Pre-Nuptial Agreements

Given the statistics on the likelihood of divorce, many couples are opting to enter into pre-nuptial agreements to protect their rights in the event of a divorce. A pre-nuptial agreement is a private contract between the parties entered into prior to their marriage that outlines how assets and debts will be handled if the parties subsequently divorce. A basic and straight-forward pre-nuptial agreement would provide that each party retains anything they acquire in their own name and that anything marital or acquired jointly will be divided based on the divorce laws. A pre-nuptial agreement may also provide for an increasing amount of support to a spouse based on the number of years married or number of children produced. Alternatively, one spouse may be required to pay support as a punishment if they commit adultery during the marriage.

Since a pre-nuptial agreement is a contract is must meet several requirements to be held valid. One, there must be a full and fair disclosure of the financial resources/existing assets by both parties. If there is not such a disclosure, there must be a provision in the agreement providing that the parties voluntarily and expressly waived the right to disclosure. Two, it must be clear that both parties voluntarily entered the agreement. For these reason, the agreement should be signed well before the wedding to avoid any challenge to the agreement that a party was forced to sign because the wedding date was fast approaching. Finally, steps should be taken to make sure the agreement is not invalidated on the basis of fraud, duress and/or misrepresentation. Any challenge under the above listed causes of action will require a fact-based analysis with the standard being a preponderance of the evidence, or more likely than not. Overall, it is difficult to overturn a pre-nuptial agreement once entered into, however, it can provide some peace of mind if the parties do not end up living happily ever after.

Learn more on Prenuptial Agreements

 

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Health Insurance as part of Support

One frequent question in the context of divorce is what will happen to health insurance coverage in the context of a divorce. Generally, a spouse cannot drop the other spouse during the context of the divorce. Health insurance is often considered in the context of support and spouses are obligated to provide support for each other during the marriage. Once divorced, however, you cannot remain on your ex-spouse’s health insurance plan. If you are unable to obtain alternate health insurance on your own right away you can look into COBRA coverage.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives the employee providing the health insurance and their ex-spouse who has lost their health benefits the right to choose to continue health benefits for a limited period of time and under certain circumstances. A spouse who elects COBRA coverage following a divorce may be required to pay the entire premium for coverage, up to 102 percent of the cost to the plan. Additionally, COBRA coverage is only temporary and generally only lasts for 36 months. Only employers with 20 or more employees in the prior year who provide group health insurance are required to abide by COBRA and provide the opportunity for a temporary extension of health coverage.

If there are children between the parties, the children may remain under the health insurance coverage presently provided. There may be an adjustment to any child support award based on who is paying the premiums on the health insurance for the children. There is a 60 day window following the termination of coverage in which to notify the health insurance provider whether or not you are pursuing COBRA coverage.

Support

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Social Security Benefits in Divorce

A party in divorce may be entitled to collect social security benefits based on the earnings history of their spouse. Your spouse must already be at least 62 years old and receiving their social security benefits. Several conditions must be met before a party is entitled to their spouse’s benefits. First, you must have been married for at least ten years. Second, you must presently be at least 62 years old. There is an exception to the age requirement if your spouse is deceased in which case you can start collecting at 60 years old or 50 years old if disabled. Third, your social security benefits based on your earnings history must be less than your spouse’s benefits. You can only receive one social security benefit and should opt for whichever is higher. Finally, you cannot be presently married. There are exceptions to this rule as well. Specifically, remarriage is permissible if it occurs after age 60 or age 50 if disabled.

Be advised that even if you elect to receive benefits based on your spouse’s social security rather than your own, it will not in any way reduce your spouse’s benefits. You spouse will continue to receive the full amount of his or her benefit. In addition, you would be entitled to receive 50% of the benefit your spouse is receiving. If, however, your spouse pre-deceases you, you are then entitled to receive 100% of your spouse’s benefits. Further, any children under 18 at the time of your spouse’s death would be entitled to benefits based on your spouse’s benefits as well.

Divorcing After 50

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Military Deployment as Custody Factor?

The US House of Representatives just passed a bill that would prohibit family courts from considering military deployment as a factor when awarding custody. The bill was introduced by Representative Michael Turner, R-Ohio, and will now be headed to the US Senate for a vote. The rationale behind the bill is that individuals who are ordered into deployment by one branch of government should not be punished in the form of adverse custody decisions by another branch of government. Presently, family court judges can cite deployment as a factor in determining a custody order. The bill would only prohibit deployment as a factor if the individual being deployed cannot bring family members with them on their assignment. Further, the assignment must be between 60 days and 18 months in length.

There is already a law in place protecting military members in the context of divorce. Persons in the military service of the United States are specifically protected by the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SCRA), which, by making provision for the temporary suspension of legal proceedings and transactions relating to them, is designed to ensure that their civil rights are not prejudiced during their terms of service. The SCRA is not, however, a blanket moratorium on all divorce actions against servicepersons. Its protections only come into play when the defendant is prevented or hindered by his or her military service in defending the divorce action. An affidavit of non-military service is a commonplace requirement in a divorce action wherein the plaintiff must submit a signed affidavit indicating the defendant is not in military service in order to move the divorce forward. The defendant can waive the protections of the SCRA and proceed with a divorce while in military service if they so choose.

Military Divorce

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Hidden Assets in Divorce

Often in the context of divorce parties may attempt to hide assets in an attempt to keep them out of the marital estate that will be up for distribution. One of the biggest red flags as far as potential hidden assets is if the spending/assets of the party are way more than would be expected based on their reported income. A party who has a small business and deals in cash can easily hide money. It may become necessary to hire an expert to analyze the income flow and see if their reported income is correct after a thorough investigation. Top level executives may receive alternative forms of income. Examples include stock options, bonuses, car allowances, and deferred compensation plans to name a few. Military members also often have a compensation package that goes beyond their base salary. It is important to obtainformation on all benefits of employment so they can be either be included as income in a potential support calculation or treated as an asset subject to distribution. Another potential problem as far as hidden assets is offshore accounts. Many offshore banks have confidentiality provisions that deflect detection. Parties should also be weary of the other party transferring assets over to family members or friends.

The first step in tracking down assets, hidden or otherwise, is discovery. Discovery in family matters typically consists of interrogatories (set of questions to the opposing party) and a production request (requesting certain documents be turned over). Tax returns and bank statements are routinely requested and are good starting points for tracing sources of income as well as where the income is going. From a tax return you can see rental income, interest on bank accounts, dividends on stock, etc. Bank statements can show the transfer of money and identify where it went to and for what purpose. Parties in a divorce may also conduct depositions wherein they question a party under oath. Further, the parties can subpoena documents directly from the custodian of the documents if the spouse will not turn them over. If these initial avenues of discovery do not yield the desired results, a party will have to contemplate whether it is worth to invest more money in the chase for hidden assets. Additionally, if a party anticipates that hiding or dissipating assets may become a problem during the pendency of the divorce, it is important to get a court injunction right away preventing the dissipation or transfer of any marital assets.

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Spousal Support

Section 4321 of the Domestic Relations laws provides that married persons are liable for the support of each other according to their respective abilities to provide support as provided by law. Similar to child support, spousal support will be calculated based on a statewide guideline. Without children, spousal support is 40% of the difference of the net incomes of the parties. If there is also a child support order, spousal support will only be 30% of the difference of the net incomes.

One longstanding exception to the duty to pay spousal support is where the spouse seeking support has engaged in conduct that would constitute grounds for a fault-based divorce. The fault grounds under the Pennsylvania Divorce Code include: (1) willful and malicious desertion without reasonable cause for at least one year; (2) adultery; (3) cruel and barbarous treatment of an injured and innocent spouse; (4) bigamy; (5) imprisonment for at least two years after conviction of a crime; and (6) indignities to the innocent and injured spouse which makes that spouse’s condition intolerable and life burdensome.

Many cases have touched on the issue of whether spousal support is appropriate due to alleged existence of another relationship outside of the marriage. It is up to the spouse who is objecting to a spousal support award to prove a fault ground for divorce by clear and convincing evidence. Adultery is defined as voluntary sexual intercourse with a person other than his/her spouse. Alternatively, indignities may be established even when the evidence does not necessarily support adultery. “Indignities may consist of vulgarity, unmerited reproach, habitual contumely, studied neglect, intentional incivility, manifest disdain, abusive language, malignant ridicule, and every other plain manifestation of settled hate and estrangement.” A single act by a spouse will not support a finding of indignities. Instead, it must be a course of conduct that renders the life of the innocent party intolerable or burdensome.

Conduct which takes place after separation is generally not relevant, however, such conduct may be introduced if it will go to show the conduct began before separation. In one case, the evidence supported that Wife had not started dating someone new until three days after the divorce complaint was filed. Accordingly, the award for spousal support was appropriate because of the post-separation nature of the relationship. In a different case, the support award was upheld despite Wife’s conduct before separation. The evidence supported Wife’s contention that her relationship with a certain man other than her husband was strictly platonic. Even though she had been spotted with the man several times, there was no evidence that anything that would support fault grounds for divorce had occurred. In the same case, Husband also alleged desertion as a reason why he should not have to pay spousal support. This defense was overcome as well since Wife’s absence from the marital home was justified based on Husband’s emotional abuse. In most cases, there will not be a problem obtaining spousal support, however, parties should be careful of the timing of new relationships.

/Family-Law-Divorce/Spousal-Support-Alimony/

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Contempt for Non-Payment of Support

In Warmkessel v. Heffner, 2011 PA Super 46, the Superior Court held that credit will not be given for time already spent in jail between being taking into custody and the support hearing due to non-payment of child support. The Defendant Father had been ordered to pay $260 per month in child support for his two children. After failing to pay regularly, several contempt petitions and a missed support enforcement hearing, the court issued a bench warrant for Father’s arrest. Police took the Father into custody a few months later and a hearing was scheduled for approximately 3 weeks out. At the hearing, the court found Defendant Father owed $6,037 in late child support payments and sanctioned him to a maximum of 3 months imprisonment. Defendant Father’s attorney asked the court to give Father credit for the 21 days already served and the court declined.

On appeal, the Defendant argued, among other things, that the purpose of incarceration as a sanction is meant to coerce parents to timely pay child support. Accordingly, the Defendant posits the time spent incarcerated based on the bench warrant issued by the family court was indistinguishable from the time incarcerated after the hearing in that the Defendant was able to reflect on the necessity to pay support in both circumstances. Defendant further argued that criminal defendants always receive credit for time served so the court violated his equal protection rights by treating him differently solely based on the civil nature of his case. The Superior Court determined that Defendant Father’s arguments on appeal were without merit and upheld the trial court’s decision.

The takeaway here is that child support obligations are a very serious matter. The family court has the authority to issue a bench warrant to have a party who is not making support payments taken into custody. Additionally, the court can order additional incarceration at a subsequent support hearing as a means of reiterating the importance of regular support payments and demonstrating the severity of the punishment available for failure to comply.

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Division of Pensions in Divorce

Pensions, as well as other retirement plans, are often one of the assets up for division in a divorce. The court will equitably divide the marital portion of a pension plan after considering all the relevant factors in equitable distribution. The marital portion of a plan would be the portion that accrued from the date of marriage through the date of separation. In some cases, the entire pension will be marital depending on the timing of the marriage alongside the start date of the pension plan.

The Superior Court recently released a decision regarding the marital status of post-separation cost of living adjustments (COLAs). In MacDougall v. MacDougall, 2012 PA Super 83, the Superior Court held that Husband’s post-separation COLAs were marital property subject to equitable distribution because they accrued without any effort or contribution by Husband. Wife had filed a Petition for Contempt after discovering that Husband’s monthly pension benefit had continued to increase due to COLAs but he was still only paying her a percentage of the monthly benefit from the date of separation. The trial court ruled in favor of the Husband in finding the post-separation COLAs were not marital, however, the Superior Court reversed their decision.

In reaching its decision, the Superior Court analyzed several previous decisions regarding post-separation increases in pension plans. Most notably, in Berrington v. Berrington, 534 Pa. 393 (1993), the Pennsylvania Supreme Court held that increases in a pension plan due to the employee spouse’s own efforts or contributions are not marital whereas increases not attributable to the employee spouse are marital. In MacDougall, the Superior Court determined the increases based on COLAs were automatic and not dependent on any additional effort or contribution by Husband, thus the COLAs were marital and subject to division. Therefore, the Superior Court held Wife’s share of Husband’s pension should also increase to reflect the COLAs. The case was remanded to the trial court in order for exact calculations to be made as far as Wife’s share of the pension with the COLAs included. This approach is arguably more fair in that it doesn’t allow one spouse to benefit from an increase that wasn’t earned and that the parties likely did not know about at the time of equitable distribution.

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Embryos are Marital Property

Frozen embyros are considered marital property and hence, technically up for division in a divorce, however there is some disagreement on exactly how the “property” should be dealt with. This is a relatively new issue in family law and different states have applied different methods for resolving the matter. The Pennsylvania Superior Court recently released a decision regarding the marital status of frozen pre-embryos in Reber v. Reiss, 2012 PA Super 86. In Reber, the court had to determine what should happen to the frozen pre-embyros of a divorced couple. Wife wanted to use the frozen pre-embryos in order to have children of her own whereas Husband wanted the frozen pre-embryos either destroyed or donated for research.

In reaching its decision, the Superior Court considered how other states have dealt with a similar issue. Some states have focused on whether there is a prior agreement between the parties concerning disposition of the pre-embyros in the event of divorce and if so, will uphold the agreement as enforceable. At the same time, other states have held that enforcing such an agreement is a violation of public policy and have declined to do so. The Supreme Court of Iowa follows a mutual consent model requiring both parties to agree on disposition, however, the Superior Court of Pennsylvania did not find this model feasible since parties would not be in court in the first place if they could agree. The approach that was ultimately adopted calls for the court to balance the interests of the parties.

In applying the balancing approach, the court found that Wife’s interest in procreation using the frozen pre-embyros outweighed Husband’s interest against procreation. This decision was based primarily on evidence that the pre-embryos were likely Wife’s only opportunity to procreate along with testimony that Wife would allow Husband to be involved and wouldn’t pursue support in response to the concerns raised by Husband. The court did acknowledge that the party against procreation should normally prevail in a balancing test, however, due to the unique facts of the case, the scales tipped in Wife’s favor. It also seems that the court would’ve likely enforced an agreement on the issue if there had been one. Accordingly, parties who intend to undergo in vitro fertilization should draft a clear, unambiguous agreement as to the disposition of embryos upon separation, divorce or death, or else be subject to a balancing approach by the court.

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Two-Year Separation – Divorce

Most parties pursuing divorce will choose to proceed with no-fault grounds for divorce. A no-fault divorce simply means there has been an irretrievable breakdown of the marriage. There are two different ways to establish an irretrievable breakdown of the marriage under the Divorce Code. First, both parties may consent to the divorce after 90 days from when the complaint was filed and served. This is referred to as a 90-day mutual consent divorce. Alternatively, if one party won’t consent, the other party can move forward after the parties have been “separated” for two years. This is referred to as a 2-year separation divorce.

Separation does not mean the parties have to live separately. Many parties still reside in the same home but are considered to be “separate” based on the definition provided by the Divorce Code. Section 3103 of the Divorce Code defines “Separate and apart” as follows: “Cessation of cohabitation, whether living in the same residence or not. In the event a complaint in divorce is filed and served, it shall be presumed that the parties commenced to live separate and apart not later than the date that the complaint was served.”

Accordingly, the date the divorce complaint is filed will generally be accepted as the date of separation regardless of whether the parties continue to live together or not. However, the date of separation can be an even earlier date. For example, the date one party does move out of the marital home is usually a clear indication the marriage is over, and hence, an acceptable date of separation. Alternatively, even if the parties continue to reside together, a date of separation can be established when one party makes it clear to the other party that the marriage is over by stating so clearly or even reducing it to writing. The party alleging 2-year separation will have to submit an affidavit certifying the date of separation. The other party has an opportunity to object and a hearing may be held if necessary to determine the appropriate date of separation. Accordingly, be sure that the other party is keenly aware of your intended separation, especially if you will continue to reside together and/or hold off on filing for divorce.

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