Disability Pension

Pensions are generally considered marital property and subject to distribution at the time of divorce. The pension may need to be appraised to determine the marital value of the pension, specifically in an instance where the party began accruing the benefits prior to the marriage or the parties were separated for numerous years before a divorce action was commenced. There are also retirement benefits that are excluded from equitable distribution. For example, under 23 Pa. C.S. 3501(a)(6), veterans’ benefits are excluded from equitable distribution.

Other disability benefits besides veterans’ benefits may also be excluded from equitable distribution. The key is to consider the purpose of the benefit and whether it is being used to compensate for lost income. In other words, if the purpose of the benefits is to provide earnings in lieu of what the recipient would’ve made were they still able to work, those benefits will not be subject to distribution. If, however, a portion of the benefit also includes standard retirement benefits, the portion representing retirement benefits will still be subject to distribution.

Click here to read more on division of marital property.

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Morality Clauses in Family Law

Some states routinely include a morality clause as part of a divorce case. A morality clause would prevent the parties from doing certain things following separation. In family law, the clause usually prevents either party from having a new partner stay overnight while minor children of the former marriage are present. Texas is one of the states that still routinely uses morality clauses in divorce actions. A recent decision in Collin County, Texas upheld a morality clause from a 2011 divorce ordering that the wife’s new partner vacate the home where two children from the marriage resided.

While morality clauses are not commonplace in Pennsylvania, they can be negotiated as part of an agreement in custody matters. Pennsylvania custody law dictates that the adult household members of the parties should be examined as part of the best interests of the child analysis. In some circumstances there may be clear cut reasons for wanting to restrict new partners from being around minor children such as criminal history or drug and/or alcohol abuse. In other instances, the parties just don’t want new people introduced into their children’s lives too quickly or only for a brief period based on the argument that the children need stability. Where the parties are entering an agreement they can put whatever restrictions they both agree to, however, if left to a Judge a party is more likely to be successful if there is a justification for the restriction rather than just a preference of one of the parties.

Click here to read more on custody.

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Practical Steps in Preparing for Divorce

Many clients contemplating divorce have questions about what they should do even prior to filing for divorce to protect themselves. Below is a list of some proposed actions from personal finance company, Kiplinger’s.

Obtain a credit card in your own name if you don’t already have one.

Obtain a checking and savings account in your own name.

Withdraw half the money in joint accounts or change the signature authority so that both parties must sign to complete any transaction. (Beware that if you withdraw all the money in a joint account you may be ordered to give back a portion by the court down the road and accordingly, it is not wise to spend it.)

Collect all information accessible to you regarding your spouse’s bank accounts, retirement/pension plans, insurance policies, real estate interests, and any other financial assets.

Get copies of state and federal income tax returns for the past few years.

The purpose of these actions is to preserve your financial stability going forward by putting things into your own name. You are also ensuring that joint accounts will not be used or closed out by the other party without receiving your fair share. Ultimately, the court will determine what that fair share is at the time the divorce is finalized and that is why the money should not be spent pending the finalization of the divorce. Another tip for parties who are selling a marital home either prior to filing divorce or while the divorce is pending, is to hold the proceeds of the sale of the home in escrow. The share of the proceeds payable to each party would then be determined at the time of equitable distribution.

Click here to view the Kiplinger’s Article: Divorce and Your Money

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