Equitable Distribution of Marital Property

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Once you have identified your marital property, the next step is reaching an equitable distribution. Equitable distribution in Pennsylvania is not an automatic 50/50 split. Instead, there are thirteen (13) factors to be considered by the court in determining the appropriate division of a marital property. A few of the factors include the length of the marriage, sources of income and needs of each of the parties, value of property set apart to each party, standard of living established during the marriage, economic circumstances of each party as time division of property is to become effective, and whether either party will be serving as custodian for dependent minor children.

In a divorce involving equitable distribution, the parties are tasked with identifying all the property to be considered. Each party is to file an inventory of assets. The Inventory should list all marital assets and debts at issue, its value or balance, anything that has been transferred, and anything a party asserts is non-marital in nature. An Inventory must be filed prior to requesting a hearing on equitable distribution. You can supplement the list of marital property if you do not have knowledge of all the assets and debts at the outset. A pre-hearing statement must also be filed if a party is seeking a hearing to address equitable distribution. Similar to the Inventory, you will list all marital assets and debts. You will include as exhibits the statements or documents for each item confirming their value or balance. It is important to work with an experienced family law attorney when dealing with equitable distribution matters to ensure all marital property is identified, valued and submitted to the court in a timely fashion.  By April M. Townsend

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Divorce Costs

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There are a number of costs involved in a divorce action. The total amount of expenses will vary depending on the nature of the divorce. For example, a simple divorce with no assets or children will have different costs than a case where there are minor children and assets to divide. With children, custody and child support may need to be addressed as well. When there are assets, equitable distribution should be raised. Other filings that may be necessary depending on your circumstances can include a request for special relief in terms of asking the court to take immediate action on an emergent situation or intervene on an interim basis. Each county will determine which pleadings require a filing fee as well as the amount. On average, it can be several hundred dollars just in filing fees.

In addition to filing fees, you should work with an experienced family law attorney to ensure your divorce and related issues are handled properly. Most attorneys will charge by the hour for the time they spend working on your case. To that end, this expense can also fluctuate quite a bit depending on the nature of your case and whether everything goes smoothly and all parties cooperate versus if it is particularly contentious and additional litigation is required. A retainer is the initial deposit you pay to your attorney to get started. Your attorney will then subtract their hourly charges from the retainer as the case moves forward. You can help manage the costs by being organized and providing requested information to your attorney in a timely manner.  By April M. Townsend

 

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Dividing Investment Accounts

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Investment accounts that are opened or funded during the marriage will be considered marital property and up for division in the context of a divorce. Investment accounts present an additional consideration when it comes to division due to fluctuating value based on the market. The balance in these accounts is subject to various gains and losses on a daily basis. It will be important to establish a clear date and time for valuation purposes. With other assets, the cut-off date for valuation is usually the date of separation. With investment accounts however, you must also account for gains and losses from date of separation through the date of distribution as they are also considered marital. This can result in a significant sum for an account with a large balance or if there is a lengthy period of time between separation and distribution. Failure to address the market experience can result in an unfair distribution.

It is good practice to work with an experienced family law attorney who is familiar with division of investment accounts to ensure you are getting an equitable distribution of these types of assets. It may be appropriate to divide the accounts based on shares instead of value. To the extent the account holds retirement assets, you will also need to be clear on any withdrawal penalties in addition to tax consequences. To the extent a Qualified Domestic Relations Order (QDRO) is necessary, your attorney can draft/review an Order with the appropriate language to effectuate the desired distribution. A QDRO is a document that identifies the plan to be divided and gives specific details as to how that division will take place and what rights the party receiving the funds, referred to as the alternate payee, will have going forward.

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Real Estate Ownership

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A deed is the document that reflects ownership in real property. A deed should be recorded with the appropriate county office that maintains records for all real property. You may need to change your deed for a variety of reasons. Any changes to a deed require that a new deed is created and recorded to replace the prior deed.  If a home was purchased prior to marriage in only one name, you may want to add your spouse’s name to the deed. If property was owned jointly during the marriage and only one party is retaining the property in a divorce, you will need a new deed recorded. Please note a deed is separate from a mortgage and additional steps may be needed to address financial liability for a property pursuant to a mortgage.

You may consider adding a child to your deed as part of your estate plan. You may also find yourself in a position where a new deed is needed during the probate of an estate to pass the property from the decedent to designated heir. Each county assesses a fee for recording a new deed. There may also be a realty transfer tax depending on the relationship between the grantor(s) and grantee(s) and the circumstances warranting the transfer. Transfers between spouses are exempt as are transfers to children. Transfers pursuant to a will are also exempt from a realty transfer tax however are subject to inheritance tax depending on the relationship of the decedent to the beneficiary or heir.

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Alimony

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Alimony is support paid to an ex-spouse following divorce. The amount of alimony is usually based on the incomes of the parties. It is not uncommon for the amount of alimony to be considered in the context of the equitable distribution of marital assets, if any. Unless otherwise stated by agreement, the amount of alimony may be modified due the changed circumstances of either party. These changes must be substantial and of a continuing nature. Parties reaching their own agreement for alimony may contract for non-modifiable alimony.

The duration of alimony is based on the length of the marriage. For example, a party may expect approximately 1 year of alimony for every 3 years married. For marriages of over 25 years, an indefinite term of alimony may be appropriate. If the parties include alimony as a part of their own settlement agreement, they are free to set the amount and length of the alimony as they so agree. Previously, alimony was a tax deduction for the party paying the support while the party receiving the support had to claim it as income. Pursuant to the Tax Cuts and Jobs Act, alimony is no longer a taxable event. This change in the tax treatment of alimony became effective January 1, 2019. If your Order for alimony was entered prior to that date, the prior rules will continue to apply.  By April M. Townsend

 

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Divorcing doesn’t have to ruin the family business in Pennsylvania

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Small businesses are the heart and soul of the economy in Bucks County and throughout the rest of the country. According to the Small Business Administration, approximately 90 percent of all of the businesses in the U.S. are family owned and run. Running a small family business comes with several advantages, like more convenience, flexibility and lower employment costs. However, things can quickly get complicated when the owners of the business decide to separate and divorce.

It all starts with the prenuptial agreement

Before a couple even says “I do,” they should already be planning for their financial future with a prenuptial agreement. This document acts as an insurance policy in case divorce ever becomes part of the equation. One of the mistakes that small business owners often make is not drafting this important document until it’s too late since they previously believed that divorce would never become an option. However, according to Forbes, over 50 percent of married couples in the U.S. eventually divorce so obtaining a prenuptial agreement should be a priority for all married couples, and those that own a business together in particular.

This agreement should be in writing, provide a full disclosure of the business’ assets and liabilities, be executed by both parties and without coercion from one side and documented in a recordable format.

Making it work after the divorce is finalized

Just because a marriage is ending doesn’t mean that the business has to go down along with it. Divorced couples can still stay in business together and be successful if:

  • They are rational and consider compromise.
  • They hire an independent business appraiser as part of the divorce proceedings.
  • They consider how their roles will shift in the workplace after they are divorced.
  • The business stays relatively the same and doesn’t undergo any big changes until after the divorce is finalized.

Although it can be a daunting task to split with a partner and still maintain a business, it can be done with a little work and a lot of communication. For example, according to Businessweek, a divorced couple that owns a bakery in the Boston area worth $2.5 million has been in business together for over 35 years. The couple, who were married briefly from 1979 to 1981, found that although their marriage didn’t work they were able to keep their business going out of admiration for the each other’s business skills.

If you and your spouse are considering divorce and are concerned about the future of your family business, contact an attorney in your area that can work through these concerns and ensure that you and your spouse are able to transition smoothly from being marital partners to business partners. You should also realize that a business has value and a competent attorney can assist in ensuring that both partners get value for the efforts they contributed to the business and find ways to separate while preserving the business.

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No More “Same-Sex Marriage” Marriage Is Marriage, Period

BY RICHARD A. ROANE

The legal and practical implications of same-sex relationships.

On June 26, 2015, the U.S. Supreme Court ruled in Obergefell v. Hodges, 135 S. Ct. 2584; (2015), that the U.S. Constitution requires all states to recognize a marriage between two people of the same sex, and further, that all states must issue marriage licenses for same-sex couples who apply for such licenses. Associate Justice Anthony Kennedy wrote the opinion for the majority in a five-to-four ruling, finding that same-sex couples have a fundamental right to marry as guaranteed by both the due process clause and the equal protection clause of the Fourteenth Amendment to the United States Constitution. For same-sex couples who were married in a jurisdiction that recognized and allowed same-sex marriage and who were living in either a recognition state or one of the 13 prohibition states, their marriages are now recognized under state law. In addition to recognizing these marriages, all states now must issue marriage licenses to same-sex couples who apply to marry. This new recognition means: • These marriages will be recognized throughout the United States, in all states, territories, possessions, and Washington, D.C., plus the 20 (at time of writing) other countries recognizing same-sex marriage. Recognition by certain Native American tribes is restricted. (See “Native American Tribes: More Exceptions on page 14.) • Children born during these marriages should have two legally recognized parents based on the “parental presumption,” regardless of gender or biological connection. • Family law courts should be available to same-sex married couples for resolving issues in dissolution (divorce), custody, child support, spousal support, and property division cases—literally all issues available to heterosexual couples.

 

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Why do I need a prenup for a remarriage?

Prenuptial agreements offer blended families a way of estate planning as well as protecting spouses in the event of a future divorce.

Anyone in Pennsylvania who has been prematurely widowed or divorced at least once knows that sometimes a marriage does not last as long as originally hoped or planned. Many people choose to get remarried and often question whether they need a prenuptial agreement for various reasons.

The American Academy of Matrimonial Lawyers noted in a 2016 survey that the prior three years had seen a jump in the number of prenups created.

Protection in the event of another divorce

The possibility of a divorce always exists and that can spell financial disaster for some. In addition to salvaging some assets, U.S. News and World Report notes that a prenup might even help protect one spouse from getting stuck with the other person’s debt.

Many people go into second or third marriages with children (or grandchildren) from previous relationships whom the parents or grandparents want to protect financially in case remarriage ends in divorce.

In divorce, separate property that belongs only to one spouse because he or she owned it prior to the marriage or received it as a gift or inheritance that continues to be held in that person’s name alone normally remains the property of that spouse, however, the increase in value becomes marital. This can be sheltered by a prenuptial agreement so that the increase in value can also be protected. Marital property, meaning assets accumulated during marriage by either spouse or by them jointly, is divided equitably or fairly in divorce unless a prenuptial agreement determines what assets are distributed and in what percentage. A prenuptial agreement also may be used to determine the level of spousal support or alimony or if there is a payment at all to the other spouse.

In a prenuptial agreement, the parent of a child from a prior relationship could negotiate that part of future marital property go to that child. For example, the parent might want to direct the marital part of his or her retirement accounts or part of the equity in other accounts or assets go to support or benefit the child, rather than becoming part of the marital property subject to division.

If the child has disabilities, the parent might want certain assets of the marriage to go into a special needs trust to protect the child’s future.

A prenuptial agreement entered into before the marriage can set forth the course of what will happen in a divorce and eliminate doubts on motives of the spouse.

Lifestyle provisions

Trying to include some lifestyle provisions might not be reasonable, such as how one spouse should wear their hair. Other matters may well be included in a marital contract. According to Time, use of social media is a topic often referenced in these documents nowadays to prevent one person from publicly humiliating or denigrating the other during or after a divorce.

A prenuptial agreement might also designate who will get the family’s pets if the couple divorces.

Estate planning assistance

Fidelity Investments explains that a prenuptial agreement can aid in a couple’s estate planning, especially when one or both spouses has children from prior marriages.

People may understandably want to take care of their spouses after they die. They also might want to make sure that their children or grandchildren from previous relationships receive certain assets or family heirlooms.

With no prenup directing assets to people outside the marriage, a spouse might automatically inherit certain assets when the other person dies even if there is a will in place as a spouse can elect to take against a will. The surviving spouse could live for quite some time longer in which case there may be little to nothing left of the estate to pass on to the deceased spouse’s children. The surviving spouse might also leave remaining assets to their biological children only and not the children of the spouse who died first. A prenuptial agreement can be used to waive that elective share and allow the will to control in the event of death.

Family businesses

Oftentimes there may be a family business that a spouse wishes to keep separate in the event of death or divorce. The spouse and his or her family may desire to keep the business intact and in the hands of family members or other owners or to avoid expensive and intrusive evaluations of their records. A prenuptial agreement can aid in easing the mind of other family members and creating a better family environment without the threats that may otherwise occur.

Otherwise, if the other spouse has an interest in the business in divorce or as an heir, the business might have to be sold or take on significant debt to pay the other spouse his or her share. In addition, if the business becomes embroiled in a court proceeding, the discovery process to determine its size, value and ownership can be expensive.

Legal assistance

Anyone contemplating remarriage should contact an experienced attorney prior to walking down the aisle for the second time. This will give him or her the insight of a professional to help make decisions about a prenuptial agreement. At a minimum, no potential spouse should sign a prenup before talking to a lawyer about its implications.

The family lawyers at Karen Ann Ulmer, P.C, represent people approaching remarriage in Eastern Pennsylvania and New Jersey, including providing advice about, reviewing, drafting and negotiating prenuptial agreements. The are available for consultations by phone prior to coming in to the office to determine if you would benefit from a prenuptial agreement.

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Saving Your Marriage: Signs Your Marriage is Struggling and What You Can Do to Save It

Divorce affects one in two marriages in the United States every year, and as time passes that percentage continues to increase. If you are involved in a marriage, it is important that you remain cognizant of the common signs that ultimately lead to divorce. If these trends are present in your relationship, there are some methods you may employ in order to save your marriage.


If your marriage is becoming an overwhelmingly negative experience there is a good chance your marriage is going to be coming to an end. Carrie Krawiec, a marriage counselor and therapist out of Michigan, suggests that for every single negative moment there should be five positive moments. This 5:1 ratio seems to be the balance required to maintain good chemistry between partners.


When unremorseful infidelity occurs there is also a very high likelihood the marriage is going to end. To the surprise of many, cheating can be overcome. In order to do so, it must be met with genuine understanding, love, compassion, and an unrelenting effort from both sides to fix that which was broken.


The decline of physical interaction between partners is a sign that the marriage is on the decline. This point goes far beyond sexual interactions. The simple things that have huge implications include hand-holding, hugs, kisses, and general physical contact. Body language is a very primal and intimate way to communicate sensually with your partner, and when that ends the marriage is likely to end as well.


Enough of the negative. Let’s look at some signs that suggest your marriage can be saved.


If you and your partner continue to go on dates there is a high likelihood that your marriage is salvageable. There is no doubt that our day to day lives have become filled with more and more chaos and to-do’s than those in the past. However, if you and your partner still make time to spend a Friday evening with one another for quality “couple time” there is a chance that the marriage can be saved.


If one partner fails to remain faithful, it doesn’t mean that the marriage is over. Despite the harsh negative emotions that accompany cheating, if both parties truly want the marriage to continue there are ways to make it happen. Understanding that cheating is usually the symptom of a larger problem within the relationship gives both partners the foundation upon which they can build.


Finally, if you are still comfortable enough to share your thoughts and emotions with your partner, the union is likely still strong enough to save. If both parties are able to offer a sanctuary within which they can truly be themselves, there are positive implications on the strength of the relationship.

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