Archive for 'Assets'
Should You Keep the House in Your Divorce?
Posted on 29. Apr, 2009 by Alabama Divorce Lawyer, Michael Sherman.
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This is a question that comes up quite a bit in my work with couples going through a divorce in Alabama. It can often be a very emotional decision. Well, I recently came across a blog by Kansas divorce lawyer Shea Stevens. Shea is posting some great material. One of her recent articles was on this very issue – Should I Keep the House?
Take a look at the article, because although she addresses it to couples going through a divorce in Kansas, the same questions would apply in an Alabama divorce. The main point, like much of the divorce process in general is to make the decision with your head and not just your heart. Making an emotional decision to keep the house when you will not be able to afford it in the long run could lead to devastating finanical effects.
So, as Shea notes, before making any agreements with respect to your martial home, here are some things to think about:
- Can you afford to make the current monthly payment?
- Do you have the ability to refinance the home solely in your name?
- How much maintenance do you expect your home will need now, in the next year, 5 years? Can you afford this maintenance?
- What is your home really worth? How much equity do you have in the home? If you sold the home, would you come up short and have to pay off the mortgage, or would you make money? What is the home’s value in today’s market?
- If you are keeping the home, were you given enough assets on your side on the balance sheet to level out the division of property?
- Will your children have to switch schools if you move?
- Do friends and family live close by?
- Can you rent a home of the size suitable for your family for less or will you be paying approximately the same amount in rent as your mortgage payment?
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Division of Retirement Assets in Divorce
Posted on 24. Apr, 2009 by Alabama Divorce Lawyer, Michael Sherman.
A prospective client recently asked me whether or not she could receive a portion of her spouse’s retirement account in her upcoming divorce. I explained to her that in Alabama, if the parties have been married for 10 years preceding the filing of the divorce complaint, the court has the discretion to award them up to half of the value of the spouse’s retirement accounts that accumulated during the marriage.
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Hidden Assets in Divorce
Posted on 24. Apr, 2009 by Alabama Divorce Lawyer, Michael Sherman.
It is not unusual for spouses to attempt to hide or undervalue assets during the divorce process. Here is a list of areas to look for potentially hidden and undervalued assets. It is from Kansas family law blogger Grant Griffiths. If you think your spouse may be participating in this type of unethical conduct, be sure to bring it up with your lawyer so the two of you can work together to uncover such practices, if possible. Also, remember that the best time to gather relavent financial information and documents is before the divorce is filed. It is amazing how often such documents “disappear” after the divorce is filed.
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Lesson: Get Retirement Money Immediately
Posted on 24. Apr, 2009 by Alabama Divorce Lawyer, Michael Sherman.
The Alabama Court of Civil Appeals recently issued an opinion in Buchanan v. Buchanan which addressed the issue of market fluctuations in retirement accounts. The facts in the case are common: husband and wife divorce, wife is awarded 50% of husband’s retirement account, the parties and/or their lawyers do not process the Qualified Domestic Relations Order to effectuate the transfer from Husband to Wife. Over three years later, the wife files a petition to hold the husband in contempt of court for failing to transfer her 1/2 of the retirement account.
Unfortunately for the parties, by then the value of the account had been reduced from $77,000 to $43,000 due to market fluctuations. The question was should the wife get 1/2 of $77,000 or 1/2 of $43,000? Who should bear the loss in value that occurred between the time of the divorce to the actual division of the accounts? The Appeals Court found that each party should share the market loss, which meant the wife would only get 1/2 of $43,000. The net result is that she lost $17,000 because a QDRO was not immediately prepared to divide the account.
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Discovering Hidden Assets
Posted on 06. Apr, 2009 by Alabama Divorce Lawyer, Michael Sherman.
In your divorce case, you may hear your lawyer talk about the “discovery process.” Discovery is essentially the legal process by which lawyers can obtain information necessary for your case (such as assets, debts, income, and other factual information). This often will involve written requests to your spouse to produce certain documents, a request for them to file written answers to the lawyer’s written questions (called interrogatories), subpoenas for documents from banks, credit card companies, etc.
Often lawyers will use multiple methods of discovery in an effort to obtain complete information. I have had clients ask me not to pursue discovery for fear of the costs that would be incurred. This is often short sighted. An example from a recent case I had is instructive.
I was representing a wife in a divorce case. The husband had complete control of all of the finances and the wife was not even aware of all of the assets. Through the discovery we sent to the husband he produced a spreadsheet that he claimed were the assets. The wife was surprised at the amount of assets that were disclosed. They were much more than she thought they had. But, the husband showed what he claimed to be the fair market value and the loans owed on them. In all, he showed a net equity of less than $500,000. It was more than the wife suspected, but something told me it was less than it should be. So, we subpoenaed his bank records.
The bank produced documents to us that included the husband’s loan application and the net worth statement that he provided to the bank. And, you’ve probably guessed the punch line – the net worth statement he provided to the bank included assets that he had not disclosed on the financial statement he provided to us, and the values were higher. In all, the difference was that he showed a net worth on the financial statement provided to the bank that was nearly $2.5 million dollars – increasing the marital estate for the divorce judge to divide by about $2 million!
My client now understands it was to her benefit to make sure we did a thorough job of discovery. Obviously this example (though completely true) is not what usually happens – at least not to this degree. But, the lesson is a good one – make sure that your lawyer does a thorough job of discovery. And, make sure that you let him.