Splitting Real Estate Outside of a Divorce

A Partition Action is the type of legal proceeding needed to divide property amongst unmarried individuals that cannot agree what to do with the property. There are two options in a partition action. One option involves physically splitting the property, if possible. The alternative option, and more likely occurrence, involves the home being sold with the proceeds divided. As far as procedure, a complaint for partition should be brought in the county where the property is located and must include all co-tenants as parties. The complaint must also include a description of the property along with each co-tenant’s interest in the property.

Following the filing of the complaint and a court order on the partition, a court officer called a “master” is usually appointed to oversee the action. This usually includes an appraisal of the property to obtain an accurate value and setting up the sale of the property, be it private or public. The parties to the partition action are responsible for splitting all fees incurred during the partition proceeding as well as compensating the master. The parties can resolve at any time to settle the matter amicably amongst themselves.

Click here to read about division of marital property.

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Same-Sex Marriage & Divorce

Last month the U.S. Supreme Court found that the Defense of Marriage Act (DOMA) was unconstitutional as it violates the Fifth amendment in failing to provide due process for all. DOMA was initially enacted in 1996 and provided that the federal government could refuse to recognize same-sex marriages granted under state laws. This resulted in same-sex couples being denied federal marriage benefits available to heterosexual couples including, but not limited to, insurance benefits for government employees, social security survivors’ benefits, evaluating financial aid eligibility and filing joint tax returns.

While the federal government will no longer discriminate against same-sex couples who have been married in a state recognizing same-sex marriage, there may still be unique issues as it relates to divorce. For one, only states granting same-sex marriages will be able to do the divorces. With divorce there is often a residency requirement of six months or more meaning one of the parties may need to relocate and establish residency in a state that can preside over the divorce action before it can proceed. Further, if same-sex couples have children and subsequently separate, there are issues they can run into as far as custody. For example, PA custody laws state exactly which persons are eligible to even apply for custody rights and limit that group to the parents, grandparents, or third persons standing in loco parentis. Accordingly, if the non-biological parent hasn’t already adopted any children thereby making them a parent, they could run into issues establishing standing for custody. To date, PA does not recognize same-sex marriages. The ACLU did file a lawsuit to allow same-sex marriage in PA following the decision on DOMA.

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Tax Consequences

Many clients going through family law matters will have questions regarding how they can/should file their taxes as well as what tax consequences may arise in their situation and the answers vary depending on if it’s a divorce, custody, or support matter. To start with divorce, while married parties can choose between married filing jointly and married filing separately. Generally speaking, it is more beneficial to file jointly. If the divorce finalizes by December 31st, parties can then opt to file single or head of household for that year. The head of household status may also be available while still considered married if you’ve been separated for at least six months, have paid at least half the cost of maintaining your own residence, and can rightfully claim any dependent children. In dividing property as part of a divorce, it is possible to rollover some assets (namely retirement accounts) to avoid immediate tax penalty. Also, certain transfers in the context of a divorce matter are exempt from being taxed such as transfer of real property.

Speaking of claiming dependent children, this leads right into considerations in custody. The primary custodial parent has the right to claim minor children on their tax return. To be the primary custodial parent you must have a greater number of overnights. It is however possible for the non-custodial parent to be able to claim the exemption if the custodial parent completes IRS form 8332 waiving their right to the exemption. The number of deductions claimed or filing status can impact a support award as it can alter the net monthly income of the parties which is used to calculate support awards. Alimony is deductible from the party paying alimony and taxed as income to the party receiving it. It is always a good idea to confer with a tax expert for the most sound advice on addressing your individual tax matters.

Click here to read more on how the IRS views Divorced/Separated Parents

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Post-Divorce Issues

Finally receiving the divorce decree is an accomplishment for divorcing parties, however, it does not always mean the end of the matter. If custody and support were issues were raised as part of the divorce, even though an initial resolution may have been met, both are issues which can be revisited based on change of circumstances. Additionally, in either a court order on equitable distribution or a settlement agreement reached between the parties, there may be provisions which carry additional obligations to be fulfilled even after the divorce has concluded. Support and custody issues always carry a continuing obligation to either pay a certain amount per month or follow a certain custody schedule. There are also several scenarios when dealing with marital property that can create a continuing obligation.

For example, when a marital residence is being kept by one party, there will likely be a provision granting the party a certain number of days to refinance the property and buy the other party out for their share of the equity. If the refinance does occur, a deed will probably be needed to place the title into only one party’s name if not already done. If the refinance does not occur in that time frame, the alternative is usually to put the house up for sale and split the proceeds. If the parties cannot agree about selling the house, selecting a realtor, setting a price, etc., either party may seek assistance from the court. This would involve a Petition for Contempt and Enforcement of the court order or agreement. Most well-drafted agreements will include a provision that the party defaulting on their obligations will be the party responsible for any additional legal costs incurred to enforce the agreement.

Click here to read more on life after divorce.

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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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Fault Grounds for Divorce

Most divorces proceed on the basis of no-fault or irretrievable breakdown of the marriage based on mutual consent after ninety days or two year separation, however, fault grounds for divorce can still be utilized. Under 23 Pa CS 3301(a), the fault grounds for divorce are listed and include(1) desertion for the period of one or more years; (2) adultery; (3) cruel and barbarous treatment; (4) bigamy; (5) imprisonment for a term of two or more years; and (6) indignities to the point of life being intolerable and burdensome. The party alleging fault must prove its existence and must also establish they are the “innocent and injured spouse.” 

23 Pa CS 3301(b) discussing another ground for divorce infrequently used: institutionalization. This provision allows a divorce on the ground that insanity or serious mental disorder has resulted in the other spouse’s confinement in a mental institution for at least 18 months without reasonable prospect the spouse will be discharged. “A presumption that no prospect of discharge exists shall be established by a certificate of the superintendent of the institution to that effect and which includes a supporting statement of a treating physician.” There is often no benefit to pursuing fault grounds for divorce over no-fault grounds as fault is not a factor to be considered in equitable distribution (division of property). However, the laws of support do address fault grounds in two instances: as a defense to paying spousal support and as a bar to receiving alimony.

Click here to read more on fault grounds for divorce.

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Custody Relocation Procedures

In a custody matter, court approval or permission of the parent is required prior to a relocation. A relocation would be any move that substantially interferes with the custodial rights of the other parent. 23 Pa CS 5337 lays out the specific procedures to be followed in the event of a proposed relocation. First, the party seeking relocation should give 60 days notice to the other parent by certified mail, return receipt requested. If not possible to give 60 days notice, notice should be given within 10 days of becoming aware of the relocation. The notice of relocation should include as much information as possible regarding the new address including names and ages of individuals who will be residing there, home telephone number, name of new school district and school, and date of proposed relocation. A counter-affidavit should also be supplied with the notice giving the other party the opportunity to object to the relocation.

If notice is properly given and no objection is received, it is presumed the other parent consents to the relocation. The party seeking relocation would simply need to file a petition for confirmation of relocation. If the other parent objects, a hearing would need to be held prior to the relocation. Section (h) goes into detail about the factors for the court to consider when making a custody determination pursuant to proposed relocation. The party proposing the relocation has the burden of establishing that the relocation will serve the best interest of the child(ren) under the factors listed. Both parties have the burden of establishing an appropriate motive in seeking to relocate or opposing the relocation.

Click here to read more on custody relocation.

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Driver’s License Suspension

One of the consequences of failing to pay child support is a suspension of your driver’s license. This can happen if support is overdue by three months or more. Advance notice must be given prior to the suspension. The notice specifies the past due amount, how, when and where it can be contested. Grounds for contesting notice of suspension are limited to mistake in the amount of past due support actually owed or mistaken identity. The suspension will occur after thirty days if there is no response, the past due amount is not paid or excused, or there is not a court-approved payment plan in place.

The available methods to have a driver’s license reinstated mirror those that could prevent a suspension in the first place. They include paying the past due amount, entering into a court-approved payment plan or being excused from the obligation. A driver’s license is not the only license subject to suspension. The court also has the authority to suspend recreational licenses issued by the Pennsylvania Game Commission as well as licenses issued by the Fish and Boat Commission. There is no right to appeal an order suspending a license. The only option is to petition the court that ordered the suspension for relief. Additionally, car insurers are prohibited from taking adverse actions, such as increased premiums or rate penalties, if a suspension occurs under 23 Pa C.S. 4355.

Click here to read more on child support.

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