Tag Archive for: divorce

Fair Rental Value

The issue of fair rental value arises where one spouse is no longer living in the marital residence pending finalization of a divorce action. The principle behind fair rental value is that the spouse that has moved out of the former marital residence still has a ½ interest in the property and accordingly, should be compensated for their interest. The court must consider a number of items in reaching an appropriate calculation of any rental credit due. First, the court must determine if there are any equitable defenses that should offset the total of any rental credit due. Second, the court must consider the length of the dispossession. Case law also establishes that the other spouse must be in actual possession of the home.

Finally, the court must calculate the total amount of credit for expenses paid on the home. These expenses would include the mortgage payments and other ordinary expenses related to the home. Similar to any rental credit due, expenses should be split in half to reflect each party’s ownership interest. If the rental value exceeds the expenses related to the home, the spouse that has left the home should get a credit for ½ of the rental value offset by the expenses. An argument for fair rental value is most likely to occur where the home is owned outright such that no mortgage payments are made or there are relatively small monthly payments on any debt associated with the house compared to what the home could rent for.

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Residency for Jurisdiction

Under Pennsylvania law, specifically 23 Pa. C.S. 3104(b), one of the parties to the divorce action must have been a bona fide resident of Pennsylvania for at least six months prior to the commencement of the divorce. Bona fide residence is defined as actual residence with domiciliary intent. Domicile denotes the place where a person has his or her true, fixed, permanent home with the intention of returning after any absence. In other words, where an individual sleeps, takes her meals, receives mail, and stores personal possession. Members of the military are considered to be residents of their home state even if they are stationed elsewhere at the time a divorce is commenced. The home state would be the state where they intend to return to and reside in following any term of active duty.

Jurisdiction for custody matters is usually also based on a six month time frame. Jurisdiction is proper in the home county of the child which is where the child has resided for at least six months prior to commencement of the action. Temporary absences from the county do not negate residency for the purposes of jurisdiction. Further, in emergency situations, the six month residence requirement may be set aside. Temporary emergency jurisdiction may be exercised if the child is in the jurisdiction at the time and it is necessary to make an immediate determination to ensure the child’s safety. For example, an emergency order may be entered if a child has been abandoned, or is subject to mistreatment or abuse. An emergency order would only be valid until a court with jurisdiction as the home state of the child makes a determination.

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Retirement Plan Distributions in Divorce

Retirement plans are often one of the significant assets up for distribution in the course of a divorce. Careful attention should be given to the type of retirement plan at issue to avoid tax penalties and/or early withdrawal penalties to the extent possible. First, retirement plans must be distinguished between qualified plans and non-qualified plans. Qualified plans include defined contribution plans such as 401Ks as well as defined benefit plans such as pensions. A Qualified Domestic Relations Order (QDRO) will be necessary to distribute a qualified plan. Non-qualified plans include individual retirement accounts or IRAs. A QDRO is not needed to distribute these plans.

Both qualified and non-qualified plans will be taxable as distributed. The QDRO effectuates a tax-free rollover of funds to the spouse being awarded a share of the retirement plan in divorce but the spouse will be taxed on it when they withdraw it. Distributions outside of a QDRO may also be subject to an early withdrawal fee. Typically, a 10% early withdrawal penalty applies to distributions before the plan participant is 59 ½ years old. There are a few ways to avoid the early withdrawal penalty including a loan from the retirement plan, disability of the plan participant, and scheduled equal payments. Additional exceptions for IRA plans include higher education expenses and for first-time home buyers.

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Non-Marital Property

Section 3501 of the Divorce Code defines what will be considered marital property versus what will be considered non-marital property. Specifically, marital property will include all property acquired by either party from the date of marriage through the date of separation. There is a presumption all property acquired during the marriage is marital regardless of how title is held (e.g. individually vs. jointly). It will also include the increase of value of any non-marital property during the course of the marriage. 23 Pa C.S. 3501 goes on to list what property will not be considered marital under the statute. Property acquired prior to the marriage or in exchange for said property is not marital as well as property expressly excluded by valid written agreement of the parties at any time.

Property received as a gift from any person other than the other spouse is not marital along with any property acquired after final separation but potentially prior to the entry of a divorce decree as long as marital property was not used in its acquisition. Any inheritance received is treated as a gift and will also be deemed non-marital so long as it is not subsequently commingled with marital funds. The court will also not look at property that was disposed of in good faith while the marriage was intact. An example would be property sold to a family member for its fair market value. Veterans’ benefits cannot be attached, levied or seized except in the case where a portion of the veteran’s retirement pay was waived in exchange for the benefits. Finally, any payment from a cause of action or lawsuit where the underlying claim occurred before the marriage or after separation.

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Alternative Methods of Service for NJ Divorce

The New Jersey Divorce Statutes provide for alternate ways to notify the opposing party of a divorce action if you do not have any contact information for the opposing party. One method is by substitute service on a special agent. This method involves serving the complaint on a person who is likely to be able to get it to the Defendant; typically, a close friend or relative. The other method involves publication of the complaint in the county where the Defendant was last known to reside. For either of the above methods, you must get approval by the court first. The court must be satisfied that every effort has been made to locate the Defendant including but not limited to inquiries of the Defendant’s friends, family, employer as well as inquiries through the post office, department of motor vehicles, voter registration, and the military.

If you are still unable to get contact information for the Defendant despite the inquiries as listed above, you can file a petition with the court for substitute service or service by publication. Where service by publication is granted, you will be responsible to publish notice of the divorce in the paper specified by the court and provide proof to the court that it was in fact published. If the Defendant does not respond in the time frame allotted, the divorce can then move forward. The next step is likely requesting a default judgment for Defendant’s failure to answer or respond.

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Possibility Coaches – April 9, 2014

The Possibility Coaches are hosting another free lecture titled “How to Emotionally Thrive During & After Divorce!” at our Doylestown office on April 9, 2014. Jon Satin and Chris Pattay are the partners behind the Possibility Coaches and focus on empowering men and women alike to lead meaningful lives and engage in healthy, successful relationships. Satin and Pattay started coaching together in 2002 and have labeled themselves as relationship, divorce, and life coaches. As it relates to relationships or divorce, their goal is to help in navigating through the emotional aspects as well as provide a framework for rebuilding to achieve a happier, healthier life. Please contact our office for additional information and to reserve your spot for this free event! Our Doylestown office is located on the 2nd floor at 44 East Court Street.

Click here to read more about the Possibility Coaches.

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Legal Separation

Pennsylvania does not recognize legal separation in that there’s nothing you would file with the court to establish separation. Instead, it is a date established between the parties that later becomes relevant in establishing grounds for divorce or valuing assets that need to be divided. Separation does not mean the parties have to live separately. Separation is defined as the termination of cohabitation, whether living in the same residence or not. At the latest, it shall be presumed that the parties commenced to live separate and apart on the date that the divorce complaint was served. However, the date of separation can be an even earlier date if one party moves out of the marital home or makes it clear to the other party that the marriage is over by stating so clearly or even reducing it to writing. The effect of establishing “separation” goes toward starting the clock on a two-year separation divorce as well as establishing a cut-off date for valuing the marital estate.

New Jersey does recognize legal separation in the form of divorce from bed and board. Both parties must consent to a divorce from bed and board. The parties will still be legally married but are able to achieve separation financially. Just as with a divorce, the parties can enter an agreement to divide all their marital property or submit to the court for a decision on division. Alimony may also be awarded where appropriate. Health insurance may continue if covered by the other spouse and legal separation is not specified as a reason for termination. A divorce from bed and board can be converted to a divorce from the bonds of matrimony if the parties elect to go through with a full divorce. It can also be revoked such that the parties resume their marriage.

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Service in Divorce

Once a divorce complaint is filed it must be served on the opposing party before the matter can proceed. Pennsylvania Rule of Civil Procedure 1930.4 discusses acceptable methods of service for all domestic relations matters. The complaint must be served by personal service or certified mail, restricted delivery, return receipt requested. If personal service is accomplished, the person effectuating service should complete an affidavit of service indicating when and where the opposing party was served. Personal service can be carried out by any adult that is not a party to the action. The Sheriff can be contacted to effectuate personal service for a fee. There are also numerous process server companies that will effectuate service for a fee. Alternatively, the opposing party can opt to sign an Acceptance of Service form which serves to waive any defects of service under the rules.

Service in a divorce matter generally must be accomplished within 30 days of when the complaint was filed. The exception is where service will be done outside of the Commonwealth in which case 90 days is permitted. If service is not completed within the applicable time frame, the complaint must be reinstated. After the reinstatement, a new time period begins to run. However service is accomplished, proof of service should be filed with the court. If service cannot be accomplished, the court can be petitioned to allow service by publication. The petition for service by publication must describe all the efforts made to find the other party by other means. If the petition is granted, notice would be published in a legal publication and a newspaper of general circulation in the county of the other party’s last known residence.

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Vanishing Credit

The court may give credit for individual property brought into the marriage depending on the circumstances. Generally, any credit to be received decreases with the length of the marriage. For example, Bucks County will reduce the credit by 5% a year such that there is no longer a credit after 20 years. A prime example of a situation where this rule would be applicable is the purchase of a marital home. Say Spouse A contributed $40,000 of their pre-marital money to the purchase of the house. If the parties separated after 5 years, the amount of Spouse A’s individual contribution is reduced by 25%. Accordingly, Spouse A would argue that 75% of the $40,000 down payment, or $30,000, is their separate property and not subject to equitable distribution in the divorce.

The rules on credit for individual or pre-marital property can vary county to county since it’s not a statute, but more or less a policy used by the respective Masters when looking at the marital estate in a divorce matter. Be careful with the commingling of individual property with marital property. It will be hard to make an argument on the amount of individual property that should be credited to a party if it’s hard to trace the source of the funds. If you encounter a situation in your divorce where it may be necessary to make a distinction between assets that are clearly marital versus those that you can trace back as being pre-marital and/or separate, you should be sure to consult with an attorney with experience in the valuation of these type of assets or risk all of the assets being addressed in equitable distribution and subject to division with your spouse.

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Service Members Civil Relief Act

The Service Members Civil Relief Act (SCRA) was signed into law by President Bush in 2003. It was an overhaul of the SSCRA which had been law since 1940. The main purpose of the SCRA is to protect service members from civil lawsuits while they are on active duty and unable to adequately defend themselves. The protections of the SCRA, accordingly, apply to family law matters such as divorce, custody and support. Divorce complaints must either include a statement that neither party is a service member on active duty or be accompanied by an affidavit of non-military service. The service member has the right to waive their protection under the SCRA and still proceed if they desire to. Any waiver of rights under the SCRA must be in writing.

The SCRA provides for a mandatory stay of civil proceedings if the case does involve a service member in active duty. The stay period may be extended if necessary. An application for a stay should establish that the present active duty impairs the ability of the service member to appear and defend themselves in the civil action. The application should also indicate when the service member expects to be available to participate. A statement by the service member’s commanding officer needs to be provided corroborating the facts alleged by the service member in the application. An SCRA website is available where inquiries can be made into the active duty status of any individual.

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