In divorces, there are two main issues – children and money. With the children, the issues center around physical custody and legal custody (decision making).
a. THE PRELIMINARIES – A PRENUPTIAL AGREEMENT
A prenuptial agreement is entered into prior to marriage, or civil union, to handle property division and spousal support, in the event of divorce. Notice that the agreement needs to be prepared and signed, prior to the marriage or union.
The laws of each state are different. However, there are similar requirement in every state. In general, the agreement must be
1. In writing
2. Signed by both parties, and witnessed
3. Signed voluntarily
4. Full disclosure at time of signature
5. Not be unconscionable
Anyone seeking to have an enforceable agreement would be wise to use a local divorce attorney. Each party should be represented by separate attorneys. Both parties need to provide all of their financial information to the other party, well in advance of signing the agreement. (Unconscionable in general means that the agreement cannot be so unfair that the court won’t enforce the agreement).
B. GETTING DIVORCED – THE SPLITS
Getting divorced without assets is relatively easy. Once there is property, many issues can arise. I will take up the issue in numerical order
1. Your tax status depends on whether or not you are married at the end of the year. First thing to address is the responsibility of each party in the event that there are any outstanding taxes from prior years. The tax liability can be split equally, or in any other Percentage. (i.e. 60%/40%, or based on income).
2. In the event that there is children, the divorce agreement needs to address who will get the tax deduction for the child(ren) each year. The tax deduction can be alternated, by agreement of the parties.
b. Child Support – In many states, such as Connecticut, child support is given to the custodial parents based on “guidelines.” Most judges do not deviate from the guidelines.
c. Alimony – There is no easy way to determine the amount of alimony. In many states, there are many factors which are considered in determining the amount of alimony, including the fault of the party or parties, and the length of the marriage. Under state law, a judge may be allowed to consider the fault of a party in determining the amount of alimony to award, although the parties have a right to a no fault divorce (there is no fault for granting the divorce).
With regard to alimony, you need to consider the amount to be given, the time frame in which it will be paid, and the events at which it will terminate (typically marriage or cohabitation of the person receiving the alimony.
d. Pensions – This is often one of the largest assets in the marital estate. The parties need to agree if and how a pension or retirement plan will be split, or a Judge will need to make a decision for the parties.
Note that there are special orders which need to be prepared and signed by a Judge, for a tax free transfer of retirement assets from one party to another, in the form of a Qualified Domestic Relations Order. The pay I remember the term QDRO is
Qualified Retirement Plan
Domestic Relations- Related to Domestic Matters or Divorce
Order of the Court
e. Personal Property – the small stuff is not always so small. In my opinion, it is better to split up all of the personal property, prior to getting the divorce agreement completed. Put into the agreement that the parties have “already agreed to split up the personal property.” It is simply too costly to fight over the small stuff. I include in personal property the following: jewelry, household items and collectibles
f. Life Insurance – consider how much insurance one party needs, if the ex-spouse is no longer alive. Often, this is made a part of the divorce decree.
g. Real Estate – since the market crash, many residences have a mortgage which is more than the value of the property. If this is the case, it may be wise for both parties to file for bankruptcy, prior to the divorce being completed, thereby eliminating the property and the debt as well. The person who intends to keep the property should be very wary of signing a hold harmless agreement, which agrees to indemnify the other spouse in the event that the mortgage is not paid (indemnify means to be responsible for the other spouses losses, if the mortgage company goes after the party). The hold harmless clause can prevent the property owner from getting out of the mortgage debt, in a bankruptcy filing.
For people with equity in the property, the parties will need to agree on how to split the equity. Before 2006, it was relatively easy to get a mortgage, and thereby do a cash out refinancing, take money out the property through a mortgage to pay off the spouse who doesn’t want the house. I have seen very few cash outs lately.
h. Stocks/Bonds and other investments need to be split among the parties.
i. Business Interests are difficult to split. I have found it helpful to get a business appraisal done to determine the value of the spouse owners interest. Then agree on an amount to be paid for the business interest.
With all that has been said, I have never seen a divorce which has not significantly affected the lifestyle of both the former husband and wife. Divorce has a devastating effect on all parties involved. Unless both parties are rich, there is no fair way to split the assets or the income of the parties. The rent and utilities for a second household can easily exceed $2,000 per month, more than the child support and alimony combined.
If you or someone you have any questions, please feel free to contact Attorney Singer
Robert M. Singer, Attorney at Law
2572 Whitney Avenue
Hamden, CT 06518
Serving all of Connecticut