Author: LPM Admin

During the course of a marriage, finances inevitably become intermingled. There are often shared credit cards and bank accounts. If a house is purchased, both individuals usually take out a mortgage together. This can also be the case with car loans and even educational loans which are applied for jointly. When a marriage dissolves, a dispute often ensues in determining who is entitled to these assets and who will assume joint debt. When couples can’t come to a mutually accepted agreement, the Arizona courts must intervene, often resulting in a time-consuming, expensive, and public proceeding. It is important to remember that Arizona is a community property state and therefore all property acquired from the date of marriage until the date of filing for divorce will be divided as per the parties’ agreement or court order.

If you think your marriage is headed for divorce, there are a few things you can do, even before separation, that can help to make the dissolution of your union and joint finances a bit easier should you and your spouse decide to part ways. The first step is to speak with a financial advisor who can assist you in organizing and creating a plan. In evaluating your current financial situation, it’s important that you not only consider your personal and joint assets but also your bills and annual taxes. A personal net worth statement helps to do just that by compiling all of your expenses, income, assets, and liabilities into a single document. In this statement, be sure to note all marital and non-marital assets and liabilities, and detail non-traditional income sources such as stocks and dividends. While this may seem like a big undertaking, it will be required by the court if your divorce is contested and some preparation now can save you a great deal of time during a stressful divorce proceeding.

One of the most important things you can do if divorce is looming is to separate your finances from your spouse as much as possible. You might consider closing joint bank accounts and credit cards and opening new accounts as an individual. This can help to protect you from hefty bills if your spouse decides to go on a spending spree, whether the charges are legitimate or out of spite. During this time you should also check your credit report for any accounts your spouse may have opened or bills they may have missed payment on to ensure your credit score doesn’t take a hit.

Once your personal net worth statement is prepared and you have successfully established some financial independence, you can start moving forward with a new budget that takes your income and expenses as well as your spouse’s financial situation into account and determines how much each of you will require to live separately. If you have children, you will also need to consider their needs and what it will take to keep their lifestyle the same during, and long after, the divorce. It is also important to start looking into life insurance and disability insurance to protect your children in the event of your death.

Lastly, don’t wait to change the beneficiaries on your insurance policies and other assets. Although some cannot be changed unless there is a final divorce decree, others may be altered and should be done as soon as possible. An experienced family law attorney can help you to understand your options before you file for divorce and protect your best interests throughout the proceedings. Contact the Arizona family law attorneys at Garnice Law today at (480) 351-4804 for a free consultation.

Mothers are the primary or sole breadwinner in 40% of US homes with children, says a 2013 study.  One in four households is headed by a single mother.  Gender stereotypes are breaking down in many areas of American life.  Women are coming farther in the workforce these days than ever before and that is having an impact of the family structure.

All of the above trends are having an effect on family law and particularly on divorce outcomes.  In a divorce matter today, the court can no longer assume that the father is the primary breadwinner and the mother is the primary caretaker of children.  Despite claims of gender neutral laws relating to family matters, it is obvious that courts of the past operated with certain stereotypes in mind.  Now, it is becoming more widely accepted that the wife could be the primary source of financial support for the family while the husband cares for the children at home.  If this is the case, it is likely that the court will award the father primary custody of the children and order the wife to pay child and spousal support.

Arizona law dictates that child support is to be calculated based on the income shares model.  The income shares model considers the total amount the parents would spend on the child if the family lived together  After determining that amount, the court takes into consideration who has primary custody, whether it be the mother or the father, and then determines which spouse must pay child support and in what amount.  In this way, both parents contribute their share.

Spousal support guidelines are state specific.  Most states consider various factors including but not limited to the length of the marriage, the need for financial support and the ability to pay support.  Arizona courts consider whether the spouse seeking maintenance has sufficient property to provide for their reasonable needs, whether they can become self-sufficient by becoming employed or for some reason cannot and whether they contributed to the other spouse’s educations.  The main point is that the gender of the giving and receiving spouse is not a factor when deciding on spousal or child support.

Another interesting statistic is that one in six fathers have primary custody of their children.  This was almost unheard of 50 years when usually only widowers took primary care of their children.  Also, we have all heard of deadbeat dads who do not pay their child support.  But what about deadbeat moms?  It seems that about the same number of women as men (about one third) don’t pay their child support.

If you are a father who is seeking primary custody of your children, child support and/or spousal support, call Nirenstein Garnice at (480)351-4804 for a free consultation.

Prenuptial agreements, or “prenups”, are familiar to just about everyone. Unfortunately, so are the circumstances that often prompt their creation, such as a wealthy person planning to marry a less wealthy person, an individual who owns part of a family business planning to marry, or an individual with children wishes for them to inherit along with a new spouse.

Most people are still unfamiliar with postnuptial agreements, which are created after a marriage occurs. This can lead to questions regarding their use and validity. Some questions include “Isn’t it a done deal once the marriage occurs?” “Are they enforceable, since the marriage has already happened?” And “why would two people who are already married even want an agreement at that point?”

While many people do not fully understand postnuptial agreements, they can provide tangible benefits in numerous situations. For example:

• Money is said to be the main area where spouses disagree, and differences often manifest after a marriage occurs. A postnuptial agreement can be used to lay out how money is to be spent and who it belongs to.

• Partners in a new business may be concerned that, upon death, a portion of their business may end up in the hands of a spouse who lacks business savvy. A postnuptial agreement that states that a spouse cannot make a claim on the business can solve this problem.

• A spouse who uses money acquired prior to a marriage to buy a house may be concerned that, if a divorce occurs, a significant loss of wealth may result. A postnuptial agreement stating that property will be deemed separate property instead of joint property can resolve this concern.

• A spouse may question his or her spouse’s fidelity. A postnuptial agreement outlining the contractual consequences of cheating can ease these concerns.

• Marriage can complicate inheritance plans, especially if one or both spouses have children from another marriage. In the absence of a prenuptial agreement, a postnuptial agreement can provide financial protection should a spouse pass away.

• Spouses who opt to stay home and care for children may feel financially insecure due to a lack of career and job skills. A postnuptial agreement can offer financial peace of mind.

There are countless other marital issues that can be effectively addressed via a postnuptial agreement. In order for postnuptial agreements to accomplish their purpose, they must be meet numerous legal requirements, such as ensuring they’re voluntary and involve full and fair disclosure, and mutual consent.

For assistance in understanding and creating a postnuptial agreement in the Scottsdale, Arizona, area, contact the divorce and family law experts Nirenstein Garnice PLLC at 480-351-4804.

Contracts that restrict free will and economic activity are generally disfavored by the courts because they smack of slavery. Non-compete agreements (NCAs) are somewhat of an exception to that general rule. NCAs are essentially employment contracts that limit an employee’s ability to work at a similar company or in a designated geographic area for a certain amount of time after leaving their current position.

Courts are recognizing that today’s employees are much less likely than past employees to remain in one job for their entire career, and are thus willing to offer employers reasonable protection from competition from past employees.

Courts generally want NCAs to have clear and reasonable provisions. The enforceability of any non-compete agreement is highly dependent on the individual circumstances of the parties to the agreement and the provisions the agreement contains. In determining reasonableness, a court will consider:

The type of business. More specialized businesses, or businesses that have trade secrets to protect, are more likely to have their NCAs upheld.
The particular circumstances of each party to the agreement. For example, the court will often look at whether the NCA was negotiated or if the employee was told they could either accept it as written or work somewhere else. If the NCA was negotiated, the court will be more likely to try to determine the parties’ intent when they wrote the contract.
Whether the restriction interferes with public interests. Just who is protected and who is harmed by the NCA’s terms?
Whether the NCA imposes undue hardship on the party restricted. Will the employee be able to find a new job not barred by the NCA with reasonable ease?
In Arizona, a court has two options if it determines that a particular NCA restriction is unenforceable. It can either strike down the entire agreement or cross out unreasonable provisions while leaving the NCA as a whole intact. Striking out unreasonable provisions is known as “blue penciling.”If a court decides to blue pencil a NCA, it can only cross out “grammatically severable, unenforceable contract provisions.” Courts cannot rewrite a contract or add new terms.

In order to be proactive with regards to the court system’s proclivity for blue penciling, many NCAs drafted today include step-down provisions. Adding a step-down provision can prevent a court from striking a key provision by providing a more reasonable alternative. An example of this would be, “This non-compete agreement will be in place for 12 months after the employee leaves the company. If a court finds this duration to be invalid, then the duration will be 9 months after the employee leaves the company. If a court finds this duration to be invalid, then the duration will be 6 months after the employee leaves the company.”A valid step-down provision will only have 2 or 3 choices and be written in good faith.

Before going to court to challenge a NCA, employees and employers should note that Arizona is a loser pays state when it comes to contract disputes. Because disagreements over NCAs can be considered contract disputes, someone who wishes to challenge or enforce an NCA must be ready to comply with the court’s ruling and pay the winning party’s court costs.

If you are a business owner who finds themselves in a dispute with a former employee for violating a non-compete agreement, you need the help of an experienced business litigation attorney. The attorneys of Nirenstein Garnice PLLC have represented executives and owners throughout Scottsdale and can help you resolve your dispute in a cost effective manner that benefits the financial and structural well-being of your business. Contact us today at (480) 351-4804 to schedule your free consultation.

Dr. Daniel Pollack, MSSA (MSW), JD of the School of Social Work at Yeshiva University has written an interesting article discussing the role of supervised visitation in child custody cases titled “Supervised Visitation and the Role of Departments of Human Services“.

In this case Husband filed for Chapter 7 bankruptcy, while the parties were in divorce proceedings. No final judgment existed nor was there a division of marital assets. Based on an estimate of her expected share of marital assets, Wife filed a timely proof of claim for one-half million dollars against Husband’s bankruptcy estate, apparently premised on her stake in a partnership that was legally titled in Husband’s name and, therefore, passed to his bankruptcy estate.  It would likely be distributed as shared marital property in a divorce decree.

The trustee sought to expunge the claim, arguing that Wife’s interest in equitably dividing marital property in Husband’s bankruptcy estate was not a “claim” under 11 U.S.C. 101(5), because the state court had not entered a final divorce decree before his bankruptcy filing. The bankruptcy judge found that the claim for equitable distribution arose prepetition and must be allowed.

On direct appeal, the Federal Court affirmed, indicating that although Wife did not have an equitable distribution decree in hand at the time Husband filed for bankruptcy, the focus should not be on when the claim accrues, but whether a claim exists. Given the Bankruptcy Code’s expansive definition of “claim,” a non-debtor spouse has an allowable pre-petition claim against the bankruptcy estate for equitable distribution of marital property when the parties are in divorce proceedings before the bankruptcy petition is filed.

Since the threat of a bankruptcy filing often is raised in a divorce case, this type of analysis proves very helpful if you are the spouse whose soon to be ex is threatening to file so that your chance of obtaining value is denied or severely limited.

By Alexander Nirenstein, Nirenstein & Garnice PLLC

The Court of Appeals this week in Stewart v. Sterling dealt with the issue of a married couple who formed a business, borrowed money from the wife’s relative for start-up costs, and were later divorced with the husband being awarded the company and without those monies being repaid at the time the divorce was finalized.

Ultimately, the relative sued the ex-husband claiming breach of contract, breach of covenant of good faith and fair dealing and unjust enrichment.  The ex-husband defended the lawsuit claiming that there was never any agreement to repay the money.  At trial, judgment for the full amount borrowed, with interest at the statutory rate and attorney’s fees and costs was entered in favor of the relative.

The Court of Appeals affirmed the trial court’s ruling finding that no enforceable contract existed because it was only an “oral debt not evidenced by a contract in writing” existed.  Nevertheless, the Court held that the trial court properly found that the claim for unjust enrichment was appropriate.

In Arizona, in order to establish a claim of unjust enrichment, a party must show: (1) an enrichment; (2) an impoverishment; (3) a connection between the enrichment and the impoverishment; (4) the absence of justification for the enrichment and the impoverishment; and (5) the absence of a legal remedy.

These factors were proved by the relative, including, “absence of legal remedy” since there existed no enforceable contract between the parties.  As a result, timing as to when the law suit was filed became critical because of statute of limitations concerns (three and/or four years).  In this case, the “discovery rule” applied, which indicates that a “cause of action does not accrue until the plaintiff knows or with reasonable diligence should know that facts underlying the cause.”

The trial court’s application of the date when the cause of action accrued in this case was the date of the entry of the Decree of Dissolution of Marriage, “the time [the relative] should have know that the ex-husband was responsible for repayment of the loan and that payment would not be made.”