When You Get Divorced…Actually Get Divorced

Many couples who have financial problems feel like they should still co-own assets after divorce. Maybe you are upside down on the mortgage on your home and you would lose money selling it.  Perhaps you have debt you still want to co-own or can not split for some reason.  Perhaps one of you wants out of the house but there is not enough cash to be bought out.

 

The problem with co-owning anything after your divorce is that you will no longer be married and co-ownership without that legal protection of marriage can be scary.  A good divorce attorney can help you brainstorm ways to ensure that your assets and debts are split in such a way that you each take your fair share and, most importantly, become financially independent of one another.  

 

You can learn a few things from this story:  A couple divorced after 15 years of marriage.  Upon the divorce they continued to co-own the marital home, an investment property, and a HELOC against the marital home.  With this much joint ownership after a divorce, there were bound to be problems.  


  1. They maintained the marital home and nested their children.  Each parent moved in and out according to their parenting agreement. They did this for the emotional security of their children.  However they didn’t have money to maintain the house and it fell into disrepair over the years, to the point that it could not be sold for market value.  


Lesson learned:  While nesting may seem like a great idea, it requires substantial financial resources to maintain the home for the children, particularly when neither of you are really still invested in the home.  Additionally each parent also needs a place to live when they are not with the children so you need the cash to maintain three homes.  


  1. The investment property was the primary responsibility of the ex-husband and after some time he tired of it.  He decided to sell it, forgetting it was in joint ownership.  Additionally he sold it “short sale” forgetting that the down payment was in the Heloc against the marital home.  Once it was sold he had a legal quagmire on his hands in violation of the divorce agreement and now there was no asset and yet a substantial debt to pay.  


Lesson learned:  After your divorce it is best not to jointly own any investment or debt. As former partners, it can be hard to reach an agreement on what should be done and one partner may feel they have more right to control or make decisions.  


3)  The ex-husband unexpectedly died. The HELOC was only in his name and his estate immediately went bankrupt.  Typically, debts are forgiven but since the house was securing the HELOC, the ex-wife had to start making the monthly payments or face a lien.  Furthermore, because the HELOC account was only in the ex-husband’s name, the ex-wife had no access to the account and the bank would not discuss any particulars of the loan with her.


Lesson learned:  If there is joint debt coming out of your divorce it is best to split that debt in some way and move on independently.  If you must co-own anything, ensure that, in your divorce agreement, you mandate life insurance be maintained specifically for the repayment of debt.


Divorce is not easy and many times finances are a factor in your reason to split. There is always a way around a difficult situation and we can help you creatively solve your financial issues so you can independently walk into your post divorce life.

 

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Discussing Your Home During Divorce

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If you are overwhelmed with the divorce process it is important to take a step back and get organized.  One of the most overwhelming aspects of divorce is related to getting your financial documents gathered and assessed.  For our clients in Bucks and Montgomery Counties here in PA, we know how stressful this can be, especially when it comes to your home.

 

What will happen to your home when you get divorced?  For most couples the marital home is one of the largest assets in their financial portfolio.  Typically there is a mortgage attached to the home and equity that needs to be evaluated.  One party may want to keep the home, but doing so can cause financial issues.


The best way to answer the question of “What should we do with the house in our divorce?” is to first take a look at the following:  


  1. The most recent appraisal of the marital home or fair market value. This is an important first step in determining what the house is worth in today’s market.  We recommend checking out comparable homes in your area that are on the market and that have recently sold.  Additionally, you will want to talk to a local realtor for current market conditions and determine if it is a seller’s market.    


  1. Your current mortgage statement and home equity line of credit statements.  With the appraisal and the debt owed, we can determine the equity you have in your house and come up with a plan to divide that equity or have one spouse buy the other out of the house.  If you have a home equity line of credit that will reduce your overall equity in the house and, when sold, will be paid off first from any proceeds.  


  1. Detailed information on who owned the home at the time of marriage.  If one spouse owned the home before you were married, then their initial investment of a down payment and some appreciation may not be subject to distribution. We can only divide appreciation that was earned during the course of the marriage.  Additionally, if one of you owned the house and the other paid for improvements or paid down the mortgage, then those factors would also need to be discussed.


  2. Copy of the deed.  It is very important to have a clear picture of who has legal rights to your home.  One or both of you may be on the deed and the distinction is important for many reasons we can discuss.  Additionally, if one of you wants to buy the other out of the house then the deed may need to be changed.  


When we work with clients like you we explain each step of the process and look for every opportunity to ease your stress.  Your current housing situation and how you want to start your post-divorce life are guiding factors in our work as we negotiate on your behalf.  Getting all of your financial documents organized will make this easier for you to understand and also considerably reduce your legal bills.  

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September Newsletter

We love this time of year as the weather is enjoyable and more time can be spent outside.  We have had some glorious weather here in PA, even as the summer has come to a close.  With your very busy lives we want to provide you with some great information on saving money and having fun at this time of year!

 

Saving Money When Getting Divorced

Many couples fear the divorce process because they do not want to pay high legal fees.  Household budgets are already stretched and the thought of paying legal bills makes many feel they can not afford to get divorced.  In our new blog “Are You Too Broke To Get Divorced?” we discuss this issue and offer great tips to cut down on legal fees. /blog/2017/09/are-you-too-broke-to-get-divorced/


Fall for Single Parents

As a single parent you may feel as if there is just never enough time in a day to get everything done.  Being Mom or Dad while juggling schedules and your career can be overwhelming.  Sometimes you just want to spend a few stress-free and unscheduled minutes with your child and need a great idea. Here is a great list – over 100! – of activities to do with your kids: https://www.thespruce.com/absolutely-free-activities-for-kids-2997490

 

Student Loan Debt

Dividing assets and debts is a significant part of the financial negotiations of your divorce. Student loan debt, acquired during the marriage, is subject to distribution. However, rather than divide it equally, the court may choose that the spouse who earned the degree take more of the debt.  How you negotiate all debt in your divorce depends on your individual financial situation.

 


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Are You Too Broke to Get Divorced?

The financial implications of your divorce can be substantial and you may think you cannot afford to get divorced.  Friends and relatives may share war stories of losing a significant amount of their savings to their ex, paying unreasonable levels of child support and alimony, and paying exorbitant legal fees.  While the financial reality can be hard to face, staying in an unhealthy marriage can be harmful to you and your children. Being reasonable through the process can also reduce your legal fees and ease the impact of the process on your family.  

Why are you financially scared to get divorced?

  1. Legal fees – every client is always concerned about legal fees which is why we readily share ours so you understand costs and billing (www.ulmerlaw.com/Family-Law-Divorce/Affording-a-Divorce/).  Legal fees in your divorce do not have to be exorbitant.  

  2. Debt – if you have substantial debt from school loans, credit card debt, or a Home Equity Line of Credit (HELOC), you might be nervous about taking that debt on yourself.

  3. Two households – if money is an issue now, running two households on your current income can seem almost impossible.  A new job, promotion, or promise to stick to a strict budget can help.

So how can you afford to get divorced and keep your head above water?  It is possible to get divorced even with an abysmal financial picture.  If you are being asked for the divorce then it can seem overwhelming, if not impossible.  When we work with you, we will suggest many ideas to help you afford your legal bills and actually build a financial picture for your life.


  1. The number one thing you can do to save yourself money in your divorce is to be reasonable.  If you and your spouse are going to fight over every single issue and involve an attorney each time, then your bills are going to be substantial.  Divide your property, start to talk about your finances and kids and gather your financial paperwork all before visiting with a lawyer.  Do not fight to leave the other person destitute and do not threaten he/she will never see the children. This aggression will cause problems.  

  2. Leave the emotion out of your decisions and negotiations.   It is best to treat our work together as you would a business transaction, leaving all emotion out of it. Be aware that divorce involves your personal life and, especially when talking about your children, it is hard to separate out the emotion.  We can help you put support in place to ensure that your fear, anxiety and sorrow are also dealt with so you can get to the business of getting divorced as quickly as possible.  

  3. Stay out of court. “Having your day in court” may seem like a good idea as you want the judge (and everyone else) to hear how awful your spouse is or you just don’t want to agree in order to cause your soon-to-be ex significant pain.  The truth is that going to court in a divorce case is a long process that requires many steps which, in turn, means higher legal bills for preparation and appearances. And, don’t forget, the judge will then be making decisions for your family, possibly for the care of your children, and they will be legally binding.

Getting divorced is not easy for most aspects of your life – and your finances are certainly one of them.  Taking a realistic view of your current financial picture, talking with your spouse and agreeing to negotiate will all ease the burden on your wallet.  

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Your Teen and Your Divorce

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All children process divorce differently and your teen will be no different.  They may be relieved if you and your spouse were constantly fighting or unhappy that mom and dad are no longer together.  They may experience a variety of emotions that they are unsure how to handle.  

 

What should you watch out for when raising a teenager and navigating through your divorce?

Regardless of their feelings about your split, it will be important for you to keep a close eye out for the following:

  1. Don’t let them play off of mom and dad:  “Dad said I could do this,” “Mom said you should buy me new sneakers.”  “Mom said that she will pay half if you pay the other.”  Whatever the case may, be do not allow your child to tell you what the other parent is going to do.  Check in with each other.  

  2. Create stability for your children:  Children of all ages need to know their schedules, how things are changing, and that they have two homes with parents who love them.  If you are all going to move then make sure they understand how they will see the other parent, attend school, and see their friends.

  3. Watch carefully and put support around them:  Your children are going through a substantial transition and need many forms of support.  Make sure that their guidance counselors are aware of your divorce so they can talk with the children and recommend a therapist as necessary.

  4. Realize boys and girls are going to process your divorce differently.  If you have a teenage daughter and son make sure you address their concerns and realize that they may have completely different fears causing anxiety.

  5. Don’t badmouth your ex:  Your children have the right to be loved and supported by both parents throughout their childhood.  The divorce is going to be difficult enough, so make sure you do not say bad things about the other parent.

  6. Promote bonds with both parents:  continuing on from #5 – your teen needs both a mom and a dad so encourage him/her to enjoy their time with the other parent.

  7. Listen to complaints but be firm:  Your child may not like the fact that he/she needs to now move between two homes, live under two different sets of rules, and “go see mom who lives too far away from my friends.”  Listen to their frustrations, acknowledge their feelings, but be the adult as they adjust to their new normal.

  8. Help them manage their emotions:  Your teens are going to have to process a significant number of emotions including shock, anger, sadness and even embarrassment – and sometimes all at once.  Make sure they know you are available to listen.

  9. It isn’t their fault – so many children feel that their parents could have been happier if they had been a better child – maybe not gotten in so much trouble, earned better grades, or not have needed so much “stuff.”  If your marriage was going to last it could have survived all of that – and your child needs to hear that from you.

 

When a teen goes through a divorce, communication is the key.  They need to know they can come to you when problems arise but they are going to need to also understand that the parents are in charge.

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Support for Adult Children

In Pennsylvania, child support should terminate when the minor child is eighteen or graduate high school, whichever is later. However, in certain circumstances the obligation for support may continue past those milestones. One example would be if the child has a disability. Pennsylvania courts have held that the child support guidelines would continue to apply in the instance of a child who, despite age, remains unemancipated or unable to support themselves by virtue of a disability. The court is to determine if an adult child has a mental or physical condition that prevents the child from earning a living wage. Additionally, the court should look to see whether an order of continued support would result in undue hardship on the parents.

In Kotzbauer, 2007 Pa.Super. 357 (2007), Father appealed a support order for his nineteen year old daughter. The daughter had been diagnosed with epilepsy which led to seizures, brain malformations and migraine headaches several times a week. While she had a driver’s license, attended community college and had a part-time job, ultimately the trial court held that the evidence presented still established she was unable to support herself. She had poor grades in school due to an inability to focus, often missed work or left early, and relied on her Mother to keep up with all her prescriptions, medical appointments, food, clothing and housing. The majority of states recognize an on-going duty of support if adult children are unable to support themselves due to a demonstrable physical or mental condition impacting their ability to earn a supporting wage.

Click here to read more about support.

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Enforcement of Support

There are a number of remedies available to promote payment of support obligations within Pennsylvania. First, Pennsylvania does wage garnishment where possible to ensure payments are collected in full on a consistent basis. If a payor does fall behind, the court will call the party in for contempt proceedings. A payor who is able to catch up at the time of the contempt proceeding will usually avoid any further sanctions. Alternatively, if the court accepts a repayment plan offered by the payor there may not be any further enforcement remedies pursued. If a payor cannot make payment in full or offer a satisfactory plan for catching up on payments, they will have to go before a Judge to discuss their failure to keep up with their support obligations.

If a party fails to appear for contempt proceedings the court has the authority to issue a bench warrant to have that party taken into custody. Additionally, the court can order additional incarceration at subsequent support hearings as a means of reiterating the importance of regular support payments and demonstrating the severity of the punishment available for failure to comply. Other enforcement remedies include seizure of payments from a government agency such as unemployment compensation, social security, retirement or disability payments, seizure of works’ compensation benefits and seizure of retirement funds in pay status. The court may also place a lien on real property, seize funds from the payor’s bank, report overdue support to credit agencies and suspend licenses including occupational, driver’s and recreational.

Click here to read more about support.

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Surrogacy

Surrogacy is the process whereby a third party is used to assist couples in having a child. Surrogacy may be traditional wherein the third party will have a biological tie to the child however has agreed to relinquish any legal rights as a parent. The other option is gestational surrogacy where the third party is just a carrier and the egg and sperm of the intended parents are implanted in the surrogate. Pennsylvania does not have a statute in place as it relates to surrogacy, however, case law has upheld a surrogacy contract. In J.F. v. D.B., the carrier mother attempted to keep the children following birth despite having entered a surrogacy agreement. 897 A.2d 1261 (2006). The court eventually held she didn’t have standing for a custody action and turned the children over to the intended parents per the contract. The courts went a step further in In re Baby S, when it explicitly upheld a surrogacy agreement. 2015 Pa. Super. 244 (2015).

In re Baby S, involved celebrity couple Sherri Shepherd and former husband, Lamar Sally. The couple had entered into a surrogacy contract to assist in having a child. Several months into the pregnancy, Shepherd refused to sign additional forms to have her listed on the birth certificate as the intended parent of the child because of the pending dissolution of her marriage to Sally. Sally ended up taking care of the child and subsequently sought support from Shepherd. The court ruled that Shepherd was an intended parent evidenced by the signed surrogacy contract and accordingly, ordered her to meet her child support obligation. Accordingly, parties who intend to use a surrogate should consult with an attorney first and draft a clear, unambiguous agreement.

Click here to read more about family law issues.

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Donor Agreements

Donor agreements are vital for identifying the legal rights of parties considering artificial insemination as part of assisted reproduction. An agreement should indicate that the donor does not have any rights subsequent to the donation. Specifically, the agreement should explain that no parental relationship is intended for the donor. It should be clear that donor’s parental rights are terminated and that the donor forever forfeits the ability to file for any type of custody or visitation if a child is subsequently born. The agreement would allow the recipient to dictate what happens with the donation or any embryos created using the donation.

Similarly, the party receiving the donation should waive the ability to file for any support from the donor. The agreement should also direct that the donor’s name not be on the birth certificate or any other legal document concerning parentage of the child. In the event of a known donor, you may also want to spell out if the child will ever be introduced to the donor. If this is a possibility, you may want to ask that contact information be kept up-to-date. The more likely scenario, however, is the use of an anonymous sperm donor. Regardless of the identity of the donor, best practice is to make sure a clear written agreement is in place to protect everyone’s respective interests.

Click here to read more about family law issues.

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Insurance companies prohibited from denying claims of victims of abuse

Under Pennsylvania’s Unfair Insurance Practice Act, an insurance company may not deny a claim by an innocent co-insured where the loss was caused by the intentional act of another insured if the innocent co-insured is a victim of domestic violence. The Superior Court of Pennsylvania recently addressed this provision in Lynn v. Nationwide Insurance Company.

In this case, Husband and Wife owned a home, which was insured by Nationwide. Without Husband’s knowledge, Wife contacted their insurance agent and requested that the insurance policy be cancelled. Wife then drugged the couple’s children and set fire to the home while she and the children were inside. Wife’s plan failed and she was arrested.

Husband presented a claim to Nationwide for the fire damage. Nationwide denied coverage in part based on an exclusion for loss caused by intentional acts. Husband argued that he was a victim of domestic violence and that Wife’s attempted arson was part of a pattern of abuse. The Superior Court held that the issue needed to be submitted to a fact finder to determine if the Unfair Insurance Practices Act prevented Nationwide from denying coverage based on Wife’s conduct.

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