credit Score Through a Credit Reporting Agency

There is no better time to obtain a free annual credit report than when you are going through a divorce or have concerns about an ex-debt spouse’s repayment. Determine your debts, what has been reported, and whether your ex-spouse is behind on payments for joint accounts.

If you reside in a community property state, you must be aware of all of your ex-obligations spouse’s accrued during the marriage, even if your name was never on the loan or credit application. Any debt created during the marriage is regarded as jointly incurred by both parties.

3. Separate and Transfer Credit Card Obligation

Instead of simply announcing that one spouse will be responsible for paying off the credit card debt, actually divide the debt on shared credit cards and transfer it to the responsible spouse. Then, cancel the joint cards without delay.

4. Include a clause on indemnification in your divorce agreement

Consider inserting an indemnification language in your divorce agreement if just one spouse is to be accountable for a jointly-owned debt. This section specifies which spouse is responsible for the debt and makes it abundantly apparent that the other spouse is not liable.

You can sue your spouse if they refuse to pay a debt stated under their name in the indemnification agreement.

Obtain Expert Legal Assistance With Your Credit and Divorce Concerns

Your credit score is an essential component of your financial well-being. If you’re considering divorce, you’ll need to know who will be responsible for the majority of the debt after the marriage and how this could affect your credit history. However, you are not required to answer these questions on your own. A local divorce attorney will be able to alleviate your anxiety.

blank
Written by Canterbury Law Group

Inheritance and Divorce

Learn whether a court can divide your inheritance in a divorce.

Not necessarily. For purpose of divorce, the law usually categorizes property as either “marital” or “separate.” As a general rule, marital property is subject to division between the spouses; separate property isn’t. This is true whether you live in a “community property” state (like California), which divides property on a 50-50 basis, or an “equitable distribution” state (like New Jersey), which apportions property based on what the court believes is fair under the circumstances.

Is My Spouse Entitled to My Inheritance in Divorce?

That depends on a number of factors, including where you live. Each state’s divorce laws will govern how to address inheritance, in community property states and equitable distribution states as well.

In the overwhelming majority states, an inheritance is considered separate property, belonging exclusively to the spouse who received it and it cannot be divided in a divorce. That holds true whether a spouse received the inheritance before or during the marriage. But in a state like New Hampshire, for example, courts may consider an inheritance to be divisible in a divorce (unless you can persuade a judge that it shouldn’t be).

Now here’s the rub—although your state may initially view an inheritance as separate property, your actions can change it into marital property. Sometimes that happens intentionally in what is called a “transmutation of property.”

An example of an intentional transmutation of property from separate to marital is where a spouse inherits a house, then puts the other spouse’s name on the deed. The spouses move in and share the costs of living there. In that scenario, if a divorce rolls around, the inheriting spouse would be hard pressed to convince a judge that the house was never intended to be marital property.

But let’s say the inheriting spouse never puts the other spouse’s name on the deed, and neither spouse lives in the house during the marriage. At some point down the road, however, the non-owner spouse contributes to improvements which increase the house’s value. At the time of divorce, a judge might determine that—although the house itself may not be marital property—the increase in value specifically due to the improvements is a part of the marital estate, and thus subject to division between the spouses.

The most common example of converting an inheritance to marital property is when the inheriting spouse “commingles” (mixes) the inheritance with marital assets. This can be intentional, but often it happens by mistake. For example, Uncle Zeke passes on and leaves you $10,000 in his will. After you and your spouse break out the bubbly and toast the kindly gentleman, you put the money in an existing savings account that’s in both your names, and which either of you can access at will. If you did that because you wanted to share the inheritance money with your spouse . . . great! Mission accomplished.

But if you thought that putting that money in the joint account was just for convenience, and that it would always remain yours alone, you may have put yourself behind the proverbial eight-ball. By commingling the inheritance with marital funds, you’ve likely converted it into marital property. You can make an argument to the court that this was never your intention, but you’ll have an uphill climb.

Can I Claim My Ex’s Inheritance Received After Divorce?

Sharing a spouse’s inheritance after divorce is a nonstarter, unless your divorce judgment specifically addresses that topic.

That said, there is a situation where an ex-spouse’s post-divorce inheritance could come into play. If you’re receiving spousal support (alimony) or child support, you might be able to petition the court to increase the support amount, based on that inheritance or any interest income the principal is making.

Courts usually allow modification of support—both up and down—for a variety of reasons, such as a job loss, a spouse or child becoming disabled, or a spouse’s substantial pay increase (again, depending on the laws in your state).

You’d first have to see whether your state views an inheritance as a potential basis for a modification request. If it does, you may have viable grounds to seek an increase in support. Of course, this is going to depend in large measure on how significant the inheritance is. Your best bet for success is when the inheritance has substantially enhanced your ex-spouse’s standard of living.

 

blank
Written by Canterbury Law Group

Community Property

Community property issues can arise during divorce proceedings and after a spouse's death. When spouses divorce or pass away, they are frequently left with the arduous task of dividing property and proceeds acquired during the marriage. This may include tangible assets (such as stocks, bonds, and legal title), as well as intangible assets (such as automobiles, furniture, paintings, and family homes) and debt. In some states, property acquired during the marriage is considered "community" property and is frequently divided 50/50 in the event of a divorce. The manner in which states treat "community property," also known as "marital property," will determine what happens to debt or assets upon divorce. Common Property Statutes State laws govern community property, and not all states have such laws on the books. Community property laws in nine states (and Puerto Rico) govern the division of debt and property in a divorce. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are included in this group. In such states, property is typically divided equally, whereas in all other states, distribution is determined by a judge based on what is equitable or fair. Alaska is distinctive in that divorcing couples have options. Despite the fact that each state determines how property is divided upon divorce, the laws may vary slightly. For instance, some states, such as California, divide debts and assets "equally" (50/50), while others, such as Texas, divide them "equitably." Even in community property states, courts in jurisdictions that apply the equitable distribution doctrine consider numerous factors, some of which justify unequal distribution of property or debt. Because these laws affect property and other valuable assets, they can have a profound impact on the future of a spouse who is forced to share a portion of an asset that was previously considered separate property. In the absence of a prenuptial agreement between the parties, property distribution will be governed by the law of the state in which the couple was married. Compared to separate property, community property In most cases, property acquired during a marriage belongs to both partners. This is particularly true in states where community property laws exist. Despite the fact that not all states have such laws, property acquired during the duration of a marriage is distributed equally upon divorce. The following are examples of community property: Earnings of each spouse during the marriage Home and furnishings acquired with marital funds during the marriage (reword) Investments and operations of a company generate interest income. The mortgage and family home Separate property, on the other hand, is that which was owned prior to the marriage, was inherited or received as a gift during the marriage, or was earned after the date of separation by either spouse. These are examples of separate property: Bank accounts that are held independently Separately held inheritances acquired during a marriage presents to either partner Personal injury compensation Any property acquired after the dissolution of a marriage is considered separate property. Courts have also categorized certain properties as "partially" or "quasi" community property. This includes assets that would have been considered separate property at the beginning or during the marriage, but have become marital property as a result of co-mingling or other circumstances. Considerations a Judge Might Employ to Determine Property Division A judge may consider several factors when determining how to divide property acquired during the marriage. A judge will consider 1) the earning capacity of each spouse, 2) which parent is the legal custodian of the children (if any), and 3) the existence of fault grounds such as adultery or cruelty. Consequently, even in states with community property, property may not always be divided 50/50. Instead, courts will consider the following factors to determine whether an unequal property division is necessary: One spouse may receive a larger share of the marital assets if fault-based grounds for divorce exist (such as adultery, cruelty, etc.). Loss of Continuing Benefit: Whether one spouse will incur the loss of compensation they would have received had the marriage continued. Disparity of Earning Capabilities: Whether disparities exist between incomes, earning capacities, and business opportunities that may impact property division. Health and Physical Conditions: Whether the physical health or condition of the spouses may impact the property division. Age Disparities: Whether there is a disparity between the ages of the spouses that could affect one's ability to work or receive retirement benefits. The size of the estate can have an impact on the distribution of property. The larger the estate, the more likely the court is to favor a 50/50 split. The likelihood that one of the spouses will receive a substantial inheritance. Gifts to a Spouse: After a divorce, gifts are typically converted to separate property. A spouse who obtains primary custody of children under the age of 18 may affect the division of property. Consult with a Divorce Lawyer Concerning Community Property Legal issues surrounding a divorce can be overwhelming in number. Property matters, alimony, child custody, child support, division of retirement benefits accrued during the marriage, visitation rights, and other legal matters must all be handled with care. Finding the appropriate divorce attorney is crucial. Contact a local divorce attorney with experience in your area today.

Community property issues can arise during divorce proceedings and after a spouse’s death. When spouses divorce or pass away, they are frequently left with the arduous task of dividing property and proceeds acquired during the marriage. This may include tangible assets (such as stocks, bonds, and legal title), as well as intangible assets (such as automobiles, furniture, paintings, and family homes) and debt.

In some states, property acquired during the marriage is considered “community” property and is frequently divided 50/50 in the event of a divorce. The manner in which states treat “community property,” also known as “marital property,” will determine what happens to debt or assets upon divorce.

Common Property Statutes

State laws govern community property, and not all states have such laws on the books. Community property laws in nine states (and Puerto Rico) govern the division of debt and property in a divorce. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are included in this group. In such states, property is typically divided equally, whereas in all other states, distribution is determined by a judge based on what is equitable or fair.

Alaska is distinctive in that divorcing couples have options.

Despite the fact that each state determines how property is divided upon divorce, the laws may vary slightly. For instance, some states, such as California, divide debts and assets “equally” (50/50), while others, such as Texas, divide them “equitably.” Even in community property states, courts in jurisdictions that apply the equitable distribution doctrine consider numerous factors, some of which justify unequal distribution of property or debt.

Because these laws affect property and other valuable assets, they can have a profound impact on the future of a spouse who is forced to share a portion of an asset that was previously considered separate property. In the absence of a prenuptial agreement between the parties, property distribution will be governed by the law of the state in which the couple was married.

In most cases, property acquired during a marriage belongs to both partners. This is particularly true in states where community property laws exist. Despite the fact that not all states have such laws, property acquired during the duration of a marriage is distributed equally upon divorce.

The following are examples of community property:

Earnings of each spouse during the marriage

Home and furnishings acquired with marital funds during the marriage (reword)

Investments and operations of a company generate interest income.

The mortgage and family home

Separate property, on the other hand, is that which was owned prior to the marriage, was inherited or received as a gift during the marriage, or was earned after the date of separation by either spouse.

These are examples of separate property:

  • Bank accounts that are held independently
  • Separately held inheritances acquired during a marriage
  • presents to either partner
  • Personal injury compensation
  • Any property acquired after the dissolution of a marriage is considered separate property

Courts have also categorized certain properties as “partially” or “quasi” community property. This includes assets that would have been considered separate property at the beginning or during the marriage, but have become marital property as a result of co-mingling or other circumstances.

Considerations a Judge Might Employ to Determine Property Division

A judge may consider several factors when determining how to divide property acquired during the marriage. A judge will consider 1) the earning capacity of each spouse, 2) which parent is the legal custodian of the children (if any), and 3) the existence of fault grounds such as adultery or cruelty.

Consequently, even in states with community property, property may not always be divided 50/50. Instead, courts will consider the following factors to determine whether an unequal property division is necessary:

  • One spouse may receive a larger share of the marital assets if fault-based grounds for divorce exist (such as adultery, cruelty, etc.).
  • Loss of Continuing Benefit: Whether one spouse will incur the loss of compensation they would have received had the marriage continued.
  • Disparity of Earning Capabilities: Whether disparities exist between incomes, earning capacities, and business opportunities that may impact property division.
  • Health and Physical Conditions: Whether the physical health or condition of the spouses may impact the property division.
  • Age Disparities: Whether there is a disparity between the ages of the spouses that could affect one’s ability to work or receive retirement benefits.
  • The size of the estate can have an impact on the distribution of property. The larger the estate, the more likely the court is to favor a 50/50 split.
  • The likelihood that one of the spouses will receive a substantial inheritance.
  • Gifts to a Spouse: After a divorce, gifts are typically converted to separate property.
  • A spouse who obtains primary custody of children under the age of 18 may affect the division of property.

Consult with a Divorce Lawyer Concerning Community Property

Legal issues surrounding a divorce can be overwhelming in number. Property matters, alimony, child custody, child support, division of retirement benefits accrued during the marriage, visitation rights, and other legal matters must all be handled with care. Finding the appropriate divorce attorney is crucial. Contact a local divorce attorney with experience in your area today.

blank
Written by Canterbury Law Group

Different Types of Separation

What does the term “separated” mean? Discover the distinctions between trial separation, permanent separation, and legal separation.

When it comes to marriage, separation is not synonymous with divorce—even if you have a court-ordered “judgment of separation.” Separation is when you live apart from your spouse but remain legally married until you obtain a divorce judgment. While a separation does not terminate your marriage, it does affect your financial obligations to your spouse until the divorce is final.

Separation is classified into three types: trial, permanent, and legal. In the majority of states, only one of the three (legal separation) alters your legal status—but all three have the potential to impair your legal rights.

Separation of Trials

If you and your spouse feel the need for a break from the relationship, one option is to live apart while deciding whether to divorce—a process known as “trial separation.” Legally, little changes during a trial separation—all applicable marital property laws remain in effect. For instance, a court will consider the money you earn and the items you purchase during the trial separation to be property acquired by a married person. This frequently means that you and your spouse jointly own the property (depending on your state’s property ownership laws).

If you and your spouse separate but intend to reconcile, it’s a good idea to write an informal agreement outlining the separation rules. For instance, your trial separation agreement may address the following:

  • whether you’re going to continue sharing a joint bank account or credit cards.
  • how you intend to budget your expenditures
  • who will continue to reside in the family home
  • how you intend to split expenses, and
  • If you have children, discuss how and when you will spend time with them.
  • If you decide to divorce, you may be able to use this trial separation agreement as a template for a marital settlement agreement.
  • If you and your spouse agree that reconciliation is impossible, your trial separation becomes permanent.

Permanent Distancing

If you live apart from your spouse with no intention of reconciling but are not divorced, the law considers you to be permanently separated.

How Separation from Your Spouse Affects Your Rights

Depending on the local law, a permanent separation may alter the property rights of spouses. For instance, in some states, assets and debts acquired during a permanent separation are considered to belong exclusively to the spouse who acquired them. Once a couple is permanently divorced, each spouse assumes sole responsibility for any debts incurred. Similarly, spouses who divorce permanently lose their right to any property or income acquired by the other.

Why Does the Date of Final Divorce Matter?

Due to the fact that spouses’ rights to each other’s property and obligations to pay debts change significantly as of the date of a permanent separation, spouses frequently argue bitterly about the precise date of their permanent separation. For instance, if your spouse left in a huff and spent a month sleeping on a friend’s couch, but you did not discuss divorce until after the month passed, the date the separation became permanent may be unclear. That means that if your spouse earned a sizable bonus at work during that month, you may be able to argue that you are entitled to a portion of the bonus.

If you move out of the house and do not anticipate a long-term reconciliation with your spouse, reconsider going out or spending the night together just for the sake of old times. If you reconcile briefly, you risk changing the date of separation and becoming financially responsible for your spouse during a time when you believed you were solely responsible for your own.

After you have legally separated from your spouse and reached basic agreements regarding your joint assets and debts, you are not required to divorce immediately. You may choose to remain married for a variety of reasons, including avoiding disruption of your children’s lives or retaining insurance coverage. Or, in some cases, preserving the status quo is simply more convenient than pursuing a divorce. On the other hand, you may decide to divorce as soon as the paperwork is finalized, or when the required separation or waiting period in your state expires.

Is Separation Required Prior to Divorce in My State?

Certain states’ laws require spouses to separate before a divorce can be finalized. State laws governing required separations vary in detail—for example, many states require spouses to live “separately and apart” for a specified period of time before the court will accept a divorce petition (formal request), while others do not require separation until after the petition is filed. If you file before meeting the requirements for separation, the court may dismiss your case. Other states may require spouses to live apart during the divorce process.

blank
Written by Canterbury Law Group

Divorce Frequently Asked Questions & When Is The Right Time To File For Divorce

In Arizona, divorce refers to a legal “dissolution” of marriage. You will go through a procedure in court to formally end your marriage. If you are the one who goes to court for a divorce, you will be identified as the “petitioner.” The other spouse will be identified as the “respondent.” Divorce in Arizona is not the same as in other states. Here are some answers to common questions most people have about divorce in Arizona.

Can I File for Divorce Anytime?

Either you or your spouse must have resided in the state for a minimum of 90 days before filing for a divorce at a local Arizona court. That is a legal requirement.  If there are children, they must typically be in the state for 180 days to vest custody jurisdiction, depending on the facts of the case.

Do I Need a Divorce Attorney?

Technically, you can represent yourself in court. However, it is highly recommended to get your attorney from your local area, like a divorce attorney in Phoenix. If you choose to self-represent, the court will assume that you know all the laws and rules pertaining to your case. You will have to follow court procedures on your own. A judge may disallow you to take certain actions if you do not properly follow court procedure. No one at court will be able to give you legal aid because they are barred by law from doing so.

You can seek legal aid if you cannot afford an attorney for your divorce. You can also petition the court to have the spouse pay for your attorney’s fees if your spouse makes substantially more income than you do.  Every case is unique.  

Do I Need to Give a Reason for Divorce?

Not in Arizona. The state has a so-called “no fault” clause, which means neither party needs to give a reason for the divorce. Moreover, the romantic escapades of Husband or Wife will have no relevance in the underlying dissolution action.  The mere desire to get a divorce is enough. In the court, only one spouse needs to claim that the marriage is “irretrievably broken “to finalize a divorce. The only exception is if the spouses have previously chosen a “covenant marriage”. Then, the petitioning spouse must provide ground or reasons for the divorce under state law.

What are A.R.S. and A.R.F.L.P.?

You will see these acronyms in the papers your divorce lawyer in Scottsdale or elsewhere files. The letters stand for particular legal statutes, or laws, in Arizona. A.R.S. refers to Arizona Revised Statutes, and A.R.F.L.P. refers to Arizona Rules of Family Law Procedure. You can go to the Arizona court or state websites to get access to these legal documents and rules if needed.  Ideally, you simply hire counsel and let them do their job to advocate for your rights in the underlying divorce.

What Do I Do if My Spouse Doesn’t Want a Divorce?

Too bad.  It’s going to happen anyway.  In cases where a spouse is morally against the divorce from advancing, there is little they can do to stop the case.  At best, the objecting spouse can request the court order a mandatory reconciliation counseling session which typically only pauses the case for 30 to 60 days. If at the end of reconciliation session, the spouses have not come to an agreement to postpone the divorce, the proceedings will go forward. Conciliation meetings are free of charge and rarely derail a case.  

If you have children, then your proceedings will be subject to a wide range of family laws in Arizona. The legal aspects you should consider will depend on the type of custody you seek. For more information, you should contact an attorney in your area.  Your children are your most treasured asset and case strategy and approach to maximize your custody is critical and experienced legal counsel even more important in such instances.  

Divorce is frequently a lengthy and costly process. Court proceedings can take months to complete. Simultaneously, the spouses may not get along and may be going through a difficult emotional period.

Additionally, the spouses may be experiencing financial hardship as a result of the household income being split and the need to support two separate homes. Having a plan in place for when to leave a marriage can help a spouse minimize the financial impact of the divorce. The following are some of the financial factors to consider when planning an exit from a marriage:

Market for Real Estate

If the couple owns a home together, one of the most important factors to consider when deciding when to divorce is the state of the real estate market. To afford smaller, separate spaces, the spouses may have to sell the house and split the proceeds. In contrast, the spouses may agree that one of them should continue to live on the property while the other receives other marital assets to compensate for his or her equity share. This step is best taken when the value of the property is high for the spouse who will receive other property. The spouse who will remain in the home, on the other hand, may prefer to divorce when the real estate market is weak so that he or she will not have to give up as many valuables to the other spouse.

It’s All About the Kids

If the couple has minor children or children who will be financially impacted by the divorce, this is an important factor to consider. A divorce involving minor children is significantly more difficult than a divorce involving no minor children. Lawyers devote more time to preparing arguments about child custody. A parent may also be obligated to pay child support for many years to come. Some states allow child support obligations to continue after the child reaches the age of 18 and may even require financial support while the child attends college. However, getting a divorce while your children are older but still dependent has a financial advantage in that they may be eligible for student loans or grants that they would not have been eligible for in an intact family. Many of these programs only consider the income of the custodial parent when determining financial aid eligibility.

Job Situation

The spouses’ employment status is another important financial consideration. In an ideal world, spouses will divorce when they both earn enough money to support themselves. This, however, is not always the case. It’s possible that a spouse’s hours have recently been reduced. A spouse’s job may have been lost. A person’s job may have been lost due to a sudden illness. When a couple is going through financial difficulties, it’s common for them to have problems in their marriage as well. Waiting for both spouses to regain financial stability or realign their careers may be difficult, but it may be preferable, especially if one spouse is required to pay spousal support to an unemployed or underemployed spouse.

Due to the separation of the spouses and their finances, a divorce often necessitates a slew of changes. One or both spouses may need to purchase new homes, vehicles, or change jobs. The economy can have a direct impact on whether these changes are feasible. If a spouse has been out of work for a long time, it may be difficult for him or her to re-enter the workforce during a downturn.

Divorce can have a negative impact on a person’s credit score. After a divorce, if spouses have neglected their credit, it can have a negative impact on their lives. Good credit is frequently required to purchase a home, rent a property, open a credit card in one’s own name, and in some cases, to obtain employment. If the parties are in a happy place in their relationship even as they consider divorce, they may want to wait a year or two so that they can both work on improving their credit scores before adding the financial strains of divorce. Another option is to try to stay in the same house or drive the same car so that the spouse is not forced to rely on good credit right away.

Income and Assets in the Future

Another factor to consider when deciding on the best financial time to divorce is the possibility of future income or asset acquisition. When deciding how to divide assets between spouses, many states do not consider the future. If a bonus, raise, or inheritance is on the horizon, it may be in the best interests of the spouse who will receive these additional funds to have the divorce finalized before receiving these funds. The other spouse may wish to postpone the divorce until these additional funds are received and can be divided.

1 2 3 7