Keeping Your Stuff
|Saturday, 03 May 2008 00:39|
Dividing property in a divorce process can be an emotional and difficult process. It's common for each party to often feel that the individual assets belong only to them. This is especially true when it comes to marriages with small businesses or pertaining to retirement accounts. The party who opened and worked in the business, or who contributed their wages into the retirement account, often feels it is not fair to have to divide the asset in the divorce case. Consequently, as a family law attorneyI am commonly asked, “How can I keep my stuff?”
Having said that, there are steps you can take to protect your share of property in the divorce process.
1. Disclose every asset. One of the most important things you can do seems, at first, counter-intuitive. Make sure to completely disclose any assets to your spouse and to the court when you are required to make financial disclosures. You should not try to conceal assets, either by “giving” them to a friend or family member of by simply not disclosing the existence of the asset. This is important for three reasons. First, if you are caught attempting to conceal an asset you may be subject to penalties for contempt of court, which can result in fines being levied against you or, in extreme cases, in jail sentences. Second, even if you are successful in concealing the asset in the divorce, you may lose half, or all, of the asset if it is discovered later. Many jurisdictions award a later discovered hidden asset to the other party plus any attorney’s fees they incurred to discover the asset. In other words, you stand to lose much more than you might gain by hiding assets. Third, if the court even suspects you are attempting to conceal assets it will negatively affect your credibility in the court’s eyes. Ultimately any court decision comes down to who a judge believes. If the court feels you are not being truthful you may conceal the asset, but lose everything else in the trial. Your credibility is the most important asset you can take into court. It is absolutely not worth sacrificing this most important asset to try and conceal another asset.
2. Disclose offsetting debts. Likewise, it is important to disclose every debt, especially debts secured by marital assets. A prime example is a loan against a 401k. Very often a party will have taken out a loan without telling his or her spouse because they do not want the spouse to know there are financial difficulties. Once the divorce is pending, however, it is imperative to come clean with any debts. If your retirement account has assets of $100,000, but you have borrowed $40,000 and paid marital bills, the court will probably only consider the net value of the account, or $60,000, as a marital asset. However, if you do not disclose the debt the court may determine the account is worth the full $100,000 and give your spouse one-half of that amount. As a result, your spouse might get $50,000 from the account and you would get a net value of $10,000. Likewise, if you have borrowed money from family or friends, disclose the debts right away. The court will probably assign the debt to you, but may use the debt as an offset against other property allowing you to keep more of the marital estate.
This is even more important if the asset is your business. Your spouse may seek a business valuation to determine how much the business is worth. The business valuation expert needs to know all of your debts in order to determine a realistic value of the business. If you borrowed money from your parents to meet payroll needs, you must disclose that information. Many times business owners do not want to admit they needed help to make ends meet. If you conceal this information, however, the business valuation will over-value the business and you will end up keeping fewer assets than you should.
3. Keep your documents. If you have money you inherited, or accounts you owned prior to the marriage, you may be able to protect those assets in the divorce process. However, the burden will be on you to prove those assets should be your separate property. You need to go through all of your documents to find any proof you can – account statements from around the time of the marriage, inheritance documents, or whatever proof you may have.
With tangible items – cars, furnishings, etc., this is usually easier. These items are easier to trace so it is easier prove when and where you obtained the asset.
4. Be prepared to negotiate. If you have a particular asset you want to keep, be prepared to negotiate with your spouse. A common example is a retirement account. Often one spouse will exchange their equity in the marital home for a larger share of the retirement account. Before you agree to such an arrangement, however, you should talk to an experienced family law attorney to make sure you are taking tax consequences into account.
The most important thing to remember is the court views the marital assets as belonging to both parties. As a result, the court is looking to fairly divide all the property. Even if you feel that your spouse did not contribute to the acquisition of the asset in question, the court will probably not share your view. There are steps, however, you can and your attorney can take to help get you the best result.
Related Website: www.cordellcordell.com