Tag Archive for: equitable distribution

Workers’ Compensation Awards

Pennsylvania law does allow for workers’ compensation awards to be distributed as marital property. The key factor is if the right to receive the award accrued during the marriage. Pennsylvania generally defers to the timing of the receipt of assets as opposed to the method in which it was obtained for classifying what will be presumed marital property. In that regard, the purpose of the award is not relevant in determining the marital status. However, the court still has the discretion to consider the purpose of the award and other equitable considerations when determining what percentage should go to each spouse in distributing the marital estate.

Drake v. Drake, 725 A.2d 717 (1999) is one of the cases that explains Pennsylvania’s stance on workers’ compensation awards. In the opinion, the court rejects the analytic approach which only allows an award to be marital if it’s intended to replace lost wages during the marriage. The award would be separate property if it is intended to replace future lost earnings extending beyond the end of the marriage. In Drake, Husband had sustained an injury in 1985. By 1989 he had entered an agreement with his employer to receive a lump sum commutation award. The parties did not separate until 1993. The court held that surely the right to receive the award had accrued during the marriage and was accordingly, marital property subject to equitable distribution. Focht v. Focht, 990 A.2d 59 (Pa. Super. 2009) confirmed the decision in Drake and also held the same rule applies as far as date of accrual for personal injury awards and lottery settlements.

Click here to read more on division of marital property.

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Dividing Personal Property in Divorce

Personal Property in a divorce includes the tangible items that you own, such as the furniture, the houseware, the televisions, the paintings, and other items in your home. When parties separate, one of the parties normally leaves the home and takes items with them. What is taken can often lead to a dispute. It is important to keep things in perspective. The court will normally assign garage sale value to the items which means you are not likely to get a huge credit if you walk away from the entire contents of the home. Some parties unrealistically expect a credit of $ 20,000 for all the contents of the home since they left with very little. This is not likely to happen. What the Court normally does is have the parties list out the items in dispute and if you cannot agree alternate on picking items from the list. If you do have valuables that have a higher value, such as artwork or guns, these things can be separated if you have an appraisal. You should have your certified appraisal before you go to court in order to obtain the highest value for this item. While you may be attached to certain items of sentimental value, it is important to weigh the cost of the item against the cost of fighting over the item. Most personal property issues resolve by agreement. When they do not, most get sent to arbitration to resolve unless the items are appraised. When you leave the house, it is best to take the items that you want to have when the divorce is finalized as it can often take years before these issues will even get heard by the Court.

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Weighing the Cost of Litigation in Divorce

When issues arise in a divorce that are in dispute, parties oftentimes are concerned with being right or getting justice. The divorce action itself, aside from the peripheral issues of custody if there are children, involves money. The court does not assess who is right and who is wrong in wanting to get a divorce. The court generally does not care why someone is getting divorced. The issues before the court are what financial assets does the court need to divide and what are the incomes of the parties with the disparity income between the parties as the biggest driving factor in the outcome of a divorce. When parties have issues that are in dispute, they often either involve a dispute over the value of an asset or the percentage that should be awarded in the divorce. In these instances, a party who is more interested in being right forgets to weigh the cost of proving they are right. For example, if two parties disagree on the buyout figure for a house and their dispute is a matter of difference of $ 20,000, the parties need to step back and weigh the cost of getting the house appraised, bringing an appraiser to testify in court, preparation time for court, time at a court hearing and any court costs and their expected percentage of the asset. When this analysis is done, oftentimes, the party will realize they could spend more in litigation than the amount they hope to gain the dispute. Disputes over financial assets are best settled by compromise. No one is ever going to be right and since courts are not liberal in awarding attorney fees, even if a party’s position prevails, the party will still be out of pocket to get to that position. At a minimum, a party must consider at all times the cost of litigation. For each and every dispute, it is important to weigh these factors: the cost to bring the claim, the anticipated cost in legal fees for discovery, preparation and attendance at trial, the amount of time it will take to have the issue determined, the cost of any expert witnesses, the amount of time and money lost from work in order to prepare for court and attend a trial, the emotional and psychological toll both on the party and any witnesses, the importance of preserving the relationship if any with the other party and affect on any common relations. Sometimes, a party may have to give up pursuing being right for the art of compromise because it makes more sense financially and psychologically. Understanding this is something a party needs to do anytime they are involved in litigation.

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What Happens to the Pet in a Divorce

In Pennsylvania, pets are considered personal property in a divorce. Like any personal property, if they were a pet prior to marriage, they go to the party who owned the dog at the time of the marriage. If they were purchased during the marriage, then like any other personal property, either party is entitled to keep the pet. If the parties cannot agree, they can either go to arbitration or they can decide that neither party gets to keep the pet. It is unrealistic to expect that the Court will entertain a custody schedule for a pet in a divorce. In addition, the custody statutes only apply to children. If you want to share custody of the pet, it is something that is best resolved through mediation. Through mediation, the parties can decide what things they want to address to agree on and this can include an agreement to share a pet. If you opt for this, be sure to not only include the schedule for you put, but also who will pay the expenses or how they will be shared, including vet bills, food, regular shots, etc.

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How long will the Divorce take?

If you are getting divorced, or recently filed, you may wonder how long it is going to take to get your divorce. In Pennsylvania, there are two no-fault grounds for divorce which is the vast majority of divorces even if you think you have been wronged. If you are already separated for two years when you file for divorce and have no assets to divide and no alimony issues, it can take as little as two months to get divorced. If you have no assets and no alimony issues but have not been separated for two years, there is a mandatory 90 day cooling off period. In those cases, you can expect your divorce to take about four to five months.

When you do have issues, either alimony or division of assets, it is much more difficult to predict how long it will take. One of the reasons it becomes much harder to predict is that you cannot get divorced until you know what the assets are which is accomplished during discovery. If your spouse is non-cooperative and does not provide the necessary information, you may spend a considerable amount of time in and out of court attempting to get this information. If you spouse does not consent to the divorce, you could be waiting at a minimum two years before you can even get grounds for divorcee which you need before you get divorced.

If your spouse is cooperative and you have assets and alimony issues but you are able to come to an agreement at the beginning, the timing would be about the same as if you had no issues, two months if separated two years already and four to five months if you recently separated.

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What Happens to the Divorce if you Spouse dies?

If you are getting a divorce, what happens if your spouse passes away before it is finalized? Under Pennsylvania law, if you have established grounds for divorce, the Family Court may still proceed with equitable distribution of your assets. They cannot grant a divorce posthumously, but you can still seek your share of the assets that you both accumulated while you were married. This is especially important in cases where the assets are held in your spouse’s name. You will need to file a Petition to substitute your spouse’s estate as the other party.

If you do not have grounds for divorce, then the divorce action will terminate and you will have to pursue your rights in Probate Court. Under the Estate laws, as a surviving spouse, you are entitled to receive in Pennsylvania 30% of your spouse’s estate even if they did not include you in the will. You would have to file a Petition to seek your elective share of the estate. If you have grounds for divorce at the time your spouse has passed away, you lose your right to seek the elective share.

If you have a spouse who is ill while you are getting divorced, it may be important to make sure you have established your grounds for divorce. In Family Court, there is a greater possibility that you will receive more of the assets since it is a Court of equity. It does not mean that since your spouse died, you will receive everything, but you likely will fair better than if you have to go to Probate Court. In order to establish grounds under the no-fault statute, you either have to have both parties consent to the divorce after 90 days of service or you can move to establish the grounds after a two years separation.

For additional information see:/Family-Law-Divorce/Grounds-for-Divorce/

 

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Divorce and When to get the House Appraised

If you are getting divorced and own a home, the value of the home is considered for purposes of equitable distribution. If the home was owned by you prior to the marriage and remained in your name alone, the increase in value of the home from the date of the marriage until the date of separation is considered marital. In this case, you should get two appraisals done on your house, one from the date of the marriage and one as of the date of separation.

If you received the home as an inheritance, you will need the values of the home as of the date of gift to you and as of the date of separation if you kept the home in separate names. Since inherited assets are non-marital, as long as they are kept separate, only the increase in value of the asset from the date received to the date of separation is considered. You again will need two appraisals to reflect these dates.

If, however, you own a home that was purchased during the marriage, you will want to delay getting the house appraised until you are either ready to sign an agreement or go to a divorce hearing. In Pennsylvania, the Court values the home as of the date of distribution so by getting an appraisal close to the date of your divorce hearing gives the most accurate value. If you get the house appraised too early, you may end up having to pay to have it appraised again.

If you own a home that was premarital or inherited, but you added your spouse’s name to the deed, you will want to get an appraisal at the time you married or received the asset, at the time you gifted it to the marriage and at the time of distribution.

When you get your house appraised, you may want to also consider whether you need to also get a fair rental value of the house included in the appraisal. If the house has no mortgage or a very low mortgage and you are not living in the house, you should get the fair rental of the house established in your appraisal so that you can make a claim for this value in equitable distribution.

It is also important to remember that you do not need an appraisal done if both you and your spouse are able to agree to the value of the home. You may also want to use a Comparative Sales Analysis in an effort to come to an agreed price.

If you are having trouble getting access to the home to have it appraised, there are remedies and you can file Special Relief with the Court in divorce in order to gain access for purposes of an appraisal. In that instance, you should consult with an attorney.

For more information see:/Family-Law-Divorce/Division-of-Marital-Property/

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Equitable Distribution and Worker’s Compensation

One asset in equitable distribution or support that parties should consider when getting divorced is worker’s compensation awards. Depending on what state the worker lives, there may be a component not only for lost wages but also an award comparable to a personal injury award. In these instances, the lost wages should be calculated into any support award and the again, you will need to decide whether you want to lump sum the award portion as either income for purposes of support or as an asset for purposes of equitable distribution. In the event that it is considered as income, you cannot double dip and claim it as an asset. If, however, the award is for an injury that occurred outside of the marital period, either before or after separation, you will need to include it as income as you cannot include it as an asset. Your support order should be very detailed and specific and identify exactly what portion of any worker’s compensation is included in the calculation of the income. Whether to have the worker’s comp treated as an asset or income really depends on how the court will treat the asset. In some instances, the court may award the majority of that asset to the injured party and it may be better to then include it income if you are also eligible to receive support. Speaking with your attorney about the expected amounts would be wise to do before you make that decision so that you can decide whether it is better as support or as an asset.

For more information see:/Family-Law-Divorce/Division-of-Marital-Property/

 

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Income or Asset? Avoid the Double Dip

Oftentimes when getting divorced, an asset the generates income can either be considered in equitable distribution or in support. For example, if you receive stock options as part of your employment, they are considered an asset for purposes of divorce. If you cash them in during the divorce, it will either be considered an asset for income, but not both. If you have a pension that accumulated during the marriage and it goes into pay status during the divorce, or if it is already in pay status at the time of the divorce, it may be considered an asset or income but not both. You need to be careful that if you have a support order that the income from that pension or the stock option is not considered into the incomes if you want to have that asset considered an asset for equitable distribution. You need to be very careful that any support order entered specifically states whether any of the income was included, and if so, how much.

Sometimes, an asset may be a hybrid of a marital asset and non-marital asset. For example, a pension may include a portion of non-marital years and a portion that is marital. In that instance, you need to weigh whether it is better to include the entire pension income, or whether you want to include the non-marital portion income and include the marital portion as an asset for equitable distribution. Since you often receive more in equitable distribution than you do in support, oftentimes, the person who is entitled to a share of the pension or a share of the stock option will want to consider it in equitable distribution instead of support. Either way, be very clear in any agreements or order, which is so that there is no double dip if you are paying and that there is no argument it was already included if it was not considered.

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Dividing a Pension in Divorce and the Survivor Annuity

Oftentimes when parties get divorce, one of the biggest assets that they have accumulated is the pension of one or both of the spouses. In a Pennsylvania divorce, the pension portion that accumulates during the marriage is what is considered marital. There may also be a non-marital portion for the years of service prior to the marriage or the years of service after the marriage. When getting divorced, there are two methods of getting each spouse their share of that pension. One method is to do a percentage distribution of the marital years. When this method is use, the spouse receives a percentage multiplied by the number of years married that the pension accumulated divided by the total number of years that the pension accumulated. This is usually distributed by a separate document called a Qualified Domestic Relations Order which is often paid to and drafted by a company or firms that handles QDROs. The other method of distribution, and the preferred method by the Court (according to case law) is an offset. Under this method, the marital portion of the pension is assigned a dollar value based on a report prepared by a company who does pension valuations. This dollar value of the pension can then be swapped with other marital assets as an offset.

One often overlooked part of a pension is the survivor annuity. If a party has a pension, then the party who has the pension is given the option at retirement to select from several different options upon their death. This could include no survivor, a 75% survivor, 50% survivor, etc. This survivor benefit election is important in that if no survivor is elected, the one spouse will receive nothing upon death of the party who holds the pension. If a survivor benefit is elected, it reduces the monthly payment of both spouses when they receive the pension. Since only the spouse who will continue to receive the pension upon death of the pension holder will benefit, the surviving spouse has an asset known as the survivor benefit annuity which must be valued separate and apart from the principal of the pension. It is something that should be addressed at the time of divorce as once the pension is in pay status this election cannot be changed.

For additional information see: /Family-Law-Divorce/High-Income-Net-Worth-Divorce/Pensions-in-a-Divorce/

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